The Train Wreck of 2006

After a couple of years of relatively cautious spending, Major League teams are opening their wallets again this winter. If you count the Troy Tulowitzki contract extension, we’ve seen three deals struck that guarantee over $100 million in future commitments, and Cliff Lee hasn’t even signed yet. The last time we saw this kind of aggressive spending in the market was 2006, when four teams spent in excess of $100 million to acquire new talent. Unfortunately for those with money this winter, that winter also serves as a reminder for why throwing your cash around can be a bad idea.

The four players who cost their teams $100+ million that winter? Alfonso Soriano (8 years, $136 million), Barry Zito (7 years, $126 million), Carlos Lee (6 years, $100 million), and Daisuke Matsuzaka (6 years, $52 million, plus a $51 million posting fee). None of those players have come close to providing a return on their investment, and are all essentially untradeable at this point.

It wasn’t just the big four, either. That was the winter where Gary Matthews Jr, Juan Pierre, Gil Meche, Jeff Suppan, Julio Lugo, Vicente Padilla, Miguel Batista, Adam Eaton, and Kei Igawa represented a large chunk of the middle class talents, all landing deals for 3+ years at pretty significant money. Even some of the older guys who had to settle for short term deals ended up as expensive busts, as Nomar Garciaparra, Frank Thomas, and Ray Durham all ended their careers on a down note.

The final tally from that winter is remarkably ugly. The numbers tell the story.

Players who signed deals of 4+ years: 14;
Total money committed to those players: $941 million;
WAR produced by those players to date: 96.9;
Dollar Per WAR produced to date: $7.3 million.

So far the cost per win for the big 14 who got long term deals that winter is over $7 million, and it’s only going to rise as teams continue to pay players like Matthews, Igawa, and Meche big money for no real value.

Of the players who signed long term deals in 2006, the only one that you could argue is a deal that the team would do again is the J.D. Drew contract with the Red Sox- he has earned the $14 million per year that Boston paid him. Interestingly, that was perhaps the contract that received the most negative reaction from the team’s local media, as Drew was labeled an injury prone malcontent from the minute he signed the deal. Given the other options Boston had that winter, they now look like geniuses for spending their money on the one productive premium free agent.

Drew, however, has not been the most productive free agent signed that year. The guy who has produced the highest WAR over the last four years from the 2006 winter free agent crop is Jayson Werth, who signed a one year deal with the Phillies for $850,000. I’d say that was a pretty decent investment.




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


41 Responses to “The Train Wreck of 2006”

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  1. Joe R says:

    Dave, can you please try to go on 98.5 The Sports Hub in Boston and explain this?

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  2. Frank Thomas was worth 3.3 WAR for a base salary of 500K in 06. I’d say that worked out.

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  3. jcj5y says:

    OK, so my question is whether the investments being made this year are more justifiable from a statistical standpoint. It’s been argued on this website that the Nationals overpaid for Werth, but not by as much as one might think, given the likely WAR that the player will produce over the course of his contract.

    Werth put of 5.1, 4.9 and 5.0 WAR from 2008-10. Crawford was 2.5, 5.7 and 6.9 over the same period. Soriano, by contrast, was coming off a three-year stretch of 1.9, 2.2 and 5.4 WAR (2004-06). Zito had just pitched seasons of 3.0, 3.2 and 2.1 WAR.

    So can we at least say that teams are choosing to invest in players more likely to live up to their contracts?

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    • Michael says:

      More to your point- the guys who’ve signed big this off-season also are have more dynamic skill sets than guys like Zito and Soriano.

      Soriano is a guy who’s entire value comes from his batting average and power. Both skills that can be a function of luck or high volatility. If Soriano has a year where his BABIP is up, and he also posts a good HR/FB rate, he’ll likely not be that overpaid for that season. If he instead has a normal BABIP, or even a bad one- he’s a huge waste of money.

      Carl Crawford on the other hand brings value with his glove, and his baserunning. He could be really unlucky at the plate and still post 3-4 wins above replacement player, just because he’s a great fielder. If he experiences regression in one skill set, there’s still a decent chance he’ll produce value elsewhere.

      The same is true to a lesser extent than Werth, while not the fielder Crawford is, he’s still plus. He also walks a lot, so his offensive is less a function of BABIP.

      Guys like Soriano, or Prince Fielder or Ryan Howard can produce a ton of production- however, it’s important to note that with guys who have most of their value concentrated in one particular skill, there’s more risk of the contract being a total washout.

      JD Drew is a great example to the contrary. Here’s a guy who signed his deal, who doesn’t do anyone thing exceptionally well. Furthermore, he’s actually seen his power numbers decline a bit over the course of his contract… and yet, he’s sill a decent value. Because he provides pretty good production at everything.

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      • Doug says:

        Soriano had a fantastic glove in LF too though. Now it’s just decent, but before injuries broke his legs he wasn’t just predicated on one thing. He could steal, field and hit.

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      • CircleChange11 says:

        Soriano is a guy who’s entire value comes from his batting average and power.

        You mean the guy that was coming off of a 40-40 season when he signed that contract? And up to that point he career 206 HR and 210 SBs?

        That’s pretty select company and rather unique talent.

        The Cubs have used the .300-.340 OBP guy primarily as a leadoff hitter, simply because “he’s fast” (or was fast).

        His power has not translated to his Cubs years, but his BA is almost always BABIP related (most are), and he doesn’t have much value in terms of OBP. But his speed had been valuable at the time the contract was signed. Seroiusly, he could have had 3 40-40 seasons. While that’s a counting stat milestone, it does illustrate rare talent.

        Soriano was signed to increase the value of a franchise that was trying to be sold, and it was also the offseason where the cubs were spending big because “they meant business”.

        I love this quote by Pinella ….

        “He likes the leadoff spot and there is none better,” Piniella said in an interview with WGN Radio. He called Soriano “a young man who can get on base and steal some bases and hit the ball for extra base power and hit it for a homer. We are talking about the best leadoff hitter in all of baseball.”

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      • odbsol says:

        Soriano was putting up good numbers his 1st year (stats not withstanding) until he tore his quad running to 3rd late in the season. That injury pretty much scrapped his speed. As to him batting lead-off, with the $ they threw at him I think they just wanted to keep him happy.

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      • Dann M. says:

        Soriano’s 2007 season was highly productive (.299/.337/.560 with 33 HR) on a 3-man offense (after him, Lee and Ramirez, we’re talking Jacques Jones, Cliff Floyd/Matt Murton, DeRosa, Theriot, and a catching black hole). His .280/.344/.532 with 29 HR in 109 games in 2008 is also no small potatoes.

        It was the midway point of 2009 when Piniella dropped Soriano from leadoff to sixth in the order. Oddly, his BABIP jumped almost 70 points after the move – his April and July were nuts, while he was awful in all the other months.

        In 2010, Soriano hit almost exclusively 6th, with about two dozen starts between 4 and 7, and not a single game higher. He wasn’t great, but he did have his trademark hot streaks and his 3rd-best K/BB and BB% of his career. In other words, he got comfortable in the 6 spot and did begin to make some late-career adjustments.

        Will he come close to earning his money? Certainly not. He is probably now a max-3.5 WAR guy, like the high-2’s guy he was in 2010.

        And also, he was nowhere near a good defensive player. His only value defensively was the same as Manny Ramirez: using a strong arm to rack up outfield assists after misplaying routine balls. It improved his sabermetric stats. But you have to have watched the guy daily to see the good and bad.

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      • JH says:

        “Soriano was putting up good numbers his 1st year (stats not withstanding) until he tore his quad running to 3rd late in the season. That injury pretty much scrapped his speed. As to him batting lead-off, with the $ they threw at him I think they just wanted to keep him happy.”

        If only it was somehow foreseeable that guys will start to break down in their mid-30s…

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      • Brandon says:

        Remember that Soriano got caught in age-gate AFTER he signed his big deal, which of course changed expectations of how he would perform at the end of his contract.

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  4. Ian says:

    It’s disingenuous to include Matsuzaka in this list. The posting fee cost the Red Sox money, but doesn’t count against the luxury tax. It can be considered a marketing investment for all intents and purposes, and since Junichi Tazawa said he only wanted to play for Boston and no one else, it’s already paid off somewhat.

    His actual contract isn’t that crazy and even missing a bunch of time he has earned $43 million in his first four years (FG numbers) while being paid just $30 million. He’s somewhat untradeable because he has a no-trade clause, but not because of the 2 years / $20 million remaining on his contract. If he can remain healthy, he’s a decent bet to earn another $30 million or so in his remaining two years, which would bring his total value “earned” for his deal above $70 million. Not a great deal, but given his posting fee doesn’t affect the luxury tax and they gave up nothing but money to sign him (no draft pick compensation), he’s a much better deal than Zito, Lee or Soriano.

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    • Travis says:

      By your logic, any team under the luxury tax threshold can just categorize all player salaries as marketing costs, giving them all excellent value!

      You haven’t sold your point that his posting fee shouldn’t be included in value calculations. “it didn’t count against the luxury tax” isn’t an argument that holds up under scrutiny.

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      • Ian says:

        I noted that the posting fee does count, but it’s not the same as signing him to a 6 yr, $110 mil deal. Since the Red Sox’ budget is essentially the luxury tax limit (they tend to spend right up to it or slightly above most years) it’s important to the Red Sox that the $51 mil doesn’t count against that. All I wanted to do was point out this discrepancy, and also note that Dice-K is better than most people credit him as being.

        If you paid $110 mil for a guy who gives you $70 mil of value and didn’t cost a draft pick and doesn’t hamstring your finances, and maybe convinces other good players from a relatively new market to sign for your team, is it as bad as the other contracts listed?

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      • Slugger27 says:

        ian, how can you say $70M in value with a straight face?

        (at least i assume you had a straight face, based on the tone of your post)

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      • Ari Collins says:

        Even pretending that Dice-K’s been worth $25 million more than he has:

        Yes. It’s still a bad deal. If the Sox could go back in time, they would definitely not pay all that extra money so they could convince Okajima to come to Boston.

        You’re also ignoring the fact that the posting fee SEVERELY front-loaded the deal, which actually makes it cost considerably more than the $110 million. I’m not smart enough to do the math on which is a greater effect, avoiding the 40% luxury tax on half his salary versus earning time-value on his money.

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    • Steve says:

      The posting fee cost the Red Sox money, but doesn’t count against the luxury tax. It can be considered a marketing investment for all intents and purposes, and since Junichi Tazawa said he only wanted to play for Boston and no one else, it’s already paid off somewhat.

      AHAHAHAHAHAHA!!!

      Oh man, that’s rich.

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    • pft says:

      “but given his posting fee doesn’t affect the luxury tax and they gave up nothing but money to sign him (no draft pick compensation), ”

      Nothing but money. Hoo boy. They lost a 1st round pick with Lugo and the 2007 draft was a horrible draft anyways as none of the picks has spent a day in the majors and none of the top 5 round picks are even top prospects.

      The fact that the posting fee does not count against the luxury tax does not mean that it is not an expense. The budget is not limited to costs that count against the luxury tax. Furthermore, the posting fee is money paid up front, as opposed to 51 million being paid in dollars that are of declining value due to inflation.

      Daisukes signing was a huge bust. He has 23 million on his last 2 years and the Red Sox may be trading for Blanton to make room for a Daisuke dump. Daisuke may turn out to be a decent pitcher in the NL West, but he does not have what it takes to pitch at fenway or in the AL East.

      I was excited about picking up Daisuke at the time and respect the Red Sox for going after him. It’s hard to project guys coming from another league 10,000 miles away, and who would have known his hands were too small for slippery MLB balls. It did not work out, lesson learned. It happens. Yankees learned a harder lesson with Igawa.

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  5. CircleChange11 says:

    I think we could all acknowledge that long-terms deals are rarely good for the team (especially at premium $ + premium years) in terms of “did they, via WAR, earn the money?”. But, that’s the price of acquiring such a free agent. [1] They aren’t signing a 2-3 year deal, and [2] someone will give them the money/years.

    IMO, rather than view the situation as we do with the general WAR/y/$ formula where we regress each year by 0.5, and raise inflation 8% a year, abased on average and come up with a yes/no answer. Teams are asking themselves a combination of “How bad do we need this guy?” and “Can we afford to let him sign with a rival?” That’s really what it comes down to.

    Throw in a lack of really great players, and there’s overpay for almost anyone viewed as being a great player.

    One also has to consider the value for the team of getting5+WAR out of one position or roster slot. IMO, there just aren’t enough player available to get 2-3 WAR from each guy all over the field. That’s why more teams don’t find 4 WAR seasons out of guys signed for a 2M/3y contract.

    Supply and demand. There is very little “great talent” so those that fit the bill are often overpaid.

    I think teams do open with a fair market value contract. But the player does not accept, and then teams have to decide to overpay or go without. Fans definitely do not like to “go without”.

    The demand is far greater than the supply. That rarely works out well for both sides.

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    • Travis says:

      Agreed. We base the value calculations as if talent spread (using WAR as a proxy) is even. Yet we are reminded regularly that talent in MLB is not normally distributed; the 5+WAR players are much less common, and so having one 5WAR player is better than having 2×2.5 WAR guys.

      I’d like to see these value calculations get modified to reflect the talent distributions. The dollar/WAR model probably shouldn’t be a linear relationship, should it?

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      • Blue says:

        It’s funny, yes it makes absolute sense that there should be a non-linear relationship…however it appears as if baseball as industry does, essentially, buy WAR in equivilently priced, single-unit lots. What elite talent gets is a longer contract, not more per win.

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  6. The Ancient Mariner says:

    And this year even has its own C. Lee to get a huge deal . . .

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  7. Jilly says:

    “Of the players who signed long term deals in 2006, the only one that you could argue is a deal that the team would do again is the J.D. Drew contract with the Red Sox”

    Ted Lilly?

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  8. Jilly says:

    “Of the players who signed long term deals in 2006, the only one that you could argue is a deal that the team would do again is the J.D. Drew contract with the Red Sox”

    Ted Lilly?

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  9. Blue says:

    Meche will be paid $55 million and has, so far, put up 10.8 WAR–that’s 5.5 million per win. With an additional win or so next year they Royals will end up paying basically market value for his marginal wins.

    Not a great deal but not a train wreck either.

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    • JH says:

      Meche will be in the bullpen next year, most likely. He decided to forego shoulder surgery to keep pitching, and no longer has the durability to start. He most likely won’t be worth 1 WAR out of the bullpen.

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  10. Bgaw says:

    Yeah Ted Lilly was a decent sign. Pretty fair value for both parties.

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  11. N00bious says:

    Vernon Wells also signed his 7 year, $126 million extension that winter.

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  12. WhatLeylandNoooo says:

    Oh thank god, I thought this was going to be about the World Series.

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  13. Paulino says:

    A few more examples to support this are
    Jeremy Bonderman (signed extension 12/06 (avoided arbitration) 07:$4.5M, 08:$8.5M, 09:$12.5M, 10:$12.5M)
    Bandon Inge (4 years/$24M (2007-10))

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  14. pm says:

    I don’t get the Soriano Hate. Did you know that he had the best UZR and UZR/150 season in history? Of course you wouldn’t know that listening to the clowns who say he plays bad defense despite the numbers to the contrary.

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  15. Blow Me says:

    This is quite possibly the dumbest fucking thing I’ve read on Fangraphs all year:

    The posting fee…can be considered a marketing investment for all intents and purposes, and since Junichi Tazawa said he only wanted to play for Boston and no one else, it’s already paid off somewhat.

    A couple of points about this idiocy:

    (1) $50 million is a pretty huge marketing fee. If that is what you categorize that fee as, how’s your return on investment so far? That is, has the $50 million fee caused your apparel sales, etc. in East Asia to increase by a corresponding amount?

    (2) Tazawa has done nothing, repeat nothing, to indicate so far that he’s worth $50 million big ones. He may or may not be good, but he ain’t that good.

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    • My echo and bunnymen says:

      At least not yet under his contract. You call someone stupid (I agree on your points) for what amounts to an ignorant opinion. However, you say someone isn’t hypothetically worth this amount either. I’m seeing ignorance combated with ignorance.

      To say what must be said without horrible backing points, Daisuke Matsuzaka has not been worth $103 million. His WAR would prove that, and his likely production to occur (and his injuries to occur as well) will still show that deal as horrible. Tazawa has nothing to do with this deal, whether or not they are friends doesn’t matter. Thank You… end of story.

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  16. pft says:

    “Of the players who signed long term deals in 2006, the only one that you could argue is a deal that the team would do again is the J.D. Drew contract with the Red Sox- he has earned the $14 million per year that Boston paid him. Interestingly, that was perhaps the contract that received the most negative reaction from the team’s local media, as Drew was labeled an injury prone malcontent from the minute he signed the deal. Given the other options Boston had that winter, they now look like geniuses for spending their money on the one productive premium free agent”

    Geniuses? Oh please.

    JD has not started more than 127 games in RF since joining the Red Sox. His struggles against LHP’ing means he sits against tough LHP’ers and his rate stats benefit from a platoon advantage. His sitting meant the Red Sox played guys like Willy Mo Pena, Mark Kotsay. Josh Reddick, etc.

    JD’s RBI totals were remarkably consistent

    64
    64
    68
    68

    The fears about JD’s contract were for the last 2 years of the 5 year deal. Last year based on FG’s WAR JD value was 10.4 million while he was paid 14 million. Given market value is generally about 70% -80% of FG’s value, JD would have been paid 7-8 million as a FA this year.

    UZR saw a significant decline defensively in 2010. One of the hold ups on the deal were concerns about JD’ right shoulder. It is interesting to note he did not record his first assist until September last year, and had the fewest asists among regular RF’ers with 1.

    As with any long term deal, one can not judge the deal in it’s entirety until it plays out in full. At this point one can only say the deal has not been horrible, and at best a break even deal.

    Genious? Not quite. Remember, there was a guy named Jayson Werth who was avaialble for a song and a dance before being released. The Phillies signed him. That was genius.

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  17. Spizot says:

    You are arguing that the Red Sox used Mark Kotsay and Josh Reddick to platoon with Drew? Since Kotsay and Reddick are both lefties, that is a rather retarded platoon. And also not accurate.

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