Spending $130 Million Well and Less Well

On Saturday, the Rangers agreed to sign Shin-Soo Choo to a seven year, $130 million contract. With Nelson Cruz and David Murphy departing via free agency and Craig Gentry traded to Oakland, they had a gaping hole in atheir outfield, and they signed the best outfielder left on the market. Given their position on the win curve, maximizing their 2014 roster potential is an understandable strategy, even though Choo is likely to be completely dead weight by the end of this deal. As I wrote at the beginning of the off-season, nearly every long term free agent contract will be a poor investment for the team by the end, as they are designed to be a value to the team in the first few years and a value to the player in the last few.

That said, even with the Rangers having ample revenues — thanks to their television contract — and being in a prime position on the win curve, this still looks like a pretty significant overpay to me, and a contract I think Texas will regret sooner than later. In fact, depending on how much money Nelson Cruz suckers someone into paying him, this might actually end up as my least favorite contract of the entire winter. And I think this deal looks particularly mediocre when you see what the Yankees did with the same resources.

According to various reports over the off-season, the Yankees and Rangers had mutual interest in three of the best free agents on the market this winter: Choo, Brian McCann, and Carlos Beltran. McCann was widely predicted to go to Texas, the team that had reportedly tried to trade for him on multiple occasions during his tenure in Atlanta, and who had a pretty gaping hole at catcher. Beltran was also linked to the Rangers, as they were going to be in the market for an OF/DH type to replace Cruz. And, of course, they had considerable interest in Choo, given how much money they just gave him.

The Yankees clearly had interest in McCann and Beltran too, since both signed with New York, and last week, Jeff Passan reported that the Yankees offered Choo $140 million over seven years before signing Beltran, only moving on to Beltran when Choo turned them down. Given that McCann signed with New York three weeks ago and still pursued Choo, it’s not exactly correct to say that the Yankees chose McCann and Beltran over Choo for the same price, but the reality is that we’re pretty sure that both the Yankees and Rangers pursued all three of these free agents, and the two teams split the three free agents down the middle, with each team spending exactly $130 million in the process.

The Yankees $130 million outlay for McCann and Beltran is a bit more costly than Texas’ $130 million outlay for New York, because it’s spread over the next five years instead of the next seven, so the per year costs are higher in the short term, pushing the net present value of the expenditure a little bit higher. But the difference isn’t actually huge; if you use a 5% discount rate, the NPV of spending $130 million in a $32M-$32M-$32M-$17M-$17M fashion works out to $114 million, while spending $130 million in a $13M-$18M-$18M-$18M-$19M-$21M-$23M fashion works out to $106 million in NPV.

Toss in the luxury tax implications of the more narrow timeline that NYY signed up for, and the Yankees total cost of their $130 million in spending is probably something closer to $15-$20 million more than Texas’s cost of spending $130 million. And they gave up two draft picks to sign both players, while the Rangers just gave up one pick to sign Choo. That second pick has some value, even if it’s not nearly as much as a first round selection.

But, in reality, the differences are on the margins. The NPV and luxury tax calculations don’t change the fact that the Yankees got eight years of two players for pretty close to the same price that the Rangers got for seven years of one player. And I don’t really see any way to prefer seven years of Choo to eight years of McCann and Beltran.

For one, I think McCann is probably a more valuable player than Choo right now. Over the last three years, Choo has been worth +9.0 WAR in 1,756 PAs, while McCann has been worth +8.3 WAR in 1,416 PAs. Choo should be projected to play more than McCann going forward — a full season for a catcher still results in fewer PAs than a full season for an OF, and McCann isn’t the healthiest guy around — but even with his limited playing time over the last few years, McCann has still basically matched Choo in overall value.

And WAR probably underrates Brian McCann. Pretty much all of the studies done on catcher framing suggest that he’s one of the better receivers in the game; StatCorner’s Catcher Report puts McCann’s value at +64 runs from framing over the last three years, which would translate to an extra two win per season in value. Even if you don’t necessarily buy the spread of value among current framing estimates — I’m one who thinks the actual spread is probably smaller than these types of calculations suggest — it’s pretty likely that McCann creates some tangible amount of real value by turning balls into strikes. Even if we only give him credit for half of what StatCorner suggests and regress the rest away, we’re still looking at something like an extra win per year that WAR isn’t given him credit for.

Even if you don’t like WAR, we could paint a much simpler comparison. Here are McCann and Choo’s 2011-2013 wOBAs compared to the average for their position over the last three years:

Player wOBA Pos. Avg. Difference
Choo 0.366 0.329 0.037
McCann 0.332 0.309 0.023

Choo is a better hitter, relative to other right fielders, than McCann is relative to other catchers, but the gap isn’t actually that large. 14 points of wOBA, over a full season difference, is worth about seven runs, and if you toss in baserunning, Choo’s offensive advantage — again, relative to the average offense from their positional peers — is about 10 runs per year, or about one win. You don’t have to give McCann much credit for defensive value to think that he makes up most or all of that gap with his framing, or on the flip side, that Choo gives most of that gap back with his lack of range. It is quite possible, probably even likely, that the defensive gap more than erases the offensive gap, making McCann the better player overall.

And that’s without noting that the offensive gap is heavily driven by disparate BABIPs; Choo’s at .340 over the last three years, while McCann is at .261. Their BB/K/ISO numbers, which are much more stable and predictive of the future, don’t actually point to a large offensive advantage for Choo. Given that McCann is two years younger and Choo’s offensive advantage is built on something resembling baseball’s house of cards, I wouldn’t even be all that surprised if McCann was actually a better hitter than Choo over the life of their contracts. Toss in the fact that McCann is a plus catcher while Choo is a minus outfielder, and I’d have a pretty clear preference for McCann.

And yet, the Rangers let McCann go to New York for 5/$85M, then turned around and gave Choo 7/$130M. Even if you think defense is overrated and McCann’s eventual move to 1B/DH down the line will nullify some of the long term difference, it’s hard for me to justify a $45 million difference between the two, especially considering McCann is the younger of the two.

I didn’t love the Yankees decision to spend $45 million on Beltran, as I think he’s probably something of an average player heading towards the years where he should be expected to decline the fastest, but I think we can all agree that Beltran still has some value, especially in 2014, when he’s probably not that different from Choo as a hitter. Steamer projects Choo for a 130 wRC+ and Beltran for a 127 wRC+ next year, so the advantages in favor of Choo are basically health, defense, and baserunning. Those things are worth something, but I don’t know that we can make a case that Choo is a drastically better player than Beltran for 2014.

For $130 million, the Yankees got a catcher who is probably a better overall player than Choo and an outfielder who is likely something close to his offensive equivalent. If you want to talk about how the Rangers needed to infuse some life into an offense that underachieved last year, well, McCann and Beltran would have done that better than Choo and Geovany Soto will. Choo’s a nice player, but he’s not the kind of star that is more valuable than two quality regulars for the same price.

Yes, baseball is swimming in cash, and the Rangers are one team that has taken advantage of the television rights bubble to ensure themselves a large revenue stream for the next few decades. But just because they could afford $130 million for Shin-Soo Choo doesn’t mean that this was the best way to spend that money. If they knew they had this kind of money available for short-term upgrades to capitalize on their window to win, they should have just more aggressively pursued a McCann/Beltran combo platter rather than settling on giving it all to Choo. Or, heck, just re-sign David Murphy for cheap, keep Craig Gentry to be his platoon partner, and use the savings to sign a player better than Mitch Moreland or Alexi Ogando.

In many ways, this deal reminds me of the Prince Fielder contract from two off-seasons ago. When the Tigers — a team very much in the sweet spot of the win curve and with a significant hole at DH after Victor Martinez blew out his knee — gave Fielder $216 million, I summed up my thoughts on the deal with this paragraph:

Fielder will absolutely help the Tigers. He might even be enough to help them get to the World Series and perhaps take home a trophy. But, in reality, if the team had $214 million to spend this winter, they should have been in on Jose Reyes and C.J. Wilson, who won’t make as much between them as what the team just guaranteed Fielder. As I wrote yesterday, the Tigers definitely needed to make an impact move, but because they got stuck in a position where there was only one impact bat left on the market, they found themselves having to vastly overpay in order to get that improvement.

It feels like the Rangers just did the same thing. One can try to justify $130 million for Choo by comparing it to the alternative of playing Jim Adduci in a playoff race, but there was no reason that the Rangers couldn’t have pursued other plans than this one. When you combine it with the questionable decision to take on $138 million in Prince Fielder’s contract, the Rangers have aggressively spent on two flawed, declining players who aren’t really stars. Both are good, above average players, and each projects for about +3 WAR next year, but I don’t know, I think $270 million should buy you more than an expectation of about +6 WAR and some serious decline afterwards. They both make the Rangers better, but almost any combination of $270 million in spending would have made the Rangers better, and I think there are a lot of combinations that would have been preferable to the route they ended up taking.

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Dave is the Managing Editor of FanGraphs.

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