19 January 2018

How To Fix MLB's Economics

MLB’s economics are broken. A few writers have noticed that teams just aren’t as interested in free agents any more. Joel Sherman claims that he supports players making a “ton of dough” in a $10 billion a year industry, but that this flawed system pays players for declining deals. He also noticed that deals exceeding both $100 million and $20 million per year have largely been unsuccessful. Jeff Passan noted that it has taken a long time for free agents to find homes this season and thought it signaled collusion. Turns out, he learned that people don’t think the MLB's current structure makes sense any longer. Teams are no longer interested in paying players for previous performance that they aren’t likely to repeat.

In addition, MLB has a problem with tanking. A number of mid/large market teams have decided to do complete rebuilds and cut spending. Passan writes in his article that “There’s less interest in winning than I’ve ever witnessed before,” one union official said. “MLB has done a fantastic job of convincing the public that’s OK. I think fan bases are accepting of losing now. Sometimes they even want their team to lose.”

According to Passan, a veteran agent is strongly considering recommending a salary cap. Union officials are openly talking about how this could result in a work stoppage. The health of the game is in the balance because it would be hard for baseball to recover from another strike. But if MLB wants to avoid a strike, they’ll need to change the compensation structure and do something about tanking. Here are the changes I recommend.

The first change would be to the amateur draft. Teams are now rewarded for being the worst team in the league by receiving the top pick in the draft. The difference between receiving the first pick in the draft and even the third pick in the draft is significant – the first pick was valued as worth nearly three times more than the first pick in 2013. In addition, teams receive a significant slot amount for the first pick  – enough to pay for that pick as well as add talent later in the draft. This gives teams an incentive to be the worst in the majors.

The amateur draft should be changed so that half of a teams’ draft pool is determined by market size and half is determined by their record in the previous season per the slot value system (all slot values are cut in half). MLB determines each teams’ market size in the CBA for revenue sharing purposes, and they can use that analysis to decide which teams deserve more draft money than others. After the fourth round, draft order will be determined by market size as opposed to record.

In addition, MLB should have a lottery open to all non-playoff teams for the first five draft slots so that there is a further disincentive to tank. It is one thing to tank if a team will receive the #1 pick and a significant draft pool. It’s another thing to tank if they might get the sixth pick and receive only a slightly higher draft pool.

If small-market teams receive higher draft pools than large-market teams, then this means that free agent compensatory picks and competitive balance picks can be eliminated. Instead, small market teams will receive one franchise and one transition tag every five years. A small market team (ranked 21-30) can tag a player that has been under their control for the past two years. If a team tags a player with the franchise tag, then if the team is able to keep that player under their control, they’ll be compensated for one-third of his cost out of revenue sharing funds. Same idea for the transition tag, only the team will be compensated for 20%. Mid-market teams ranked (14-20) receive one transition tag every five years. Players that receive one of these tags can’t be traded for three years afterward and their teams receive no compensatory cash if the player is traded.

The minimum wage should be increased from $550k to $1.6 million. Teams receive significant production from team controlled players, so these players should see significant rewards. In addition, forcing teams to pay fair values for team controlled players will reduce the financial incentives to tank. A team that uses only minimum wage players will see its payroll increase from $13.75M to $40M. Such as increase could cost MLB between $300M and $450M. In an ideal situation for the players, MLB teams would eat the entire cost of the minimum wage increase. In the current situation, where the union has limited leverage, veteran players may need to take a 5-10% decrease in salary to help pay for a minimum wage increase.

Players will remain under control for six years, with players that have three years of service time eligible for arbitration. To reduce the likelihood of roster shenanigans, a player will receive credit for a full season of service time if he is on the roster for eighty days in one season. The Super Two rule will remain as is.

Revenue sharing would be significantly reduced. Instead of the current 33% level, teams should be taxed at 16.5%. There will be two forms of revenue sharing. The first set, taking 6.5% of revenue, will go from large-market clubs to small-market clubs based on market size. This revenue will also cover payments for players that receive a franchise or transition tag.

The second set, consisting of 10% of revenue, goes to all teams that make it to at least the division series of the playoffs regardless of market size. This reward should be at least $100 million per playoff team and strongly encourages teams to try to win their division and at least make it to the playoffs as well as discouraging tanking. This cash should be enough to help even low-revenue teams keep a playoff dynasty intact.

One of the major problems that large market teams have with revenue sharing is that some small market teams don’t always spend that money on players. This method primarily helps small-market teams that are willing to spend money to keep their best homegrown players. Other teams will see their revenue sharing payments slashed.

Nathaniel Grow argues that the MLBPA has limited leverage to convince MLB to increase salaries. With free agents losing their appeal, I think he’s largely correct. However, there is significant friction between large market clubs and small market clubs. Large market clubs have stopped allowing the Athletics to receive revenue sharing. In addition, large market clubs have complained about how small market teams support themselves via revenue sharing. Other teams in large markets complain about how they’re paying more than other teams in the same market. Meanwhile, the Rays were hoping for more assistance via draft reform. Both would get what they want from this proposal.

A plan like this would help ensure competitive balance, incentivize teams to win instead of tanking and reward players based on production instead of seniority. This would be a significant upgrade from the current system that rewards teams that tank and encourages teams to spend billions of dollars on players that can’t produce. If MLB doesn’t change to a system like this in the future, teams will quickly discover that this system doesn’t work and there are better uses of their money. That’s likely to lead to players receiving an increasing smaller portion of the pie and ultimately a strike.

18 January 2018

Manny Machado is Scott Rolen

18 months ago, Manny Machado was projected to earn more per year
than the island nation of Tuvalu.

There are two main narratives that rotate around Manny Machado.  First, his defensive play is the second coming of Brooks Robinson.  Second, if he had not missed so much time recently then he would unquestionably be the best third baseman in baseball.  Regarding his defensive play, you can waste an entire afternoon looking at the utterly mind blowing things he does with a glove, a couple arms, and a couple legs.  Regarding the latter, it is perhaps a bit more interesting than it seems on the surface.

A week ago, I knew the MLB.com best ten third basemen article was about to come out, so I asked this for my Twitter followers.

Half of the respondents declared that Manny is the best third baseman in baseball.  MLB.com this past week released their list to declare that Machado was the eighth best third baseman in baseball.  A year ago, he was third.  A year before that, he was fourth.  To be fair, in the writeup the staff at MLB.com made Machado the fifth best by tipping their hats to his potential.

Thinking about the potential as Machado enters his age 25 season, I thought that his unreached potential may be an idea that is kept afloat by the perception that he has missed a great deal of time during his development these past three years, so I asked this:

Over 80% of those who answered the poll were wrong.  Machado has missed 11 games these past three years for an average of 3.7 games missed per season.  He has been there every single day for the most part.  While he has done well, last year was a bit of a mess as he struggled to a good season of 3.5 bWAR.

In June of 2016, I made a comp model of Machado to see just where he might be headed.  He had done so much at such a young age that it was difficult to find positional comps and I had to look at big picture comps.  The group he fit into consisted of Ken Griffey Jr, Mickey Mantle, Alex Rodriguez, Al Kaline, Andruw Jones, Eddie Matthews, Cesar Cedeno, Vada Pinson, Frank Robinson, Hank Aaron, Cal Ripken Jr, Johnny Bench, Albert Pujols, and Orlando Cepeda.  It was a remarkable projection with the mean expectation to be a career as storied as Cal Ripken Jr's (~85 bWAR).  Even at its worse was a fringe Hall of Famer in Lou Boudreau (~60 bWAR), but, at its best, a monster Mike Schmidt level career (~105 bWAR).

Year Age PA HR AVG OBP SLG WAR Value
2017 24 642 34 .297 .375 .539 7.4 51.8
2018 25 639 31 .296 .374 .531 7.1 52.2
2019 26 662 35 .292 .370 .533 7.3 56.3
2020 27 570 29 .285 .367 .531 6.2 50.2
2021 28 646 31 .282 .362 .507 6.4 54.5
2022 29 651 33 .291 .378 .526 7.3 65.2
2023 30 593 27 .278 .366 .496 5.8 54.4
2024 31 551 24 .277 .357 .484 4.9 48.3
2025 32 516 23 .271 .350 .485 4.4 45.5
2026 33 450 19 .270 .350 .461 3.6 39.1
Mean 285 .287 .368 .511 60.4 517.5

However, 2017 was a train wreck in comparison to what the mean expectation of that group was.  Worse, Machado was unable to meet the -SD of that group, which was a WAR of 5.6.  That is certain to redirect a projection model.  It may seem unfair that a single season could torpedo a career projection, but it seems a bit dream casting to wish a season that missed expectations to be ignored.

So, I set out to update the model.  With another year under the belt, we are now able to restrict the model to shortstops and third basemen.  The comps are offensive based.  In the final projection, Machado's position is assessed as a shortstop and over the length of his career he is assumed to be league average there.

His new comp model cohort consists of Cal Ripen Jr, Alex Rodriguez, Evan Longoria, David Wright, Troy Glaus, Hanley Ramirez, Scott Rolen, Ron Santo, Jim Ray Hart, Ryan Zimmerman, Troy Tulowitski, Nomar Garciaparra, Hank Blalock, and Ernie Banks.  The weakest fits in this model are related to Alex Rodriguez and Troy Glaus for their prodigious power and Jim Ray Hart who could hit, hit, hit, but was unable to field, field, field.  Hart's plate appearances were greatly suppressed by his terrible fielding.  Regardless, the contribution of these three are largely overwhelmed by what the others in the cohort did.

The silver lining of the new projection model is that the baseline remains the same.  Lou Boudreau is still our -SD expectation, so Manny would have an interesting HoF case with around 60 bWAR.  The mean has dropped to a Scott Rolen level (70 bWAR) and the +SD expectation has dropped significantly down to a Brooks Robinson career (80 bWAR).  In other words, Manny has gone from someone who seemed likely to be mentioned in hushed tones throughout the land to someone who may still get that treatment, but only provincially.

Here is the mean projection:

Year Age PA HR AVG OBP SLG WAR Value
2017 25 639 29 .291 .367 .510 6.5 45.5
2018 26 555 24 .288 .366 .504 5.5 40.4
2019 27 508 24 .282 .360 .506 4.9 37.8
2020 28 607 26 .267 .339 .463 4.5 36.5
2021 29 540 25 .283 .360 .499 5.2 44.2
2022 30 483 20 .276 .347 .486 4.1 36.6
2023 31 539 21 .260 .325 .448 3.4 31.9
2024 32 486 19 .267 .331 .462 3.4 33.5
2025 33 470 17 .256 .323 .428 2.6 26.9
2026 34 449 16 .249 .314 .423 2.2 23.9
2027 35 441 14 .230 .290 .387 1.2 13.7
235 .274 .345 .479 43.5 370.9

For the time that overlapped between the two projections, ages 25 to 33, the decrease in value is 30%.  Originally, the value was assumed to be about 413 MM and in this iteration that fell to 288 MM.  That is a pretty sizable drop.  At this point, a mean contract extension would be 16 MM for this year and then a whopping 10 year, 325 MM payout.

It would also be likely that Machado would ask for an opt out. My conclusion has been than an opt out is worth the break even point for total potential loss and total potential gain at that point in time. This gives us this little table to cover years 2019-2028:

opt Out Total
1 311
2 338
3 349
4 371
5 380
6 382
7 382
8 372
9 331
None 371

Last year, I noted that Machado was set to earn more per year than the gross domestic product of Tuvalu.  At 36 MM a year, Machado would earn more than that in several iterations of this contract.  That said, it may well be that the team that signs Machado fully and totally believes in him. If that is the case, then we would see that 10/371 contract bump up to 10/417.  Yes, it is a major dropoff when we were pondering a potential 700 MM player, but that is what happens when what you have is good play and a lot of yet unfulfilled promises.

****Update:
Here are the three outcomes from the model in case anyone is interested.

Year Age (-SD) Mean (+SD)
2017 25 6.1 6.5 6.8
2018 26 4 5.5 6.9
2019 27 3.4 4.9 7
2020 28 3.9 4.5 5.4
2021 29 4.3 5.2 6.4
2022 30 2.7 4.1 5.1
2023 31 2.7 3.4 4.3
2024 32 3 3.4 3.8
2025 33 1.9 2.6 3.4
2026 34 1.8 2.2 3
2027 35 0.9 1.2 2
34.7 43.5 54.1

17 January 2018

Gerrit Cole Trade: Wins Over Dreams

I found it rather remarkable how so many in the media and secondary baseball blogs railed against the Pirates' pieces arriving from dealing Gerrit Cole.  The argument was that Gerrit Cole is a good, but not great pitcher and that the Pirates only got spare parts.  In turn, they allegedly had a deal with the Yankees on the table that would have given them Clint Frazier and a couple spare parts.  Here at the Depot, we rarely look at the dealings of other teams so explicitly, but this may prove to be a useful discussion given the current state of the Orioles and the likelihood that we might see some significant pieces being dealt at some point this season.

For this discussion, I have little interest in what Gerrit Cole is worth.  Instead, I am interested in comparing the two deals.  The Astros handed the Pirates Joe Musgrove, Michael Feliz, Colin Moran, and Justin Martin.  This will be compared against the Yankees deal with Frazier and two spare parts.  We will assume the spare parts in the Yankees' deal are one pitching and one position prospect.

Now, prospect writers tend to be biased.  They love the big splash.  They like to be able to say lofty thing and extol on plus tools.  That is certainly a generality, but conversation about mid-level pieces does not get you much unless there is a loud tool in there to dream on.  Moran and Martin does not have any fancy tools.  Musgrove and Feliz do, but also have significant time in the majors to tarnish that shine.  It is a dull package.

From the Yankees side, it is a bit more splashy.  Clint Frazier, whose last year and a half has actually dimmed his value, is a once sterling prospect.  Before the 2017 season, he was around 20th across the boards on the top 100 MLB prospects lists.  However, it should be noted that the backend of 2016 was a struggle at AAA and 2017 AAA was hitting on level.  His time in the Majors, enough to cause his rookie status to expire, was also fairly uninspiring.  In this exercise, we will assume that his youth saves him from any of this and that he still rates on par with a positional prospect around 20th overall instead of indications that point toward these struggles as indicative of a prospect who should be around the 50th to 60th rank.

Looking at Bust Rates, Frazier is pegged as a 20-40 position prospect.  Fringe prospect probabilities were assessed using original methodology of Victor Wang in conjunction to the Perez study linked.  Feliz was treated as a fringe pitching prospect.  Moran and Martin were treated as fringe positional prospects.  Musgrove's outcomes are based on projection modeling.
Bust Bust
Clint Frazier 68% Joe Musgrove 65%
Fringe A Position 89% Michael Feliz 93%
Fringe B Pitching 93% Colin Moran 89%
Justin Martin 89%
All crap out 54% 46%

That does not seem like much of a difference.  The Pirates stand to have a 13% better chance of avoiding a complete bust situation.  However, the chances of receiving an exceptional prospect (>2.5 WAR/yr) is 27% for the Yankees package vs. 21% for the Pirates package (29% less).  I would even offer that the bust rate is too high for Musgrove who looked at times as if he was a fairly top notch bullpen arm.

Regardless, the difference in outcomes is not that much.  The Astros' deal offered the Pirates fits where they lack organizational depth plus a great probability that at least one player will be a solid MLB pro.  The Yankees deal offered a much better profile for a superstar player (ignoring the last 20 months of Clint Frazier's play), but at a position where the Pirates currently have some measure of MLB solutions.  What the Pirates needed was pitching and infield.  This move will likely better set up the Pirates to win as opposed to taking a chance on a superstar player.

16 January 2018

Orioles Offseason Update: Adam Jones Is Arguing With Fans

There's not a whole lot going on in Birdland. The Orioles will probably sign at least one starting pitcher eventually, but for now, things are still quiet. So far, the team's biggest move is trading for outfielder Jaycob Brugman, who has 162 career plate appearances, and their most notable free agent signing is Michael Kelly, who has yet to appear in the major leagues. Making moves just to make moves is not the key to success, but hopefully it's revealed soon that Dan Duquette has something up his sleeve.

Yesterday, something not transaction related caught fans' attention. And that something would be Adam Jones jumping into the Twitter replies of a MASN article about him and responding to fans who were criticizing him.





Jones has never been one to bite his tongue, so it's not surprising to see him defend himself. It's also not the first time he's gotten into it with fans. Some people might not like it or find it awkward or pointless; I find it entertaining.

Some interesting comments by Jones have popped up this offseason. He hasn't shied away from talking about 2018 being the last year on his deal, and he's also been, let's say, questioning of the team's direction. Maybe he is simply frustrated with this offseason. Maybe he knows he won't be offered an extension to his liking and that he'll be leaving Baltimore soon. Maybe he's bored. Or maybe all of the above. Who knows for sure?

Jones isn't the same player as earlier in his career, but how could he be? Still, it would be nice if the O's could figure out a way to keep him around by shifting him to a corner outfield spot. There's a lot of factors at play, and perhaps Jones hopes to cash in one more time for a big payday. If that's the case, he probably won't be with the O's in 2019.

If you think things were sentimental when J.J. Hardy left, just wait for the potential Jones departure.

12 January 2018

After 2018, Duquette Will Likely Be the Third Winningest GM in Orioles History

Effectively, the Orioles have installed thirteen different "General Managers". That number pops up to fourteen if we so choose to count the Mike Flanagan/Jim Bettie design as its own separate entity.  Below is the ranking of General Managers by total wins.

Years Wins Losses Pct
Hank Peters 1976-1987 1036 845 .551
Lee MacPhail 1959-1965 612 506 .547
Roland Hemond 1988-1995 592 634 .483
Harry Dalton 1966-1971 582 383 .603
Dan Duquette 2012-2017 519 453 .534
Frank Cashen 1972-1975 358 279 .562
Mike Flanagan 2003-2007 293 355 .452
Paul Richards 1955-1958 276 337 .450
Andy MacPhail 2008-2011 267 380 .413
Pat Gillick 1996-1998 265 221 .545
Syd Thrift 2000-2002 204 281 .421
Frank Wren 1999 78 84 .481
Art Ehlers 1954 54 100 .351

Currently, Duquette sits fifth all time for total wins (6th if you wish to look at winning percentage, 4th as games played as general manager).  He is 63 wins behind Harry Dalton and 73 behind Roland Hemond.  It would take a pretty catastrophic season for him to remain in fifth and it is like that 2018 will end with him sitting in third.  With a playoff season or an extension, Duquette would pass MacPhail for second place in the next year to year and a half.  As it is he is about four to five to seven years away from Hank Peters.

Needless to say, Duquette has overseen one of the more successful periods in the history of the Orioles franchise.  He has succeeded under the ownership of Peter Angelos where other respectable executives like Roland Hemond, Frank Wren, Jim Beattie, and Andy Macphail have failed.  Maybe he is not the answer long term, but it is remarkable how successful he has been in a job that few people thought it was possible to be successful in.

As Duquette enters his final contract year, many have called for him to be sent off into the sunset.  This is a rather common thought even though we know he is a wanted commodity as evidenced by the Blue Jays' interest a few years back.  Areas in which he is dinged include a lack of international amateur spending, which is something that no Orioles GM has done since Pat Gillick.  That makes it seem like a franchise issue instead of a GM issue.  He is hit for diddly daddling in the free agent market, but studies have indicated how waited out the market gets you a better price point.  While the Orioles have spent lavishly, much of that spend has been caught up in arbitration contracts and the owner's contract proclivities (see: Chris Davis).

The main area of weakness for Duquette has been him gutting the minors.  He was willing to get rid of fringe prospects, which has put the club in a starting pitching depth crunch the past couple years as a few of their starters fell apart.  The minors in general came in from being buoyed by several high draft picks and little depth to one of simply little depth as the club became more competitive and Duquette felt free to sign free agents that resulted in the loss of draft picks.  However, the club, even though restricted predominantly to the domestic market, has done well to find talent deeper in the draft on the position side.  It has made what was a glaring issue into something that is now more or less sub-par.

As it stands, I still think Duquette has not shown a talent at rebuilding a franchise and it feels like the franchise is on the threshold of a rebuild.  That said, he has had lots of success here and elsewhere under a wide range of limitations.  He has also shown to be successful with the Orioles, which is something no one had been able to do in the 15 years before his tenure.

With all of that in mind, I think the wisest move for this franchise would be to extend Duquette for another five years and see how well he can restock the cabinet.

11 January 2018

How Can The Orioles Win You Over?

Let's just be honest: A lot of fans aren't very happy with the Orioles right now. It isn't hard to come up with some reasons why:
  • The O's haven't handled the Manny Machado situation gracefully. 
  • Buck Showalter and Dan Duquette have expiring deals, so the team's future is even more uncertain.
  • They haven't done anything yet in free agency and only have two starting pitchers you can count on (or one if you're not a huge Kevin Gausman fan). 
  • Every reliever is apparently an option to move into the rotation.
  • The front office is unwilling to rebuild and Dan Duquette talks instead of retooling the roster, but they're seemingly content to follow the same strategies as previous offseasons. 
There's more, but you get the point.

So starting today, what can the Orioles do to win you over? It's getting there, but it's not too late. This is a hypothetical, but be reasonable. The O's are not going to sign the most expensive free agents like Yu Darvish, Jake Arrieta, and J.D. Martinez. Also, they're almost certainly not going to extend Machado. Sorry.

Maybe some of you would be happy if the O's signed Alex Cobb or Lance Lynn, and then another lesser starter like Jason Vargas or Andrew Cashner. That would at least give the appearance that the O's are taking next season's chances seriously by giving Dylan Bundy and Gausman some help.

If you want the O's to rebuild instead, maybe moving Machado for a package of prospects would be a good start. Perhaps that's followed by cleaning house, with Jonathan Schoop, Brad Brach, Adam Jones, and any other trade piece being moved before the season, or perhaps at the trade deadline.

Or maybe you just want something to feel good about. That might mean an extension for Schoop. Or maybe you just want some appearance of a direction or plan. Both are understandable. Let's get through this frustrating offseason together. What do you want to see happen?

10 January 2018

Extending Jonathan Schoop... Or Not


When one asks who pray tell is the face of the franchise, you hear a few names.  You hear Adam Jones, Manny Machado, Zach Britton, or maybe Buck Showalter.  Some who wish for some solace in the wake of Machado's expected exit some time in the next year, wish for Jonathan Schoop to be extended and take the reins.  As it is, the contract-based face of the franchise in the coming years is pretty much Chris Davis.  With his deal ending after the 2022 season (assuming he plays that long), his deal spans three years longer than Darren O'Day and Mark Trumbo whose deals end after the 2019 season.  To be it another way, Trey Mancini's last arbitration year is scheduled to be the same as Chris Davis' last contractural year.  But, wait, what about Jonathan Schoop?  That is presumably what this article is about.

On the surface, there are concerns that maybe Jonathan Schoop is not interested in an extension.  In 2016, he signed a deal with Fantex where the company paid him 4.91 MM up front and in return Schoop gives Fantex 10% of his earnings.  That deal increased his 2016 pay from 0.52 MM to 5.43 MM.  In 2017, Schoop paid 0.35 MM to Fantex.  In 2018, he is expected to hand over 0.91 MM.  Fantex has already recouped about a quarter of their initial investment.  What this means is that with Schoop's wages being garnished, he may well wish to explore every option to maximize his value.  Rarely does a player ever take a homegrown discount and this is certainly a scenario where there is little reason to expect that and, instead, we should expect a full market value deal if any extension will be reached.

This also complicates matters because a full market extension within the context of today is one that pegs Jonathan Schoop as a second baseman.  It is true with the development of shifting that range has decreased greatly as a skill requirement for playing up the middle.  Schoop, who is fairly slow for a second baseman, has been able to get away with subpar range by sitting further back than most second basemen and being heavily positioned.  His strong arm helps make it work for him to sit so deep.

However, the recent years have shown issues that cause some concern.  In the minors and his first stint in the Majors, it was fairly obvious that he was inadequate as a third baseman.  He first step was terrible and he had difficulty getting down to the ground.  It is difficult to play the position if you are a step late and have trouble getting down on balls on the side.  Those issues were less impacting at second base.  He has lost athleticism these past few seasons, which was expected.  The problem is that he is showing further issues with his first step and getting down on the ball even at second base, sitting so deep.  This has changed a conversation from where does Schoop fit in his 30s on the field to one where it is plausible that he might need to find a home off second base sooner than that.

As you know, it is hard to find a powerful bat capable of playing second base.  That is one aspect that makes Schoop so valuable.  When you take that bat and place it at third base, right field, or, God forbid, first base, that offensive ability no longer stands above the pack, but begins to look rather ordinary next to others in that positional cohort.  Schoop will be looking at his maximum value and would likely choose to prove himself as a viable second baseman than to accept a lesser deal based on him playing a different position down the road.

So what does a Jonathan Schoop deal look like?  MLBTR expects an arbitration value of 9.1 MM.  Our own method (assuming an expectation of 3 WAR and a second year arbitration rate of 34% market rate) comes up with 8.2 MM, but lets just say 9 MM.  His last year, we expect 10.6 MM, but let us be generous and peg him for 11 MM.  BORAS, as of this moment, see Schoop on the free market as a player who would see five years for a total of 83 MM (actually 82.7 MM, but we are using roundish numbers).  With arbitration dampening his value, the actual extension would be around 71 MM.

That said, the BORAS model sees that Schoop does not have a long track record.  For Schoop, he will likely want to bet on himself and that likely means so will the Orioles if they wish to extend him.  BORAS sees Schoop, if he continues to perform at the same level as last year, earning a five year contract after the 2019 season that is worth 94 MM.  In this scenario, the extension would be the 20 MM for the arbitration years and then that deal, so seven years at 114 MM.

The final scenario is if Schoop has all the confidence in the world and thinks as he enters his age 26 and 27 seasons that his performance will rise even higher.  If we accept a full one WAR increase, then we are saying that Schoop turns from the 4 WAR" player he was last year and into a "5 WAR" player.  BORAS would think that would yield Schoop a five year deal worth 113 MM after 2019.  The extension in this case would be a seven year deal worth 133 MM.  The five year deal arrangement would be around 5/86.

So that is the range of options that we might expect if Schoop becomes the new contract-based face of the organization.  Five year deals would range from 71 to 86 MM and seven year deal would range from 114 to 133 MM.  These are major cost outlays and it makes one wonder if the Orioles are dedicated to fielding competitive teams in the years to come.  If they are, then Schoop makes sense (if you believe he can be a four to five WAR player at whatever position he ends up at ).  If not, then the surplus value in his near term arbitration-base deals could set the club up with getting a decent prospect return to try to prime the next competitive window for the club.


09 January 2018

Making Faulty Comparisons Doesn't Improve Mark Trumbo's Contract

Hey, I get it. This Orioles offseason seems to be making all of us crazy. No one knows exactly what the O's are doing, and some of us are on edge.

Still, it shouldn't lead to write-ups like this defense of Mark Trumbo and his contract:
Let us not forget that initially it was believed Trumbo might land a five-year deal in the $65-$80 million range. That didn’t happen. Likely because Trumbo was viewed as a defensive downgrade by most teams and that power wasn’t in as high demand as usual.

He signed last January for a three-year, $37.5 million deal. It seemed reasonable then.

And, frankly, it’s reasonable now.

He’s owed basically $26 million over the next two years and if he splits the difference between his two seasons and hits 35 homers and drives in 87 runs in 2018 and 2019 that’s worth the investment.

Consider that this offseason, the Philadelphia Phillies gave Carlos Santana, who is three months younger than Trumbo, a three-year, $60 million deal.

Like Trumbo, Santana is a career .249 hitter who had 23 homers last year. Yes, he’s considered an above-average defensive first baseman nowadays and draws a ton of walks (a .365 career OBP), but I think it’s hard to argue he’s worth nearly twice what Trumbo is.

Trumbo doesn’t get compared to Santana, though. Orioles fans prefer to link him up with Davis, and moan about the wasted money on those two.
Go read the whole thing if you want to take in the larger, though obvious, point that Chris Davis and Trumbo have very different contracts. These two players seem to get lumped in because they're powerful but lumbering 1B/DH types. No, Trumbo's contract is not killing the Orioles, but it's not helping either - and that's because the Orioles invested in a 1B/DH who isn't an effective DH (and is a terrible outfielder) when first base is occupied by Davis.

As noted, Trumbo being owed $26 million the next two seasons isn't great, but it's not crushing. It would be better if the O's could play him at first base. He's movable, but the O's would either have to include money in a potential deal (not their style) or take on a bigger contract (not likely, but possible).

Anyway, all of that about Trumbo's situation has been hashed out already. The Manny Machado saga has seemingly pushed everything to the back burner, so it's not like getting Trumbo out of town is a huge priority. But it's something that could help the Orioles. And when discussing that, it's important to be clear about what Trumbo's value is. And guess what? He's not close to the same player that Carlos Santana is.

I guess Santana is relevant because he just signed that deal listed above, so let's break a few things down about the "... it’s hard to argue [Santana's] worth nearly twice what Trumbo is" line. Let's look at the past five seasons for both Santana and Trumbo:

Carlos Santana, 2013-2017: 15 fWAR, 14.7 bWAR
Mark Trumbo, 2013-2017: 3.2 fWAR, 3.6 bWAR

In that span, Trumbo has had two negative-WAR seasons and zero years above 3 WAR. Santana has had zero negative-WAR seasons and three years of 3 WAR or better.

Don't care about wins above replacement? Santana had a wRC+ of 117 or higher in four of the last five years (high of 132, low of 107). That also includes an OBP of .357 or better in each season. Trumbo had a wRC+ of 107, 90, 107, 125, and 80, respectively. In three of the five years, he posted a sub-.300 OBP, and his high in OBP was .316 in 2016.

You don't even need to include defense to see just how much better Santana is than Trumbo. That doesn't make Trumbo horrible, necessarily, and clearly the O's figured they'd get production closer to the 2016 version of Trumbo than the 2017 one.

Steamer projects 2.6 fWAR for Santana and 0.6 fWAR for Trumbo. FanGraphs' Depth Charts projections have 2.8 fWAR for Santana and 0.9 fWAR for Trumbo. There are more, but you get the idea. By a fair analysis, Santana is worth at least twice what Trumbo is, and it's closer to 3-4 times. Looking at batting average and home run totals is an outdated way to do things, and a far superior OBP means a lot.

Considering how bad Trumbo was last year, he'll need to do more than just split the difference between his 2016 and 2017 seasons. He needs to be much closer to the 2016 version. While not impossible, how confident are you that that'll happen?

08 January 2018

Trade for Jacoby Ellsbury and Make the Yankees a Champion

The Yankees have some relative holes in their roster.  Not many, but when you want to ensure a World Series as much as possible, you want to try to cover those holes up.  The club has some uninspiring play in their infield and they have shown a desire, rather unique to the Yankees, that they would like to make Jordan Montgomery their sixth pitcher as opposed to their fifth one.  Combine that with a 2018 payroll of 162 MM and a desire to spend less than the 35 MM allotted under the luxury tax, they are in a very minor bind.  In 2019, about 20 MM will come off the board after consideration for arbitration, so it might be a long term issue to some extent.  If they truly want Manny Machado in 2018, they will need to shoulder his expected salary of 17.2 MM.  Beyond 2018, if they succeed in their rumored desire for him, then they may well need 40 MM a year.

This payroll crunch can be vastly simplified for the club if they do one thing: trade Jacoby Ellsbury.  Ellsbury has been passed by with Aaron Hicks establishing himself in centerfield.  Ellsbury, who has three years and 63 MM remaining with an additional 5 MM to buy out a fourth season, is effectively a very expensive Jarrod Dyson.  Ellsbury is a strong platoon bat from the strong side who should be sat as often as possible when a leflty appears on the mound.  His defense is still strong (though no longer exceptional) and he would immediately become the Orioles fastest player on the roster even as he enters his age 34 season.  His likely output would be in the 1 to 2 WAR range, which is a useful role playing starter.

For the Orioles, Ellsbury would help bridge a gap from an Adam Jones centerfield to, well, an Ellsbury one until his deal runs out.  Jarrod Dyson would also fit here and his expected pay around 8-12 MM a year provides one measure to show Ellsbury's break even point.  One benefit with Ellsbury over Dyson is that Ellsbury is a bit more respected in the game and it may be that a veteran like Jones would be more amiable to let another established veteran like Ellsbury take over instead of career platoon player Dyson.  But maybe not.  Anyway, there is a need and Ellsbury could fit.

Specifically, Ellsbury has 68.4 MM coming to him.  BORAS thinks his value would be worth a two year deal for a total of 19.4 MM this off season.  If his decline adheres to my projection, then that third season would have a future market value of one year and 8.3 MM.  This give a total value of 27.7 MM with a worth of -40.7 MM.  Earlier I noted that Manny Machado was worth somewhere in the neighborhood of 40-60 MM for 2018.  Let us be kind and peg his value and Elsbury inclusion to totaling 100 MM in assets for the Yankees to send back to the Orioles.

The Gleyber Torres Scenario
The jewel in the Yankees minor league crown is Gleyber Torres.  He would be the ideal prize if the Orioles would deal Machado over to the Yankees.  He is largely seen as Machado-light and is arguably the best prospect in baseball.  That gives him a value about 72 MM, a value that would only be possible if the Orioles took on Ellsbury's contract.

Why would the Yankees do it?  Torres is a great prospect, but he is not really a need.  They have suitable backup options at second, third, and short.  If Machado is the long term solution at short, then the Yankees would potentially be wasting Torres' value by pushing him around the diamond.  Dealing him out for one season (and potentially no more) of Machado would be a relatively insane thing to do for a lesser revenue club, but the Yankees position does make Torres movable.

To make up the rest of the package, you could argue that Chance Adams and Justus Sheffield would fit well.  Replacing Sheffield or Adams with Miguel Andujar could work and New York might see replacing Andujar easier than finding more starting pitching depth.  Some are very high on Sheffield, so his inclusion might be a bit more pie in the sky.  With Andujar, the Yankees could probably slide in someone like Todd Frazier.

The final deal would probably be Machado for Ellsbury, Torres, Adams, and Andujar.  It would give the Orioles four 2018 players.  It would remake half of their infield, provide a starting pitcher, and kick the can on a major issue in the outfield for a few years.

The non-Gleyber Torres Scenario
This would be a far higher quantity of players going back to the Orioles.  The Machado replacement would be Miguel Andujar, who has a value of about 20 MM.  Chance Adams and Justus Sheffield are two arms that the Orioles would love in the organization and are worth about 20 MM each.  Domingo Acevedo would be a strong target.  The righthander can raise his fastball to triple digits, but has had some injury issues in the past that might be related to overuse.  He could be a strong solution to Brad Brach leaving after 2018.  A 20 MM value on him might be a bit too much, but a 100 mph fastball holding its own somewhat at AAA as a starter is a nice item to have.  Finally, Nick Solak who is a relatively non-descript second base prospect who just seems to perform.  His tools are rather unimpressive, but he performs. That is a good piece.

This monster of a deal would be Machado for Ellsbury, Andujar, Adams, Sheffield, Acevedo, and Solak.  It would provide the Orioles with potentially five 2018 MLB pieces and Solak who would be a depth solution in case Jonathan Schoop departs at some point.

Conclusion
It would be frankly surprising to see the Orioles take on money to get a better deal.  That said, these deals are largely them handing over one player who would be paid 17.2 MM and getting back a multitude of MLB players for about 24 MM.  Spending 7 MM on three or four addition starters is a pretty cheap deal.  Keep in mind that only Gleyber Torres has a decent expected success rate.  The others are far less likely.  Also keep in mind that by taking Ellsbury off their hands, the Orioles set up the Yankees payroll to more easily reconfigure itself to make big runs at the Machado, Bryce Harper, Clayton Kershaw free agent season of 2018/2019 without difficult luxury tax challenges.

It is a tough call to make.

***Edit: One more thing to add, based on Perez' prospect outcome work and a couple things behind the scenes, we can expect the Torres package to deliver roughly one player (1.05) who average 2 WAR or better per season over his first six season from those three prospects.  In the second package, the likelihood is 0.87 players with 2 WAR or better.

05 January 2018

Peter Angelos is Not Cheap

If one frequents Twitter for long enough, you hear a common refrain that takes many different forms.  Boil it down and it is a resounding "Peter Angelos is too cheap to spend any money".  This mantra is said often.  You tend to get it coupled with the idea that the Orioles are a sleeping giant (which I think is properly credited to Peter Gammons during the Flanny/Beattie years), which ignores how power and money have largely left the confines of Baltimore to other locations either by migrating down to DC, migration/buyouts to other areas of the country, or simply mainstays of Baltimore economy drying up.  A very complex issue is expressed very simply and Baltimore's presence as a top tier American city is something many Marylanders believe to their very core regardless of inconvenient facts like market size, corporate presence, population, etc.

To try to nail down the facts a bit, we could lean on Forbes and assume their estimates for payroll and revenue are fairly accurate.  If you accept that, then the Orioles have the ninth lowest revenue in MLB.  That is something that MLB itself would largely agree with as the Orioles quality for special compensation in the form of draft picks and revenue sharing because they are categorized as a low revenue club.  To those who might scoff at that, in what interest is it in MLB to make the Orioles look better off than they actually are.  Other teams would want that compensation.  MLB might well would prefer the Orioles to look better so that the tangled issues with MASN might untangle a little easier.

Anyway, below we have a list of clubs, payroll, and revenue.  It is ordered greatest to least in club's proportion of revenue dedicated to MLB payroll. 

Rank 2017 Team 2017 Payroll Estimated Revenue % MLB Payroll
1 Tigers $200 $275 72.7
2 Orioles $164 $253 64.9
3 Royals $146 $246 59.3
4 Marlins $120 $206 58.3
5 Rangers $173 $298 58.1
6 Nationals $165 $304 54.1
7 Mariners $154 $289 53.4
8 Blue Jays $144 $278 51.8
9 Rockies $128 $248 51.6
10 Dodgers $226 $462 48.8
11 Cardinals $150 $310 48.5
12 Angels $164 $350 46.9
13 Mets $156 $332 46.9
14 Indians $126 $271 46.4
15 Braves $126 $275 45.9
16 Giants $182 $428 42.4
17 Twins $105 $249 42.1
18 Red Sox $179 $434 41.2
19 Astros $122 $299 40.9
20 Cubs $177 $434 40.8
21 Reds $93 $229 40.6
22 Athletics $82 $216 37.8
23 W. Sox $100 $269 37.2
24 Yankees $195 $526 37.1
25 DBacks $93 $253 36.8
26 Rays $71 $205 34.8
27 Pirates $92 $265 34.5
28 Phillies $112 $325 34.4
29 Brewers $61 $239 25.4
30 Padres $61 $259 23.7
As you can see, and pretty much what we have said here at the Depot for awhile, the club's current philosophy is to highly leverage their operation into MLB pay.  As such, the Orioles devote the second highest percentage of revenue to MLB payroll.

At the very least, I think this helps show that there is uncertainty in saying that Angelos is cheap.  Indicators exist that the opposite might well be true.