Jeff Karstens and Imperfect Information

Jeff Karstens‘s free agent case was, to me, one of the most intriguing of the offseason. I covered it multiple times at multiple outlets. I thought the Pirates’ decision to non-tender Karstens was curious — the club has little starter depth beyond A.J. Burnett, James McDonald and Wandy Rodriguez; Phil Irwin was the fifth best starter in the organization according to ZiPS, including minors-bound first overall pick Gerrit Cole. Things only looked worse following the Francisco Liriano debacle — his two-year, $14 million contract remains on hold, in the same limbo as Mike Napoli‘s would-be deal with Boston.

Although I understood why Pittsburgh might not want to take the risk on Karstens — he has dealt with regular injuries and has never thrown more than 162.2 innings in a season. Given a likely budget crunch, it’s easy to see how Pittsburgh might be better served with a sure thing. But I thought Karstens and his 3.59 ERA and 3.94 FIP since 2010 (49 appearances, 41 starts) could be an intriguing value play for which a team would pay at least $5 million — meaning, considering the non-tender, Karstens wouldn’t return to Pittsburgh.

Tuesday, Karstens reportedly signed a $2.5 million contract with the Pirates. I was wrong on both counts of my prediction, a good reminder of the imperfect information available to those of us who try to foresee these things from outside MLB organizations.

The concept of perfect information is key to the evaluation and modeling of games. In game theory, a game of perfect information is one in which all players have all the relevant information necessary to decide future moves. Obviously, this is not the case with the free agent market in baseball. Teams get different information from their scouts and the information learned from employing a player seems to be signficantly useful. Similarly, those predicting these moves from the outside are privy to even less information (which is maybe why it’s smarter to stay out of it, but I haven’t learned yet apparently).

The first indication the Pirates were considering non-tendering Karstens came back in October, when general manager Neal Huntington publicly questioned the righty’s durability:

“He’s doing everything he can to get the best out of his abilities,” Huntington said. “Unfortunately at times, his body lets him down, and it’s been various body parts.”

So obviously the Pirates had questions about his durability — possibly even beyond Karstens’s injuries to date — issues the entire league were privy to following Huntington’s quote. But were these questions based on issues surrounding the hip flexor injury which placed Karstens on the DL in September? Or the shoulder soreness which sidelined him from April to June? Was it just a matter of his constant nagging injuries and the idea that his past injuries would lead to more future injuries? Or was it something deeper in the ideas of the coaching and training staff — something other teams may not pick up or could ignore in their process of gathering information?

All this ambiguity and the constant demand for starting pitching — even lottery ticket, back-end material like Karstens — convinced me Karstens would find suitors outside of Pittsburgh. Not only didn’t he find other teams willing to sign him, he even took a pay cut — down from $3.1 million in 2012 to $2.5 million in 2013, and he earned far less than the $3.8 million Matt Swartz projected he would earn in arbitration this season at MLBTradeRumors.com.

It would be easy to point to Huntington’s quote as the obvious signal of an imploded market for Karstens, but Carlos Villanueva was regarded similarly by Alex Anthopolous before hitting the free agent market this season, and he got $10 million over two seasons. When asked about Villanueva’s ability to start, Anthopolous said:

“I don’t want to use a term that’s derogatory to the player,” he said. “I don’t want to doubt him. But I have to also be objective and realistic too.”

Villanueva received a two-year, $10 million from the Chicago Cubs to start this season.

So what does all this say about information (in the game theory sense) in the MLB free agent market? To me, the contract Villanueva signed with the Cubs tells us a bit, but not enough for me to believe wholeheartedly in his ability to start. It only takes one team with imperfect information — perhaps missing one of the most important signals — to earn a contract.

In Karstens’s case, on the other hand, the string of decisions made by general managers leading up to Karstens’s eventual $2.5 million contract with the Pirates speaks volumes. The information contained in the results — Karstens’s 2.5 WAR in the past two years and his strong strikeout and walk rates in particular — suggested he should be able to accrue $3.8 million worth of value to a team even if he’s limited to 90 or 100 innings. To see all 30 teams pass on giving him that value to the point where the Pirates — a team which we already know doubts Karstens — end up re-signing him suggests a wide variety of information gathering processes ended up spitting out the idea that Karstens wasn’t worth the value I pegged him at.

I wrote in November:

Part of Karstens’s improvement was a drop to a 7.8 percent HR/FB, his lowest since 2009. But looking at Karstens’s last two seasons, he owns a 3.59 ERA and a 3.94 FIP with a 10.2 percent HR/FB, indistinguishable from his career average. That comes out to a 96 ERA- and a 105 FIP- — in effect, Karstens has been a league average pitcher for 250 innings, and in this market, 100 innings of league average pitching is likely to be worth about $5 million, if not a bit more.

Of my two-part belief — Karstens is roughly an average pitcher, and Karstens is relatively likely to pitch 100 innings — one of those parts must be somewhat significantly out of line with the beliefs of the 30 MLB front offices. And, as much as I trust the analytic tools available to analysts like myself, it would be wrong not to consider this new information when reevaluating this year’s prediction.

The reevaluation: Karstens remains a possible bargain for the Pirates, and I doubt they regret spending the $2.5 million given the issues with Francisco Liriano’s contract and the dregs available on the free agent market. However, the 30-year-old’s health issues appear to be serious enough to the point where getting even half a season’s worth of starts is not even considered a likelihood, and his results perhaps cannot be expected to match his decent 2011 and 2012. Karstens should be a worthy investment, but now likely not the potentially difference-making value I expected earlier in the offseason.




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9 Responses to “Jeff Karstens and Imperfect Information”

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  1. Pirates Hurdles says:

    What’s even more baffling is that Kevin Correia pitching for the same team with far worse primary and secondary stats got 2 years $10 million and isn’t really a big innings eater either (145, 154, 171 the last 3 years).

    Bizarre to say the least, I’m glad the ugliest man in MLB is back on the roster.

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  2. Spike says:

    surprised there wasn’t more of a market for him.

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  3. fred says:

    Good post and shows more humility than most fangraphs/BP posts.

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  4. Utah Dave says:

    I am a life-long Pirates fan. I like Jeff Karstens – especially given the options available. But one thing that keeps puzzling me with regards to every baseball media outlet I have read is the automatic assumption that James McDonald is a major league pitcher. The last couple of months of 2012 were beyond awful. I watch the Pirates a lot on Extra Innings. He has very good stuff. His problem is between his ears I think. By the end of last season he appeared to have lost all confidence. Making the assumption that he will take the ball 30 times next season seems like a pretty big leap of faith to me.

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    • JRoth says:

      And this is why I think the Pirates shouldn’t have played cute with Karstens – I think they got lucky to get him back*, and that they will need someone in addition to AJ, Wandy, McDonald, Locke & McPherson, even if the youngsters are basically productive. You can hope that Cole is ready to contribute come June, but hope is not a plan.

      *because of game theory on another level – how could Huntington know that none of the other 29 GMs would offer him even $3M?

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      • Dan says:

        He obviously didn’t know for sure, but he seemed to have an inkling that there would be minimal interest. And he was right. You could call that lucky, I’d me more inclined to say it was a calculated risk that payed off.

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    • Pitnick says:

      Important to note that he was a Cy Young candidate for the first half of the year. Definitely not a given that he makes it through the year in the rotation, but when you consider that Cole’s on the horizon, Morton will return at some point, and two of Locke/McPherson/Irwin will not make the rotation (maybe all 3 if Liriano gets signed), they actually have better depth than most teams at SP. Their 6th, 7th and 8th starters are far better than what the Giants have in AAA, for one example. It’s just that the front (and middle) of the rotation doesn’t have a lot of guarantees.

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  5. Bill says:

    One thing to note is that he takes up a roster spot on the 40 man roster. so you sign him, have to ‘give up’ a player through waivers, and then he gets hurt and you are out. A minor concern to some I suppose, but still a concern.

    depends on your roster construction I suppose. Maybe he would make a better RP?

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