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  1. I completely agree with this analysis. You hit the nail on the head. A great deal for Giants. The only thing I would add is they didn’t have to risk 5+ years to lock him up for the next 3. That is good for them too, because it removes much of the risk that other recent contract extensions for pitchers on other teams have had to shoulder.

    Comment by DrBGiantsfan — March 30, 2010 @ 1:33 am

  2. I actually completely disagree with this analysis in its method of rating *this* deal. The great rate they are getting in 2010 has nothing to do with this deal. They have, in effect, given him an extra $1.5MM for 2011 and then guaranteed him $15+MM for 2011. Therefore, *this* deal can not be looked as *getting* him for $11 or $13MM. If I’m understanding this correctly, it actually gets him for $16.5+MM for 1 year, with the possible exception that he could’ve made more than $6.5MM in 2011 due to the esacalators.

    If the Rays extended Longoria for a year beyond his current deal for $30MM would his new cumulative contract still be team friendly? Absolutely. Would that individual move be smart? Absolutely not. You need to look at each move independantly. Yes, this is an extreme example, but I think it makes my point.

    Comment by Pat — March 30, 2010 @ 2:23 am

  3. Edit: Guaranteed him $15+MM for 2012.

    Point being that the 2012 salary and the increase in 2011 salary is all this deal does. They already got the credit for the good deal previously – this is a new one.

    Comment by Pat — March 30, 2010 @ 2:33 am

  4. No real increase in 2011 salary as the $6.25M team option included an easily reached $1.9M escalator that vested the option. This is indeed a great deal for the Giants.

    Comment by giantsrainman — March 30, 2010 @ 5:57 am

  5. Sorry, but a 10% discount on what he’s worth (And he’s only worth that much as long as he pitches in a park that suppresses HRs), two years in advance, is not a “great deal.” The risk of injury easily offsets the little bargain they got.

    Comment by cpebbles — March 30, 2010 @ 6:57 am

  6. Giantsrainman – I’m not saying this is a terrible deal, but do you really see this as a deal that nets the Giants Matt Cain at $11 or $13 MM/year in comparison to his value, because I don’t. So, while I agree with you that it likely doesn’t pay him more than what he would’ve made in 2011 (although there is the risk they have), you have to admit that this deal is essentially a 1 year extention at $15+MM two years in advance for a pitcher that may be worth $16-$17MM. Great deal? I don’t think so. With the typical 10% risk it would be ~$14MM if he were worth $17MM.

    Comment by Pat — March 30, 2010 @ 8:19 am

  7. “And he’s only worth that much as long as he pitches in a park that suppresses HRs”

    I don’t necessarily agree with this. I fully understand what you’re saying – he’s a FB pitcher, HR/FB rates tend to be consistent, but I’m not sure that Cain fits in with the “normal” group here. His HR/FB rate on the road for his career is still a nice 7.3% (6.6% at home, 6.9% overall). His career FIP is actually lower on the road than at home (3.87 road, 3.91 home), and his xFIP is lower on the road than at home, as well. He also has a career .278 BABIP. I’m not saying this stuff is definitive proof against your point, but it does present us with a decent amount of evidence that Cain is a very good pitcher, and probably one of the small group of pitchers that’s exceptionally hard for hitters to hit.

    I’d say this is a good deal overall, especially considering guys like Felix and Verlander getting 5 year deals (yes, I realize they’re better, but the point is 5 years to a pitcher = extremely risky). 3 years mitigates a lot of that risk, and so far Cain has an exceptional track record of health/durability.

    Let’s also keep salary inflation in mind. I won’t pretend to know what the future holds, but I’d bet on some salary inflation – I don’t know how much, but I’m pretty confident there will be some. If Cain simply maintains his performance he could be worth $18-$20M or something when this extension kicks in.

    Comment by B — March 30, 2010 @ 9:49 am

  8. Does the deal make some sense? Sure, but I agree with the previous posters that you need to look at just the extension – as the other contract already existed. The Giants commit to pay $15 million for 2012, for a pitcher that has been worth 3.5-4 wins a year. So they are basically paying market rates, 2 years in advance. If they expect Cain to make a major step forward this year and be a 4.5-5 win pitcher, then the deal makes sense. Or it they think salary inflation will jump in the next 2 years. If neither of those is true, then they are taking on a bunch of risk without paying below market value – which can’t really be seen as a good deal for the team.

    Comment by Ken — March 30, 2010 @ 11:14 am

  9. A few things I think you’re missing, first, other than periods of the biggest financial crisis since the Great Depression, salaries have consistently seen inflation, so that’s probably a good bet that market rates will be higher in the future than they are now. Second, a key thing I think you’re missing is that the extension is buying out a free agency year without guaranteeing money beyond that year. Pitchers are risky. 3 years carries some risk, but it also means they managed to avoid having to lock him up for 4-5 years like King Felix and Verlander got. So basically they ensured Cain would be around for at least an extra year into FA, which might have been a gamble to wait until he’s a free agent to try to sign him, without having to take on a large amount of risk. Seems to me they struck a good balance between risk and reward/certainty, especially given Cain’s age, performance history, and durability.

    Comment by B — March 30, 2010 @ 11:38 am

  10. None of this matters, JH assured everyone that Cain will be ‘gone after next’ year. So this is a mirage, Cain can’t sign a deal and you all can’t analyze it.

    Comment by CaR — March 30, 2010 @ 12:05 pm

  11. I mentioned salary inflation, which they might be counting on, and that is fine. In terms of risk, I don’t think this is a terrible deal, I just don’t see it as particularly team friendly. Think of it this way. If he was a free agent right now, and they signed him to a 1-year deal for $15 million, that would be roughly market value. They have simply signed that deal 2 years in advance – which I think carries more risk for the team than for the player (basically, Cain is more likely to be a 1-win pitcher due to injury than a 5-6 win pitcher due to a dramatic breakout).

    I think that you’re saying that 1-year, $15m is below market value, because on the free agent market he would be asking for 5-years, $75m – which is possible, but I haven’t seen enough evaluation of long-term contracts and the associated risk premium to really evaluate that.

    Comment by Ken — March 30, 2010 @ 12:56 pm

  12. “I think that you’re saying that 1-year, $15m is below market value, because on the free agent market he would be asking for 5-years, $75m – which is possible, but I haven’t seen enough evaluation of long-term contracts and the associated risk premium to really evaluate that.”

    That’s a good way of putting it, though I’ll say that I’m merely suggesting it as a consideration because, like you, I haven’t seen enough evaluation of the subject. Basically, I think it’s a worthwhile and possibly significant consideration, though I’m not exactly sure how to properly take it into account.

    Comment by B — March 30, 2010 @ 1:18 pm

  13. Zing!

    Of course if you actually read what I wrote, you’d know that what I actually said was:

    “Cain’s a free agent after 2011. If he stays with the Giants it will be at or near market value.”

    Call me crazy, but it appears that’s exactly what’s happened.

    Comment by JH — March 30, 2010 @ 1:29 pm

  14. Some thoughts:

    First off all, while there is a health risk with every pitcher who ever threw a ball, Matt has never missed a single start. That is part of the reason the Giants were willing to give Barry Zito a 7-year contract. Barry hasn’t pitched anywhere near well enough to justify his contract, but he still has yet to miss a start in his career. It would appear Matt is a far better than average health risk.

    With that in mind, in three years, the Giants risk losing a piece of their fine rotation to free agency. I don’t think that is going to happen, but it could. Given that Justin Verlander is being paid about $18 million per season for his first three years of arbitration eligiblity, I’m not sure the Giants might not have benefited from locking Matt up for another year or two if they could do so for $15 million per season.

    Wouldn’t a 10% discount from $17 million actually be $15.3 million, not $14 million? And I suspect based on Verlander’s contract that Matt is worth a bit more than $17 million in today’s market. On the other hand, based on the contract of Felix Hernandez, who is better than either Verlander or Cain, maybe Matt isn’t worth even $17 million. But Matt has been the healthiest of the trio.

    AT&T Park hasn’t been the pitchers’ park most think it is — at least not since about the time it was renamed. Although Matt has pitched more innings at home than on the road, he has given up 41 homers at home compared to 36 on the road. His homer rate at home is slightly lower, but not by much. His K/BB ratio is actually better on the road than at home.

    Matt’s home park advantage doesn’t seem to be out of line with the norm, and in Tim Lincecum’s case, Tim has pitched almost identically on the road as at home. Statistically, Verlander has enjoyed a home park advantage that is very similar to Cain’s.

    Finally, why I think the deal is a good one: The Giants’ pitching staff is developing a comraderie that may potentially enable the Giants to keep it together slightly less expensively than might otherwise be the case. The young pitchers WANT to stay together.

    I don’t think they spent any more than market value on the extra year, but they made Matt very happy in the process. They took a somewhat awkward situation in which they had an extreme sweetheart contract with Matt over 2010 and 2011, were able to extend it a year without truly overspending, and kept Matt (and perhaps the staff overall) happy.

    The Giants now control through at least 2012 all of their pitchers who have major league contracts. Given the strength of their staff, that’s not a bad thing. Not a bad thing at all.

    If anything, I would be more critical of the Giants’ contract extensions to Brian Wilson and Jeremy Affeldt than the one to Cain. The Giants took a potential tempest in a teapot with Matt and turned it into a positive for both sides.

    I think the deal is better than most of us mere laymen can realize.

    Comment by SharksRog — March 30, 2010 @ 1:43 pm

  15. “AT&T Park hasn’t been the pitchers’ park most think it is”
    “Matt’s home park advantage doesn’t seem to be out of line with the norm”

    Yes and no. You’re right that it actually plays as a slight hitters park according to the park adjustments these days, but that’s just the overall run environment. The important note to consider with Cain is that he’s an extreme flyball pitcher, a RHP, and AT&T largely suppresses HR’s, almost all of that coming from RF. So LHH, the ones with the biggest advantage against Cain, struggle to hit HR’s, so Cain’s FB tendencies don’t hurt him as much in AT&T as they would elsewhere. This is one of those cases where simply using average park effects don’t tell the whole story.

    That said, as we both made the point, his HR rate on the road has been very good, too, and almost as good as his home park HR rate. So he might just be one of those special pitchers whose stuff is flat out tough to hit rather than just a product of a park that suits his skillset.

    Comment by B — March 30, 2010 @ 1:59 pm

  16. You are crazy.

    “Cain is gone after 2011″, is clearly written in the first paragraph of one of your essays designed to point out how idiotic anyone must be for daring to disagree with Dave on any matter. That direct quote is restated and backed up several times in your opus. I don’t know if you are on the payroll to act as bouncer in every comment thread where Dave gets snide with a dissenter but you were particularly harsh with a guy simply for having an opposing view. Your mission to embarrass DrB has failed as you had no idea what you were speaking of.

    Comment by CaR — March 30, 2010 @ 2:09 pm

  17. Yes, and when the point was labored, I pointed out that I was using “gone” as shorthand for “no longer under club control.” I refined the meaning, and the discussion moved forward.

    But you’re right. The simpler explanation is clearly that I fail to understand that teams are capable of signing players to contract extensions.

    Comment by JH — March 31, 2010 @ 8:29 pm

  18. The importance of no longer being under club control in the discussion should be obvious. At a $15 million/year salary Cain’s an expensive veteran, not part of a young core of cost-controlled players that give the team both production and financial flexibility.

    Comment by JH — March 31, 2010 @ 8:36 pm

  19. Well now you’re back peddling. You attempted to pretty much dismantle the guy as an idiot. You took a superior tone regarding knowledge of a prospect base and assumed that you knew what the Giants were able or willing to do. A couple of days later, one of your first pronouncements was proven wrong. I’m just happy to point it out to you.

    Comment by CaR — March 31, 2010 @ 11:06 pm

  20. “Cain’s a free agent after 2011. If he stays with the Giants it will be at or near market value.”

    Direct quote. From myself. Acknowledging the possibility of Cain’s return post-2011. The thread wasn’t about Matt Cain, and no pronouncements were made. If you can’t follow the discussion and know that, you’re an idiot. By all means, though, keep sniping.

    Comment by JH — April 1, 2010 @ 6:47 pm

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