|Did Someone Say Bananas!|
Cost and value can be looked at in a couple ways. Two of the approaches I have taken to determine value of a player are: (1) projections of market value based on retrospective performance and (2) projections of cost per win based on comparison modelling of future performance. I christened a model BORAS which looks at past market value based on age and offensive performance. That model thought the contract Davis would seek would be four to six years in length with a 20.8 MM annual salary. Off the bat, seven years is considered a sizable deviation. A 23 MM AAV is not beyond the 95% Confidence Limits, but certainly would be considered in the top quartile. In other words, it is a uniquely high salary for a uniquely high length of contract, according to this model. Perhaps a simpler way to put it is that the contract is one year too long and 35 MM too expensive.
The comparison model does not have a snazzy name because it simply is what so many people already do around the league and on the internets. You can read about it here. That model does not set any idea about how long a deal should be, but what value we can expect coming out of that deal. For seven years, the upper composite value is 172 MM with the 50th percentile mark as 104 MM. That is a pretty wide divide and the top tier is largely driven by amazing performance by Sammy Sosa, Jay Buhner, and Frank Howard, players who blossomed later than normal and had strong seasons in their thirties. If you considered all the similar players, then the conclusion would be that the Orioles overpaid here by 57 MM.
The deferred payments changes the contract slightly. As it stands the deal will take 22 years to complete with payments. He gets 17 MM from 2016-2022, 3.5 MM from 2023-2032, and 1.4 MM from 2033-2037. In today's money the deal could be expressed as roughly seven years and 138 MM or that Davis needs to deliver roughly 18 WAR. The 50th percentile projection puts him at 12.5 WAR while the upper level projection is at 21.8 WAR. With that in mind, BORAS would now say that is 1/13 too much and the comp model would be marked down to 34 MM overpay. Regardless, the deal looks optimistic, but not egregiously so.
Where the deal looks worse has to do with fit and the consequence of holding onto Chris Davis. First of all, Davis brings to the immediate a strong bat with a heavy right handed favored split. This might bring visions of Ryan Howard in your head, but keep in mind that Howard was useful until his Achilles gave out the year before his extension went into effect. Most ways to look at it though point towards Davis likely being a useful to very useful presence for the next three to four years and then be rather poor. The reason for that has to do with how does what he does so well, which is to only touch a few balls but make those touches count. Players with big power and poor contact rate tend to develop a couple years later than normal and stick around for an extra year or two before seeing their value completely collapse. Players similar to Davis in the past often experienced complete loss of ability likely due to them depending so much on a fringe skill (i.e., contact) to take advantage of their another very loud tool (i.e., power).
Wile Davis should indeed be helpful in the near term and provide a needed left handed bat, he really is not what I would call the best fit for the club. Depending on what else the Orioles do (there is talk about the club remaining in the Yoenis Cespedes market due to pitching drying up), they may be pressured to play Davis in right field. Metrics project a range for Davis of -15 to 0 defensive runs. If you ask scouts and front office folks, they lean hard toward the -15 mark. If you ask Scott Boras or my 13 year old nephew, they lean hard to 0 and also suggest that Davis should be a swing man to buoy the rotation. What this all means to me is that the club was in more need of a strong presence in right field defensively than a left handed bat. Cespedes might well be worth two to even three wins more than Davis defensively in right field, which may mean more to a club whose starting pitching does not exactly miss bats.
On top of this, we would have expected Chris Davis to have signed somewhere even though no other suitors ever made it known they were interested in him (although the Houston Astros made a great deal of sense). If Davis would have signed elsewhere, the Orioles would have been awarded something near the 32nd pick in the 2016 draft, which is worth about 7 MM. That turns the deal into something more like seven years and 145 MM.
When it is all said and done, the deal looks poor, but not monumentally foolish. I think they spent too much for a player who was slightly more of a luxury than them actually addressing a more pressing need. Davis will likely provide good value for the next three to four years, but it would not be surprising if he is released before the end of this contract. The comparison modelling says it is a 50/50 shot that he is a MLB player the final year of the deal.