The Nationals Lost Money Because of the RSDC Decision

Summary: While the RSDC decision allows the Nationals to receive more money in media rights fees than MASN's request, it also causes the Nationals to lose money due to lower equity stake distributions and loss of equity value. The amount that the Nationals lose due to lower equity stake distributions and loss of equity value is larger than the amount they gain in total media rights fees. Therefore this decision causes them to lose money.

Warning! Gory Mathematical and Financial Details Ahead! It’s hard to sufficiently explain how valuations work without using jargon that can be difficult to understand. 

The latest documents from the MASN case shed light on confidential conversations about a possible sale of MASN. These discussions ultimately weren’t fruitful but the parties created numerous pro forma documents discussing potential terms for a sale. These documents include figures that make it possible to determine the equity value of MASN and therefore discuss the total difference in value between MASN and the RSDC's proposals from 2012-2016.

There are two factors that are necessary to determine the equity value of an enterprise. The first is the “exit multiple.” The second factor is the “discount rate.” Let's start with the "exit multiple." Basically, an RSN is valued based on its profits. An RSN that earns $100 million in profits is more valuable than one that earns $10 million. But one wouldn't agree to sell their business for one year's worth of profits by itself. So, the “exit multiple” is used to determine how much more than profits a business should be worth. The "exit multiple" multiplied by profits determines the future value of an RSN.  This also means that if MASN earns less in profit, then it's worth less as an enterprise.

The “discount rate” is used to determine the rate of return necessary for one to invest in a business. This takes into account rates of return for other investments as well as possible risk. Think of it this way. I can invest money in treasuries and be highly certain that they won't default. If I were to buy a 30-year bond for Sears, it is considerably less likely that they won't default. Therefore, I may want to use a discount rate of 2% when buying a treasury bond while using a discount rate of 20% when buying a bond from Sears. I need to receive a higher rate of return from Sears than from U.S. treasuries because an investment in Sears is so much riskier.

These pro forma documents indicate that a fair exit multiple is 15 and a fair discount rate is between 9-11% for a network owned by a media company. They argue that a fair “exit multiple” for MASN under current conditions is between 12 and 15 while a fair discount rate is between 11-13%. The people who drafted these documents believe that the RSDC decision reduces the certainty of future MASN cash flows as well as the viability of MASN as a profitable RSN. In other words, they believe that it is reasonable to claim that a fair “exit multiple” is 15 while a fair discount rate is about 11%. However, they also believe that MASN's value should be discounted due to the RSDC being unwilling to allow MASN to earn a reasonable profit. If the RSDC is going to force MASN to pay unreasonable rights fees, then any buyer is going to refuse to pay full price (even if they were allowed to pay fair rights fees).

By multiplying the last year of free cash flow by the exit multiple listed above one can determine the terminal value of MASN at the end of 2016. Once that is known, it is possible to determine the present value (present value is 2012 and not 2014 because 2012 is when the deal started) of MASN by means of discounting expected income streams using the discount rate while also using the discount rate to determine the present equity value of MASN. 

There have been enough documents that it is possible to determine MASN's revenues, expenses, media rights fees, profits, and equity distribution according to both MASN and the RSDC. This pro forma document created by Allen & Co. has helpful information.

I've also created a document and spreadsheet that discuss in more detail what results I use for MASN's and the RSDC's proposals based on what is in the actual reports. 

According to MASN's proposal, MASN is predicted to earn a profit of roughly $67.7 million in 2016 and therefore has a terminal value in 2016 of $1.01 billion.  With a discount rate of 11% over a five-year period, the present value of terminal value is $603 million of which 83% will belong to the Orioles and 17% will belong to the Nationals. Determining the present value of media rights fees and equity distribution can be accomplished by discounting 11% per year from the amount of each received. For example, the Orioles and Nationals are expected to earn $42M in media rights fees in 2015. That amount is equal to $42M/1.11^3 or roughly $30.7M in 2012 dollars. In order to determine future value, one would increase the amount received by 11% until 2016. So, the $42M that each team receives in media rights fees in 2015 is worth $46.66 million in 2016. The chart below shows how much revenue each team earns from media rights fees and equity distributions using both present and future value using MASN's proposal.

According to the RSDC's proposal, MASN is expected to earn a profit of roughly $24 million in 2016 and therefore has a terminal value in 2016 of $360 million. The present value of its terminal value is $213.5 million. The chart below shows how much revenue each team earns from media rights fees and equity distributions using both present and future value.

This chart shows how much the Nationals and Orioles will earn using present and future value from each of these proposals. I use gross rights fees rather than net rights fees to determine total value because the Nationals currently would be eligible for revenue sharing if they weren’t ineligible due to being in a top 15 market. As a result, they won’t be paying revenue sharing tax on all of the money that they receive in rights fees and therefore using gross rights fees allows for a more accurate comparison.

Both the Orioles and the Nationals will receive increased rights fees from this deal but both will suffer significant losses in equity distributions and equity value. While the Orioles would suffer significantly larger losses if the RSDC decision is upheld, this would also result in the Nationals losing anywhere from $25-50 million dollars over the five-year period.

It is worth noting that a significant amount of the value that the Nationals will lose is from their loss of equity. The Nationals or Orioles will not be able to take advantage of any of this money unless they sell MASN to an outside buyer or if the owners of the Nationals or Orioles sell their team. It is also possible for both parties to agree to a media rights deal that could significantly increase the value of MASN right before selling it to an outside party and therefore increasing the value of MASN. However, pro forma documents written by Allen & Co. show that potential buyers consider the RSDC decision to be a detriment to MASN's value and therefore would reduce the amount that they’re willing to offer. Simply put, potential buyers aren't stupid.

The reason why the Nationals are willing to accept a deal where they lose money is because they believe they can receive higher rights fees in a situation where their media rights are not controlled by MASN. They believe that they can either force MASN to demand higher carriage fees (which will allow MASN to pay the Nationals a larger media rights fee while remaining profitable) or force MASN to sell the Nationals their rights. If the RSDC does decide that Bortz should be used, then MASN will likely be profitable for the foreseeable future and it could be a long time until the Nationals regain control of their media rights.

In the meantime, the value of the Nationals equity stake in MASN has decreased due to the RSDC's decision. At least from 2012-2016, the Nationals would receive more value for their rights if MASN had won rather than the RSDC.

Examining De Aza's Struggles Against Southpaws

Alejandro De Aza has been a major league regular for three full seasons, though his best offensive work came in limited duty in 2011 when he posted a 150 wRC+ in 171 plate appearances. In the three years since, he hasn't come close to approaching that stat line, and his numbers have actually been trending downward:

2012: 585 PA, 106 wRC+
2013: 675 PA, 98 wRC+
2014: 528 PA, 94 wRC+

When the Orioles acquired De Aza from the White Sox late last August for two minor league pitchers, he was struggling mightily. In 439 plate appearances, he had a slash line of just .243/.309/.354 (84 wRC+). But after the trade, he batted .293/.341/.537 (145 wRC+) in 89 plate appearances and was a useful weapon (obvious small sample size qualifier).

In 2015, Steamer projects De Aza to post a 101 wRC+, which is right in line with what the average major league corner outfielder posted in 2014. But that would also reverse De Aza's downward trend of overall offensive performance over the last few seasons.

De Aza has clearly been better throughout his career against right-handed pitching:

vs. RHP: 103 wRC+ (1,717 PA)
vs. LHP: 85 wRC+ (459 PA)

Somehow, he managed to perform better against left-handed pitching than right-handed pitching in 2013 (123 wRC+ vs. 90 wRC+). A .355 BABIP against lefties elevated those numbers. But in 2014, he was truly awful against lefties:

vs. RHP: 113 wRC+ (433 PA)
vs. LHP: 9 wRC+ (95 PA)

That's right: 9 wRC+. So what happened? For one, lefties started to attack De Aza even more on the outside corner of the plate. Here's where De Aza saw pitches from lefties in the 2012 and 2013 seasons combined:

And here's where he saw pitches from lefties in 2014:

De Aza saw fewer pitches in the middle of the plate and more low and away. His whiff rate jumped:

After his improved 2013 against lefties, opposing southpaws went back to throwing De Aza more breaking pitches in 2014 with two strikes:

Year	Hard	Breaking
2012	56%	41%
2013	62%	32%
2014	54%	43%

Overall, his strikeout percentage went from 18.6% in 2012 to 22.5% in 2014. He also chased more pitches outside the strike zone (32.1%; career 28.8%) while making less overall contact (78.2% vs. career 79.9%). That coincided with a drop of his average on balls in play from .339 in 2012 to .317 last season (career BABIP of .330), which has been partially affected by De Aza's infield fly ball percentage rising from 6.2% in 2012 to 10% last season. His HR/FB rate also dropped back to his career average (7.9%) after hovering around 11% in 2013.

The most obvious way to get around De Aza's struggles against left-handed pitching is to stop using him as much against them. Here's his plate appearance totals against lefties since 2012 (with percentage of all plate appearances against lefties):

2012: 147 PA (25%)
2013: 153 PA (23%)
2014: 95 PA (18%)

At the time he was traded to the Orioles, De Aza had faced right-handed pitching 357 times and lefties 82 times. So he faced lefties about 19% of the time. After the trade, De Aza faced right-handers 76 times and left-handers 13 times (so about 15% of the time). That's not a huge change, and maybe it wasn't necessarily done by design. But it makes sense to limit De Aza's at-bats against lefties, and Buck Showalter is adept at utilizing platoon options.

Steve Pearce is the obvious right-handed batter to slide into a corner outfield spot when a lefty is on the mound. But what about the other spot? Travis Snider and David Lough are both lefties and aren't great options to face southpaws either. Perhaps Delmon Young (shudder) could receive some playing time in the outfield when a lefty is on the mound. Regardless, though, fitting all of De Aza, Snider, Pearce, Lough, and Young on the roster may present some challenges.

Perhaps De Aza is due for an uptick in BABIP. Maybe he'll also enjoy the shorter porch in right field at Camden Yards over a full season. De Aza certainly isn't as bad against left-handed pitching as he was in 2014, but he still doesn't fare well against them; they may also have figured out an even better way of handling him. Still, De Aza's numbers against right-handed pitching have mostly remained steady, and they should again in 2015. And there's definitely value in a $5 million decent-fielding corner outfielder who can hit well against right-handers.

Photo: Keith Allison

The Orioles Keep Adding Fringy Middle Infielders

Despite signing shortstops Rey Navarro (major league deal) and Paul Janish (minor league deal) in November, the Orioles have recently agreed to terms with another infielder and are close to signing yet another shortstop. A couple days ago, the Orioles agreed to terms with Jayson Nix on a minor league deal. Nix is a Ryan Flaherty type -- a utility infielder who can fill in adequately enough (at least defensively) at second base, shortstop, and third. But it was reported yesterday that the Orioles are also close to a deal with Everth Cabrera.

As Joe mentioned yesterday, the Orioles "don't have many promising infielders in the upper levels of their farm system."  So the O's are doing their best to bring in several infielders to compete for a bench spot. Joe already tackled the Navarro and Janish signings, so let's focus on Nix and Cabrera.

Nix has never been more than a fill-in type player. He can field well enough, but he can't hit. He has a career wRC+ of 67, and last year he was truly awful. In 91 combined plate appearances for three teams, he had a wRC+ of -8. FanGraphs had him at -1.0 WAR despite only appearing in 41 games. He is a real long shot to make the major league roster, but could provide some infield depth if he's stashed in Norfolk.

Unlike Nix, there's plenty to note about a potential Cabrera signing. First, his deal would be for one year and about $2.4 million if he passes the O's physical (no guarantees there, obviously). He also has an option remaining, meaning he comes with some added roster flexibility (something Buck Showalter and Dan Duquette value). Cabrera is under team control as well for another year, giving the O's even more flexibility if Cabrera performs well in 2015.

Everth Cabrera

Unfortunately, Cabrera also comes with some on- and off-the-field issues, as several reporters have noted. In 2013, he was suspended 50 games as part of MLB's Biogenesis investigation. Then last November, he was arrested and charged with resisting arrest after being stopped by police for driving under the influence of marijuana. Craig Calcaterra noted that Cabrera was also charged with domestic violence in 2012 (he was accused of  “assaulting his wife by hitting her in the face with a closed fist and slamming her head against the wall”), though the charges were eventually dropped. Considering the O's were willing to take a (low-risk) chance on Delmon Young last season, it's not surprising they'd consider Cabrera.

Unlike Nix and Janish, who are both 32, and Navarro, who is 25 but has never received a major league at-bat, Cabrera, 28, is the most noteworthy move. Navarro is still young enough to improve enough to surprise some people, but Cabrera has had some actual success in the big leagues.

Besides the games missed because of the 2013 suspension, Cabrera has battled hamstring injuries the past couple seasons. He had his best offensive year in 2013, when he batted .283/.355/.381 (114 wRC+) in 435 plate appearances. But after dealing with his suspension and returning the following season, he was terrible. In 391 plate appearances, his numbers dropped -- .232/.272/.300 (65 wRC+). Career wise, Cabrera is a decent enough hitter for a shortstop (86 wRC+). (In 2014, the average major league shortstop had a wRC+ of 87.) But Cabrera is not a plus, or even average, defender. He has a career DRS of -13 at shortstop, and a career UZR of -22.6 (-7.3 UZR/150). He could be an option to play some second base, but he's only played 80 career innings there (and only 2 innings at third).

Cabrera, however, would improve the O's overall team speed on the basepaths. He has 136 career stolen bases, and he's been successful 78% of the time (above the break-even rate of 75%). He was remarkable in 2012 (44 steals in 48 attempts) but less so the last couple years (37 for 49 in 2013 and 18 for 26 in 2014). Those aren't terrible percentages, but the Orioles also don't need baserunners who are going to run into outs. It's possible he'll never approach the raw totals from 2012 and 2013 again, but he's still above average on the basepaths, which has some value.

Are any of these major signings? No. But it's smart for the Orioles to keep trying to improve the rest of the roster, especially since the O's are not interested in paying large sums of money for star free agents. Overall team depth is important, and the O's do have some players prone to injury. The O's already seem to have a decent amount of depth; one or two of these moves should help even more.

For the most part, these minor moves are about roster flexibility. Sure, maybe Cabrera could play some second base, if he proves to be adequate enough defensively. Jonathan Schoop has really struggled against left-handed pitching for some reason, while Cabrera hits better against them. There could be a fit there. But Schoop, Flaherty, Cabrera, and Navarro all have options remaining, which could mean plenty of Norfolk shuttling. As Jeff Long said last week, "Part of out-performing expectations on a regular basis, at least in the Orioles’ case, involves wringing every last bit of value out of each roster spot at the club’s disposal." Showalter and Duquette keep an open mind when looking for any way to improve the club, and roster shuffling has become one of their favorite weapons.

Photo via Keith Allison

Part 2 - Impressions of the Orioles' (minor-league) Free Agent Signings

In my most recent article, I looked at the three minor-league free agents the Orioles signed to their 40-man roster. In this article, I will look at some of the minor-league free agents the Orioles signed to minor-league contracts. I won't be reviewing every Oriole minor-league signee. Some, I don't know anything about them that you can't find out by looking at their statistics. Others are unlikely to do anything of notice.

Some of the signings were players who had either been released before the end of the 2014 season or had never played in organized baseball before. Most of these signings are roster filler who will fill holes on the minor-league teams, and are unlikely to do anything of interest. But one of these players, Casey Haerther, has shown enough to be possibly interesting even though he's likely being seen as roster filler.

Going into 2015, the Orioles don't have anyone who projects as the AA Bowie first baseman. Christian Walker has moved beyond that level; his successor, Chris Marrero, was himself awarded free agency; and the best bet at Frederick, Trey Mancini, isn't ready. Casey Haerther does project to be a AA-caliber first baseman, but may be more than that. In the Angels system in 2010 and 2011, Haerther put together some James Loney-like seasons - a .300 batting average with some doubles but few walks or home runs. He reached AA in 2012 but didn't play well; the Angels released him after the season.  He spent the last two seasons in independent ball and had an outstanding season in 2014 (.360/.390/.535). He'll play 2015 at age 27 and is probably the best bet to be the Bowie first baseman. If he plays well and the circumstances are right, he might get a cameo with the Orioles.

The other players the Orioles signed were in organized baseball at the end of 2014 and became free agents according to the terms of the Basic Agreement. The Orioles signed several of their own free agents. Chris Jones and Steve Johnson have been in the organization for several seasons; they chose to remain in comfortable surroundings. Both seem likely to begin 2014 as utility pitchers with Norfolk and might see major-league time under the right circumstances.

Another player the Orioles re-signed in whom they believe is Michael Almanzar. The Orioles selected him in the 2013 Rule 5 draft; after he was returned to Boston, they re-acquired him in the Kelly Johnson trade. The only backup infielders on the Orioles current 40-man roster are Ryan Flaherty, Jimmy Paredes, and Rey Navarro. The Orioles also don't have many promising infielders in the upper levels of their farm system. The Orioles have  gone to great lengths to add Almanzar to the organization, so he could see major league time.

The Orioles signed two other middle infielders, with big-league experience. 32-year-old Paul Janish has played 431 major-league games, mostly with the Reds (for whom he was the regular shortstop in 2009 and 2011.) Ozzie Martinez, who turns 27 in May, has played 34 major-league games. Both have good defensive reputations although Janish has been considered better. Martinez is a light-hitting infielder; Janish is a non-hitting infielder. If injuries strike the infield, either Janish or Martinez could see some big-league time.

The Orioles also signed two once-interesting prospects who are still young enough to have some development potential. Rossmel Perez is a defense-oriented catcher who doesn't hit for power; the Orioles catching situation isn't settled and it's possible Perez might see some time as a backup. Derrik Gibson is an "athlete", a toolsy shortstop whom the Red Sox probably promoted too aggressively. He doesn't have power, but he draws walks and can steal bases. If he can hit for average - a big if - he's young enough to develop into a replacement-level regular.

Finally, the Orioles signed a few pitchers who might get on the Norfolk-to-Baltimore shuttle. Cesar Cabral is a left-handed specialist (in his major-league career, he's pitched 4 2/3 innings in 12 games.) He has good strikeout rates but spotty control. Dane De La Rosa is a 32-year-old from independent ball who had knee problems in 2014 but pitched exceptionally well in 2010-2013, with 2013 being spent with the Angels. And Terry Doyle is a 29-year-old minor-league journeyman who pitched very well until he signed in Japan in mid-2012; it took him a couple of years to regain his effectiveness and he pitched well for Gwinnett in the second half of 2014. Any of these three guys might be released in spring training, or they could see an inning or ten with the Orioles if needed.

What Went Wrong for Ubaldo Jimenez?

The Orioles seem intent to head to spring training with six viable starting pitching options. Every O's fan has his or her opinion about which of the six should be traded, demoted (if possible), or relegated to a long relief role. But the highest paid of the six, and the most ridiculed, is Ubaldo Jimenez.

2014 was not a good year, baseball wise, for Jimenez. In 125.1 total innings, he finished with a 4.81 ERA (and a 4.67 FIP and 4.48 xFIP). He was mostly his own worst enemy, as he wasn't unfortunate on balls in play (.289 BABIP vs. career .292) or home runs (10.9% HR/FB vs. career 8.9%, with most of those earlier low home run totals coming several seasons ago).

Batters swung a career low 39.1% of the time against Jimenez, while making contact a career high 82.3% of the time (82.2% in 2012). He wasn't throwing pitches in the strike zone (career low 47.9%), so batters were content to take walks or get in good counts and look for certain pitches to hit. Despite throwing his fewest amount of innings since 2007, he still maintained his average career K/9 of 8.3. But he walked a career high 5.53 per nine innings (he'd never had a BB/9 over 5), which clearly hurt. Among all pitchers who threw at least 120 innings, Jimenez's 5.53 walk rate was the highest in the majors. Justin Masterson (4.83 BB/9) was second. At least Masterson was close to the third name on the list, Brad Peacock (4.78). Jimenez was in his own category of awfulness.

Jimenez's strikeout and walk rate combination in 2014 isn't unique, but it doesn't happen often. Since 1961, only seven other pitchers (14 total times) had seasons in which they threw at least 120 innings and had a K/9 of at least 8.3 and a BB/9 over 5.5. Nolan Ryan accomplished that feat five times. Randy Johnson, Kazuhisa Ishii, and Bobby Witt each did it twice. And Kerry Wood, Ed Correa, and O's legend Daniel Cabrera did it once apiece.

Rk	Player	BB9	SO9	IP	Year	Age	Tm	Lg	ERA	FIP	ERA+ ▾
1	Nolan Ryan	6.14	10.26	299.0	1977	30	CAL	AL	2.77	3.12	141
2	Nolan Ryan	6.63	8.54	131.2	1970	23	NYM	NL	3.42	4.03	118
3	Kazuhisa Ishii	6.18	8.57	147.0	2003	29	LAD	NL	3.86	4.72	105
4	Randy Johnson	6.16	10.31	210.1	1992	28	SEA	AL	3.77	3.61	105
5	Randy Johnson	6.79	10.19	201.1	1991	27	SEA	AL	3.98	4.00	103
6	Nolan Ryan	6.00	8.45	198.0	1975	28	CAL	AL	3.45	3.67	102
7	Ed Correa	5.60	8.41	202.1	1986	20	TEX	AL	4.23	3.78	102
8	Nolan Ryan	5.79	10.35	284.1	1976	29	CAL	AL	3.36	2.91	99
9	Nolan Ryan	5.68	9.97	234.2	1978	31	CAL	AL	3.72	2.96	98
10	Daniel Cabrera	6.32	9.55	148.0	2006	25	BAL	AL	4.74	4.20	95
11	Kerry Wood	5.72	8.67	137.0	2000	23	CHC	NL	4.80	4.92	95
12	Bobby Witt	8.81	10.07	143.0	1987	23	TEX	AL	4.91	4.54	91
13	Kazuhisa Ishii	6.19	8.36	154.0	2002	28	LAD	NL	4.27	4.94	89
14	Bobby Witt	8.16	9.93	157.2	1986	22	TEX	AL	5.48	4.83	79
15	Ubaldo Jimenez	5.53	8.33	125.1	2014	30	BAL	AL	4.81	4.67	79

Provided by Baseball-Reference.com: View Play Index Tool Used
Generated 2/16/2015.

Not only did Jimenez throw the fewest innings, but he arguably pitched the worst of the group (at least according to ERA+). Witt's consecutive seasons of 8+ BB/9 are also quite remarkable. No one else on this list is even above 7. It's also interesting that everyone on this list was 31 or younger at the time. Unsurprisingly, striking out and walking a bunch of opposing batters doesn't seem to be an aging pitcher's game.

Jimenez also below average in the groundball rate category as well. Earlier in his career, Jimenez posted groundball rates in the high 40s and low 50s, but the last three years, he's finished at 38.4%, 43.9%, and 41.3%, respectively. (The major league average groundball rate for starters in 2014 was 44.6%.)

Jimenez, who mostly throws sinkers, sliders, four-seamers, and splitters, is also dealing with declining velocity, a continuing trend for him.

It's not unusual for pitchers' velocity to decline over time -- specifically around age 29 or so. However, Jimenez has been losing velocity since the end of the 2010 season. 2011 was his age 27 season, so he's been dealing with velocity issues a couple years earlier than normal.

For some reason, Jimenez started throwing more sinkers again. After throwing sinkers 31% of the time in 2013, he threw them more than 40% last season. That was the highest percentage for him since 2009. He also threw his lowest percentage of four-seamers (18.5%) since 2009.

The sinker was a real weapon for him from 2007-2009, though the return to the sinker didn't pan out last season. Jimenez kept his two-seamers down in the zone, but the horizontal movement just wasn't there. (The same thing for his four-seamer.)

Jimenez can still be effective, but he will need to cut down on his walks. Besides the difference in strikeouts and walks, he's similar when it comes to fly balls and ground balls to the rest of the O's rotation. Perhaps that's why Jimenez (maybe at the request of O's pitching coaches) threw more sinkers in 2014 -- to try to rekindle some of the groundball inducing stature from his earlier days with the Rockies. It's also not a bad idea considering the team's excellent infield defense.

It's worth noting that Jimenez admitted to working out less last offseason while he was waiting to be signed:

One of the most difficult aspects for Jimenez was the constant fear of getting injured. In order to reduce the risk, he cut down on his workouts. Instead of throwing from a mound like he usually does in the offseason, Jimenez instead threw long toss on flat ground from 90 or 120 feet. He never once took the mound in the offseason.

At the gym, Jimenez would run less miles than he would normally run, and he almost completely stopped lifting weights. He had become paranoid that even the rumor of an injury could knock down his market value even more.

It's impossible to know for sure whether less offseason training played a large role in Jimenez's disappointing 2014. But it didn't help. Regardless, he pitched poorly, sprained his ankle somehow while walking in a parking lot, and lost his rotation spot. He was then left off the Orioles' American League Championship Series roster.

This isn't exactly how the Orioles envisioned the Jimenez signing going. And they clearly tried to unload his contract (three years remaining on his four-year, $50 million deal) earlier in the offseason. But if he's healthy and throwing strikes, he can certainly be useful in 2015 and beyond. It's not unreasonable to pay $12-$13 million a season for the services of a good, helpful starting pitcher. Surely, the O's would be just fine if Jimenez returned to that level.

A Wholly Unscientific Look at Matt Wieters's Defense Post-Tommy John

Before I get into this, I should stress that — as the title states — this is an unscientific article. As such, it shouldn't have any huge effects on anyone's appraisal of Matt Wieters, much less for the Orioles in 2015 overall. Unlike erstwhile Depot contributor Stuart Wallace, I don't study medicine, nor do I have any experience with injury analysis. I simply wish to compare Wieters's plight to those of players who have dealt with similar adversities.

In the campaigns preceding 2014, Matt Wieters had one of the better arms in the majors: From his debut in 2009 to 2013, he accrued 16 rSB, the most in the American League. Gunning down one in every three attempted base stealers, he provided as much value as he could behind the dish.

In the early going of last year, he began to show signs of wear. Of the twelve men who took off against him, eleven arrived safely; had he compiled enough innings to qualify, every other major leaguer would have topped that rate. He didn't qualify, though, because his season went from bad to worse: A damaged ligament in his right arm sent him under the knife, and put his future in doubt.

Many pitchers have undergone Tommy John surgery, and many people have written of its effects. (Their findings have tended to contradict each other.) But what about the hitters who have done the same? To the best of my knowledge, only two people have looked into the latter group: Jeff Zimmerman at RotoGraphs, and wafflechip27 at the FanGraphs Community blog. Both of those looked at hitting performance, though; I'd like to focus on the other side of the ball — throwing. What does the operation's history tell us about players' defense before and after it?

Because very few position players have undergone Tommy John surgery, I had a very small sample size with which to work. From Jon Roegele's Tommy John surgery database, I found 24 catchers (Wieters included) who had it. Of them, a few — Matt Clark, Dustin Houle, Matt Reistetter, Andrew Knapp, and obviously Wieters — have had the surgery within the past year-plus, and thus haven't had enough time back. Moreover, 12 of them didn't play much prior to having the procedure. Thus, I limited my scope to the five who remained.

What did I find? Well, only two of the guys accumulated significant major-league innings both pre- and post-surgery, and both of them fared pretty well going forward:

Player	Pre Innings	Pre CS%	Pre rSB	Pre rSB/1000	Post Innings	Post CS%	Post rSB	Post rSB/1000
Todd Hundley	5782.1	25.9%	---	---	2822.2	23.8%	---	---
John Baker	1538.0	19.4%	-10	-6.5	1032.1	17.7%	-3	-2.9

While neither Hundley nor Baker was particularly adept at throwing out runners after Tommy John, their rates of doing so didn't diverge much from their rates before it. Plus, they were of a similar age to Wieters when they had it done — Hundley was 28 (like Wieters), and Baker was 29. So this tells us that Wieters will come out of this as good as ever, right?

Well, no. Aside from the fact that two people don't exactly make for a large sample, this means of analysis has one fatal flaw: survivorship bias. By only looking at the catchers who made it back to the show, we get an incomplete picture. Instead, we should take into account all of the catchers who had major-league time beforehand, regardless of if they made it back or not. And bringing in the three other men changes the conclusions a little bit.

Ben Davis had 3631.1 innings and a 33.9% caught-stealing rate before falling victim at age 28. Returning to the minors the following year, he threw out a mere 20% of base stealers over the last five seasons of his career. Vance Wilson — he of the 2388.2 innings and 40% CS% across eight seasons — went under the knife shortly after turning 33. He would endure the surgery again a year later, and would only play 18 games at AA (in which runners went 20-for-20 against him). And Chris Coste, who owned a considerably more mediocre 22.1% clip in 1641.2 innings, took an early retirement once he went through the procedure (albeit as a 37-year-old). Taken together, these three detract from the relative optimism inspired by the previous two.

The ages of the five men (and the fact that, y'know, there were only five of them) obviously add some pretty significant caveats to this. Nevertheless, one shaky point remains: When a catcher has Tommy John surgery, his future value takes a hit. If Wieters hits the free agent market after 2015, will the Orioles bring him back? Considering the things I've learned in writing this, I'm not too sure.

How to Fix the MLB Draft

Fangraphs writers have recently written two articles discussing how they would fix the draft. David Cameron wrote the following:

So what if there was no draft? Instead, what if we just lumped all new players -- foreign or domestic -- into a single acquisition system where each player was free to sign with the team of his choice, only with firm spending caps in place to ensure that young talent flows more freely to clubs that can't compete on major-league payroll alone? In other words, a team's talent acquisition budget would be inversely tied to its major-league payroll; the more you spend on big leaguers, the less you get to spend on prospects, and vice versa.

This proposal has a few problems. The first problem is that it will likely convince teams not to spend more money on payroll than other teams. Carson Cistulli created a graph showing how large each team's draft pool would be in 2015 based on this proposal and determined that the Dodgers would have no money in their pool and the Yankees would only have $2.2 million. It is unlikely that teams are going to be willing to spend a lot of money on players if it means they can't afford to draft any talented prospects. In addition, teams like the Yankees are currently able to add international talent with only minimal repercussions. If this method is implemented then this loophole will be closed and it will make teams really loathe to spend more money than anyone else.

The second problem is that even if teams like the Yankees were still willing to spend a lot of money on players they would likely fail in this system.  The Yankees have one of the largest payrolls in the majors but are struggling to remain competitive because they've been unable to develop quality homegrown talent. Most production is contributed by team-controlled players. If teams like the Yankees and Dodgers are prevented from drafting any of the best players then they will struggle even with large payrolls. This will cause fans of the Yankees and Dodgers to stop attending their games and therefore a significant loss in revenue, which would be disastrous for baseball.

However, it does make sense to disassociate draft position with record. Associating draft position with record encourages the Astros to spend minimal amounts on free agents in order to pocket revenue and receive top draft picks. Does baseball want to encourage the Astros to tank? Nor is it reasonable to give the Mets or Phillies better picks than teams like the Royals, Orioles, and Pirates simply because they had a worse record. Shouldn't we want MLB to reward small-market teams for being successful? If the draft is a way to ensure parity by rewarded small market teams then it should reward small market teams. The current method rewards failure instead of supporting small market clubs.

I think Cameron's idea of a draft pool where players can be selected is a good idea but using payroll is a mistake. Rather the draft pool should be based on an obscure metric called the Revenue Sharing Performance Factor.

The Revenue Sharing Performance Factor is discussed in the CBA and one can find a chart with the factor for each team on attachment 26, page 235 in the PDF and page 222 in the paper copy. Basically, this factor is meant to ensure that each team is paying a fair amount into revenue sharing based on revenue earned and market size. You can find a more detailed description starting on page 132 in the PDF and 119 in the paper copy if you're interested.

Using the metric, the pools would look like this in 2012 and 2013 presuming that teams could spend a total of $295M in each of 2012 and 2013:

The Yankees would have a pool of less than $7 million while the Royals would have a pool of nearly $10.3 million. This would allow the Royals to sign better prospects than the Yankees but would still give the Yankees ample opportunity to add talent. In addition, the Astros no longer receive a reward for tanking as their draft pool is at $9.4M each year while the Mets and Cubs would have a draft pool of about $8.5M. This wouldn't force those clubs to spend money in free agency but it would make it harder for them to succeed if they didn't.

Implementing this method would lead to other changes. It would no longer make sense to allow teams to give qualifying offers to potential free agents because small market teams would have a built-in advantage due to the fact that they can’t sign their best players when they become free agent eligible. In addition, it would make sense to completely abolish the luxury tax. This method encourages teams in large markets to spend money on free agents if they want to be competitive. If so, it isn’t fair to penalize them for spending money. It would also make sense to eliminate the supplemental revenue sharing plan. That way, teams that have a larger revenue and market size than average but aren’t likely to spend enough money to be subject to the luxury tax would see some benefits from this deal and would be more likely to support it.

This deal is good for small market clubs by ensuring that they have a larger draft pool than large market clubs regardless of record. It would help large market clubs by ensuring that they no longer need to pay luxury tax and wouldn’t have to share as much money via revenue sharing. It would be good for all clubs because it would control spending on both foreign and domestic prospects. The richest clubs wouldn’t need to spend millions on foreign prospects and the poorest clubs would have a fair chance to convince foreign prospects to join their organization. It would be good for the players union because prospects would be able to choose their team and the elimination of the luxury tax would encourage spending by rich teams. Unlike Cameron's plan, this has benefits for all teams as well as the players union.

It seems like a win-win-win-win situation to me.