Article: Three-Bagger: Darvish Meeting, Sano Fallout, Ice Cold Stove

[Squirrel]

It’s happened before. The most recent time the owners were caught attempting to restrict player movement, the result was Jack Morris coming to the Twins.

Do I know it is happening now? Of curse not. Just wondering if there are any rumblings about it, from agents or the MLBPA.

I hadn’t thought of that, and it could be, but I’m thinking not. But I really don’t know. I think the Ohtani sweepstakes just threw everything off this year making this an atypical year. But then again, it’s weird that only ... what was it someone posted, only 30% of FA have signed this year? Not sure how that compares to other years. And I’m not sure your Morris example would be considered recent ... are there other examples that comes to the collective mind?

[Riverbrian]

In my opinion... Collusion isn't the right word. It's more like a collective reset.    

 

Multiple things in no particular order. 

 

The Dodgers and Yankees seem to be on the sidelines as they try to reset the luxury tax. Taking the two big boys out will slow a market. 

 

Harper and Machado are already a factor. I think the Dodgers, Yankees and quite a few others are looking at next year and doing some pre-prep for that. 

 

The young GM's are seeing the danger of Jason Heyward length contracts. They are not colluding but they are all seeing the same obvious data. 

 

 

 

 

[yarnivek1972]

I hadn’t thought of that, and it could be, but I’m thinking not. But I really don’t know. I think the Ohtani sweepstakes just threw everything off this year making this an atypical year. But then again, it’s weird that only ... what was it someone posted, only 30% of FA have signed this year? Not sure how that compares to other years. And I’m not sure your Morris example would be considered recent ... are there other examples that comes to the collective mind?

That’s the most recent example of teams being CAUGHT (and punished) for collusion. There have been rumblings since then. Mid 2000s or so was one of the more recent. But nothing was ever proven in years since. I saw sn article on mlbtraderumors that said there have been half as many transactions to this point in the offseason as the 2012-13 offseason. Half. It certainly whiffs of collusion.

[yarnivek1972]

FWIW, there have been a few players and at least one agent (not surprisingly, Scott Boras) who have shall we say “speculated aloud” that something less than random is happening. The counter argument is extremely valid: next year’s class could be much more attractive and the increased use of analytics means that the same type of mindsets are making these decisions. 5-7 contracts for 30 year olds who aren’t uber stars may be a thing of the past.

[Major League Ready]

 

If more than one big-market team felt their forecast on any pitcher was solid enough to predict this, the six-year $160M contract that MLBTR predicted for Darvish back in November would get obliterated.

 

It's hard to keep up with how rapidly the price has gone up for players who control their own destiny. An ERA you mentioned would be something like 3-4 WAR if at a starter's full workload. Estimates of the going rate in free agency have been in the neighborhood of $10M per WAR lately. And six years of solid performance like that, regardless of the pitcher's age, is a whale of a long time. $200M would probably be a cheap outcome for the team that wins the bidding.

 

MLB is raking in the dough. Top players are getting their cut.

 

If Darvish does go for the mid-$100M range, it won't be with the performance expectation you laid out.

 

Are the estimates you referenced in the highlighted part of your post the average production per WAR after signing or are this calculated based on the price free agent signed and there war for 2-3 seasons leading up to free agency?

 

I think you are confusing production per WAR with what players are signing for in comparison with this historical WAR.  For example, Lorenzo Cain averaged  4.6 WAR over the last 3 years.  He signed for $16M/year which equates to 3.8M per WAR.

 

Zack Cozart signed for $12,666,667 per year.  His war the previous 3 years was 2.97 which equates to 4.265M per WAR

 

Chatwood was hurt sand missed a lot of time so it's hard to go by his historical numbers.  Streamer projects him at 1.9 WAR which equates to $6.666M per WAR. 

 

There is a lot of variance but the premise that the market value is $10M per war is not accurate unless they are signing them even though they expect their production to be half their historic rate.  One would think they are basing their offers on the previous 2-3 years productivity and the end result has been much poorer than expected.

[Otto von Ballpark]

Are the estimates you referenced in the highlighted part of your post the average production per WAR after signing or are this calculated based on the price free agent signed and there war for 2-3 seasons leading up to free agency?

 

I think you are confusing production per WAR with what players are signing for in comparison with this historical WAR. For example, Lorenzo Cain averaged 4.6 WAR over the last 3 years. He signed for $16M/year which equates to 3.8M per WAR.

 

Zack Cozart signed for $12,666,667 per year. His war the previous 3 years was 2.97 which equates to 4.265M per WAR

 

Chatwood was hurt sand missed a lot of time so it's hard to go by his historical numbers. Streamer projects him at 1.9 WAR which equates to $6.666M per WAR.

 

There is a lot of variance but the premise that the market value is $10M per war is not accurate unless they are signing them even though they expect their production to be half their historic rate. One would think they are basing their offers on the previous 2-3 years productivity and the end result has been much poorer than expected.

I think you answered your own question when you brought up Steamer projections. Nobody expects Cain to post the same WAR rates from ages 32-36 as he did from 29-31. His Steamer projection for 2018 is 2.9 WAR, and a rule of thumb is to subtract a half a win per year for aging. That's 9.5 WAR over the life of the deal, or $8.4 mil per win. Now, I suspect the Brewers expect a bit better of him that that, but a realistic median projection might fall in the $7 mil per win range over the life of the deal, especially when you factor in health (he's likely to miss more time as he ages).

 

A guy like Cozart muddies the water further because so much of his WAR has been in one outlier season, it adds a lot of uncertainty to his projection. He's only once reached that 2.97 WAR figure in his entire career, can you really expect him to average that over the next 3 (ages 32-34)?

 

I too am not sure about the $10 mil per win estimate (maybe around relievers? the post was from almost a month ago), but it seems like $7 mil is still going strong.

Edited January 30, 2018 by spycake

[ashbury]

Are the estimates you referenced in the highlighted part of your post the average production per WAR after signing or are this calculated based on the price free agent signed and there war for 2-3 seasons leading up to free agency?

 

I think you are confusing production per WAR with what players are signing for in comparison with this historical WAR. 

"Actual cost and actual WAR created by free agents collectively"

 

https://www.fangraphs.com/blogs/the-recent-history-of-free-agent-pricing/

 

Not the years prior to the FA signing. (Which would, by the way, be a very amateurish way of forecasting. As the writer of the above-referenced article goes on to say, "I have found in the past that projections tend to overshoot actual WAR on average". I choose to give front offices credit for better projections than outsiders, and thus that they know what they are getting into, more or less, when they sign those contracts.)

[Major League Ready]

 

"Actual cost and actual WAR created by free agents collectively"

 

https://www.fangraphs.com/blogs/the-recent-history-of-free-agent-pricing/

 

Not the years prior to the FA signing. (Which would, by the way, be a very amateurish way of forecasting. As the writer of the above-referenced article goes on to say, "I have found in the past that projections tend to overshoot actual WAR on average". I choose to give front offices credit for better projections than outsiders, and thus that they know what they are getting into, more or less, when they sign those contracts.)

 

It's pretty easy to calculate actual cost.  What I am wondering is how they are forecasting and determining market value.  Has there been a considerable gap in forecasted vs actual performance.  Of course, this includes how long the player will add significant value.  It seems like there was a tendency be overly optimistic.  Does WAR even have any significant role in contract valuations.  Honestly, I have never dig into it by it seems highly suspect.  How accurate has Streamer been?  I have never seen a metric this suspect used in any form of valuation in any other industry.  

 

Are we seeing an adjustment this year?  There are more business school educated personnel in front offices now.  There appears to be an adjustment in-process this season.  Are the front offices finally recognizing the odds of defying aging and the cost of losing cost controlled players.  It will be very interesting to see how this shakes out in coming weeks.

[Vanimal46]

FWIW, there have been a few players and at least one agent (not surprisingly, Scott Boras) who have shall we say “speculated aloud” that something less than random is happening. The counter argument is extremely valid: next year’s class could be much more attractive and the increased use of analytics means that the same type of mindsets are making these decisions. 5-7 contracts for 30 year olds who aren’t uber stars may be a thing of the past.

The symptoms and signs have been here for years. We're noticing it now because of the serious lack of activity this winter... The best of the best free agents have no issue getting long term contracts. Harper/Machado/Kershaw will have multiple 7-8 year contracts to decide over because of their age heading into FA. The rest will demand similar long term contracts and struggle to find a team willing to do so.

 

You bring up analytical front offices and that plays into it for sure. They see years of data handing out poor FA contracts rewarding past performance, and now they don't want to do it anymore.

 

So how are players supposed to get their piece of the revenue pie? If the market is capped for international FA, and their contracts are controllable for 6-7 years, how can they earn money for their performance right now?

[rdehring]

Is it possible we are seeing the beginning of bringing baseball compensation back to reality?  Is it possible that ten years from now contracts will be smaller, risky contracts to older players will be shorter and overall payrolls will be down?  Perhaps on the flip side, ticket prices will be held constant or even edge down and the fan will be able to take his family to a game for a bit less of a hit to his budget?

 

Was talking about baseball salaries the other day to a family of doctors.  A surgeon has lives in his hand every day, yet many make what is the minimum for baseball.  Others make more, but few make what a player makes in their first year of arbitration.  

 

Is a change coming?

[ashbury]

It's pretty easy to calculate actual cost.  What I am wondering is how they are forecasting and determining market value.  Has there been a considerable gap in forecasted vs actual performance.  Of course, this includes how long the player will add significant value.  It seems like there was a tendency be overly optimistic.  Does WAR even have any significant role in contract valuations.  Honestly, I have never dig into it by it seems highly suspect.  How accurate has Streamer been?  I have never seen a metric this suspect used in any form of valuation in any other industry.  

 

Are we seeing an adjustment this year?  There are more business school educated personnel in front offices now.  There appears to be an adjustment in-process this season.  Are the front offices finally recognizing the odds of defying aging and the cost of losing cost controlled players.  It will be very interesting to see how this shakes out in coming weeks.

You raise several tangents and I'll only try to address the three I bolded. I don't think we really know what forecasting the teams use, except to speculate that the kinds of sabrmetric forecasts developed 20 years ago (back when baseball front offices were mostly pooh poohing the business school quants)  probably were a starting point, but they've gone in different directions by now and have left the amateurs in the dust - the heavy hitters in the world of business analytics have gotten pretty good at teasing out patterns from so-called Big Data. Occasionally team personnel take part in things like the SABR Analytics Conference (there's one coming up in March, not too late to buy a plane ticket to Phoenix!) but I've never attended one and I don't know what they choose to say there but I bet it's not very much they consider a competitive advantage.

 

Second, I doubt they use one of the WAR variants literally, even if WAR is conceived in the desired spirit of "value added to the team". For one thing, I'm sure we all agree, in deciding on a contract offer it always comes down ultimately to dollars and cents. A team's winning record contributes fuzzily to revenue in ways they surely can model, and individual players in turn contribute fuzzily to winning in ways the teams also model. But in addition, big-ticket players can contribute to revenue a little more directly, such as concessions sales (might Darvish bring in $1M in sales of jerseys shipped to Japan during several years for example?) or simply name-recognition putting fannies in the seats. Just being seen as "going for it" may be quantifiable for revenue as well - which I think several posters here are suggesting as a reason to pull the trigger on a big contract now. The idea of dollars divided by WAR is just a proxy for the real computations the teams make, and I don't think anyone was pretending otherwise.

 

Third, I am guessing that the free agent logjam is indeed an outcome of an adjustment, but not quite straightforwardly. It may be that the forecasts several years ago were inaccurate, but the inaccuracy was apparently skewed toward the overly optimistic side, and not merely random with bad outcomes generally balanced by surprises on the good side. It looks like teams were paying more for wins, in practice, than they believed going in - if that's a circular argument, so be it, because I can't know what goes on inside GMs minds. OTOH, they were easily affording these dollars. Empirically they WERE paying recent free agents $10M per win, or thereabouts; their perhaps not believing it beforehand doesn't make it untrue. So they CAN pay that price per win, if they choose to, and it's a matter of sharpening up their forecasts (which, in the years that have followed, they probably have) to get more wins for their dollar. That in turn perhaps leads them to spread the money around a little more evenly, which in turn disappoints the top-end free agents who keep waiting for the "real" offers to finally start rolling in this off-season.

 

There's a lot to think about, when trying to reverse-engineer what's going on in baseball's front offices.

[ashbury]

Perhaps on the flip side, ticket prices will be held constant or even edge down and the fan will be able to take his family to a game for a bit less of a hit to his budget?

I don't wanna launch a lengthy digression, but the insertion of this old chestnut always gets me. Ticket prices are high because other fans are waving fistfuls of dollars to acquire tickets ahead of you. If teams dropped their prices, scalpers would swoop in and pocket the difference. Salaries are more of an effect, than a cause, of high ticket prices.

 

[Otto von Ballpark]

5-7 contracts for 30 year olds who aren’t uber stars may be a thing of the past.

I am not so sure. Cain just got 5/80. Sounds like JD Martinez has a 5/125 offer from Boston, but he doesn't want to DH. Hosmer has a 7 year offer of probably at least $120 mil from San Diego. And Darvish has a 5 year offer from someone too, if not the Twins. Seems like the players aren't getting the variety of 5-7 year offers they wanted (perhaps because the Yankees, Dodgers, and others are sitting out for luxury tax purposes), and they are still holding out for their preferred teams/situations, but they are still getting 5-7 year offers at comparable dollars as before.

[Mr. Brooks]

I don't wanna launch a lengthy digression, but the insertion of this old chestnut always gets me. Ticket prices are high because other fans are waving fistfuls of dollars to acquire tickets ahead of you. If teams dropped their prices, scalpers would swoop in and pocket the difference. Salaries are more of an effect, than a cause, of high ticket prices.

 

Aside from Boston and New York, how often are baseball stadiums filled to capacity during the regular season?

I think there is room to go down before demand overtakes supply. More likely, IMO, teams find a tipping point where all the empty seats are more than made up by the inflated tickets that are sold. I'm not sure where that number lies, but I'd imagine it's in the 75-80% capacity range.