First Pitch: Spending Money in Free Agency Isn’t Worth It
A few years ago I saw Pat Lackey at WHYGAVS write an article at the end of the year talking about what he learned about the game of baseball that year. I thought it was a good approach to take. It makes sense for anyone to embrace new lines of thinking, evaluate their old lines of thinking, and wonder if there is something new to focus on going forward.
One of the big things I’ve been evaluating this year is whether free agency is worth it. Last year I wrote an article talking about the realistic options for the Pirates. The team had four needs: catcher, shortstop, first base, and starting pitching. My suggestion was Ramon Hernandez at catcher, Clint Barmes at shortstop, Derrek Lee at first base, and Chris Capuano on the mound.
This year my suggestion might take a different tone: no one at all.
After Clint Barmes and Rod Barajas started struggling early in the year, I started evaluating my thoughts on free agency. My feeling prior to this year was that teams like the Pirates had no shot at the big free agents, leaving them with the lesser players to choose from. Some of those players still had value, and would be worth pursuing at lower costs.
The problem with that value is that the ceiling starts out lower, which means that if the player struggles, there’s no a lot of room between them and a replacement level player. So in the case of Rod Barajas, for example, you’ve got a catcher who has a -0.6 WAR and costs $4 M, which is about $3.5 M more than a replacement level player, all while getting half a win less than a replacement level player would bring.
I started thinking about how the Pirates might be better off avoiding the lesser players, and going for the “all their eggs in one basket” approach. That’s when I started paying attention to some of the higher priced free agents. And that’s when I noticed that most of those guys weren’t performing well either.
I have been meaning to take an overall look at free agency from this past off-season, trying to find which players produced value. I wanted to wait until the appropriate time to start talking about the off-season. Unfortunately, the late season slide has brought that discussion in to play prior to the end of the 2012 season. I was reminded of this topic yesterday in the comments section, and took a look today.
Below is a chart of every free agent from last year who signed with a new team for $1 M a year or more. The tables are sorted by value. I’ve included their 2012 WAR numbers to date (prior to the 9/23 games). Those numbers can still change over the final two weeks of the season, but they probably won’t change significantly. The final column is the value that the players produced this year. Value is measured as $4 M for each win above replacement, minus their contract. So if a player is paid $5 M, and is a 2.0 WAR player, it would be calculated as: (2.0 * $4 M) – $5 M = $3 M. The value in that case would be $3 M.
I used the $4 M per win figure because that’s where the contracts ended up this year. I will point out that in some cases the value isn’t the only thing to go by. I’ll get in to that bit more later.
$5 M and Under
This group had some of the biggest values, and the best success rate for players to provide positive value. 47.9% of the players in this group produced positive value, which isn’t really that strong. Basically if you’re signing two players from this category, one of them will work out and one will be a bust, on average. The Pirates had three players from this group: Barajas, Erik Bedard, and Nate McLouth. Bedard and McLouth have produced positive value, although both come with a disclaimer. Bedard’s value was $700,000, which isn’t a steal by any means. McLouth has positive value, but all of it has come with the Orioles.
Two of the best deals from this group came on the international market. Norichika Aoki has put up over $10 M in value for the Brewers, which is the second most valuable free agent contract of all of the deals I looked at. Wei-Yin Chen has given the Orioles $5 M in value.
This group had five out of the 12 players provide positive value, hitting 41.7%. Again, the top value was an international deal, with Yu Darvish providing $9.6 M in value, despite his $10 M a year deal. That figure doesn’t include the posting fee for Darvish, which was $51.7 M. Even when you add in that value, Darvish is seeing a positive value of $983,333.
There was one thing I noticed in this group: most of the bad contracts are relievers. If you take out all of the relief pitching contracts, the average value of the rest of the players is $1,925,000. Also, five of the eight remaining players, or 62.5%, had positive value.
After noticing the relievers dragging down the values, I made a separate tab for relievers. You’ll note that out of 18 relievers signed for $1 M or more, only three of them produced positive value this year. All three were signed to one year deals for $4 M or less. Yet for some reason, teams still pay relievers big dollars.
This group ended up being very over-paid. The average value was -$3,471,607. Even if you took out Jonathan Papelbon and his -$7.3 M in value, you still get almost -$3 M from the rest of the players. Only one player provided positive value, and that was Aramis Ramirez, who was the most valuable contract out of everyone I looked at.
It makes sense that these guys are over-paid. They’re the most valuable guys on the market, and as a result, they’ve got the most bidders and the attention of the teams with the most money. That drives up the price to the point where they can’t possibly put up the numbers needed to justify their deals.
Some of these deals aren’t bad deals, even if they come with negative value. The big example would be Carlos Beltran. The Cardinals saw Albert Pujols walk for an average of $25 M a year, which has led to -$9.8 M in value this year. Meanwhile, Beltran was signed for $13 M a year, has produced almost the same results as Pujols, and while he’s at -$1 M in value, that’s a discount compared to Pujols. Add in the playoffs, and Beltran will probably even out the value of his contract, which combined with the savings from Pujols signing elsewhere, makes his deal a great move.
Who Should the Pirates Target?
The Pirates have been in a difficult situation when it comes to free agency the last few years. They’ve been limited to the lower paid guys. Most of those guys are bench options or marginal starters, yet the Pirates need above-average starters. The guys they sign have been pretty much doomed from the start. They’re supposed to be role players, but because the team has been rebuilding, those players end up being the highest paid players on the team, which raises expectations for their production.
As for the bigger free agents, the Pirates can’t be a player for those guys until they start winning. This year’s results could be enough to turn some heads, at least in the middle range. But we’ve seen how that’s worked in the past, with players turning them down for one year deals elsewhere, or players choosing not to sign with anyone at all, rather than signing with the Pirates.
They don’t have a chance at the top guys, and they really shouldn’t be going after those players. It’s not a smart move to pay 20% or more of your payroll to one player. Plus, in most cases teams are paying for the name, rather than the numbers. Carlos Beltran has a 3.0 WAR and is making $13 M a year over three years. Josh Willingham has a 3.9 WAR and is making $7 M a year for three years. There’s some hindsight to that, but not a huge amount. Willingham has been consistently a 2-3 win player. He’s having a career year this year, but should have been expected to provide value even without the career year. Beltran was a 4.7 WAR player last year, but has been inconsistent with injuries, posting a 0.8 WAR in 2010 and a 3.0 WAR in 2009. For the Pirates, it makes more sense to go after the Josh Willingham types, who are consistently good, not far off in value from the top guys, and cost much less.
Basically what the Pirates are looking at is one of two options:
1. Go the same route and add players in the $5 M range or less. On average, half of them should provide positive value, but even if they’re providing positive value, they might not amount to more than an average player, which really limits the upside of these deals.
2. Go for a big name player in the $5-10 M range. They’ve had trouble adding guys like this in previous years, but perhaps this season will help, as long as players figure they could help avoid a third straight collapse next year.
Or, maybe there’s a third option: skip free agency altogether. Maybe add a few role players or bench bats, but try to add players through other means. Another A.J. Burnett style trade would be a good example. Find a team that spent big bucks on a free agent a few years ago, only to see that player fail to live up to his contract.
In the Burnett deal, the Pirates will only be paying an average of $6.5 M a year. By comparison, pitchers like Jason Marquis have landed $7.5 M a year deals through free agency in recent years. Marquis was coming off a career year, but that was an outlier. He was usually around a 1.5 WAR pitcher throughout his career. By comparison, Burnett was coming off of two of his worst years in his career, and was around a 1.5 WAR player. Which player would you take? The guy coming off a career year, who is more likely to be no better than a 2.0 WAR player? Or the guy who at his worst is a 1.5 WAR player, and still might have a chance at some upside, all while costing $1 M less a year?
There’s some hindsight that’s unavoidable with that comparison. Burnett was a risk that worked out, and Marquis looked to some like an over-payment at the time. But the point is that this is what is available on each market. The trade market provides players at reasonable prices, mostly because some other team was foolish enough to win a bidding war, and now they’re having to pay part of his salary just to deal him. The free agent market provides players that teams either no longer want, or can no longer afford. The players that teams can’t afford usually aren’t coming to the Pirates, since they usually command big dollars and go to the big market teams. The other players are cast off for a reason. Some might want to just test the market, but in most cases they’re out there because they’re just not that good.
That’s the problem I see with the free agent market. The good players go to the big market teams. A few of the middle players might go to successful teams in smaller markets. But the smaller markets are largely stuck with players who can’t land a big deal elsewhere, and for good reason. But because they’re still some of the best options on the free agent market, they get paid more than they should.
Unless they can attract one of the middle players, the Pirates should avoid free agency going forward. They’d be better off looking at alternate avenues for talent, such as trading for bad contracts, signing minor league free agents, or signing some lower priced guys and hoping they break out. I’d also add an exception to the “avoid free agency” plan, and that’s considering international talent. Not all of the international players work out, but it seems like the ones that do provide a lot of value compared to similar US players on the free agent market.
Links and Notes
**The Pirates beat the Astros 8-1.
**Over at Bucs Dugout: A Military Member’s View Of The SEAL Training.
**God is angry about Zoltan? Am I the only one who thinks that it’s amusing seeing someone calling themselves a “die-hard Pirates fan” (which could be viewed as idolizing if we’re being so strict with the rules) taking such a “by the book” approach here? Alternate comment: I didn’t know Michele Bachmann was a Pirates fan.