Extend Cole Hamels Now (If You Want To)

If you took MRIs of Cole Hamels’ arm right now, he would probably get a clean bill of health. So would most elite pitchers who were about to receive nine-figure contracts. But that does not mean that they are likely to maintain their health and their elite performance level. Pitchers often fall apart soon after changing teams. I have written about this many times before, most notably in this year’s Hardball Times Annual. In that article, I produced the following chart of millions-of-dollars-per-WAR spent by teams for re-signed players (RSP) and other people’s players (OPP) in all multi-year deals ending between 2007 and 2011.

Millions of Dollars per WAR N RSP OPP Diff.
All 196 3.7 5.1 39%
Hitters 104 3.5 4.1 17%
Starting Pitchers 44 4.1 7.9 93%
Relief Pitchers 46 3.4 8.1 139%

*Note that I have adjusted this for fWAR from rWAR

You’re not reading that wrong. Starting pitchers who sign multi-year deals with other teams cost twice as much per WAR as ones who stay on the same team. I went on to explain that this is primarily because pitchers who stay on the same team usually beat their projections; pitchers who change teams usually fall short of their projections.

It’s not hard to see why this happens. When you see a pitcher every day, you learn a lot more about him than you do from a single MRI. You learn about his recovery after starts; you learn about what types of minor soreness he has had in his past; you learn about his workout routine and his work ethic. There is just way more information available to a team that has worked with a player for years. The Phillies have had that luxury with Cole Hamels, and they are apparently willing to offer him about $130 million for six years. Contract talks have been heating up. It’s not hard to tell that the Phillies probably see Hamels as a pitcher likely to maintain his elite status if they are willing to let that $130 million offer sit out there.

Hamels could get more than $130 million. Chris Cwik summarized this earlier today. Looking at his list, it looks like a fair offer would be something like $135 million. Not only that, but if Hamels does hit the free-agent market, then unlike the other pitchers on that list, Hamels’ bidders would not have to worry about losing a draft pick upon signing him (assuming he is traded midseason before hitting the free-agent market). That should add another $5 million to his price tag, so he is likely to get something like six years, $140 million on the free-agent market. But unlike the pitchers who changed teams on Chris’ list — like Johan Santana, John Lackey and Barry Zito — the Phillies’ interest in Hamels suggests that he is unlikely to either be hurt or to stink suddenly after changing teams.

If the Phillies do not extend Hamels, they are unlikely to be able to reproduce that $140 million of value elsewhere on the market. The above graph shows how unlikely they are to get that sort of value by signing a pitcher from anywhere else. Not only that, their main deficiency at hitting will be in the outfield — another area where teams get notoriously poor value per dollar.

Do the Phillies need to get younger? It would be smart. Is the Phillies’ farm system weak? Yes. But does their farm system doom them to failure? Hardly.

The Phillies have had a terrible season, but up and down their roster, they have the makings of a team that is going to be competitive next year. They will have Cliff Lee and Roy Halladay atop their rotation, along with the consistently above-average Vance Worley. Chase Utley and Ryan Howard have lost a step — as long as a heel and two knees add up to one step — but they are still above-average players at their positions. Jimmy Rollins, Carlos Ruiz and Hunter Pence will all provide unambiguously above-average value at their positions. Add back an elite starting pitcher, and they have a good chance to win the division title.

Of course, the Phillies may not actually be engaging Hamels genuinely, and they may only be making a public-relations-driven effort. But chances are that if the Phillies are really disengaging with trade partners (as Jayson Stark suggests), they probably have concluded that Hamels is a safe bet to retain his value. If he does, then he is likely to prefer significantly more value for $140 million than whatever other pitchers the Phillies could replace him with. So, Ruben Amaro really should be signing Cole Hamels right now to whatever deal is necessary. That is, if he actually wants to.




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Matt writes for FanGraphs and The Hardball Times, and models arbitration salaries for MLB Trade Rumors. Follow him on Twitter @Matt_Swa.

21 Responses to “Extend Cole Hamels Now (If You Want To)”

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  1. Tom says:

    I have no idea how the Phils will fill out the rest of the team if they sign Hamels. They’ll have a payroll of about $148m assuming they go to arbitration with Pence and pick up Ruiz’s $5m option. If they say Kendrick is the #5 starter they’ll still need to pay for…
    3B
    CF
    LF
    And an entire bullpen minus closer.

    Sure you can do that for ~$30m but considering there is basically nothing ready in the system I don’t know what kind of production they’ll be able to get out of any of those spots. Unless the rotation dominates like they did in 2011 then 2013 could look a lot like 2012.

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    • nik says:

      LF is most likely going to be handed to Dom Brown. I fully expect him to play the final 2 months of this season to claim the spot.

      Most of the bullpen are young cost-controlled guys who are due to bounce-back from injuries. Bastardo/Stutes/DeFratus/Herndon/Diekman/Aumont. This can be a good bullpen.

      The biggest question marks will be CF and 3B. Maybe they can swing a trade for Headley. Worst case – Rollins plays 3rd and Galvis gets SS. This should leave enough money to bring back Victorino or even go after Bourn.

      The final thought is that they can go over the cap for a year as the penalties are not that severe for first time violators. In 2014 the cap goes up.

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      • Andrew says:

        Also a 6 year/130 million dollar contract does not necessarily have to be structured at 22 million per year. If the first year was say 15 million, then that would provide more flexibility.

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      • Garrigus Carraig says:

        I don’t see a problem with the Phillies going over the line for a season or two. They have a ton of money. They have approximately 260 straight sellouts. They have a decent shot at one of those Angels-sized tv contracts. If they can return to competitiveness in ’13 and stay there for a few years, they’ll continue to squeeze maximum value out of the new stadium they didn’t have to pay for.

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      • Matt Swartz says:

        Andrew, that’s a good thought, but the luxury tax works off of AAV. They would be better off putting a cheap player option at the end of the deal that he can reject and dragging the effective AAV down. For instance, Rollins gets paid $11 million for 2012-14 each year, but then has a $5 million player option/$11 million vesting option for the 2015 season. For the luxury taxes, this counts as 4 years, $38 million, so $9.5 million a year. That type of structure could help with Hamels too.

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    • Matt Swartz says:

      What I’m saying is that dollar-for-dollar, they’ll get more mileage & be better off going with retreads at 3B, CF, and LF than the alternative of losing Hamels and trying to spend the money on those other positions. And they definitely will not get very good value with that money in the pen. It’s going to be a sacrifice somewhere, and you can get more value out of concentrating a lot of dollars on Cole Hamels.

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  2. nik says:

    Phillies are actually giving up more than just the 130 million. There is also the opportunity cost to trade him for a big return. So its really 130 million plus the remainder of the year’s salary ($5 million) PLUS the value of the players he would bring in a trade.

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    • t ball says:

      Theoretically they could have their cake and eat it too by trading him and then re-signing him. Obviously that’s a long shot, and they’d probably end up paying him more that way, too after he hits the market. But I think I’d deal him and take the chance that the offers he gets on the market aren’t better.

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      • Cidron says:

        he will get his money, and even more on the FA market.. way to many suitors for him not to, as they will be competing for his services, instead of merely just picking up him as a FA.

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      • t ball says:

        Yes, I think that’s the most likely outcome. But I’m not sure he turns down $130M unless he’s convinced he can get substantially more.

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      • Matt Swartz says:

        Cidron, the whole point is that the Phillies should give him what he would have gotten on the FA market. It’s not an absolute rule that he’ll get more by waiting– what if they offered him $400 million? There’s some number (probably around 6/$140 that would make it worth it).

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    • Matt Swartz says:

      I think it’s wildly optimistic to think that whoever is willing to part with prospects to get him now isn’t also willing to do what it takes to extend him in-season before he ever gets back to the Phillies on the free agent market.

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  3. Kinanik says:

    I can’t find it in the THT annual, but how do you deal with club control years? The data in the article on traded prospects is very interesting. I wonder if there’s not a ‘Winner’s Curse’ component to these results?

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  4. creane says:

    Say the Phillies have information about Hamels and do not want to sign him, and would like to trade him. If they did not try to sign him and start shopping him, other teams would view this as information and so his trade value goes down. So they offer enough to look like they are interested, but not enough to get Hamels to sign and then trade him.

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    • nik says:

      That’s pretty far fetched. The teams that would trade for him don’t really care about his long-term well being. They want him to be good this year and he’s been pretty damn good.

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    • payroll says:

      $130m is a lot of money to float out there just to rile the market.

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  5. Dylan says:

    If they can get relief this year (ie trading Blanton, Vic, Polly, etc.) then the LT wouldn’t be as big of a deal next year since they’d be first time offenders and it jumps up to 189 the following year with Utley, Halladay, Pence, and Ruiz off the books (some will resign)

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  6. I guess nobody’s down with OPP, at least they shouldn’t be.

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  7. Antonio bananas says:

    Yea signing a guy to a 6 year deal for his, correct me if I’m wrong, age 30- 35 seasons is a great idea. Especially with other guys signed long and expensive deals past their prime. Worked out real well for the cubs around 2009.

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