21 July 2010

Looking Back at the Mortgaged Future of 1996

I was reading Tony Pente's summary of the troubles the Orioles are facing and I was led to this article.  It included this passage:

The Orioles further mortgaged their future by acquiring veterans such as Eddie Murray, Todd Zeile, Pete Incaviglia, Terry Mathews and Luis Polonia and successfully made their wild-card run.

As you probably know, I hate overreaching statements and I zeroed in on this one.  I amcertain it is true that this is a mind blowingly silly statement (especially after the writer already said the system was ignored for at least a decade prior to the deals in '96, which is very true).

So did the O's "mortgage their future?"

09 July 2010

Orioles sign Hector Veloz, 3B

Veloz tested positive for stanozolol. It seems his price dropped a considerable amount after that. He is a pretty high profile guy this year.

A smattering of links follow . . .

Ben Badler

The Orioles have signed 16-year-old Dominican third baseman Hector Veloz for $300,000, according to his trainer, Victor Baez.

The bonus is a franchise record for an amateur player signed out of the Dominican Republic and is believed to be a franchise record for all of Latin America. A club official did not return calls seeking comment.

At 6-foot-2, 195 pounds, Veloz, who is from Santiago, stands out for his plus raw power from the right side, though he has been inconsistent hitting in games. He also shows an above-average arm and solid hands at third base.
 Frankie Piliere

Scouts have been somewhat torn on Veloz, who is one of the standouts of the Dominican Prospect League. Some have said his bat is arguably the best in the class and others have been less certain. He should be looking at seven figures from one of the clubs that is more convinced of his offensive potential.


29 June 2010

Depot Retro: Koji Uehara scouting report

Tuesday, Nov 11, 2008
Scouting Report: Koji Uehara, RHP, Japan
By Nick James
Before unveiling our Fall 2008 Top 40 pitchers in the 2009 Draft Class, we take a quick look at another Japanese right-hander: Koji Uehara. The 6-1 /187 lbs. 33-year old (34 this upcoming May) is looking to sign with a Major League organization this Winter, with the Orioles apparently the only team currently looking at him as a starter.
Grading Out
Motion – 50
Tempo – 60
4S Fastball – 50
2S Fastball – 55
Slider – 50
Changeup/Forkball – 55

Overall Motion – Uehara’s motion is clean with some deception and an interesting thrust upwards at the end of his high-effort delivery. As he enters his leg kick, he gets great bend in his back leg allowing him to get maximum thrust in his stride. His plant is clean and he does an excellent job of keeping his momentum directed towards home. As he releases, he drives upwards with his plant foot, giving him the appearance of rising upwards as the pitch comes. On occasion, he'll enter this thrust before the ball has completely left his hand, leaving the pitch up (though this is much more the exception than the rule). While his follow-through -- both leg and arm -- can be violent at times, it's generally under control and leaves him facing forward. Overall, there is a lot of effort, but the mechanics are clean enough to have helped him avoid serious injury over a good-sized career.

Arm Action – As Uehara splits his hands and enters his stride, he cocks his wrist pulling the ball in and towards his elbow. This action places additional stress on the elbow and is generally a red flag indicating a higher probability of elbow troubles down the line. Given that Uehara has not run into serious elbow injury in his career, it's quite possible this is a non-issue. Still, if Baltimore is looking to use him as a starter, it will be something to keep in mind with regards to pitch counts and inning counts on the season. Otherwise, Uehara's arm action is clean though he throws with some effort. There is a good amount of torque on the shoulder, but his upper-half generally works well with his lower-half, helping to ease some of that tension. His follow-through is generally smooth, though as mentioned above he can get a bit violent at times leading to recoil.
Pace – Uehara keeps a terrific pace, moving cleanly through his motion and keeping all of his parts working together. His upper-half and his lower-half are on the same page, reducing stress in his shoulder (which is key considering his generally high-effort delivery).
Mechanics Grade – B
Fastball – Uehara comes with a low-90s 4-seam fastball that is generally flat and a 2-seamer a couple of miles-per-hour slower with good arm-side run. He commands both pitches well to all four quadrants and mixes them well so as to give the batter a different look. His 4-seamer is a below-average pitch, though it plays-up a bit due to his command. His 2-seamer is an average pitch that plays-up due to the late action and has plus-potential when he is living on the black.
Slider – Uehara's slider is a tight little offering with late bite and not great depth. Like his fastballs, his slider plays-up due to his command, and he's able to keep the pitch inside against lefties and on the low corners against righties. It's an average pitch that should play well against ML hitters provided he keeps it out of the middle-of-the-plate.
Changeup/Forkball – Uehara's other secondary offering is a changeup/forkball with good depth and fade. It's most effective as a chase pitch with two strikes, though he's comfortable throwing it inside to lefties and breaking it over their knees to the low-inside corner. This fringe-plus-offering may be the key to his success or failure as a starter, as it will help keep his pitch count down and produce ground balls if he commands it well.
“Stuff” Grade – B- – Uehara is not likely to overpower anyone at the ML-level, but he has the potential to keep hitters off-balance with three solid to above-average offerings. If he can maintain his plus-command, his three pitch mix should play towards the back-end of a ML rotation. His slider and fastball are not good enough to miss with, so leaving either over the plate will get him into trouble in a hurry. He'll need to work ahead in the count and utilize his change/forkball to get some swings-and-misses or groundouts.
Nick’s Notes
Uehara could be groomed as a reliever or a starter, though it looks like he would prefer to start and Baltimore is currently the only team looking to use him in that role. Plus-command and an adequate if unspectacular arsenal could make him a solid option at the back of a rotation, though given his arm cock (pulling the ball to his elbow) it may make sense to use him in the #5 spot where he can have a couple of starts skipped as a precaution. Were Uehara to struggle as a starter, he could be used as a situational reliever, primarily as a groundball pitcher in the Bradford mold.
Prospect Grade – C+

27 June 2010

Depot Retro: Markakis Extension

What is Nick Markakis Worth?
 May 29, 2008

 A point of frustration to some may be the top brass of the Orioles dragging their feet with regard to signing Nick Markakis to a long-term contract. So far this year other teams have shown a proclivity to locking in their young players for the long-term. Detroit traded for and signed Miguel Cabrera to a 7 year deal for 140 MM. The Tigers also locked up Curtis Granderson for 5 years at 30 MM.

Toronto handed down a 6 year, 64 MM deal to Alex Rios and a 4 year, 12 MM deal to Aaron Hill. Evan Longoria was signed long-term after a handful of games. That contract has some iffy language and can be 6 to 9 years in length and 17.5 to 44 MM in worth. The Milwaukee Brewers signed Ryan Braun to an 8 year, 45 MM contract. Rockies inked Troy Tulowitski to a 6 year, 31 MM deal. The Indians, who supposedly invented this approach of committing to young talent, sign Fausto Carmona to a 4-7 year deal for 15-48 MM. So, yeah, a lot of these contracts have been signed lately, but a major question is: Why are these deals being signed?

The Players Perspective
A baseball players entire perceived worth is related to his baseball performance. In turn, this is basically related to his physical fitness. A baseball career can be incredibly short. Many players have had an amazing rookie season and then just disappeared. Stuck in the renewal and arbitration systems, their pay is undervalued in comparison to their worth to the team. A few examples would be Angel Berroa, Ben Grieve, Bob Hamelin, Jerome Walton, Pat Listach, Marcus Giles, and even our very own Craig Worthington. The retention of physical ability is a chief concern among players and it is understandable why they would want to enter into a long-term contract because of the financial stability of such a deal.

There is a counter argument. Jayson Stark's article last week listed several players who have little interest into locking themselves into a deal. The players mentioned were the Uptons, Russell Martin, Prince Fielder, King Felix, Jeff Francoeur, and the Red Sox trio of young stars (Jonathan Papelbon, Kevin Youkilis, and Dustin Pedroia). Why would they not wish to enter into a deal? The trade off of signing a long term deal is that you may undercut your own value. The thought is that these deals cost a player about 3-5 MM per free agent year bought out. That is dependent, of course, on whether the player pans out. The players listed above are some of the best in the game, so it goes to reason that they can most likely keep their level of play. If I was Francoeur, I'd sign a deal though. Extreme contact hitters are a risky projection.

The Teams Perspective
A major concern of any organization is salary control. Money isn't free . . . it obviously has a cost. This cost often is hard to see. It will be difficult to know whether Jay "Albatross" Gibbons played in effort in courting other free agents, investing in the minor league system, or improving scouting. It is to a team's advantage to be able to identify plus talent and then secure it with a low ball offer. That is where these contracts make sense. Even teams with massive amounts of cash flow engage in this. Robinson Cano's extension is an example. The issue is though that sometimes the player you locked in is Kenny Lofton and sometimes it is Carlos Baerga. For a mid to low market teams, this strategy may be a necessity as the only way to compete long-term is taking a risk on young players and securing a few free agent years on the cheap. Richer teams do it because it gives them more money to spread around and a poor decision on this level is not going to affect them as much as a poor decision on a free agent signing when the contract carries more of a premium.

The Orioles' Perspective

It appears the Orioles are in between. Dan Connolly wrote an article a week or so back in the Sun. An anonymous source in the front office called the deal absurd and was quoted:
"To give a guy a contract like that who has never done it in the big leagues, that is what I call high-risk," the official said. "This game isn't that easy to predict."
The source of those comments may have emerged from someone who thought signing Gibbons and Mora to extension was a good idea. Andy MacPhail's comments (mentioned in the story) were more general and even-handed, which is what one would want from an official statement. It seems to be more clear that the team sees themselves as having not much to gain if Markakis does become the best right fielder in the game, but much to lose if he does not. It looks to me they will wait and let the free agent market determine his value. Is this a good move if it is indeed what they are doing?

From the Orioles (and, conversely, Markakis') perspective, what savings can be gained by signing Nick right now? This study will dive back into the generalized runs created equation and shifting that to wins, which I have done in the past on many occasions. Nick's performance will be used from PECOTA's 7 year forecast. Changes in the forecast by year will be incorporated into the current 25th and 75th projectile performance projections. Valuation is my own figure with each win being worth roughly 3 MM in today's market. Over the past five years, players salary has increased roughly 10% each year. Projected worth will increase at the same rate. All of this will be tied together in terms of cumulative savings or cost. It should be stated that I considered his defense to be average. The general consensus is that he has a plus arm and average range.

Nick Markakis Projection
Markakis' year has been a bit peculiar. He is on pace for 26 home runs, but is also on pace for 16 doubles. It is a peculiar line. His rates fall in at 253/374/424. His PrOPS place him at 280/396/492. His 2007 50th percentile PECOTA projection places him at 356/470, so PECOTA is right there in the middle and I am going to run with that. PECOTA's projections require a subscription, so I don't feel right publishing them here. What I will show is his 25th, 50th, and 75th percentile projections convert to runs created per 162 games. As you can see, he 25th percentile condition shows him being roughly replacement level as a right fielder (RL-RF is 348ops/413slg) for his career. The 50th percentile places him slightly above league average (Avg-RF is 360/465). His 75th percentile has have as significantly better than league average. Perhaps the strangest thing about these projections is how consistent they have Markakis' level of performance over these next 7 years.

Performance Valuation By Year
Although his performance is projected to remain relatively constant over the next seven years, salaries will climb as more cash flushes into MLB. Over the past five years, salaries have increased about 10% each season. Each win over replacement level player performance was multiplied by 3 MM in 2007, 3.3 MM in 2008, 3.6 MM in 2009, etc. Markakis' current performance is worth about 12 MM to the Baltimore Orioles, but he is being paid 0.455 MM. You can probably understand why he might be a little annoyed about the renewal system. If he was a free agent (ignoring his age and potential breakout ability), he would be worth that 12 MM. Compared with other players in that range it falls right on the nose. Jose Guillen is getting paid 13 MM and he was the 2007 league average right fielder (I'm still not sure how he did not get pay docked for the PED aura).

Cumulative Earnings Gained or Lost
This leads us to the bottom line. I think a proper correlative to Markakis would be Alex Rios. Toronto signed him to a 6 year, 64 MM contract this past offseason. That would be similar to what we would expect it would take to sign Nick this upcoming offseason. I assigned him a 6 year, 66.01 MM contract for simplicity and avoidance of numbers with dreadful connotation. The cumulative costs for the 25, 50, and 75 projections are based on three arbitration years and three years of free agency with the cost set by performance valuation of the prior season. For instance, in the 50th percentile I predicted arbitration worth as 5MM in 2009, 7MM in 2010, and 11MM in 2011. The next three years were then dictated by the valuation of his 2011 performance, which comes to 18 MM per season. That comes to a cumulative cost/earnings of 76 MM.
Out of the scenarios considered here, the Orioles would lose money only if Nick hits his 25th percentile projections. The Orioles would lose 16.5 MM over the course of 6 years. Of course, this is based on the free agent market and may overvalue his worth as there may be 0-3 year players capable of this performance. If you consider that possibility, it might be a loss of 50 MM or so over that time period. If Markakis hits his 50th percentile, the Orioles would have saved 10MM over 6 or 1.7 MM each year. The 75th percentile would be a savings of 37 MM over 6 years or about 6MM per year.

 It is understandable why the Orioles might be reluctant to secure Markakis for the long term. If he falters it be a costly mistake (about 50 MM). If he stays the same as he is now, he basically get what he would have gotten anyway. If he breaks out . . . then he will cost a lot of money and years. That is basically what it comes down to. If you are sure that he is going to be a premium player, then you should lock him up in order to maximize your cash efficiency for other players on your roster. Ideally, the only time you pay a premium is when you bring players into your organization via free agency.

I think signing Markakis should be a priority and it will be fine to lock him in for 6 years at 66.01 MM. Perhaps a bit smarter of a contract would grant him 4 years at 40 MM and 2 team options years for 13.005 MM a piece. That way, he would still get a great deal of value for his first 4 seasons of the contract and the team would have an out if he completely crashes. I think Nick is not a high risk player. As opposed to the previous players mentioned (i.e., Craig Worthington, Ben Grieve) is not someone who relies on two tools. Markakis has plus ability in all skills and I think that makes him an easy one to bet on. Of course, this assumes Nick wants an extension. He certainly wants to be paid more, but I am not sure he wants to be lock in long-term. If he buys into the hype (Rob Neyer predicted that over the next 5 years he would be the best RF in the game), then he would be foolish to sign long term. Time will tell.

Though perhaps the biggest lesson is the savings attributed to developing young talent. Looking at Nick Markakis' 75th percentile projection, what we see is that over the next 6 years is that he could earn 103 MM if he goes the arbitration and free agency route. In turn, to get that much production off the free market, it would cost 157 MM. Even with respect to the average RF, you get a savings of 22 MM over 6 years. This is probably the lesson we have learned over the last decade or so: 0-3 year players are worth a lot of money. So, the next time you get excited by your team acquiring an established player (i.e., Bedard) for a collection of prospects (i.e. Adam Jones, Chris Tillman) . . . remember that with the extra 20-30% savings your team may be making, you can extend your own guys or pay the premium for the specific free agent talent to get you over the hump.