I will take the extreme view of each even though a multi-path approach could be used. I should also note that many of the ideas expressed in this article were done in a conversation with Baseball Prospectus' (formerly Camden Depot's) Nick Faleris. He also wanted me to express that some of the ideas in this article are more things-to-explore as opposed to things that are easily implemented. Anyway the four paths that emerged from our discussions were:
- Spending on the June Draft
- Spending on the International Market
- Establishing Infrastructure
The problem with having 17 MM to spend and being on the threshold of Spring Training is that you are now sifting through players that other teams did not really want. These players have warts and successful teams at this stage in the game are those who somehow are able to evaluate players better than other teams. That said, I am unaware of any team that actually does this well. Usually, those under the radar signings that wind up highly rewarding a club happen in November and December as those analytically (either/or quantitatively or qualitatively) skilled teams move quickly to get the players they want. If a team sees a player who is underappreciated, they tend to act quickly instead of playing out the string and risk another team from recognizing the same reasons why the player might be valuable.
So, yes, we are in a period of free agency that contains misfit toys. Below are what remains of the major ticket items and what supposedly is their last contract terms that they asked for:
Most likely, none of these players will get close to what they are asking. Unsurprisingly, the last major players off the board are ones who result in the winning bid meaning the forfeiture of a draft pick. Depending on how you evaluate a draft pick, a first rounder outside of the protected first ten selections is worth anywhere from 5 to 14 MM. The promise of such cheap talent makes many a team hesitant to relinquish a pick particularly when the ability to recognize talent tends to exponentially decrease in a draft.
Anyway, what do these players mean for a team like the Orioles? I think it is fair to say that the Orioles are optimistically a .500 team in their most likely outcome as currently constructed. A player like Morales or Cruz is probably worth about 1 or 2 wins above what the roster currently has. For instance, the team's options for designated hitter or left field (i.e., Steve Pearce, Nolan Reimold, Delmon Young) all hit southpaws as well as Morales. The value Morales really has in how well he hits righties in comparison to Henry Urrutia or Xavier Paul. In other words, that surplus value has to be realized in about 350-400 plate appearances. That is a somewhat limited opportunity for impact.
Ervin Santana and Ubaldo Jimenez are more interesting options. As it stands, the Orioles likely have a rotation similar to Chris Tillman, Wei-Yin Chen, Miguel Gonzalez, Bud Norris, and Kevin Gausman. Of those, Chen, MiGo, and Norris are the ones I would look to move down. I think Gausman is capable of pitching as a three or two this season and should get time to establish that. The three I mentioned are all extreme split pitchers. Chen and Norris are platoon pitchers while MiGo's performance significantly degrades as he moves through the order. As a result, all of these pitchers probably are capped for an expectation of 2 WAR, but that WAR might hide the fact that they all leave games early and tax the bullpen arms. Santana and Jimenez are probably worth about 2 wins a piece with their addition to the team. That would free movement of Chen, MiGo, and/or Norris back into the pen and strengthen that part of the 25 man roster. Additionally, it would give the team some additional pieces to acquire some marginal players to supplement the roster.
However, with 17 MM to spend, you could only sign one of those players. The Orioles would lose their first round pick (in a draft that appears to be pretty full of talent this year), take on a large salary as well as reducing future payroll flexibility, and improve themselves from a low 80 win team to a mid 80 win team. That seems like a big risk to take when this club is probably a couple players away from really making a large mark in the playoff race. That big risk maybe increases playoff odds from about 3% to maybe 8%. Is that enough of an increase to offset the risks to what appears to be a solid future window that includes Gausman, Manny Machado, Dylan Bundy, Eduardo Rodriguez, Hunter Harvey, and Jonathan Schoop? Is it enough of an increase to remove what is likely to be a solid prospect from this year's draft?
The more I consider those questions, the more I think that it is likely a poor idea to max out this year's roster with the remaining players of note. I see the potential collateral damage they carry to be more of a hindrance than their talent benefits this team and future ones. So, this begs the question, what else can the team do with the money?
Spending on a June Draft
When we first began Camden Depot in 2007, spending big on the draft was a way for the lower revenue teams in the league to compete in acquiring talent. The money scale was so low that clubs could secure an extra few million and go hard after prospects who gave the appearance of being hell bent to college or ones who had one or two loud raw tools. It was a risky way to acquire talent, but it tended to be more efficient than trying to compete with the big boys in free agency. However, with the advent of soft caps and resulting penalties, this really is no longer an option. The penalties are as follows:
|0-5%||75% tax on excess|
|5-10%||75% tax on excess and loss of 2015 1st round selection|
|10-15%||100% tax on excess and loss of 2015 1st and 2nd round selections|
|over 15%||100% tax on excess and loss of 2015 and 2016 1st round selections|
The Orioles will have a soft cap of about 6.5 MM. If they used their 17 MM here, then there effective cap would be about 15 MM with the rest of the money going to taxes. In addition the team would lose their 2015 and 2016 picks which would be decent prospects to contribute to the playoff window of the Orioles second core and are likely to be worth about 20 MM in total. In other words, the Orioles would lose 37 MM to acquire promising, but incredibly risky 8.5 MM in additional talent in the 2014 draft. That 8.5 MM in additional talent is probably worth something closer to 5 MM as the prospects are overpays based on their currently limited profiles. A markup of seven times the actual value seems to me to be an incredibly poor investment tactic. Doing this would seem to hurt the club more than signing a free agent who has compensation attached to him.
Spending on the International Market
The international market was another area where teams with limited funds once could compete with higher revenue clubs. The poster boy for this approach would be the Twins' (and almost Orioles') Miguel Sano. Pools are now based on the previous season record as the draft is, which kind of works against the premise of trying to use the pool system to shuttle high talent to the lower revenue teams because it assumes lower revenue teams will be among the worst teams. This punishes lower revenue teams who do well and rewards higher revenue teams that do poorly.
Anyway, this system has a similar set of penalties:
|0-5%||75% tax on excess|
|5-10%||75% tax on excess and loss of 2015 IFAs over 500k|
|10-15%||100% tax on excess and loss of 2015 IFAs over 500k|
|over 15%||100% tax on excess and loss of 2015 IFAs over 250k|
For a team like the Orioles, the pool for next season will be around 2.5 MM. In any year, there tends to be about 10-15 players who sign for more than 1 MM with a subset of about 3-5 who make in excess of 2 MM. This basically constitutes your elite and near elite players. It is a group that the Orioles have never successfully made a play on and, for the most part, do not seem to even consider.
The next tier of players go for between 500k and 1 MM. Since the 1990s extravagances, the Orioles have only put out this kind of money for one player, Korean high school left handed pitcher Kim Seong-min. That ill-fortuned adventure left the Orioles with peculiar discrepancies between their international and domestic scouting reports as well as them being banned from going to Korean Baseball Association sanctioned events due to improperly signing the player. The next tier of players signed for between 250 and 500 k. Since the 1990s, the Orioles have spent this amount on two players: 3B Hector Veloz (whose price dropped dramatically due to positive steroids test) and RHP Olelky Peralta. There is also some word that last summer's signing of Jhomar Reyes is also in this bracket, but those figures have yet to be revealed as I write this.
As you can see, the Orioles sit out of the top three tiers completely and mainly sit on the side of the fourth tier. They strategy for the past decade or so has been to find the low level prospects that sign largely due to relationships rather than big money. That said, the Orioles are known in the industry as being rather scattered. They have been fickle with their efforts in Venezuela and even pulled out completely when violence in the countryside grew worse. Although having a nice academy and a long standing tenure in the Dominican Republic, they are said to have some of the poorest relationships with the local trainers. This is somewhat evidenced by how few power arms come into the organization from the Dominican, which year in and year out produces raw, hard throwing prospects.
Dan Duquette tried to solve the issues by hiring renowned scouts Fred Ferreira to work Latin America and Ray Poitevint to man the Pacific Rim. Both men are well-respected in the industry, but this approach to acquiring credibility by hiring the old hands is said to be a bit old in how things are currently being done. It seems that over the past decade or two that once you get past the top 30 players, relationships matter. A man with a name as your scout can get you in the door, but the scout who has been hanging out with your family and your trainer will get you a signed contract as you walk back outside. The Orioles seem to lack that and it would prevent them from effectively using a major cash inflow to grab guys effectively in those lower tiers. In fact, when you do see signings for more than 100k in this organization, it usually is in a place where the scouting is not so intense, such as Curacao.
So, if the Orioles took their 17 MM to the international amateur market, then they would have about 8.5 MM extra to spend and would be limited the following year to spending about what they normally spend. That 8.5 MM would perhaps get them 3 or 4 top tier international prospects. The team would see dividends from this investment maybe 5 or 6 years from now when one becomes useful to the club. 17 MM for one useful (likely not good) player. That seems like an overspend as well. This is not to say that major investment in the international market is not a good thing to do. Just that a major investment resulting in paying a tax winds up being inefficient.
The final path I am putting forward is to suggest that the 17 MM should be spent largely on enhancing the infrastructure in expectation of better acquiring, assessing, and developing players than by trying to buy through data or relationship gaps. In other words, perhaps it is better to buy more knowledge than to buy things that reflect knowledge. That might have actually made things more complicated and confusing. Simpler, be able to assess quality on your own instead of relying on being aware of what others want and then trying to acquire that thing.
The first step is changing the perspective with the farm system. Maybe this has already happened, maybe it has not. The perspective we want to change is one from a subsistence farm to a mixed use farming where the goals are to provide what you need as well as creating excess commodity for sale. One might argue that the Orioles have fallen in the subsistence trap before when they selected Brian Matusz over Buster Posey in the 2008 draft due to organizational needs for an elite pitcher when a very polished and safe position player was available who happened to play the same position as their perceived face of the franchise, Matt Wieters. Now, I admit that the decision was a bit more nuanced with Posey trying to bluff his way into a bigger signing bonus, a bluff that scared some teams. However, I think the point stands well enough as an example.
Another example would be the Yankees system of acquiring amateur talent. Many would agree that the Yankees do not have the ideal approach or bothered with putting money into their domestic drafts. Many would also agree that they do place importance in international amateur arms and highly skilled positions (e.g., catcher, shortstop). You could argue that this investment is misplaced for the Yankees because they have the ability to overspend and enlist proven veterans for most of their positions. Of course, there are failings there as a team might overcommit in years and the club winds up being very old and short on defense as is the main trouble facing the Yankees now. However, their youth system still serves a proper role for the club in that it can produce things other people want, but the Yankees have no time to actually mature.
For instance, think of Jesus Montero. Not for one moment did anyone think the Yankees would use Montero at first base or designated hitter where they wanted more immediate pop and also have a place for some of their older players to rest. Other teams wanted that potentially potent bat and the Yankees were able to pair Montero with another interesting international arm, Hector Noesi, in order to acquire a potential frontline pitcher in Michael Pineda. Yes, the deal has yet to really work out for anyone involved, but it is a deal that fit the Yankees' interests very well. So, yes, while you might think certain pieces are not useful for this organization, they may be useful to other organizations and that may wind up getting you what you want.
Beyond that perspective shift, it is also likely time to invest in updating the knowledge base of an organization. This is something that I think would be right in Dan Duquette's wheelhouse. Currently, Major League stadiums are fitted with Pitch f/x, Hit f/x, and Field f/x technology. This helps enable better assessment of player at the highest tier. What is interesting is that this technology is often completely missing at the minor league level where information on players is harder to come by. Currently, minor league performance is best assessed by qualitative scouting and then backed somewhat by performance metrics. Those metrics are best developed with pitching and hitting, so most of those arenas are lit up fairly well. Fielding though could be much better assessed and an organization having a better understanding of their own players will have a better understanding of which ones are the best to be handed over in trades as well as getting glimpses into the talent of other organizations. Additionally, this new knowledge might be able to better inform the developmental side of things.
Another path to explore is to determine the feasibility of entering into relationships with different athletic programs and installing the f/x systems in select college stadiums. For instance, identifying several clubs in the ACC and SEC which typically see the highest level of competition in college baseball. This extra information may not be incredibly illuminating when figuring out who to select in the first round (though it might be), but could be worthwhile when selecting in later rounds. Additionally, a company like Trackman should be engaged to determine the ability to set up similar assessments in JuCo, international, and high school tournaments that lack this information infrastructure.
Finally, move on from the relationship aspect of international scouting. Relationships have been one of the most important aspects of scouting in the Dominican Republic and other international venues. Scouts rarely just come up on talent. They have guys birddogging for them and letting them know about other players. This could be as innocent as a local noticing talent and passing it on to as murky as a trainer who hides talent for certain scouts in exchange for some type of compensation. Pre-Duquette, the Orioles had floundered on the relationship aspect of scouting. The team tended to pick over more publicized talent as well as players who were released from other organizations. Now, Duquette hired Fred Ferreria, a very well respected scout in his late 70s. Ferreria has some connections and it has slightly improved the Orioles' ability to find more relevant players.
However, relationship-based scouting will soon be greatly minimized. Why? An international draft is coming. No, it has not been announced, but the writing is very clear on the wall. With the induction of an international draft, hiding players becomes less effective and teams become less willing to engage in the practice. Money-wise, it just does not work out in such a scenario. In turn, it prioritizes evaluation. In countries like Venezuela and the Dominican Republic, you do not need resource heavy scouting. These countries are becoming highly organized and you really only need a couple of your top evaluators going to a showcase to find these players. The key to getting an edge on talent is finding players where baseball infrastructure is less sound.
Money should be spent on the Orioles in the fringe markets. Money should flow into scouting and academies in emerging markets. Why not be the first club to establish a strong academy in Europe? As far as I am aware, the Orioles have one part-time scout out there working in central Europe who is also managing a club in Brno, Justin Prinstein, who is also a coach for Hungary's national team. The two Baltimore signings I am aware of is Jan Novak from the Czech Republic and Rachid Engelhardt from the Netherlands. Other teams though are being more aggressive, such as the Seattle Mariners who have signed several players (i.e., Alex Liddi, Kalian Sams, Ramon Romeijin, Lars Huijer, Scott Ronnenbergh, Dylan Unsworth, Ugueth Urbina Jr., Alexandre Roy, Daniel Thieben, and Tom de Blok). It is there and the only academy present is sponsored by Major League Baseball and lasts only a few weeks, which is a similar setup to what is available in Australia. Other countries to target would be Curacao (which the Orioles already appear to be doing), Brazil, Colombia, and Argentina.
When a team has a playoff window open, it is tempting to blow whatever resources it has to getting through that window. As it stands now, the Orioles have a window with an interesting and increasingly expensive core of players in the context of a division of teams that are currently rudderless (i.e. Blue Jays), in short supply of reinforcements (i.e. Rays), lacking in Major and Minor League depths (i.e., Yankees), or solid with a bevy of Minor League talent about to break through (i.e. Red Sox). This should be a prime span of action for the Orioles, but years of misfortune and mismanagement make this current core of players in need of several more additional pieces to make a strong claim for a Wild Card slot.
Further complicating the spend now approach is that the team has a second window on the horizon with players such as Manny Machado, Kevin Gausman, Dylan Bundy, Hunter Harvey, and Jonathan Schoop eager to make their marks on baseball. This also includes likely mainstays such as Adam Jones and Chris Tillman. With potential talent influx from dealing players like Matt Wieters and Chris Davis, that could be a very strong, open window in the latter half of the 2010s just in time for Duquette and Buck to tack on another extension. That window could be made even stronger if money went into beefing up the infrastructure to better compete in that second window.
With those thoughts in mind, it appears to me that money is being ineffectively spent on any of the remaining free agents. None of them drastically improve this team. Those moves move the team from the bottom of a competitive division to the middle of a competitive division. That increase in probability of reaching the playoffs (as evidenced by 2012, a mid-level team can have a lot of things come together and make the playoffs) could be worth it. However, I think that investment would pay greater dividends for what many hope to be another run by a strong Baltimore team. With that in mind, overinvestment in the domestic draft or international free agency is likely not the answers. Investment in infrastructure and development of fringe, yet established baseball talent markets seems to me to make the most sense.
Perhaps it is a disgrace for the Orioles to maintain a bottom tier payroll for 2014. If spent wisely though, it could be the best thing this club can do with an extra 17 MM in the bank.