Cole Hamels Is an Ace and Got Paid Like One

The Phillies had a decision to make — give Cole Hamels a really big contract or trade him for prospects and watch him sign with someone else over the winter. They chose Door #1, giving Hamels a six year, $144 million contract that is the second largest deal for a pitcher in Major League history, coming in only behind the seven year, $161 million deal for CC Sabathia. As with any big contract (especially for a pitcher), this is a pretty big risk, but answering the question of whether it was worth it requires a look at the specifics of both Hamels and the Phillies situation.

There’s no question this is close to the going rate for premium pitchers. At $24 million a year for six years, this puts him in the same AAV tier as Sabathia and Cliff Lee and just a notch above the deal that SF gave Matt Cain a few months ago. Hamels wouldn’t have gotten less than this in free agency, so it’s not an overpay in terms of what the market would have yielded. The price for premium pitching has been firmly established at $22 to $24 million per year for five to seven years.

So, for this to be an overpay, you have to believe that Hamels is not actually a premium pitcher. And, really, the only way to come to that conclusion is if you still judge pitchers by wins and losses.

Since 2006, 76 Major League pitchers have thrown 800 or more innings. Hamels has thrown 1,295, but I set the bar a lot lower so that we could include some of the better young arms who have come up in the last few years. Among those 76 guys, here’s where Hamels ranks relative to league average:

Innings: 1,295 (12th)
ERA-: 80 (11th)
FIP-: 86 (18th)
xFIP-: 81 (6th)

This isn’t one of those cases where the results and the underlying skills don’t match up. Hamels has prevented runs at 20 percent better than the league average, and he’s pitched in a way that we would have expected him to prevent runs at 19 percent better than average. The other pitchers in baseball with an ERA- between 78 and 82 over that span: Justin Verlander (78), Felix Hernandez (78), Matt Cain (80), Tim Lincecum (80), Cliff Lee (81), Roy Oswalt (81), and Zack Greinke (81).

These are the best pitchers in baseball. Hamels has established himself as a guy who can give you 200 elite innings every year, and there aren’t more than a half dozen or so pitchers in the sport that you can say that about. If you’re making a list of the very best pitchers in the sport, Hamels is on it. The only way to argue that this is an overpayment is to argue that every market value contract for premium pitchers is an overpayment. Maybe that argument has merit, but that’a a totally different thing than saying that this specific contract is for too much money. Cole Hamels got paid commensurate with the level of performance he’s had and with what the market has been paying for players at this level.

Now, the other question is whether this was a good deal for the Phillies to sign. Not every market value contract makes sense for every franchise, and different organizations have different prices at which a player no longer makes sense for their situation. As my colleague Bill Petti has pointed out, the Phillies are entering some scary territory in terms of percentage of payroll allocated to a small number of players. With Roy Halladay, Ryan Howard, and Cliff Lee, the Phillies already had $65 million committed to three players in 2013, and even assuming that Hamels’ deal is somewhat backloaded, he’ll probably make something close to $20 million next year, pushing the total for those four players to around $85 million. As Bill notes, teams with that kind of roster construction usually don’t win, as the rest of the roster has to be sacrificed in order to afford to pay the “Core Four” half the payroll.

However, the Phillies are already all-in on the stars-and-scrubs philosophy. While the Ryan Howard contract was a colossal mistake, it’s in the books and can’t be undone. For the last several years, the Phillies have made consistent choices to prioritize the present, and the result has been a team that has the makings of a perennial contender. It didn’t work this year, as there were just too many injuries to overcome, but the Phillies still have the roster of a contending team in the short term, while their longer term future already looks pretty rough.

In that situation, backtracking on the commitment to win with this group isn’t really an option. You can’t make that many win-now moves at the expense of your future, and then decide that you went too far and it’s time to pinch pennies. In the Phillies situation, only two decisions make sense – keep trying to win as many championships as possible until these guys can’t play anymore, or tear the whole thing down and start over. Letting Hamels go in the interest of fiscal prudence is trying to cross a bridge you already burned to the ground.

The Phillies have given regular playing time to exactly four guys under the age of 30 this year – Freddy Galvis (injured and suspended), Hunter Pence (29 and on the trade block), Vance Worley, and Hamels. Beyond their two under-30 starters, the whole roster is headed towards the downside of their careers. Letting Hamels walk because now they can’t stretch the budget is just cutting the legs out from everything they’ve done the last few years. I might not think that their original plan was the best way to go about building out a roster, but now that they’ve built this roster, they have to stick to it. They have to keep guys like Hamels in the fold until the whole thing falls apart and they just have to start from scratch.

The Phillies aren’t there yet. Their 2012 struggles show that this kind of plan is fraught with risk, but the last five years shows it can pay off too. If they keep the band together, everyone stays reasonably healthy, and they can fill a few holes on the cheap this winter, the Phillies can be contenders again in 2013 and maybe even 2014.

The Phillies probably will have to trade Cole Hamels eventually. They just didn’t have to trade him this week. For now, keeping him and trying to hang another banner was the right choice.



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Dave is the Managing Editor of FanGraphs.


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Mike N
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Mike N
4 years 1 month ago

As a Phils fan, I agree with pretty much everything you wrote.

Also consider that Halladay’s contract is up after 2013, so where do you get an ace after next season?

The Howard contract really is a shame, though….

DD
Guest
DD
4 years 1 month ago

From the other 2 $20+ mil pitchers on the roster?

Dustin
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Dustin
4 years 1 month ago

That would be fine if their offense didn’t suck

Analyst
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Analyst
4 years 1 month ago

That may be the going rate on the open market, but this is an extension. The Phillies got nothing close to the extension rate and killed their leverage by waiting this long to get it done. They might as well have held onto him, gone through the compensation process, and then re-signed him at the same pay rate (this deal is pretty much exactly what he would have gotten in a reasonable market).

Just because this is the going rate for premium starters doesn’t mean an organization should bend over and take it from an agent for the contract. The Angels didn’t do that with Weaver, and the Giants didn’t do it with Cain. However, the Phillies did do it with Hamels, and that is the wrong move.

nik
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nik
4 years 1 month ago

Hamels would not have gotten “pretty much exactly” this same deal if he hit free agency. Also its not much more than Cain’s extension.

marc
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marc
4 years 1 month ago

“They might as well have held onto him, gone through the compensation process,”

What compensation do you get when you re-sign your own player?
Answer: None. Better off signing him now than having to compete with 29 other teams in November.

Aaron (UK)
Member
Aaron (UK)
4 years 1 month ago

You get compensation if someone else signs him, and they lose a pick.

So the party who loses out by letting this go to November is actually Hamels, because every club trying to sign or re-sign him is having to give up a pick to do so, which will depress his price. By signing now the pick magically disappears and Hamels can extract (some of) its value for himself.

Getting traded as a rental would have maximised his take in November (all the more so if he performs at an elite level in the postseason again, though there’s obviously risk both ways there).

Sleight of Hand Pro
Guest
Sleight of Hand Pro
4 years 1 month ago

nobody will give a shit about giving up a pick for hamels. it wouldvbe been a $150M+ contract. the 1st round pick has zero effect on his market.

Aaron (UK)
Member
Aaron (UK)
4 years 1 month ago

Obviously the pick doesn’t really “disappear” – the Phillies should have been incorporating its existence into their negotiations (both with other suitors, and with Hamels) now.

But the new rule that the compensation doesn’t apply if the player is traded in the final year of the contract makes it harder for these “Type A” players to be moved at the deadline.

Could this have the unfortunate effect of persuading bad teams to deal their best players before their final season even starts – i.e. throwing in the towel in March?

Richie
Member
Richie
4 years 1 month ago

Really, if you think 1st round picks have no value, what are you doing on this site??

YanksFanInBeantown
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YanksFanInBeantown
4 years 1 month ago

@Richie

Because a pick in the latter half of the first round TOTALLY is commensurate in value to a 28 year old proven ace. The Dodgers would DEFINITELY let that hold them up from signing him.

marc
Guest
marc
4 years 1 month ago

Aaron – Let’s ignore the fact that the original comment that I was responding to said that the Phillies should have let him be a free-agent, re-signed him and received compensation for it.

You don’t lose a pick anymore for signing a free agent. If the Phillies made Hamels a qualifying offer (top 125 salary in MLB), and they lost him, they would get a sandwich pick between rounds 1 and 2. The signing team gives up NOTHING.

everdiso
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everdiso
4 years 1 month ago

That pick is crucial, it probably would have been a deciding factor for a couple of teams. The Jays, for example, are primed to compete for the next decade, are an attractive destination for free agents like Hamels, and have the financial resources to do the contract. However, giving up that first round pick makes it unpalatable, as the Jays know that AA can get them a surefire ace with that pick.

YanksFanInBeantown
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YanksFanInBeantown
4 years 1 month ago

I hope that’s the fake everdiso…

Aaron (UK)
Member
Aaron (UK)
4 years 1 month ago

marc – Not so – see http://mlb.mlb.com/mlb/downloads/2011_CBA.pdf (extract below):

The current system of draft pick compensation will be replaced with the following system:

A. Only Players who have been with their Clubs for the entire season will be subject to compensation.

B. A free agent will be subject to compensation if his former Club offers him a guaranteed one-year contract with a salary equal to the average salary of the 125-highest paid Players from the prior season. The offer must be made at the end of the five-day free agent “quiet period,” and the Player will have seven days
to accept the offer.

C. A Club that signs a player subject to compensation will forfeit its first round selection, unless it selects in the top 10, in which case it will forfeit its second highest selection in the draft.

D. The Player’s former Club will receive a selection at the end of the first round beginning after the last regularly scheduled selection in the round. The former Clubs will select based on reverse order of winning percentage from the prior championship season.

nik
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nik
4 years 1 month ago

I disagree the Phillies will “have to” trade Hamels. He can be a cornerstone pitcher that can bridge the current Phillies era to the post Utley/Halladay/Rollins version.

Are the Yankees going to “have to” trade Sabathia when ARod, Teixeira and Jeter get too old?

whatever
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whatever
4 years 1 month ago

No likely not as Tex, AROD and Jeter are already old.

LTG
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LTG
4 years 1 month ago

Despite the bad example nik provides (the offensive core of the Yanks is obviously Cano and Granderson and they are not older than CC), the point is a good one. Mike Newman just reported on two young hitting talents on the left side of the infield in the Phils farm system and there are two or three mid-rotation starters on their way. It is possible for the Phils to transition from the current core to the next, if some of the young talent pans out as expected. (Which is not to say it will.)

Also, Tex is the same age as CC and having a solid year. Why is he old already? Don’t confuse overpaid with not good anymore nor past peak with old.

Greendale
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Greendale
4 years 1 month ago

One thing that nobody considers is that, if the Phillies want to make a change, Halladay, Utley, & Pence can come off the books after 2013. That will be about $50 milllion in payroll.

They certainly have some sizable contracts, but I’m not sure why everyone thinks the Red Sox & Yankees are constant contenders, but that the Phillies have a “grave” future.

DD
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DD
4 years 1 month ago

The problem is reinforcements. If the reinforcements are from the minors, or Jayson Werth type scrap heap signings, they will be fine. They don’t have much upper minors depth, especially on the position player side, and will have to use up that free cash on expensive FAs, who are not young or cheap.

vivalajeter
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vivalajeter
4 years 1 month ago

Well said. Yeah, $50MM is coming off the books. But they need to find a solid starter, a solid 2B and a solid RF to offset that. They don’t grow on trees, and the Phillies don’t have a minor league system that can easily replace them. And if the Phillies expect to be legit next year, they’re likely banking on Halladay being close to an ace and Utley being a very good 2B (albeit not as good as his prime).

In some cases, money off the books is a huge gain. The Mets just went through that with Oliver Perez and Luis Castillo (they contributed nothing, but made almost $20MM/year combined). The Giants will save a ton when Zito comes off the roster, because he’s easily replaced at much less cost. But that’s simply not the case with the Phillies.

Bjogc
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Bjogc
4 years 1 month ago

Is this another nail in the coffin of how pitcher WAR is calculated? A career high 4.9 war Dosent scream “ace” to me

Sleight of Hand Pro
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Sleight of Hand Pro
4 years 1 month ago

its 2012, i dont think many on here still look at pitcher WAR to judge elite talent.

but…. yeah… another nail in the coffin is fair to say.

vivalajeter
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vivalajeter
4 years 1 month ago

Well, there was just an article about Lester, and the author said he’s the 7th best pitcher simply because he had the 7th best WAR from 2008-2010. So even though it’s 2012, some people seem to think that WAR is the ultimate decider on who’s better.

jesse
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jesse
4 years 1 month ago

Not at all. we need to adjust our view some. hamels ranks 13th in WAR since 08. so he is, by that measure an ace. But we also need to realize that an elite pitcher isn’t worth as much on the field as an elite hitter is. and will always lag behind in war, because while the top end is more scarce the effect on the team isn’t as big.

drewggy
Member
drewggy
4 years 1 month ago

“The Phillies probably will have to trade Cole Hamels eventually. They just didn’t have to trade him this week. For now, keeping him and trying to hang another banner was the right choice.”

Assuming they eventually will have to trade Hamels, they should do it as soon as possible if they want to get anything out of the deal other than salary relief. Whomever is trading for him would want to get some surplus value out of the first few years of the contract.

nik
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nik
4 years 1 month ago

If they wanted to trade him, they probably wouldn’t have extended him.

Phils_Goodman
Member
Phils_Goodman
4 years 1 month ago

“and watch him sign with someone else over the winter”

He still could have re-signed with the Phillies. He actually said he would be willing to do so even if he was traded.

Sleight of Hand Pro
Guest
Sleight of Hand Pro
4 years 1 month ago

everyone says that. remember how much CC loved milwaukee?

Phils_Goodman
Member
Phils_Goodman
4 years 1 month ago

Huh?

chuckb
Member
chuckb
4 years 1 month ago

I agree with everything you wrote. The Phils went all-in with the Howard extension and the trades and extensions for Lee and Halladay so Hamels isn’t the guy to decide to become frugal with. It’ll probably end up costing them Pence but Hamels is better.

I’m not quite sure I understand why Hamels did this, however. He could have gotten this extension from the Phils in the offseason — who else are they going to give $144 M to? — and had an opportunity to explore the market to see which other teams would be interested. More importantly, however, he’s got to be wondering if the Phils are going to be able to put enough pieces in place around him in order to win another championship. I realize that money talks, but exploring the market this offseason would enable him to see if there is anyone else who’ll give him that money and might be in a better position than the Phils to win a championship in the next 6 years.

I doubt that the Phils all-in strategy is going to work. I think they’ll end up having to blow up the ship sooner rather than later and that there’s at least 1 other team better positioned to win over the next 6 season and give him the money the Phils gave him.

I hope that Hamels at least got a no-trade clause into the contract so that he can have some input into where and when he’s traded.

mcbrown
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mcbrown
4 years 1 month ago

I said this in another article about Hamels, but I’ll repeat it here: there are far too many personal factors that go into a decision like this for us to assess what someone should or shouldn’t have done. We don’t have any idea what his personal utility function is and how much he values some potential financial upside against the potential personal hassle of the process. Maybe Hamels is really looking forward to a nice long offseason sitting on a Caribbean beach, which would have been interrupted by shopping himself around in free agency. Maybe he was sick of the distraction hanging over his head. Maybe he really just didn’t want to get traded in-season because it would interrupt his family’s life in a way that is not worth a few million extra bucks to him.

Plus, it’s not just potential upside to Hamels for waiting. If he tears a ligament between now and free agency, how much of a financial hit would he take? It’s a low probability, high severity risk that he has eliminated for himself by signing now.

Personally, if I was getting a contract of that size, and I liked where I lived and the people I worked with, I would have made the same decision as Hamels, no question. You might make a different choice – there is no right answer.

CircleChange11
Guest
CircleChange11
4 years 1 month ago

It would be nice to sit around and hypothetically debate in my own mind whether I accept the 144M or push it and go for 160M.

Life can be so stressful. *grin*

hk
Guest
hk
4 years 1 month ago

I think your second paragraph hits the nail on the head. At some point, the risk of a significant injury – even if it is unlikely that he will suffer one in the next two months – has to enter the equation. Is it worth passing up $24M per year to chase $25M or $26M knowing that a torn ligament or worse could turn the $24M into something significantly less or even $0? If I was Hamels, I would have taken the certainty of the $144M.

TKDC
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TKDC
4 years 1 month ago

The Phils are in a tough spot because if Halladay and Lee are in top form in 2013 (and Howard is OK), going all out makes sense. But if they aren’t, this deal will probably look like a mistake in retrospect.

Slats
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Slats
4 years 1 month ago

But Matt Cain is horrible.

cable fixer
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cable fixer
4 years 1 month ago

“Letting Hamels go in the interest of fiscal prudence is trying to cross a bridge you already burned to the ground. ”

This about sums it up–if you’re not returning close-to-elite, ML ready talent (borjous, andrus)…and those seemed unlikely…then you have to do this if you’re the phillies because you’re “all’in” already with the current group.

YanksFanInBeantown
Guest
YanksFanInBeantown
4 years 1 month ago

In what world does Peter Bourjos, he of the .300 career OBP, deserve to be mentioned in the same sentence as Elvis Andrus?
Andrus is younger, just as good a fielder, and a much better hitter at a more important defensive position.
Bourjos is an excellent 4th OF with no bat.

Michael
Member
Michael
4 years 1 month ago

How much will this deal inflate the trade values of other starting pitchers on the market?

YanksFanInBeantown
Guest
YanksFanInBeantown
4 years 1 month ago

In what world does Peter Bourjos, he of the .300 career OBP, deserve to be mentioned in the same sentence as Elvis Andrus?

Andrus is younger, just as good a fielder, and a much better hitter at a more important defensive position.

Bourjos is an excellent 4th OF with no bat.

YanksFanInBeantown
Guest
YanksFanInBeantown
4 years 1 month ago

Reply fail

Colin
Guest
Colin
4 years 1 month ago

I think letting Hamels go for “fiscal prudence” was exactly the direction they should have gone and I disagree with the nothing that they burned that bridge to the ground already.

This is a team heading in the wrong direction right now. They now find themselves in a fairly competitive division and they are probably going to struggle to sign elite talent with the amount of money they already have locked up. Why isn’t this a rebuild at this point? Let Hamels go, get your compensation. Some of your other big deals are coming due, try and have some good drafts and focus on bridging the gap until your new core group arrives. That really seems like the best play.

I don’t see how throwing gasoline on the already burning house does anything for them now or in the future.

nik
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nik
4 years 1 month ago

Hamels will be here long after the other guys are gone.

CircleChange11
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CircleChange11
4 years 1 month ago

Yeah, starting pitchers are pretty much a sure thing.

vivalajeter
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vivalajeter
4 years 1 month ago

This is the way I’m leaning as well. They should probably be healthier next year than this year – but everybody will be a year older, they’ll need to find a new CF with limited funds, and they’re unlikely to add any good new pieces that aren’t here this year. They have potential for success next year, but I wouldn’t be surprised if they finish at or under .500 either. Their roster is made up very poorly, with a lot of high-priced players that aren’t coming close to earning their salary. They may have been better off trading their pieces, giving up 2013 and maybe 2014, and trying to get things going after that.

Analyst
Guest
Analyst
4 years 1 month ago

And yes, I realize my mistake in saying the Phillies could sign him in the offseason AND get a comp pick.

I would rather the comp pick and the flexibility than a 32 year old Hamels making 24 million dollars.

Richie
Member
Richie
4 years 1 month ago

Sorry, but this is a poor article. Who the heck gives a cat’s behind what Hamels has done in the past? How does he project?

dnc
Guest
dnc
4 years 1 month ago

He projects to continue being an ace. There’s no reason to expect his performance to get better or worse at this point in his career, barring injury, or otherwise losing velocity, neither of which are possible to predict.

Phantom Stranger
Guest
Phantom Stranger
4 years 1 month ago

The contract is fine in a vacuum for the Phillies, but ignores the huge commitments they have to players like Howard going forward. It wouldn’t be a shock if the Phils win 95 games next season if the pitching staff is healthy, but the team is more fragile than ever.

Colin
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Colin
4 years 1 month ago

The way their offense looks going forward, I would be surprised by that even with their top notch pitching.

Josh
Guest
Josh
4 years 1 month ago

This really shows how bad those Howard and Papelbon contracts are, not to mention the Rollins one.

NavyJoe
Guest
NavyJoe
4 years 1 month ago

Across baseball, teams have paid ~$4M per WAR. Rollins has 2.7 WAR right now, which projects out around 4.7 WAR for the season. His contract was for $11M/year. Seems like an OK deal for the third best SS in baseball this year.

Antonio Bananas
Guest
Antonio Bananas
4 years 1 month ago

What a great deal. Pitchers often stay healthy and maintain elite status into their 30s. Having nearly 100M to small group of players in their 30s is also a great idea. Philly has the most loyal fans who won’t cast judgment if the team sucks. WHAT A DEAL!!!

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