Reds Buy Out Votto

Joey Votto‘s monster 2010 (.324/.424/.600, .439 wOBA) came just in time for his first season of arbitration eligibility. That won’t be a concern now, as the Votto has reportedly signed a three-year, $38 million contract with the Reds, buying out his arbitration seasons. While Votto is obviously a great player, that number might seem steep to some for a player still under team control. However, a closer look shows that the Reds are getting a very good deal.

As has been mentioned before, in their arbitration years players usually get 40, 60, and 80 percent of what their value would be on the open market. The easiest way to calculate this is to apply this to length of the contract. Rather than three years, we value the contract as 1.8 years. Assuming a current market of about $5 million per win above replacement (WAR), and an expected annual increase of between five and ten percent, the Reds are paying Votto as if he is around a four WAR player.

To get an idea of Votto’s estimated offensive true talent for 2011 (i.e., projections), I have looked at three systems and converted their projected lines to a wOBA and custom linear weights based on the 2010 run environment (as found here) for consistency. “Runs” are runs above average per 700 plate appearances.

ZiPS: .301/.396/.540, .407 wOBA, +49 runs

CAIRO: .297/.388/.395, .535 wOBA, +42 runs

My (as-yet-unnamed) projection system: .308/.403/.554, .405 wOBA, +48 runs

Without adjusting for park or league, CAIRO projects Votto to have the second-highest wOBA to Albert Pujols, and my projections have Votto’s 2011 wOBA as the highest in baseball (the full ZiPS projections are not available yet). Whomever you think the best is (once parks are accounted for, Pujols would probably come out on top; my personal [subjective] opinion is that Pujols is still better, but the fact that I’m even making the comparison…), the point is simply that Votto can hit. Big revelation there. Looking at the average and adjusting slightly for Cincinnati’s hitter-friendly run environment, let’s call Votto roughly a +45/700 hitter.

In the field, while Votto had a big 2008 according to most systems, he’s been pretty close to average (a bit above overall), and that’s how the Fans see him. Some between average and five runs above seems like a fair estimate.

Bringing it all together: +45 offense + (zero to five) runs fielding, -12.5 positional adjustment + 20 replacement level = 53 to 58 RAR times 90 percent (about 150 games) playing time = between 48 and 53 runs above replacement. Five wins seems like a good projection for Votto’s current true talent. Given that the Reds are paying him as if he’s more like four, they are getting a very good deal. The average annual value of almost $13 million might be a bit more than they would pay in the first arbitration (although Ryan Howard got $10 million three years ago), but it probably saves them money in the second and third years and thus overall.

While Votto could probably have been able to get more money overall by going to arbitration each season, by signing for three years gets security by getting guaranteed money for the next three seasons in case he gets hurt or his performance dramatically falls off for some other reason. At 27, he’s probably at the peak of his powers, but that also means he’s also unlikely to be any better than he is right now. Moreover, unlike some recent players (including teammate Jay Bruce), Votto didn’t give up any of his free agent years. He’ll be 30 going into his first year of free agency, which isn’t young in baseball terms, but still gives him a decent chance for at least one more big payday.

All things considered, while the Reds are winners from a money standpoint, this is a relatively fair deal for both sides. Votto gets guaranteed money and security without giving up future years of free agency. The Reds get one of the best hitters in baseball in the prime of his career at a price they couldn’t get on the free market. In Votto and Bruce, they have a first base and outfield combination that is closer in talent than one might think to the Albert Pujols-Matt Holliday pair in St. Louis, and is also younger and cheaper.

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Matt Klaassen reads and writes obituaries in the Greater Toronto Area. If you can't get enough of him, follow him on Twitter.

35 Responses to “Reds Buy Out Votto”

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  1. MikeS says:

    I agree he will have a chance for one more big pay day if hestays anything close to his current level, but with $38M does he really need a huge FA contract at that point to be secure for the rest of his life? As long as he manages his money just a little he’ll be fine. After a certain number it’s not about financial security, it’s just keeping score.

    And I definitely think you should permanently name it “Matt Klaassen’s (as-yet-unnamed) projection system” or “MK(AYU)PS.” People would probably call it “Make Ups” which would just be hilarious for a projection system, especially if you kept the formula secret.

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    • Daniel says:

      If Votto deserves a big pay day, why shouldn’t he take it? If he doesn’t, it’s just going into the pocket of a billionaire owner. How much do *they* really need it?

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      • Jimbo says:

        That stuff “going into the pocket of a billionaire owner”? Where did ‘it’ come from? Ultimately, taxpayers and consumers of baseball. Just because they know how to milk the cow in today’s version of capitalism, it is still greed in essence–keeping score as the post above put it.

        If it were up to the billionaire owners, players could juice all they want if it would generate more income. (Or did they not know what was going on as contracts ballooned starting with Canseco and Clemens? (Speaking of ballooned…))

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  2. phoenix2042 says:

    i have a couple questions about the projections:

    “ZiPS: .301/.396/.540, .407 wOBA, +49 runs
    CAIRO: .297/.388/.395, .395 wOBA, +42 runs
    My (as-yet-unnamed) projection system: .308/.403/.554, .405 wOBA, +48 runs”

    CAIRO thinks he will have a sub-.400 slugging? that’s a .098 ISO… a little low right? was that supposed to be a .495 instead of .395? and second: your projections system gives him a higher AVG, OPB and SLG than ZIPS, yet that yields a lower wOBA and fewer batting runs? why is that? Thanks for clearing this up!

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  3. jirish says:

    I think they did this for all kinds of reasons.This is a PR move,it’s a move that says we love our homegrown stars, you are important to us, and that makes the Reds fans happy.

    I think they simply wanted the cost certainty going forward and to avoid going to arbitration with him for the next three years. Perhaps they are hoping that since they were fair with him now, that he’ll re up with them later.

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  4. Blue says:

    I fail to see why this is a good move for the Reds. They are buying $15million of projected production for $12 million and taking on a ton of unneccessary risk to save that 3 million bucks.

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  5. Travis says:

    $15 of projected production for a guy whose last three seasons have provided $18, $21, and $30 million in production? That’s logical.

    Arbitration would have given him similar salary numbers over this three year period; perhaps more. It’s a good deal.

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    • Blue says:

      15 WAR, I forgot to multiply. In any event, paying him full arb value now is not a good deal for the Reds; they don’t get any years of control, they don’t get a ton of projected surplus value, they make him more difficult to trade, and they take on injury risk.

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  6. DL80 says:

    Totally agree with Blue. If Votto really is a 5-win player for the entire contract (which is unlikely), that makes him worth 3 years/75 million. Arb values would be $10, $15, $20. So instead of the 3 years/$45 mil he would get in arbitration, the Reds lock him up for 3 years/$38 million? So they save $7 million (over three years) at most, assuming he stays where he is offensively, isn’t overvalued defensively, and doesn’t get hurt.

    I would think there is not much room for Votto to suddenly get a lot better, so this seems like a lot of risk for the Reds with only a small savings (about $2 million per year).

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    • Telo says:

      I think the logic is that, on average, they will probably save a bit of money on the deal. But more importantly, they endear themselves to a hopeful franchise player, and remind the fans that he will be playing for the Reds for at least another three years. It’s a smart PR and long term move, and an average to slightly above average front office move.

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      • Telo says:

        And my post does understate the possibility that Votto really is a top 3 hitter in the league, as last year he showed he may be. In which case this deal is great.

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      • DL80 says:

        Yes, I agree that they will probably save themselves a very small amount of money based on arbitration estimates. And if the market skyrockets in the next few years, they could see themselves saving $10million+. But he is definitely playing for the Reds for three more years (at least), no matter what. That’s what arbitration does.

        I can understand wanting to avoid contentious arbitration, and that makes a lot of sense to me. But if you are going to give Votto some security, you need to at least get one of his free agent years.

        If I’m the Reds, I either want 3 years/low $30s or 4 years/$50-$55 million. You’ve got very little risk and medium upside with the first offer in case Votto gets injured or declines. You’ve got medium risk but a lot higher upside (from the Reds’ perspective) with the second option.

        As is, the Reds got a medium amount of risk with very little upside. I just don’t see how that makes sense for them. Yes, it’s a fine deal, and they make out a little bit better than they would have if Votto’s not hurt. And no, the extra 5 million over 3 years that a 3/$32 gives them isn’t going to make a huge difference.

        But clubs should be aiming to have more possible reward than risk, not the other way around.

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    • nolan says:

      There’s something to be said for rewarding your players for their performance on the field. Also a lot of teams look to avoid arbitration on their players as it can lead to some animosity between the team and the player. This is a deal that fairly values Votto, rewards his MVP season with guaranteed years, and keeps him away from arbitration. There is some risk but I think there’s a lot of reward, too.

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      • Blue says:

        How is it “a lot” of reward except for Votto? The Reds took their single biggest time of leverage–before his first arbitration hearing, before Votto made his first real money–and pissed it away for nothing but avoiding arbitration for three years.

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  7. Powder Blues says:

    I don’t think 3 arbitration hearings would have been wise for Cinci. What could they possibly use to argue against him? His depression; his anxiety; his migraines? I guarantee those would have come up in a semi contentious manner, and I can’t think of a faster way to a person’s bad books than attacking his frail state of mind instead of his body.

    That being said … not getting his first FA season is kind of inexcusable.

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    • CircleChange11 says:

      That’s actually a pretty good point.

      The Reds would have to walk into an abitration hearing and say every reason why Votto doesn’t deserve money … and then turn the corner and say “C’mon Joey, you’re the man. We need you to lead us to another division title.”

      Star athletes are funny in the way they can often only hear the negative things, and then carry that with them forever. We see numerous examples of that. If the negative comments don’t materialize, they somehow create the scenario where the world really is against them.

      The second point is secondary to the first. The Reds just avoided going intoarbitration and arguing against their best player … and they may have saved some money in the process.

      When it comes to contracts and value, just being “within a range” is good enough. Sometimes I think FG would look at a player with a 15M/y contract who only performed at the 14.5 M level, and say that he “under-performed his contract” or was an “over-pay”.

      The Reds just signed Joey Freackin’ Votto, 2010 MVP, for 3/38, and avoided the ugly arbitration situation altogether.

      I under-appreciated Jockety when he was in StL. This dude just turned a potentially negative situation (arbitration) into a plus-plus. Votto feels respected & rewarded and gets a good contract. The Reds avoid confrontation with their best player, and get a good contract.

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  8. nolan says:

    Votto had an MVP season last year and led the Reds to their first playoff series since 1995. That’s huge. His wOBA the past three years? .373, .418, .439. Phenomenal. He could be the Cincinnati Pujols for the next 8-10 years. You don’t think he’s worth 3 years and $38 million dollars because the Reds could nickle and dime him in public arbitration hearings and save 5-6 million? Look at what happened with Lincecum’s arbitration hearings last year. Do the Reds want to go through that process? Based on their history in dealing with arbitration, no.

    I think taking care of your best players and avoiding arbitration with fair contracts is a good front office strategy. Is that wrong? It’s about more than WAR-to-dollars, Blue.

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    • George Purcell says:

      No, I don’t think he is worth the money because he didn’t give up any free agency. If he’s not willing to do that and I’m the Reds, I sign him for as cheaply as possible through his initial years of control…and if he blows up a knee this year and is out of baseball I’m not needlessly on the hook for his next two year’s worth of salary.

      And let’s not be ridiculous by comparing him to Pujols, shall we?

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      • Theo says:

        Just looking at him yesterday, he’s put up great numbers for all three years he’s been in the majors. Sure, he won’t be Pujols, a surefire HoF’er, but he could be a perennial MVP contender for the Reds, which is great.

        If anything, it’s a sign of good faith — we think you’ll continue to be worth this much for the next three years — that probably helps their chances of extending him or signing him as a free agent, rather than going to arbitration year in and year out.

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      • DL80 says:

        Fair enough, Theo. It’s not a terrible deal by any stretch of the imagination for either side. It’s a slightly useful deal for the Reds. But if the objective is to maximize surplus value over risk, they didn’t do a great job at that. They did an ok job, and perhaps the emotional/morale aspect of avoiding arbitration is worth the rest.

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      • fredsbank says:

        how do you know it wasnt the other way around, and he wanted to an evan logoria-esque contract, but the reds were the difficult party?

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  9. mike says:

    the background on Votto is that he isn’t particularly interested in staying in Cincy any longer than he has to. He was perturbed that they waited to bring him up full time until he was 24. Also the reds play in Cincy. If you are from a true metropolis like Toronto, Cincy is kind of…. beneath you (no offense Cincy folk, it’s your equivalent of moving to Youngstown, OH) Apparently, he had a parent (father I believe) pass away while he was in the minors. I believe he is the eldest sibling and so plays somewhat of a parental/breadwinner role. As a Jays fan Im hoping his idea is to become a Jay for 2013 or in Free agency for 2014. As a cincy fan Im assuming he is gone after 2013 either way now.

    About the trade it seems kindof Meh. Nothing really gained or lost significantly on either side. The chances of a serious enough injury to affect Votto’s arbitration case are low given his position and lack of history of injuries.

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    • RMR says:

      Curious where you get the idea he isn’t interested in staying in Cincy, Mike. Everything he’s said, both before and after the contract has been simply that he doesn’t want to commit to being in any given place 5, 6, 10 years from now. He’s a guy still trying to figure his life out and isn’t ready to put down deep roots anywhere yet. It’s not about Cincinnati — for or against.

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      • blackout says:

        He actually mentioned in a local interview (Cincinnati Magazine?) that he was interested in playing in Canada so that Canadian kids saw that they could make it in MLB. IIRC he cited Larry Walker’s tenure with the Expos. So, it’s not crazy to think that playing part or all of his 30s in canada is in the back of his mind. And as someone who currently lives in Cinncinati and has visited Toronto many times, no offense taken, Mike, though the jump from Cincinnati to Youngstown isn’t necessarily the analogy I’d draw. It’s not THAT drastic. lol

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  10. aweb says:

    This contract is also making Votto a very valuable trade chip, should the need arise. Things can go very wrong for baseball teams in a short time, especially those that can’t afford to spend around problems like the Reds. Votto at 6/108 million (for example) takes a lot of potential trades off the table in two years if the franchise needs to replenish the farm system and start over.

    This might be seem as another mutual benefit to a shorter contract, actually, as Votto may like the idea of moving on if a rebuild happens.

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    • Blue says:

      A multiyear contract decreases Votto’s value, not improves it. He’d be worth more with a single year deal for 2011.

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      • aweb says:

        Compared to the types of contracts a lot of players have been getting to cover arbitration+free agency, his is better from a purely “is he tradeable” standpoint. And since the Reds figure to contend this year, it’s not an issue right away…

        I’d dispute your statement outright – a lot of teams would love to have Votto right now on that contract, and the return would be higher for the Reds if the other team had him locked up for 18 months, instead of 6 (for instance). Nothing in this deal says “potential franchise killer”, unlike a 5-6 year deal.

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  11. Bob says:

    Can we take the next step in valuing contracts? Instead of using averages for three years, don’t we have enough information to used production distributions and calculate the expected value from those ranges?

    So for example, let’s say that Votto in 2011 has a 30% chance of producing 7 WAR, 50% of 5 WAR and 20% of 3 WAR. eWAR (expected WAR) – 5.2 (we could use BP’s ranges of value but these are illustrative)

    In 2012, those percentages change to 25% of 7 WAR, 45% of 5 WAR, and 30% of 3 WAR. eWAR – 4.9

    2013, it changes to 20% at 7, 40% at 5, and 40% at 3 – eWAR of 4.6

    Over 3 years, eWAR of 14.7. However, based on these %s (assuming they’re not connected which isn’t absolutely correct), Cincy has a 8.4% of losing money on the contract (using 60% of $5M per WAR), 23.4% of breaking even, and 68.2% of saving money. However, the expected cost of Votto’s production is $44.1M, which means the Reds would save $6M (not PVed) over the contract.

    These numbers are mostly fake, so you can’t draw any real conclusions, but it seems like in order to value a contract, we need to value the risk behind that contract. To me, this seems like a key issue in the Farnsworth/Jenks discussion that really isn’t addressed. Who would you trust more to produce value commensurate with his contract? Farnsworth or Jenks?

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    • Blue says:

      You’re treating this like a FA signing; it isn’t. The only issue is what Votto might make in arbitration.

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      • DL80 says:

        I like Bob’s idea, though. But after applying $5 per WAR, you need to adjust for arbitration. You can’t just take 60% (averaging the 40/60/80), you need to take 40% of the first, 60% of the second, and 80% of the third. I think.

        Also, you need to factor in the non-zero chance of 0 WAR, 1 WAR, or even negative WAR (assuming a catastrophic injury, PED suspension, off-field suspension, etc.). I’m not sure how you’d even calculate any of them.

        For example, I imagine Josh Hamilton’s chance of 0 WAR and 1 WAR is a lot higher than most players because of both chance for injury and the non-zero chance of what would essentially be, I think, a lifetime suspension for using drugs again.

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