Free Agent Values: CC Sabathia

Welcome to the Free Agent Frenzy – starting today, GMs can rush around with their owner’s checkbooks, signing available players for massive contracts that they’ll probably regret in a year or two. But while free agency, as a whole, is a bad way to build a team, that doesn’t mean you can’t get a good deal if you understand what a player’s value is likely to be going forward.

So, today, we kick off a look at some of the big free agents, and what they should be expected to sign for if the market is rational. The market isn’t rational, so bet on almost everyone getting a lot more than the figure we come to, but consider it a baseline for a fair salary. First up, CC Sabathia.

As we all saw, Sabathia was a monster last year, throwing 253 innings with a 2.93 FIP, combining quantity and quality into a package that was one of baseball’s most valuable. He ran a 4.25 K/BB rate and limited the long balls, which pretty much guarantees success at a high level. He was a dominating, MVP caliber pitcher. But what can we expect going forward?

He’s 28, and he’d never been that good before, so some regression has to be expected. We can’t expect him to perpetuate his career year into infinity. However, his last three seasons have established a level of excellence that few in the game can match – a 3.30 FIP in 2006, a 3.14 FIP in 2007, and a 2.93 FIP in 2008. Those are best-in-the-league type numbers, and he’s been pitching at an elite level for quite a while now, so while we expect some regression, we can only regress him back to a Cy Young level.

Let’s put his true talent level FIP at 3.10 – it will be slightly higher if he signs with an AL club, slightly lower if it’s an NL team, but that’s a pretty solid estimate of his current abilities. And, because he’s proven more durable than most pitchers the last two years, let’s project him as a 210 inning starter going forward. How valuable is a 210 inning, 3.10 FIP starting pitcher?

I’d argue that a replacement level starting pitcher is something like a 5.50 FIP, but that pitcher certainly wouldn’t be allowed to throw 210 innings in a season. He’d get taken out for relievers much earlier in his starts, and so we’ll split the replacement level performance between 160 innings at 5.50 FIP and 50 innings at 4.50 FIP, which we’ll call our estimated replacement level for a reliever.

Now, to compare the two.

Sabathia: 210 innings, 72 runs allowed

Replacement Lever Starter: 160 innings, 98 runs allowed
Replacement Level Reliever: 50 innings, 25 runs allowed
Replacement Level Total: 210 innings, 123 runs allowed

That’s a 51 run difference in Sabathia’s favor, which translates to about 5 wins. One could potentially argue that there’s some additional value in having Sabathia eat those innings instead of relievers, which takes a load off the bullpen and allows the higher leverage relief aces to work more often when the other four starters pitch, so let’s toss another half a win into the pile to account for the cascade effect on the pitching staff.

That puts Sabathia as a +5.5 win pitcher. That makes him a legitimate MVP candidate, and right there with Johan and Halladay as the best pitchers in the game. So what’s a 5.5 win pitcher worth?

Last year, the going rate for free agents was $4.5 to $5 million per win. Not everyone got exactly that, of course, but the aggregate was pretty close. Free agent salary inflation has been near 10% per year for quite a while, so we’ll call this year’s marginal win rate $5.5 million just to be safe. I think the economy might shrink some spending and it could end up closer to $5 million, but we’ll see – for now, we’ll say it’s $5.5 million.

5.5 million * 5.5 wins = 30.25 million. That’s what we’d expect Sabathia to be worth if he signed a one year deal, which he clearly won’t do. In exchange for the security of a long term deal, he’ll give teams a slight discount off his current value. At a 10% discount for the safety of a five to seven year deal, that would put his annual average salary at $27 million.

So, that’s the baseline – six years, $162 million for Sabathia. If he signs for significantly less than that, whoever gets him is getting a relative bargain.

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Dave is a co-founder of and contributes to the Wall Street Journal.

8 Responses to “Free Agent Values: CC Sabathia”

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  1. ajwalsh says:

    If it’s $5 million per win, what do you pay replacement level pitchers? Do negative win pitchers have to pay to play?

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  2. Dave Cameron says:

    The $400,000 league minimum salary is accounted for in the $5.5 million per win calculation.

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  3. Jake Russ says:

    This assumes that he remains a 5.5 win pitcher over the life of the deal. Which is possible, but I’d have to say unlikely. So the team could argue down off your 27mil/year. Since this proposed 6 year deal would cover him until about age 34. What I think is more plausible is a deal averaging in the mid $20 millions (say $24mil) but heavily backloaded, so the team can take advantage of the time value of money. The $24mil/year would be factoring in both a little age slippage and the security factor of going to 6 years. Proposed escalation: 17,20,24,26,27,30 Avg=24.

    CC’s Avg. of $24mil/yr would also put him 22.4% above Johan’s Avg of 19.6/year. I know salaries as a whole are going up at around 10% a year, but I also guess that salaries for the premium players are going up a bit faster than 10% as teams get closer to understanding replacement level. The guys at the top should start to see even more dollars chasing their extra marginal wins than the players closer to replacement level.

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  4. Jake Russ says:

    I’m thinking now that that last sentence is confusing. So let me rephrase. I don’t think salary inflation has a linear relationship with production. I think that the upper echelon players will see greater inflation in their salaries each year than mean salary increase.

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  5. Daniel Love Glazer says:

    What is FIP?

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  6. fritts says:

    It stands for fielding independent pitching

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  7. Sky says:

    I’ve got Sabathia at $26MM per year, mostly due to a more conservative ERA projection.

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  8. Rob says:

    Santana was also already under contract. It makes a difference because he couldn’t entertain other offers as such.

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