Article: Long-Term Deals Highlight Key Truths

[John Bonnes]

Yesterday, we discussed how the Twins’ and Max Kepler’s unusual long-term contract was a result of him being a somewhat unusual candidate to receive a long-term deal. The Twins also announced a long-term deal with Jorge Polanco. The deals' similarities and differences reflect a few truths about the Twins plans and tendencies.The Twins Indeed Still Have Some Money To Spend This Offsesason

 

Kepler’s deal varied from most typical long-term deals in that he got paid quite a bit more than he would make in year three. So does Polanco’s. This makes sense, given that we’ve estimated that the Twins entered the week $25-$30M below last year’s payroll level and should have some money that they can still spend. It’s good to see that is the case, and that the Twins recognized that greasing the wheels with $6M of that makes a lot of sense.

 

The Twins Will Commit To Competency (At The Right Price)

 

Usually long-term deals target budding superstars. But while both Kepler and Polanco could be described as “good”, Kepler’s batting average has stalled out and Polanco has questions about his defense, his steroid suspension and his power potential. That didn’t stop the Twins, who instead structured contracts whose core included four guaranteed years at a salary already consistent with their value, but didn’t increase much. In both cases that meant paying them more than they were worth this year, paying them about what they would have made next year, and locking them into their present value in 2021 and 2022.

 

The Twins Expect At Least A Little Improvement

 

The fifth year in both contracts gives a raise to both players, but would still represent a major bargain if both players really establish themselves. The real payoff appears if the players take a big step forward. If they do, the Twins will have two of Kepler’s free agent years under their control (one guaranteed) and three of Polanco’s (one guaranteed).

 

And if they don’t, that fifth year will sting a little. Not much, but a little. The Twins are betting each will take at least a step forward to justify that, and giving them four years to figure it out.

 

The Twins Are Still Cognizant Of Spending, But Also Understand Their Margin Of Error

 

If either deal goes south, the Twins are able to spread the impact to a limited amount per year. The only year where they could really hurt the team is 2023, which should also be when both players are in the prime of their careers. Otherwise, the money at risk is really just $4-5M for Polanco and $6-7M for Kepler, neither of which is likely to significantly impact the ability to improve the team over a given offseason. While being mindful of payroll, they understand they can make a $4M to $6M mistake without crippling an offseason. They just don’t want to make a mistake bigger than that.

 

Minor League Depth May Pay Some Unanticipated Dividends

 

I don’t want to overstate the impact of this, but it’s awfully interesting that the Twins top two prospects (and two of the best in the minors) happen to be a left-handed hitting outfielder and a shortstop. And that both are probably going to spending at least part of this year in AA, just a step or two from the majors.

 

I’m not saying that Kepler and Polanco were hearing footsteps, but their agents might have been. I firmly believe both were safe for 2019 and 2020, but if we’re not talking about OF Alex Kirilloff and SS Royce Lewis stepping into major league roles in 2021, something has gone seriously wrong.

 

With these deals done, how they all fit into the picture is the Twins problem. For the record, it’s a nice problem to have, and I have no concerns about anyone blocking anyone. These contracts look very trade-friendly, or perhaps one of their young studs bring back a key superstar for a playoff run. But whatever the solution, Kepler and Polanco now know that someone will be handing them checks from 2021-2023.

 

There is a balance in these deals that has a certain elegance. In general, teams have been less eager to sign players who they don’t anticipate to be superstars. The Polanco and Kepler deals represent a more nuanced approach: lock up steady players who are young and have upside, without committing so much in any given year that future improvement is at risk. It’s a balanced strategy reflecting a balanced philosophy that we’ve seen repeatedly in the Falvey-Levine era. We’ll see if it’s a successful one.

 

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[ScooterDance]

This feels like the approach we will see as commonplace after a strike.

 

Both players could have made more in the latter half of their respective deals. By giving some future earning potential in exchange for increased compensation whilst not proven stars, everybody wins. Both sides are assuming the risk. If the players become stars they still have the ability to make some scratch down the road.

 

The current system enables smart teams to optimize for young, cost controlled talent. Once that talent gets expensive they can flip it for more assets. See Tampa.

[mickeymental]

Year Minimum Average
1967 6,000 19,000
1968 10,000 N/A
1969 10,000 24,909
1970 12,000 29,303
1971 12,750 31,543
1972 13,500 34,092
1973 15,000 36,566
1974 15,000 40,839
1975 16,000 44,676
1976 19,000 51,501
1977 19,000 76,066
1978 21,000 99,876
1979 21,000 113,558
1980 30,000 143,756
1981 32,500 185,651
1982 33,500 241,497
1983 35,000 289,194
1984 40,000 329,408
1985 60,000 371,571
1986 60,000 412,520
1987 62,500 412,454
1988 62,500 438,729

1989 68,000 497,254
1990 100,000 597,537
1991 100,000 851,492
1992 109,000 1,028,667
1993 109,000 1,076,089
1994 109,000 1,168,263
1995 109,000 1,110,766
1996 122,667 1,119,981
1997 150,000 1,336,609
1998 170,000 1,398,831
1999 200,000 1,611,166
2000 200,000 1,895,630
2001 200,000 2,138,896
2002 200,000 2,295,649
2003 300,000 2,372,189
2004 300,000 2,313,535
2005 316,000 2,476,589
2006 327,000 2,699,292
2007 380,000 2,824,751
2008 390,000 2,925,679
2009 400,000 2,996,106
2010 400,000 3,014,572
2011 414,000 3,095,183
2012 480,000

2013 490,000

2014 500,000

2015 507,500

2016 507,500

2017 535,000

2018 545,000

2019 555,000

 

Edit:

6,000 in 1967 = 45,217 in 2019, according to www.usinflationcalculator.com 

Edited February 17, 2019 by mickeymental

[beckmt]

If Kirloff comes near his maximum top of his ceiling, it could mean that the Twins will view Rosario as the expendable piece (depending on his production) in the next few years.  I believe even with the Twins Daily staff Kirloff will be here (given a good season in Pensacola) either late 2019 or late April in 2020.  His top end is well above either of the Twins two corner outfielder or any first baseman now in the system.

[gunnarthor]

I think this article is a bit forgiving of the FO and ownership. They had an opportunity to make significant improvements to the team in a way they've never had before and they decided not to do it. Locking up a few 2-3 WAR players isn't getting it done.

 

Ownership hasn't signaled to fans that they are committed to building a competitive team so I'm not sure why fans should commit to this team. I imagine if the team has a lousy April, TF attendance will be quite low this year.

[bird]

This is spot on in my opinion. We seem to be witnessing this as a league-wide trend.

 

I saw on the MLB channel yesterday a short segment detailing the difference, in one year, in the number of MLB players age 33 and over versus the number 26 and under, and it was like a 35% change in the ratio in a single year. I'm guessing the most plausible explanation is that front offices have assessed historical data in a slightly revised context. The Twins are far from the only team to adhere to a "commitment at the right price" discipline, and they're obviously not the only team to be much more cognizant of the risks associated with blowing through their perceived margin of error. We can rightly criticize our teams for being too conservative about the risk assessment and associated controlled spending, but from a pure business perspective AND, perhaps according to the performance data on the younger versus older players and the cost benefit analysis applied to that, it's hard to combat the logic behind it.

 

The success of elite prospects has become more predictable. Player development tools and knowledge have exploded. No team has a significant advantage in either the draft or the IFA market due to the restrictions (if honored). Even payroll spending, as wide as it is, sits in a range with a portion of that range shared by most teams. This means it's become much more of an asset management game, favoring teams with system-wide asset value, exceptional player development capabilities, extremely competent scouting for the purposes of correctly evaluating talent in other systems, a focused operating strategy, and adroit traders.

 

As counterintuitive as it sounds, I wonder if the Twins aren't the envy of two thirds the teams in the league. Close to a top 10 team (saw them ranked #11 somewhere recently). A top 5 or so prospect pipeline. Really good scouting, improving player development capabilities, established relationships in the DR where that stuff really matters, fabulous physical facilities, and a strategy in place emphasizing managing their considerable player assets (yes, I know some cringe at this notion) for sustainable excellence.

 

We all know they could use a few more favorable bounces.

 

I'd be curious to see how many teams have a top 10 MLB power ranking and a top 10 farm system, talent-wise.

 

IMO, Mr. Bonnes described some things here that affirm this more risk-assessed, asset-based approach.

Edited February 17, 2019 by birdwatcher

[Teflon]

Jeff Sullivan's recent Kepler article on FanGraphs shows some interesting performance indicators in Max's 2018 season that should make us as optimistic about his future as the MLB teams that were asking the Twins about possible Kepler deals this off-season.  

[strumdatjaguar]

 

If Kirloff comes near his maximum top of his ceiling, it could mean that the Twins will view Rosario as the expendable piece (depending on his production) in the next few years.  I believe even with the Twins Daily staff Kirloff will be here (given a good season in Pensacola) either late 2019 or late April in 2020.  His top end is well above either of the Twins two corner outfielder or any first baseman now in the system.

 

The Twins only need one of the current Top Three OF NOT to produce to open up a place for Kiriloff.    Or maybe Kiriloff suddenly hits a wall at a higher level of the minors.  The best cases senario is for the Twins to have the "problem" of all four plus a few others (Wade?) producing and creating depth and trade opportunities.    The same goes for Royce Lewis and Wander Javier, except there is also an option of moving Sano (if he removces his question mark) to 1B and have either Lewis, Javier or Polanco play 3B.

[Otto von Ballpark]

I'd be curious to see how many teams have a top 10 MLB power ranking and a top 10 farm system, talent-wise.

 

Top 10 power ranking seems generous -- Fangraphs has them tied with 2 other teams at #12 in projected 2019 wins right now, and we're in the worst division (featuring the 26, 27, and 28th ranked teams in projected 2019 wins).

 

Also misleading -- "top 10" meaning ranking 10th in a league with ~8 great teams isn't all that notable of a distinction. A team in that position might be much closer to the 20th ranked team than they are to 7th or 8th.

[Otto von Ballpark]

A top 5 or so prospect pipeline. Really good scouting, improving player development capabilities, established relationships in the DR where that stuff really matters, fabulous physical facilities, and a strategy in place emphasizing managing their considerable player assets (yes, I know some cringe at this notion) for sustainable excellence.

 

This seems to be double-counting -- giving credit for 5th ranked farm AND scouting, for example -- or assuming a lot of things that are far from clear at this point (like player development).

[jkcarew]

 

I think this article is a bit forgiving of the FO and ownership. They had an opportunity to make significant improvements to the team in a way they've never had before and they decided not to do it. Locking up a few 2-3 WAR players isn't getting it done.

 

Ownership hasn't signaled to fans that they are committed to building a competitive team so I'm not sure why fans should commit to this team. I imagine if the team has a lousy April, TF attendance will be quite low this year.

The Twins Will Commit To Competency

 

Yay!

[bighat]

 

 

6,000 in 1967 = 45,217 in 2019, according to www.usinflationcalculator.com 

 

Yeah but you're forgetting about all those huge sponsorship deals, like the extra $10 bucks for an Ovaltine commercial or the cool $54.32 paycheck a player could take home for endorsing Lucky Strike!

[brvama]

Good analysis and something that I can get accept. I also think that the FO is being consistent to their mission when they were hired: To develop a strong team for the long-term. These signings seem to underpin that approach by locking in at least good support players who have the potential to improve.

 

As Birdwatcher added, the improvement in the Twins so far is not just in player acquisition, but in the revamping of a system that lacked many of the necessary qualities for a strong competitive team long-term. That takes time, but I see the progress and am encouraged.

[bird]

 

Top 10 power ranking seems generous -- Fangraphs has them tied with 2 other teams at #12 in projected 2019 wins right now, and we're in the worst division (featuring the 26, 27, and 28th ranked teams in projected 2019 wins).

Also misleading -- "top 10" meaning ranking 10th in a league with ~8 great teams isn't all that notable of a distinction. A team in that position might be much closer to the 20th ranked team than they are to 7th or 8th.

Fair point. I'm not relying on my own opinion when it comes to comparisons of MLB talent, but I DO contend the MLB talent is better than last year's W-L record, and I DO contend that this talent is trending in the right direction. It won't take that many of the unanswered questions to be positively answered.

 

I do agree with you that there are some teams, maybe even six, that will remain formidable for a long time into the future, because they have incredibly valuable assets system wide, are maybe ahead of the Twins in a few other areas I mentioned, and have far more revenues. But my whole point wasn't about that. It was about suggesting an explanation for teams, any teams, deploying a strategy like what Bonnes describes.

[bird]

 

This seems to be double-counting -- giving credit for 5th ranked farm AND scouting, for example -- or assuming a lot of things that are far from clear at this point (like player development).

 

Scouting entails more than draft selections, and why wouldn't you assign credit to them for signing off on the newly acquired prospects? Those additions have had an impact on the rankings, right?

 

And yes, I'm assuming player development is better and would cite any number of things as evidence.

[Otto von Ballpark]

Scouting entails more than draft selections, and why wouldn't you assign credit to them for signing off on the newly acquired prospects? Those additions have had an impact on the rankings, right?

 

And yes, I'm assuming player development is better and would cite any number of things as evidence.

If you credit their scouting for getting prospects in trade, and you credit their farm system ranking which includes those prospects from trades, then that seems like double counting. Same with scouting the draft and farm system ranking.

 

And a lot of this stuff is still very speculative -- the new FO doesn't really have much to show for "improved development" at the MLB level yet. Some of that will no doubt improve with time, but just in a current snapshot, I don't necessarily think other orgs envy the Twins development processes quite yet.

[PseudoSABR]

 

If you credit their scouting for getting prospects in trade, and you credit their farm system ranking which includes those prospects from trades, then that seems like double counting. Same with scouting the draft and farm system ranking.

And a lot of this stuff is still very speculative -- the new FO doesn't really have much to show for "improved development" at the MLB level yet. Some of that will no doubt improve with time, but just in a current snapshot, I don't necessarily think other orgs envy the Twins development processes quite yet.

I don't see it as double counting so much as giving them credit for both results (the farm system) and the process (scouting).  

[mickeymental]

 

Yeah but you're forgetting about all those huge sponsorship deals, like the extra $10 bucks for an Ovaltine commercial or the cool $54.32 paycheck a player could take home for endorsing Lucky Strike!

... plus all the cigs they could smoke.

[Otto von Ballpark]

 

I don't see it as double counting so much as giving them credit for both results (the farm system) and the process (scouting).  

That's perhaps fair, although I'm not sure we really know much about their scouting process other than what we see manifested in the results. (At least we may not know enough to notably differentiate them from other teams in this regard -- I'm guessing the scouting quality spread is much narrower among MLB teams than the spread of farm system talent, for example.)

 

Also, with our recent regime change, it might be hard to assess where our scouting currently sits -- Kirilloff and Graterol were both scouted/signed by the previous regime, for example, and make up a decent size chunk of our farm system upside right now. Not to slight the new front office in any way, but we may not have a sample size yet to really judge their scouting relative to the league.

 

Edit: but I admit, this tangent is nit-picking, and I apologize! I was commenting quickly yesterday and I'll try to stay on topic now.

Edited February 18, 2019 by spycake

[Otto von Ballpark]

 

Fair point. I'm not relying on my own opinion when it comes to comparisons of MLB talent, but I DO contend the MLB talent is better than last year's W-L record, and I DO contend that this talent is trending in the right direction. It won't take that many of the unanswered questions to be positively answered.

First off, sorry to nitpick rankings and stuff. I was responding quickly between other things, but I should have known better! I fall into that trap too often, and I apologize.

 

Back on topic, I think I understand your point, and to an extent, I agree -- this team is better than last year's 78 wins indicate. But I'm not sure that necessarily supports a conservative approach -- we're still maybe just a low-80s team on MLB talent right now. Going conservative probably keeps us in the same range for 2019.

 

These extensions, plus Berrios and Rosario in the same group, suggest we have a pretty stable core right now -- not necessarily stars, but some solid longer term assets. We pretty much had this core when the new front office took over too, despite the dreadful 2016 season. I don't like to demand any splashy moves in any given short time frame, but I think I would have liked to see this front office show a bit more aggression to improve our MLB talent over the past couple years, and take a chance at elevating this low-80s win team to a high-80s projection. Short-term deals, selling at the deadline -- those are necessary parts of the toolbox too -- but I'd like to see the front office differentiate itself with some smart forays into trades and FA to add more significant MLB talent.

 

Perhaps those moves are still coming, but given our talent base, I wonder, if not now, then when?

[bird]

 

If you credit their scouting for getting prospects in trade, and you credit their farm system ranking which includes those prospects from trades, then that seems like double counting. Same with scouting the draft and farm system ranking.

And a lot of this stuff is still very speculative -- the new FO doesn't really have much to show for "improved development" at the MLB level yet. Some of that will no doubt improve with time, but just in a current snapshot, I don't necessarily think other orgs envy the Twins development processes quite yet.

I should have not used the phrase "envy of". I was really wondering (not opining) if the Twins aren't, at the current time, already in as good or better shape with respect to having the pieces in place to operate competitively in a changed environment. I cited the combined strength of the minor and major league talent, because aside from cash, it's the fuel that the FO needs.

 

I could maybe simplify the point I was making. In doing so, I think we'll see a slightly narrower gap in our perspectives. And it will be a reflection of my propensity to be optimistic and your admirable trait of intelligent skepticism.

 

Bonnes is describing a couple of strategic things that are trending among baseball teams. Things like making smart decisions about locking up non-elite core players, avoiding specific risks, and building and using the prospect pipeline.

 

I think we can see that, to operate this way and be competitive, a number of component capabilities have to be top notch. Scouting is one. There are several ways the talent evaluation process works, as you know. Which is why they have five dozen employees, some very specialized. They have to be good with the numbers (analytics), with scouting professionals, scouting amateurs, scouting international players, having a presence and relationships in the DR where a fifth of the talent comes from, and with a complex process allowing their input to be utilized well. 

 

I don't follow your double counting notion. Other component capabilities, such as the adoption of state of the art technology, a competent, well-staffed coaching contingent, good training and rehab facilities-- all kinds of other things--they ALL have an influence, over time, on the value of the minor league talent.

 

The FO really doesn't have much to show for "improved development" at the MLB level yet. But this hardly means saying the team has improved greatly in this are is very speculative. I suppose I should be more skeptical than I am, but I'm just seeing too many small examples that give me greater optimism than you have right now.

 

And maybe I'm wrong about how they compare with respect to all these component capabilities, I can't be sure. I'd be more worried about that if I was touting their use, for example, of Rapsodo 2.0 as a sign of them being at an advantage, and I'm certainly not. 

 

I clearly have a greater believe in this new FO than many. I very much believe that they're operating with a strategic plan in their binder, that they know what they're doing, that they know enough to surround themselves with talented people, and that they are fairly early in the process. But as you said, there are some elite, well-run organizations out there, most of whom have the extra advantage of obscenely higher revenues and profits. Other than some luck thrown their way, how do overcome that. They aren't going to consistently outsmart the other well-managed teams.

 

Edited February 18, 2019 by birdwatcher

[bird]

 

First off, sorry to nitpick rankings and stuff. I was responding quickly between other things, but I should have known better! I fall into that trap too often, and I apologize.

 

Back on topic, I think I understand your point, and to an extent, I agree -- this team is better than last year's 78 wins indicate. But I'm not sure that necessarily supports a conservative approach -- we're still maybe just a low-80s team on MLB talent right now. Going conservative probably keeps us in the same range for 2019.

 

These extensions, plus Berrios and Rosario in the same group, suggest we have a pretty stable core right now -- not necessarily stars, but some solid longer term assets. We pretty much had this core when the new front office took over too, despite the dreadful 2016 season. I don't like to demand any splashy moves in any given short time frame, but I think I would have liked to see this front office show a bit more aggression to improve our MLB talent over the past couple years, and take a chance at elevating this low-80s win team to a high-80s projection. Short-term deals, selling at the deadline -- those are necessary parts of the toolbox too -- but I'd like to see the front office differentiate itself with some smart forays into trades and FA to add more significant MLB talent.

 

Perhaps those moves are still coming, but given our talent base, I wonder, if not now, then when?

 

 

I don't have much of an opinion on the aggressive-conservative thing as a rule. I just know that, as a fan, I'd prefer them to be more "aggressive". But I'm also of the believe that there's almost always more than one way to go about solving an exceedingly challenging and complex problem. This FO has the challenge of solving the problem of baseball mediocrity in an environment where the competition is vast and competent. While they have resources, they also have an environment where finding ways to construct defensible beachheads aren't really there, other than cash, and just maybe a miniscule advantage in the DR or something.

 

And I think that's why Falvey is taking the approach he's taking, much to ours and Kimbrell's chagrin. Build up value, keep it liquid, and follow the best practices of Houston and others. Personally Spy, I think they will be more aggressive once they believe the talent value has increased more, both with the core in MLB and with the prospect pipeline, and they plan to avoid ever running out of available cash in the event of an opportunity. But that's just my opinion, and I could be all wet.

[Otto von Ballpark]

 

The FO really doesn't have much to show for "improved development" at the MLB level yet. But this hardly means saying the team has improved greatly in this are is very speculative. I suppose I should be more skeptical than I am, but I'm just seeing too many small examples that give me greater optimism than you have right now.

This is a fair difference. I know I've seen folks citing Stewart's 2018 season as meaningful in this context, and I'm definitely not sure about that yet. Same with the improvement of Pressly and Gibson -- those are good things and signs of competence, but I'm not sure they are indicative of anything greater yet.

[bird]

 

This is a fair difference. I know I've seen folks citing Stewart's 2018 season as meaningful in this context, and I'm definitely not sure about that yet. Same with the improvement of Pressly and Gibson -- those are good things and signs of competence, but I'm not sure they are indicative of anything greater yet.

 

Yeah, I'm with you there. We need to see several concrete examples of improved performance to fully validate my optimism, which is entirely based on the build-out of the people and technology infrastructure and the commitment to a markedly larger annual operating budget dedicated to player development.

[Otto von Ballpark]

 

And I think that's why Falvey is taking the approach he's taking, much to ours and Kimbrell's chagrin. Build up value, keep it liquid, and follow the best practices of Houston and others. Personally Spy, I think they will be more aggressive once they believe the talent value has increased more, both with the core in MLB and with the prospect pipeline, and they plan to avoid ever running out of available cash in the event of an opportunity. But that's just my opinion, and I could be all wet.

I posted this thought elsewhere too, but I don't think most teams can afford to wait and time things that much. Yes, the 2012 Twins didn't have much reason to aggressively add MLB talent; same for the Marlins today and other orgs bereft of wins and talent. But pretty much every other team should be on constant alert for smart aggressive risks to take to add significant MLB talent.

 

If Milwaukee waited to be aggressive until they were in Houston's position circa August 2017, they might have been waiting forever, and squandered good opportunities along the way. (Heck, one could argue that Houston was perhaps too passive given their talent and resources but got lucky with Verlander being available and rejuvenated when he was -- in addition to the luck they had with building their core too.)

 

I feel like, whether they realize it or not, the Twins stated policy of waiting to be aggressive is more a de facto acceptance of too many of the limitations of the Terry Ryan era.

[Jim Hahn]

Birdwatcher, your above posts are thoughtful and insightful. I don't know that I quite agree with all your conclusions, mostly because it is too early early to be very sure about much of anything about this FO and their abilities, yet.

 

Falvey and Levine are clearly very smart. The thing about smart people is that they have to be aware of what they don't know and what they don't do well. Good bosses hire people good at their jobs. Then they let them do their work without micromanaging their work.

 

Right now FO's all through baseball are accessing more and more information about all sorts of minutiae relating to all parts of baseball. Trying to manage this information and separate the useful from the useless is becoming increasingly important.

 

I believe this FO will be given time by ownership to find their way. I do believe it is pretty obvious that they are still finding that way. Eventually, we as fans should be able to see clear direction in how they are doing thing, and results. We really aren't seeing that, yet.

[highlander]

I like the approach. I'm all for DDD! Draft, Develop and Deploy.