Valuing the Context
During the baseball off-season, few, if any aspects of the game are as interesting as where free agents end up. Each signing catalyzes a frenzy of analytical activity as writers from all walks of baseball life attempt to deduce whether or not certain moves made sense or were executed under poor judgment. On occasion, deals can be deemed poor before money even enters the picture, due primarily to the player being below average outside of some shiny stat like home runs or RBIs. On the other hand, there are always plenty of deals that make sense, statistically, but the money does not add up.
For the last month or so, Dave and I have used statistical analysis as well as economic concepts to determine the fair market value for several players. Essentially, we have been working to determine what a player is worth, relative to a replacement level player, while factoring in the going rate of dollars per win, inflation, and a potential discount rate for multi-year deals. There is no better way to evaluate a contract from a context-neutral standpoint then to combine offense and defense and determine wins above replacement.
Unfortunately, as Rob Neyer pointed out in a post yesterday revolving around my article on Gil Meche’s worth, baseball does not exist inside of a vacuum, and context is very real. Rob’s point, with which I firmly agree, is that even though Meche has statistically been worth over the average annual value of his current contract, the deal is still poor when the context of the Kansas City Royals is taken into account. As in, is that $11 mil/yr really worth increasing the win total from 71 to 73?
This idea of context is extremely important, because the price of increasing from 71 to 73 wins is vastly different than an improvement of two wins from 91 to 93. The difference, realistically, involves the playoffs. That 93-win team may now play into October whereas, with 91 wins, they would have fallen just short. Therefore, it would make more sense for teams in this situation to pay a higher fee per win than the 71-73 win team. Perhaps they value wins at a rate of $7-7.5 mil as opposed to $4.8-5 mil. Along similar lines, the team with the win total in the 70s may be inclined so as to value players at a rate of $3-3.5 mil/win. With regards to Meche, Rob’s point boiled down to the fact that even though Meche is worth about $12.4 mil right now, he is not worth that much to the Royals, with their payroll and attendance struggles, as well as their inability to make the playoffs, or even the .500 mark.
Our analyses here generally tend not to discuss context, as we merely look at the fair market value of a player, regardless of where he signs, perhaps to serve as a benchmark. If Meche were a free agent right now, he would be worth 12.5-13.8 mil, depending on whether or not he signed a one- or multi-year deal. If he were a free agent today, worth a projected 2.75 wins above replacement, it would make sense for a team on the cusp of making the playoffs to “overpay” his worth to increase their chances. It would not make sense, however, for a team like the Royals to do the same, given that they would still struggle to even reach the .500 mark.
In an e-mail conversation with Neyer, we arrived at the same conclusion: the issue of an opportunity cost is what this really boils down to; that is, what would happen if the $55 million given to Gil were instead invested into international talent, the amateur draft, or scouting? In that scenario, how many potential wins could be added to the major league team in the five years of Meche’s tenure, or even the year after? For all we know, those investments could have resulted in five players capable of sniffing the +1.5-2.5 win mark. And would the attendance or TV ratings from the past two years be any worse without Meche?
I like Meche, and statistically, he is worth more than the average annual value in his current contract, but I wanted to make it clear that context needs to be included when evaluating a deal in order to be as accurate as possible. It is different determining if an actual signing makes sense compared to simply determining the fair market value. For instance, if we wanted to see if Ryan Dempster was worth his deal, or how much his worth exceeded the value, a similar analysis would need to be run, and the context of the Chicago Cubs would also need to be taken into account. If the goal involved merely determining his fair market value, prior to signing, context is not necessarily as important.
The problem we run into, though, is that even though all dollars/win are not created equally, it is particularly tough to determine the true rates. Are 85-win teams justified in spending $7 mil/win? Are 90-win teams justified in spending $9 mil/win? Are 65-win teams justified in spending anything over $3 mil/win on a single player, given their likely low payroll and the fact that one player would not turn the team around? What are your thoughts on the matter? At what win threshold does it make sense to exceed the general going rate or fall short? Should teams with little shot at contending for several seasons even attempt big deals?
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You make a good point about context. A good business analysis would be a comparison between the Rays and Royals.
One team has a lot of young talent that was either drafted or traded for, with only a few low level free agents on the team. Until this year they were a perpetual loser.
The other has had some talent come through the building, but they have been unable to turn that into a net gain via trades (see Beltran).
It sounds like the Royals should trade Meche to a contender that needs a fifth starter for a group of prospects.
If you want to build a team in the free agent market you will always contend, but you will have a payroll like the Yankees. The other option is to roll the dice and try to accumulate good young talent through the draft and trades (Rays). Or you could do some combination of the the two (Red Sox).
There’s another point here, too, to which Scappy alludes: that only affects Meche’s value to the Royals if they keep him–it doesn’t affect his value in trade. What I think you and Rob Neyer have established between you is that Meche’s contract makes sense for a contending team but not for a non-contender like the Royals, and thus that he’s a player who’s more valuable for them to trade than to keep.
still three years to go on the contract. maybe the royals start competing at some point during that time and locking in a pitcher like meche at that price is a good long-term investment. obviously, don’t know what happens going forward. doesn’t look great now.
opportunity cost is obviously an issue – but the royals don’t seem to have been hamstrung in the amateur draft on spending. i’m not sure about international spending, though. could be other areas that money is invested in, too, that i’m not aware of. a fan might argue that they’d rather see the money go to meche instead of lining the pockets of the owners.
My thought about the way that you and Dave have been calculating fair contract values is this: Should the first WAR really cost the same as the third or fourth? That is, you are supposing a constant rate of $/WAR, but I don’t know if that makes sense, for two reasons: First, there are a limited numbers of roster spots and innings to distribute. So a 4 WAR player seems to me to worth more than four 1 WAR players, because he’s only taking up one spot, and you can get other possibly valuable players to put in those other three slots. There is an opportunity cost that may not be adequately accounted for.
Second (and this applies to non-contending teams) 3-5 WAR players have extra value to teams in terms of being star players that fans want to see. To take a simple example, here are two possible line-ups.
Team 1: One 0 WAR players, five 1 WAR players, three 2 WAR players.
Team 2: Four 0 WAR players, three 1 WAR players, one 3 WAR player, one 5 WAR player.
Both these teams will be about average (depending on the pitching) but the second will get fans (especially casual fans) more interested. They’ll be able to go root for their above average players. From a business point of view, then, I think it’s good to have a star player or two that fans can get excited about, and so those players are more valuable.
We’ve been calculating salaries relative to how MLB has valued them in the past. I agree with you – the price of wins should increase exponentially, not linearly. MLB does not agree with us, however – they pay pretty much the same per win for a 5 win player as they do for a 1 or 2 win player.
This is one of the main reasons why “stars and scrubs” works as a roster building concept. The stars are undervalued by the market.
Okay. Thanks, Dave.
That gives me another thought: When you do these analyses, you are trying to determine what the player’s _true_ worth. So, in a sense, it’s a normative rather than descriptive exercise. So shouldn’t your system reflect the fact that, as you say, the price of wins _should_ increase exponentially? Then your valuations would reflect that 1-2 win players are overpaid and 5 win players are overpaid in our current market.
An intelligent GM would probably try to match up his valuations with the true worth of the free agents in just this way.
Man, there were a lot of typos in that. Sorry. I was concentrating so hard on getting my thoughts together I didn’t pay enough attention.
What Eric and I have been calculating is basically “is this a good or bad contract relative to the market it was purchased in?”. It’s a pretty broad view of a player’s value relative to his cost, determining whether he’s an asset or a liability after inking his new deal.
There’s certainly a greater level of detail available to dig into, and one of the things you’ll see on FanGraphs going forward is expounded analysis of player value within certain contexts. We have to lay a foundation before we get there, though.
What about what the rest of the market did in the FA period for that season? The same offseason thet Meche signed.
Player Length Total $ AAV$
Meche 5yrs $55 $11
Suppan 4yrs $42 $10.50
Schmidt 3 yrs $47 $15.60
Padaiila 3yrs $33.70 $11.20
Zito 7yrs $126.60 $18
Lilly 4yrs $40 $10
Of that group is Meche not far and away the best signing? Also it is not as if
A) he is taking up some ungodly chunk of pay roll.
B) They have chosen to shrink payroll as it was cut by about 8 million from 07 to 08. And based on the ‘07 number it is less then 20% of payroll.
C) the trade value he could provide. What GM does not see the value Meche is now? 200ip of good ratios?
Also and the big one is the fan element. While I think it is easy for baseball fans, and especially intelligent ones to see the fault in “bad signings” 95% of a fan base is made up of common fans. Simply put you need to be in the headlines. And while I realize their attendance is still on a decline, the Meche signing did give them a splash in the pan of attention when it did occur.
I think any model built on a predicted win basis needs to provide sufficient accounting for the variability inherent in such prediction. Particularly with small market teams, they may never be able to accrue enough talent such that their mean win projection puts them within reach. They may always need things to go right. Thinking of the Reds as a 74-82 win team instead of just an 78 team results in different conclusions.
Mike, if the point of signing Meche to that reasonable deal was to then unload him for good prospects two years in, then it’s a very solid deal. However, this is unlikely to be the case based on what KC has done recently. A team like the Royals, without an exorbitant payroll, needs to build from within, as Dave mentioned, with young players under control, contributing a win or two each for practically no money. Then, once they are very close to contending, or projected to content in a couple of seasons, sign someone like Meche to get you over that hump.
Ask the 2008 Rays or White Sox what they thought a win was worth prior to the season. Their answer would have probably been too low (well, if they were realistic about their chances). Or, for that matter, how about the Braves and Tigers? Their estimates would have been too high.
Now, I will give you that teams like the Royals have a pretty good idea that they’re not crossing the 90-win threshold any time soon, but even from 70 wins to 80 wins, the value of a marginal win changes significantly. At 80, your team might be in the race in August and you might draw more fans. At 70, probably not so much.
Even beyond the difference in marginal win value depending on which win it is, you have to consider the elasticity of your fan base (not the size of sweatpants they wear to all-you-can-eat night). Cubs fans are going to turn out in Wrigley no matter what (within reason). Royals fans might not turn out even if their team did improve to 80 wins. So each win buys you different levels of growth in interest.
Of course, teams also get an immediate benefit when they make a big splash in free agency. There must be teams out there hungry for a competitive team that would see a big spike in attendance and interest if they signed a big name. (Giants, maybe?) That team would benefit more regardless of whether their win total went up. I don’t think this last one can be measured too well, it’s almost like a fixed income regardless of wins.
Rick, what I would do in a case like that is something similar to PECOTA, with the percentiles. First, figure out the returning Reds players, their salaries, and their wins above replacement. Then determine the available money left, the number of players that need to be signed, and the dollar/win value if their ultimate goal is to be 35 wins above replacement, or 85 wins.
Then, after that, calculate the same value if they are a 74 win team, 76, 78, 80, etc, and ultimately come up with a range. Instead of a concrete number like 1.43 mil/win, the Reds would be in the range of 1.21-1.54 mil/win, hypothetically speaking.
I totally agree that context is important, this is a great article and discussion of that.
What I would like to add is to discuss the (relatively) flippant comment about “what would happen if the $55 million given to Gil were instead invested into international talent, the amateur draft, or scouting?”
The thing is, the Royals have been investing in the amateur draft. They have been signing the high bonus prospects with their high draft picks, in fact, they have went to the Boras well multiple times. However, once you get out of the first five or so picks overall, the success rate of finding a good player drops pretty dramatically, even more so once you reach the back of the first round, then continuous on down the line. There are not a lot of stars beyond the first 10-20 picks overall, those are shots in the dark that happen to hit, not something you can throw money at and ensure it happens, though the Yankees and Red Sox are giving it a try.
If money is all it takes to be a success in scouting, then one would think that the Yankees would be the best overall, year in, year out. If they can outspend on player payroll 4-8 times the amount of the least payroll, and almost double of almost any team, they should easily be able to do that in the scouting department as well as in their development budgets. Yet they are no more successful than any other team in developing talent from the farm system.
And in terms of international talent, while that is an area that they probably can improve in, again, it is not like throwing money there works well either. The Top 10 list of big bonus babies (prior to the records given this year) is littered with a lot of busts like Joel Guzman and Wily Mo Pena, among others. It is not like shooting fish in a barrel, there are a lot of expensive busts, as well as successes like Miguel Cabrera.
And it is not like there is an infinite supply of stars waiting out there for a team to invest $55M in scouting, internationally, and via the draft, and create the next Yankee Dynasty. Again, throwing money at this will not ensure development of a bushel of good players. There must be a marginal point pf return there as well, and I would think that $55M would far exceed that, based on the points I made above.
On another note, people like to point out the poster child of the moment for the way to do things but ignore the context of how that happened. This year, its the Rays, just a couple of years ago, it was Tigers, the Brewers got some of that love in recent years too, the Braves as well, long ago. The context is that each of these teams had to endure a long period of horrific baseball before they successfully rebuilt themselves.
The Braves from 1985 to 1990 were among the worst teams in the majors. The Tigers from 1994 to 2005 were among the worst teams in the majors. The Brewers from 1993 to 2006 were among the worst teams in the majors.
The Rays for their whole life of their franchise, from 1998 to 2007 were among the worst teams in the majors.
It’s nice and easy to point at the latest flavor of a successful baseball franchise, but it typically ignores the fact that there is usually a brutal pregnancy that preceded that success, a brutal period that seeded the current success by obtaining key talent high in the draft, using Top 5 picks, where the odds are much higher in terms of opportunity to procure good players.
You have to risk looking into mouth of the abyss and hope that you are like the Rays and not like the Royals or Pirates. And as one can see above, a ten year gestation period is not uncommon.
And, I would also add as a final note, risking a brutal stretch like that is better for rapid rebuilding than it is by floating along on mediocrity and semi-goodness. It is better to burn brightly like the Phoenix and rebuild from the ashes, than bravely (and foolishly) cling to mediocrity and try to extend your prior success with signings of mid-tier free agents.
“There must be teams out there hungry for a competitive team that would see a big spike in attendance and interest if they signed a big name. (Giants, maybe?) ”
Actually, perhaps not. While the Giants attendance did dip in 2008, from 2000 to 2007, they have been pretty consistently around 3.2M in attendance, which is basically a full ballpark. Of course, having Bonds was the main reason for that (well, that and the new shiny park), but even without Bonds in 2008, they lost only about 360,000 in attendance.
At $50 per tix (which I think is high), that’s “only” $18M, and there has been talk that the Giants would spend over that amount in free agency this year. Just by the Affeldt signing plus the rumored Furcal pursuit, that would be roughly the $18M right there and there has been talk that they might pursue Sabathia, who would cost more than that high-side estimate of $18M for revenues.
There would be a spike in interest, though, but I’m not sure that would be a good return monetarily for the Giants. And, obviously I’m not accounting for further drops in interest and attendance should the losing streak continues, which should be included in the return on investment. As John notes, it would be hard to measure this.
Lastly, what would really help this discussion is a source for WAR data. It seems like a relatively easy calculation, based on what I saw in the Meche analysis, perhaps this can be included in Fangraphs somewhere. That would give a good sense of the relative scarcity of certain levels for WAR.
You won’t have to hold your breath for much longer.
I appreciate this site and the analysis, but I have to come to the defense of the boys in blue.
To go along with what obsessivegiantscomplusive said, the Royals in 2008 spent the most on draft bonuses–not just for this year, but ever. No team has ever spent more on draft bonuses that the Royals did in 2008. They signed several players for over slot money. They are 1 of only 2 teams to have 7 minor league affiliates. They have built a new academy in the Dominican. They just hired Mike Arbuckle to help scout–they didn’t have a position open for him, so they just made one up because they wanted a talented scout on board.
I agree that Free Agent signings don’t happen in vacuum. The context for the Royals is that they are spending large amounts of money on the things you mentioned. They used to be a cheap organization–but not anymore. Dayton Moore plans to compete for the division title in 2009/2010. 2009 may be ambitious but Bill James wrote a couple of weeks he could see this team winning 85-90 games next year. Also, taxpayers just spent $250 million to redo the stadium–which will be unveiled in April, the public outcry of trading Meche would be defeaning.
As you can tell, I’m a Royals fan and we are sick or trading away our star players and then being known as a cheap organization and then making a great free-agent signing and then being told that, simply because we are the Royals, it’s not a great free agent signing.
I have a question that I would like the feedback on. If I am to understand some of the opinions being expressed here correctley. If your team is bad their is no point in signing free agents for value? I mean do we not agree that given what we know Meche is under valued? Also this whole “in a vaccum” comment gets me. The reason the formula was able to give a dollar figure was because a Market Value figure had been assigned. If I am a Royals fan I am happy that not only did Dayton Moore get the steal of the state side free agent signings (I am excluding DiceK) he also got it on what turned out to be a under valued deal based on the AAV for wins. I guess I just dont understand how you can take a concrete number and then adjust it accordingly for something each individual owner decides to spend.
Mike, I have a post for tonight about the Brewers that might shed some light on it. Meche has turned into a very good pitcher, and is currently worth more than he signed for. Many feel this would be the opportune time to trade him because you can get the most in return for him right now. The vacuum refers to a situation without context. As in, if we knew nothing about any team, Meche would be worth 13.8 mil or so. However, when referring to no vacuum, we are saying that a contract to KC is vastly different than one with NYY. Meche’s 11 mil is a big deal for the Royals and a large chunk of payroll whereas it would be miniscule or standard on the Yankees.
Read Dave’s post, as it illustrates what teams can spend on dollars/win. It DOES vary team to team as it effects what else they can do on the market.
For instance, the Yankees can afford 5 mil/win, so signing Meche to a 13-15 mil deal wouldn’t hurt their plans to sign other free agents at all. For the Royals, though, with their payroll and the goal of adding 40 wins above replacement to the team, can manage something like 1.228 mil/win. So, if they sign Meche to a deal worth 5 mil/win, can you see how that would greatly reduce the 1.228 mil/win average figure with regards to what they can spend elsewhere?
Eric,
I appreciate the response and I get completley what you are saying (or at least trying very hard ; ) my point is more to how any team can operate in a market then? How can you assign concrete value to a win if payroll is so drasticly different? I mean if they signed Hanley Ramirez for the same price are they fools? He only adds 5 or so wins? Again I love the discussion and please keep the insight coming
Mike,
These are not necessarily concrete figures. Here’s how we got them. A replacement level team costs 12 mil and will win 50 games. The goal of any team should be to win about 36+ games above replacement. So, let’s say the Royals want to win 86 games, the 36 above replacement. Let’s also say that they have a 60 mil payroll.
This means that they have 48 mil (60 payroll – 12 mil for replacement team) to win 36 games above replacement. 48 mil/36 war comes out to 1.33 mil/win.
The way to operate in a market is to exploit its ineffeciencies or take advantage of certain aspects. For instance, the As have a dollars/win figure below 1 mil, but they compete because they build from within, promoting top-tier prospects who make the league minimum throughout their first three years.
This is why some people are calling for Meche, Greinke, etc to be traded: doing so would net great prospects that, combined with solid drafting and scouting, could potentially get you an 85-win team for 60 mil.
Perhaps I’m not understanding your question. But, basically, the values are not concrete, it’s just a benchmark and average, and after a signing, needs to be adjusted. If the Royals have a 1.33 mil/win average, and sign Meche to 5 mil/win, it means that they have something like 1.15 mil/win left to spend on FA.
This has been a fantastic discussion, just wanted to let everyone involved know.
Actually, Eric, I think it would be $1.33million + $400K per win if they started the season with zero players. Unless I’m mistaken?
If the Royals have a 1.33 mil/win average, and sign Meche to 5 mil/win, it means that they have something like 1.15 mil/win left to spend on FA.
Just as a quick clarification, we have to remember that teams pay drastically different prices for different types of players, depending on service time.
0-2 year players make the league minimum, regardless of how good they are. These are essentially free wins – you don’t pay anything extra for them out of your annual budget.
3-4 year players make severely depressed salaries – often 25-40% of their free agent value.
5-6 year players make slightly depressed salaries – 70-90% of their free agent salaries, in most cases. They’re cheaper than free agents, but not a huge bargain.
Free agent eligible players make whatever they signed for when they were free agents. On the whole, this will approach something like market value, though obviously there are good and bad contracts within this sphere.
No one is saying that a team like the Royals can never pay more than $1.3 million per win in a single contract. That figure is meant to represent an average of all players on the roster, including all the young, cheap bargain players that KC already has. The more young, cheap, productive players you have making significantly less than your team’s average marginal win/$ rate, the more you can spend on veterans who are certainly going to cost more than that rate.
This is, in essence, the stars and scrubs philosophy – get a bunch of low cost, quality players to fill as many roster spots as you can, and use the savings to pay as many legitimate stars as you can.
Yeah, Mike, does this answer your questions? The numbers are merely the average, not the concrete figure. If the Royals have 10 players that are all quality (average, above average, above replacement, etc), making about $400k-$900k, it’s likely that their dollars/win would fall below the $1.33 mil/win average, meaning that signing someone to a $5 mil/win deal could be possible.
Problems occur when you don’t have that many, under control, quality players, and you sign someone to the $5 mil/win deal, that then hamstrings you from signing the other players capable of increasing your win total, without an increase in overall payroll.
Eric,
I just realized exactly how to word my question lol. Ok I visit fangraphs about kabillion times a day ok. Everytime someone has wrote an article using WPA and contracts they have assigned a value of about $5.5 million p/w.
Ok so now how can that number be a true value if only one third of the teams can consider it value? How can we come up with any number for what a win is worth if you do it for team by team payroll when teams literally jump up and down?
Take Meche for example. In ‘07 he made $7 million and team payroll was 67 million so he took up less then ten percent. The next season his salary went up to $11 mill and the team shrunk payroll to 58 million. His value didnt spike out of control but it looks worse because the team on their own free will shrunk payroll by ten million.
So basically should we ever give a league wide individual salary figure for each win? or do you literally do it team by team?
Hope that came out as clear as it was in my head guys.
“For instance, the As have a dollars/win figure below 1 mil, but they compete because they build from within, promoting top-tier prospects who make the league minimum throughout their first three years.”
It should also be noted here that the A’s have also been spending big money on players, not unlike the Royals. They have been dipping in the free agent market liberally the past few years, signing Loaiza ($7M), Piazza ($8.5M), plus signing Chavez to a big money contract ($10-11M) and trading for Kendall’s big money contract ($11-13M), as well as signing Kotsay ($7-8M) after trading for him. Plus now trading for Holliday ($10M). They even spent big money for a reliever, signing Embree to $3M.
Meanwhile, the Royals signed Sweeney long-term to a big contract ($11M), plus picked up Meche ($11M), and Guillen ($12M), plus traded for Odalis Perez ($8M). Not a heck of a lot different, in terms of big contracts taken on, if anything, the Royals have not been as aggressive with signing the upper tier free agents, though they have took shots with mid-tier like Sanders, Redman, and others.
One thing I was going to note earlier but neglected to, was that re-building teams need to sign free agents when they are available, not when they are necessarily needed, hence why the Tigers (who caused many to scratch their heads, including me) signed all those big money free agents when they were still losing hand over fist, like I-Rod, Ordonez, among others, before they became key parts of their return to contention.
Now, one might disagree, but the Royals appear to target that they will return to contending status in 2009-10, so do they wait until now to get a pitcher that they think they need (and risk either that one they like is not available or available but either too expensive or outbidded) or get Meche when he was available at a price they thought was good (or good enough) but a couple of years early? That’s the context that I think has been missing from this discussion.
Mike,
I’ll give it a shot to explain what the disconnect is, as I see it. Just because there is a market does not mean that every team will find value in the market. They can be priced out of the market under certain circumstances. A market holds no guarantee for all participants, even in a limited market like that of baseball. If you recall Econ 101, only a certain portion of the buying population will find value with the good at a certain price, not all will find value.
Also from Econ 101, the market value is set by the teams bidding on the free agents, so that is why you have a league-wide figure for $/W. Theoretically, if a player is being offered less than that average, another team should jump in and close the gap until it reaches equilibrium at this league-wide $/W. But with limited participants and payrolls, there will be lumpiness in the bid winning process, with some below and some above, depending on the situation.
Thus, for a number of the remaining teams, they are essentially priced out of the market in terms of “buying wins” when they either have too low available payroll, whether by already having a number of high salary players or by dropping their payroll while holding other large contracts on their books.
That is what Dave was trying to show with his table of marginal win data in the other post (perhaps a link should be provided in the post text to refer to that one since they are kind of linked). Each team has a different threshold where they reach this critical point.
If a team devotes too much to a high priced free agent like Meche, even if he is a good value in a vacuum, then they need to counter that with a lot more cheap players and that’s not always possible. Hence why many are suggesting trading Meche to both lower the average $/W for the team as well as bring on the young, cheap prospects that also helps lower the average $/W.
The context I think people are missing there is that good pitchers, at least as well as Meche as been pitching with the Royals, is relatively rare and thus the Royals should hold onto him, I think. Trading him does not necessarily net you a replacement pitcher immediately. Sometimes it works, like when the A’s traded Mulder to get Haren (and others). Sometimes it blows up in your face, like when the A’s traded Hudson to get Meyer (and others). Given that the Royals hope to be contenders as soon as next year, trading him would not be good with regards to those plans, it would be an added risk that you take on.
However, I suppose this could be where the extra money on scouting could pay off, if they can identify the right players to trade for, so that you end up getting the Kouzmanovs instead of the Barfields in your trade. Or better, the Hanley Ramirez when you give up the Josh Becketts, instead of the Carlos Gomez and Phillip Humber for the Johan Santana’s.
Thanks, that was very helpful and this was just a great discussion overall.
Eric, unfortunately your entire anlaysis is based on a fatal flaw: that Meche’s value is somehow based on his performance over a replacement SP, said replacement SP having the following stats:
Replacement SP: 150 IP 5.50 FIP 92 runs
The problem? In 2006, the year before Meche signed, the BEST Royals pitcher had an ERA+ of 92 (Luke Hudson, 5.12 ERA, 102 innings). Only 3 other SPs had over 100 innings–Redman (ERA+ of 82), R. Hernandez (ERA+ of 73) and Scott Elarton (ERA+ of 88).
When you look at the wins contributed by Meche, however, you have to look not at the wins above a mythical replacement player but rather the wins produced by the WORST starting pitcher in the rotation. That’s the true net gain provided by Meche.
Here’s a thumbnail about how that looks: In 2008, Meche made 32 starts. In those starts he went 14-11.
In 2006, the worst four “starting pitchers” on the Royals (Duckworth, Denny Bautista, Bobby Keppel, Joe Mays) made a total of 27 starts. The received one (1) win for those efforts.
In summary, here is my point: Meche on the Royals pushes a horrific amalgam fifth pitcher off the roster and into the bullpen/AAA/working at the car wash. The marginal gain from that substitution is nowhere near as low as the 2.5 wins you assert–in fact, Meche probably contributes between 10 and 12 wins directly compared to that bunch of losers.
And THAT is why is makes sense, even at his contract, for the Royals.
George, you are correct, but for a DIFFERENT analysis. First off, I never said this was a bad deal – Rob Neyer did. Personally, I like Meche, and find it interesting how the deal was lampooned and yet he now exceeds the value he signed for.
What we determine here is known as Fair Market Value, which is context-free. So, in determining Gil Meche’s Fair Market Value, we compare him to a Replacement Level SP and RP, since a Replacement SP would not pitch the 200 innings Meche would. So, Meche’s true value is +2.5 wins above replacement.
Now, to sign with the Royals, it might be substantially more, because you’re adding a +2.5 win pitcher who then replaces, say, a -2.0 win pitcher. This is a swing of +4.5 wins, so his value to the Royals is much more. That’s not what we’re determining here, but you are correct in that his value to KC is more than his value to NYY or Bos, which is basically the whole point of this post.
And, for the record, the reason that some people dislike the deal, still, has NOTHING to do with Meche’s performance. We can all agree that he has become a good pitcher. The problem stems from the fact that this was their only real big signing, or worthwhile signing, and until they produce good players from within, aren’t going anywhere. I think a lot of the people who dislike the deal feel that the money should have been spent elsewhere, say on international scouting. That the Royals are now breaking records in the draft is a positive sign. The hope, I guess, is that by year four or five of his deal, they are able to contend AND that Meche is still effective. If he isn’t effective when these young guys are ready to produce, then it is a bad deal.