Free Agency Is Still Broken

The free agent market has never been a good place for baseball teams to find talent. Back in 2014, I wrote an article discussing how the free agent market will break your heart because of the high bust rate of even top free agents. Since that article, it seems that things have gotten worse.

The dataset I use doesn't do a good job tracking option years. It's probable I'm missing a few players that had an option. There were 144 total players signed to a free agent deal worth at least $3 million that covered 2016.  Of these 144 players, 45 contributed either zero or negative WAR to their teams (31%). Another 61 contributed between zero and two WAR of value (42%). Only 38 contributed 2+ WAR (27%). As a result, one free agent WAR cost $8.6M in 2016. In total, these 144 players contributed 186.9 WAR (1.3 WAR per player).

The Detroit Tigers were the huge losers in 2016. They spent $115M on Justin Upton, Victor Martinez, Jordan Zimmermann, Mike Pelfrey, Anibal Sanchez, Mark Lowe and Prince Fielder. One caveat of this is that Prince Fielder was traded to the Rangers in 2013, and so Detroit wasn’t fully on the hook for his 2016 salary. If we include Fielder on this list as a player that the Tigers signed as a free agent to a deal that covers 2016, then they received -1.5 fWAR in return. If we exclude him, then they received .3 fWAR. Regardless, nothing will change the fact that they spent a significant amount of cash on players that were worth roughly the same as replacement level players.

The Orioles spent roughly $70-$75M to sign Chris Davis, Matt Wieters, Pedro Alvarez, Darren O’Day, Yovani Gallardo and Ubaldo Jimenez. In return, the Orioles received 6.2 fWAR - $12 million per WAR. This was only slightly worse than average, and illustrates how teams need to spend a significant amount of money in free agency just to get a slight advantage.

The primary exception to this rule in 2016 is the Cubs, who signed Jon Lester, Dexter Fowler, Jack Lackey, Ben Zobrist, Jason Hammel, David Ross, Jason Heyward and Edwin Jackson to free agent contracts covering 2016. Heyward and Jackson were largely busts, but the other five were huge successes. As a result, the Cubs received 26 fWAR from free agents while just spending $117M. Each free agent WAR cost the Cubs $4.5M, suggesting that free agency can be an excellent option for teams if they can hit on multiple players. Their luck largely ran out in 2017 when Lester, Lackey, Zobrist, and Zobrist fell back to earth and their combined horde of free agents signed for the 2017 season only contributed 6 fWAR at a cost of $96 million.

If the numbers for 2016 look bad, then the numbers for 2017 are catastrophic. There were 165 total players signed to a free agent deal worth at least $3 million that covered 2017. Of these players, 53 (32%) produced negative WAR and another 21 (13%) produced zero WAR. 58 (35%) more produced between 0 and 2 WAR exclusive while only 33 (20%) produced 2 or more WAR. As a result, one free agent WAR cost $14M in 2017 and these players contributed 128 WAR (.78 WAR per player).

Detroit again was a big loser, as they spent a fortune on Jason Upton, Mark Lowe, Jordan Zimmermann, Anibal Sanchez, Mike Pelfrey and Victor Martinez and received 2 WAR on their investment. On the bright side, things would have looked even worse if they didn’t trade Fielder to the Rangers previously. It’s worth noting that Detroit appears to have significantly cut payroll for 2018 and is presumably trying to rebuild their team without having to rely as heavily on free agents. The Angels also did pretty badly as their two main free agent splashes, Josh Hamilton and Albert Pujols ended up costing roughly $55M for -2 WAR.

The Dodgers, however, had significant success as they hit on Justin Turner, Kenley Jansen and Rich Hill. Worth noting is that all three of these players were originally Dodgers that ended up resigning with the club in free agency. In other words, they were known quantities and perhaps more akin to extensions than the average signing. As a result, the Dodgers paid $105M for roughly 16 WAR or an excellent price of just $6.5M per win.

The Orioles spent $73M in the free agent market and ended up receiving 1.1 fWAR for their efforts, resulting in a $/WAR of $66.1M. It turns out that their signings of Castillo, O’Day, Davis, Gallardo, Jimenez and Trumbo did not work out well for them – or anyone else for that matter. Just think, the Orioles could have signed Scherzer and Greinke for the amount of cash they spent on those six players and have money left over. Then again, it is well known how risky it is to spend money on starting pitching in free agency.

Minnesota was one of the most successful clubs. They signed three free agents whose contract covered 2017; Ervin Santana, Jason Castro and Ricky Nolasco. Santana ended up being one of the best pitchers in the majors, while Castro was an average catcher and Nolasco was traded to the Angels. Even including Nolasco in this analysis, free agents signed by the Twins produced 8.6 WAR at a cost of just $34 million.  If we exclude Nolasco, then they produced 7.3 WAR at a cost of just over $20 million, as the Twins were able to earn a wildcard spot in the playoffs. 

Organizations simply can’t build a winning team out of free agency. There simply isn’t enough free agent talent available unless a team is able to hit on three or four of the best players. Even in that case, the cost is still prohibitive for all but large market clubs. Instead, teams need to build their foundation with team-controlled players. Teams need to be able to accurately assess their talent and determine which players can help their team over the long run and should receive long extensions.

Teams that aren’t in huge markets should go into the free agent market only sparingly and only when they’re really comfortable about a player’s future performance.  Most free agents only contribute a minimal amount at a significantly high cost. From an owner’s perspective, it has to be tempting to just pocket $70 million in profits rather than spending the cash on free agents that will likely do little to help a team going forward.

This means it does make sense to devote a significant part of payroll to one or two players if a team is sure that they’re good (cough cough Machado). Most free agents contribute minimal production, so spending money to keep elite talents in the fold while focusing internally to fill out a roster makes sense. Realistically, small and middle market teams don’t have an opportunity to have many elite talents at once.

This is extremely relevant to the 2018 Orioles. The Orioles should realize it’s highly unlikely that they’ll be able to add significant talent to their club via free agency, so they need to be able to gauge whether their current team has enough talent to win. Since they don’t, it makes sense to look into which of their current players should be considered part of their future core and which players should be traded as part of a rebuild.

Baseball teams today only win if they’re able to develop team controlled young talent, that’s supported by extended home-grown elite talent and a few smart free agent signings. This means that teams can only be successful if they can gauge their own talent and determine which players they should keep and which should be traded based on the situation of their organization. Have the Orioles learned this lesson?

Would You Be Happy With Carlos Gonzalez And Jason Vargas?

The baseball season is over, and fans are desperate for things to talk about. That leads us to one of the an annual exercises of MLB Trade Rumors, when Tim Dierkes and/or a combination of writers predict free agent landing spots. As you'd imagine, it's an incredibly difficult job to correctly forecast which free agents will land where, and more than anything, it's just for fun.

The 2017/2018 predictions were published yesterday. For the O's, they include two signings: Carlos Gonzalez (1 year, $12M) and Jason Vargas (1 year, $10M).

If you read any part of our blueprint series, or are just vaguely familiar with the current makeup of the O's roster, you know they desperately need starting pitching. An offseason in which the main starting pitching signing is Vargas would, to put it mildly, not inspire confidence!

Again, though, MLB Trade Rumors' post just features a bunch of guesses. Some of them are right; most of them are wrong. If you tried the exercise yourself, you'd probably do just as well, or close. Just as an example, I looked back at the last five years of predictions for the Orioles. Here they are (with top 50 rank in parentheses):

2013: Nick Swisher (6), Joe Saunders (25), Jeff Keppinger (41)
2014: Scott Feldman (27), Nate McLouth (41)
2015: Nelson Cruz (9), Nick Markakis (24), Jung-ho Kang (50)
2016: Scott Kazmir (18), John Jaso (45), Justin Morneau (48)
2017: Mark Trumbo (8), Michael Saunders (20)

Of the 13 predictions over the last five offseasons, the Orioles signed one player: Trumbo.

Dan Duquette has said the Orioles intend to reload this offseason. Signing Carlos Gonzalez and Jason Vargas would not qualify as reloading. The O's don't like to spend big in free agency, especially on starting pitching. So what are they going to do? Make a few trades? Sign a lefty like Vargas as the main rotation upgrade? Grab a couple of starters off the scrap heap? Let it ride with sort-of interesting but unproven starting options like Miguel Castro and Gabriel Ynoa?

If the Orioles are actually going to reload, they'll have to do a lot more than those two signings. But then again, the O's version of reloading a starting rotation or roster is much different than other teams'.

Orioles Reportedly Make Substantial Offer To Chris Davis, But 'No Progress' Made On Deal

It's a running theme to make fun of the Orioles and particularly Peter Angelos for being cheap, or not spending enough to keep players, or hoarding MASN money, etc. In some cases it's more justified than others, but it's really something many fans say when they're frustrated or have run out of other things to talk about. As long as Angelos owns the team, it's likely something that won't go away.

That being said, re-signing Chris Davis, who's going to command an enormous contract, would go at least part of the way to showing the Orioles are willing to do whatever it takes to retain (some of) their own expensive talent. It's not absolutely necessary -- the Orioles are a mid-market team and spend like one -- but it is intriguing.

Buster Olney previously reported that Angelos has been "personally involved" in the Davis negotiations, but last night came the first report that the Orioles made a substantial offer to Davis. According to Roch Kubatko, it might not be enough:

Sounds like no progress was made in #orioles talks with Boras regarding Chris Davis. Its believed Os offer in neighborhood of $150 mil.

— Roch Kubatko (@masnRoch) December 9, 2015

The "just do something" crowd has to at least respect this effort from Orioles management, though we still don't know (and might never know) the details of the team's offer to Davis. He's looking for the best possible deal, so it's not like he has a responsibility to simply accept the O's best offer. That's typically not how free agency works, and surely not for a Scott Boras client.

Understandably, the Orioles may be moving on from Davis soon. Regardless of the terms, a $150 deal would represent quite an investment for the Orioles -- and it would blow Adam Jones's six-year, $85.5 million contract, the largest in franchise history, out of the water.

Whether the Orioles should be making that type of financial commitment to a first baseman is arguable, and they could use that money to fill several other holes instead. It's not like there's a shortage of other free agents and trade options to consider, and locking up Davis for a huge sum would seemingly limit what the Orioles could do to shore up the starting rotation and corner outfield concerns (unless you want Davis in the outfield full time; no thanks).

The Orioles clearly want Davis back, so it will be bittersweet if he's not playing in Baltimore next year -- especially if he ends up playing for a division rival. Still, depending on what other moves the O's make this offseason, letting him walk could be a blessing in disguise.

Free Agents Will Break Your Heart

Everyone knows that prospects will break your heart. Many prospects touted as the next big thing have ultimately failed. But top free agents that are unsuccessful with their new team don’t seem to have the same stigma attached to them. It seems the common perception is that top free agents are more likely to be productive than the top prospects. Certainly, casual fans get excited when they see their team sign a top free agent and usually are willing to trade prospects for top players.

I wanted to see whether this perception is accurate so I looked at all prospects ranked in Baseball America’s Top Hundred list from 1998-2007 and all free agents that earned an annual salary of at least five million, have completed their contract, and whose contract information was either in MLBTR or ESPN’s transaction tracker. These free agents were primarily players that signed a contract starting from 2007 to 2014. A more detailed description of my methodology can be found here.

Position prospects ranked 1-10 produced an annual average of 2.08 fWAR while free agent position players earning $15 million annually produced 2.09 fWAR per year. In addition, 56% of the prospects and 60% of the free agents produced more than 1.5 fWAR per year. This indicates that these position prospects were about as successful as the top free agents.

Free agent position players that earned between ten and fifteen million and those that earned between five and ten million performed similarly. Position players earning between ten to fifteen million produced on average 1.24 fWAR per season while those earning between five to ten million produced 1.13 fWAR. The position players that earned between ten to fifteen million did have slightly higher success rates as 41% were successful and 22% were stars. In contrast, 34% of the position players that earned between five to million were successful and 19% were stars. But in general, there’s little difference between position players that earned ten to fifteen million and those that earned five to ten million. This suggests that the best strategy for teams is to go after top position free agents or to stick with the ones that are affordable.  

Free agent position players that earned between $5 and $15 million annually performed similarly to position prospects ranked 51-100. The prospects produced an annual average of 1.06 fWAR while the free agents produced an average of 1.17 fWAR. 32% of the prospects and 36% of the free agents produced at least 1.5 fWAR per year. They also performed similarly to position prospects ranked between 26 and 50. Position prospects ranked 26-50 produced 1.34 fWAR per year while 35% produced at least 1.5 fWAR per year. It is worth noting that position prospects ranked 26-50 from 2003 to 2007 averaged 1.5 fWAR per year while 46% produced at least 1.5 fWAR per year.

Position prospects ranked 11-25 produced 1.63 fWAR per year while nearly 47% produced at least 1.5 fWAR per year. These prospects are easily better than free agents earning between $5 and $15 million annually but not as good as the top position free agents.

The chart below shows position category results.

Pitching prospects ranked 1-10 weren’t as successful as the top free agent starting pitchers. These prospects produced 1.98 fWAR on average per year while the top free agent starters produced 2.74 fWAR per year. 61.11% of the prospects and 70% of the free agents produced at least 1.5 fWAR per year. However, pitching prospects ranked 1-10 from 2003-2007 performed similarly to the top free agent starting pitchers. These prospects produced 2.36 fWAR on average per year while 81% of these prospects ultimately produced at least 1.5 fWAR per year. Pitching prospects ranked between 1 and 10 from 2003 and 2007 may not have had the same ceiling as the top starters but they arguably had a higher floor. Still, it appears that the top free agent starters are better than the top pitching prospects.

Pitching prospects ranked 11-25 performed similarly to free agents starting pitchers that earned between $10 and $15 million annually. From 1998-2007, the pitching prospects produced an annual average of 1.58 fWAR and 43% produced at least 1.5 fWAR per year. However, from 2003-2007 the prospects produced an annual average of 2.18 fWAR and 58% produced at least 1.5 fWAR per year. Free agent starting pitchers earning between $10 and $15 million annually produced an average of 1.85 fWAR and 53% produced at least 1.5 fWAR per year.

Pitching prospects ranked 26-50 from 1998-2007 produced an annual average of 1.01 fWAR produced an annual average of 1.05 fWAR while 31% produced at least 1.5 fWAR per year. Those ranked between 26 and 50 from 2003 to 2007 produced an annual average of 1.05 fWAR while 35% produced at least 1.5 fWAR. Free agent starting pitchers that earned between $5 and $10 million annually produced an average of 1.04 fWAR while 30% produced at least 1.5 fWAR per year.

Pitching prospects ranked between 51 and 100 from 1998 to 2007 produced an annual average of .73 fWAR while 20% produced at least 1.5 fWAR per year. There was no difference between the 1998 to 2007 and the 2003 to 2007 results.

If one believes that Baseball America is getting better at predicting pitching prospect performance over time then it makes sense to use the 2003-2007 prospect results. In fact, it makes sense to presume that current prospects will be even better than those ranked from 2003-2007. Therefore, it suggests that pitching prospects ranked from 1-10 have similar production to free agent starters earning $15 million or more, pitching prospects ranked from 11-25 have similar production to those free agent starters earning $10 and $15 million and those pitching prospects ranked from 26-50 have similar production to free agent starters earning between $5 and $10 million.

If one believes that Baseball America simply had good luck when selecting top prospects from 2003-2007 then this suggests that pitching prospects ranked from 1-10 are similar but better than those free agents that earn between $10 and $15 million and prospects ranked from 26-50 are similar to free agents that earn between $5 and $10 million.  

The chart below shows pitching category results.

Ultimately, the following groups have similar production:

• Free Agents earning at least $15 million per year = Prospects Ranked 1-10
• Free Agent Starting Pitchers earning between $10 and $15 million annually = Pitching Prospects Ranked from 11-25
• Free Agent Starting Pitchers earning between $5 and $10 million annually = Pitching Prospects Ranked from 26-50
• Free Agent Position Players earning between $5 and $15 annually = Position Prospects Ranked from 51-100

Prospects ranked by Baseball America have become significantly more productive and valuable over the years. Today the best free agents have similar success rates and production to the best prospects. Maybe it is time to start saying that free agents will break your heart.

Should the Orioles Sign Bartolo Colon?

According to Jon Heyman of CBSSports.com, the Orioles may be interested in the services of starting pitcher Bartolo Colon:

Colon market heating up. Orioles, mets, others. If it's 1 year deal, it'll be significant number, maybe $10M plus.
— Jon Heyman (@JonHeymanCBS) December 9, 2013

 Colon, who turns 41 in May, is coming off a season in which he compiled a 2.65 ERA (a career best) in 190.1 innings. He adjusts for not striking out many batters (5.53 K/9 in 2013) by not walking many (1.37 BB/9). He was rather lucky with his home run rate (6% HR/FB in 2013; career of 10.2%) and he posted the highest strand rate (80%) of his career (73.2%), but his .294 BABIP was right in line with his career average (.292), as was his groundball rate (41.5%; career of 41.8%). That's not Justin Masterson territory or anything, but it would have been second highest among regular Orioles starters last season, behind Houston-bound Scott Feldman (48.6%) but ahead of the also-likely-to-depart Jason Hammel (40%). The groundball rates of the other O's starters: Miguel Gonzalez (39%), Chris Tillman (38.6%), and Wei-Yin Chen (34.4%).

Bartolo Colon (photo via Keith Allison)

Colon won't be able to replicate such a low ERA in 2014, but he could certainly be useful as an innings-eater (insert obligatory fat joke) who gets opposing hitters to put the ball in play. And I'm only talking about a one-year deal for Colon. The Orioles should not be interested in offering a soon-to-be 41-year-old pitcher anything more than a one-year deal.

Besides Colon's age, the major concern seems to be Colon's 50-game suspension in 2012 for testing positive for synthetic testosterone usage. A controversial stem cell procedure administered in 2010 that very well may be the primary factor in reviving Colon's career also was investigated by Major League Baseball because the "orthopedic surgeon who performed the operation, Dr. Joseph Purita, had used HGH on other patients but denied using it on Colon, and ultimately MLB’s investigation found no wrongdoing." After his career seemed to be over after 2009, he posted a 4.00 ERA in 2011 with the Yankees in 164.1 innings, then went on to have two very good seasons with Oakland (for not much money: $2 million in 2012 and $3 million in 2013). So who knows exactly when Colon will revert back to his 2006-2009 self, but he's thrown at least 152 innings the past three seasons, which is something the O's rotation could use. Tillman and Chen seem locked in as the Orioles' No. 1 and 2 starters, but the rest of the starting rotation options (Gonzalez, Bud Norris, Kevin Gausman, Zach Britton, Steve Johnson, T.J. McFarland, etc.) all have their issues.

Some fans think the O's should steer clear of Colon simply because of his ties to performance-enhancing drugs. But as Cardinals general manager John Mozeliak, when talking about his team's decision to sign Jhonny Peralta, another player suspended 50 games for using PEDs, said:

When you think about what you’re trying to build it’s a lot of things that you factor into how you put a club together — character and makeup are some things that we weigh into our decision-making. But I think in his case, he admitted what he did. He took responsibility for it. At this point in the game there is nothing that says he can’t go play or isn’t free to go sign with some other club. I don’t think it’s the Cardinals’ responsibility necessarily to be the morality police. [Emphasis added.]

If that stance is good enough for the Cardinals, arguably the best-run MLB franchise right now, then I think that mind-set would be just fine for the Orioles to adopt.

And here is Craig Calcaterra of NBC Sports' Hardball Talk on Peralta, free agent contracts, and PEDs:

Here’s a shocking idea: Jhonny Peralta got a big crazy free agent contract, not because he used PEDs, thereby messing up the incentive system, but because everyone in free agency is getting a big crazy free agent contract these days. . . . Peralta got paid because he’s a good player at a position with scant available talent in a market that is paying through the nose for even ordinary talent. If that’s troublesome to you, you have a lot of things to worry about besides whether 50-game suspensions are sufficient to deter PED use. [Emphasis in original.]

I find the steroids/PEDs topic to be exhausting and much more appropriate for sports talk radio hosts and callers to yell about. (For those interested, Jon Shepherd's post back in August is well worth a read.)

Colon could help the Orioles win more baseball games, and that's what matters. His age is a concern, but there wouldn't be much risk attached to a one-year deal. And a $10 million deal for Colon is not unreasonable. Hiroki Kuroda signed yet another one-year contract with the Yankees, this time for $16 million (plus incentives), but he's both better and about two years younger than Colon.

Year	Age	Tm	W	L	ERA	G	GS	IP	ERA+	WHIP	HR/9	BB/9	SO/9
1997	24	CLE	4	7	5.65	19	17	94.0	83	1.617	1.1	4.3	6.3
1998	25	CLE	14	9	3.71	31	31	204.0	128	1.392	0.7	3.5	7.0
1999	26	CLE	18	5	3.95	32	32	205.0	126	1.273	1.1	3.3	7.1
2000	27	CLE	15	8	3.88	30	30	188.0	127	1.388	1.0	4.7	10.1
2001	28	CLE	14	12	4.09	34	34	222.1	110	1.394	1.1	3.6	8.1
2002	29	TOT	20	8	2.93	33	33	233.1	147	1.239	0.8	2.7	5.7
2002	29	CLE	10	4	2.55	16	16	116.1	172	1.160	0.9	2.4	5.8
2002	29	MON	10	4	3.31	17	17	117.0	129	1.316	0.7	3.0	5.7
2003	30	CHW	15	13	3.87	34	34	242.0	120	1.198	1.1	2.5	6.4
2004	31	ANA	18	12	5.01	34	34	208.1	89	1.373	1.6	3.1	6.8
2005	32	LAA	21	8	3.48	33	33	222.2	122	1.159	1.1	1.7	6.3
2006	33	LAA	1	5	5.11	10	10	56.1	89	1.456	1.8	1.8	5.0
2007	34	LAA	6	8	6.34	19	18	99.1	71	1.621	1.4	2.6	6.9
2008	35	BOS	4	2	3.92	7	7	39.0	119	1.385	1.2	2.3	6.2
2009	36	CHW	3	6	4.19	12	12	62.1	113	1.444	1.9	3.0	5.5
2011	38	NYY	8	10	4.00	29	26	164.1	107	1.290	1.2	2.2	7.4
2012	39	OAK	10	9	3.43	24	24	152.1	114	1.208	1.0	1.4	5.4
2013	40	OAK	18	6	2.65	30	30	190.1	141	1.166	0.7	1.4	5.5
16 Yrs			189	128	3.94	411	405	2583.2	113	1.314	1.1	2.8	6.8

Provided by Baseball-Reference.com: View Original Table
Generated 12/10/2013.

Colon also would not cost the Orioles their first-round pick because the A's did not extend him a qualifying offer. So, by signing him, the O's could improve the rotation in the short term without sacrificing anything valuable in the long term. Still, he's likely seeking a two-year deal after three consecutive solid seasons, and I wouldn't be surprised if some team offered him such a deal. But that team shouldn't be the Orioles.

Major League Retreads in the International League -- A Comparison

Among the stories of the 2012 Orioles were the returns of outfielders Lew Ford and Nate McLouth from baseball oblivion. Having been declared washed up by most, if not all teams, Orioles GM Dan Duquette took low-risk gambles in signing them to midseason minor-league contracts. After performing well at Norfolk, they were promoted to Baltimore where they made contributions to the team's playoff run. Duquette received a lot of credit for finding Ford and McLouth. Less known is that Duquette took several other low-risk gambles that didn't pay off, at least in that the players didn't contribute much to the 2012 Orioles. So the question is — was Duquette lucky or exceptionally talented, at least in comparison to the other GMs? This article will look at the other teams with International League franchises to compare the Orioles and those other teams in their use of last-chance talent.

In the spirit of full disclosure, I confess that I've been skeptical of Dan Duquette as a GM since I saw him quoted as saying that one of the hardest things to find, always, is a backup catcher. Also, although I don't believe I've ever formally met him, I have been working in the Norfolk press box when Dan Duquette was visiting the Tides general manager and have overheard their conversations. There's a certain amount of subjectivity in a big-picture overview like this; and while I hope my biases don't affect my conclusions, they might and you should be aware of them.

For this article, I'm going to focus on players most generically like Ford and McLouth — once-successful major-league players who were signed as free agents after spring training. The term "successful" is somewhat nebulous. However, if I tried to come up with some arbitrary definition, there would almost certainly be a borderline candidate on one side or the other of the line. All of the players identified were either long-term major-leaguers or had been a regular player for at least one full season. Limiting the players to those signed after spring training eliminates players who may have been free agents waiting for the right offer, and ensures that all the players had been truly given up on.

Below are all the retread major league players, based on the above definition, on International League teams in 2012. Players who made a significant contribution to the big-league team are in bold.

Buffalo (New York Mets)—C.J. Nitkowski
Charlotte (Chicago White Sox—Conor Jackson, Jose Lopez, Dewayne Wise
Columbus (Cleveland)—J.C. Romero
Durham (Tampa Bay)—Hideki Matsui
Gwinnett (Atlanta)—Miguel Batista, Lyle Overbay
Indianapolis (Pittsburgh)—None
Lehigh Valley (Philadelphia)—Mike Fontenot, Jake Fox
Louisville (Cincinnati)—Joey Gathright, Will Ohman
Norfolk (Baltimore)—Lew Ford, Bill Hall, Nate McLouth, Jamie Moyer, Joel Pineiro, J.C. Romero, Miguel Tejada
Pawtucket (Boston)—Nelson Figueroa, Scott Podsednik, Mark Prior
Rochester (Minnesota)—None
Scranton / Wilkes-Barre (New York Yankees)—Jason Bulger, Kosuke Fukudome, John Maine, Ramon Ortiz
Syracuse (Washington)—Koyie Hill, Mike Gonzalez, Mike MacDougal
Toledo (Detroit)—None

Teams with affiliates in the International League took chances on 29 established major-leaguers who were available free agents during the 2012 season. Four, or just about 14%, or nearly 1 in 7, proved to be of at least marginal value to the parent club. Since most of these players were signed to minor-league contracts, there is little risk in signing these players, so even a 1-in-7 chance of getting a useful player out of it might seem worthwhile.

The 2012 Orioles signed seven of these players during the season, as many as were signed by any two other teams combined. That should not come as a surprise. The Orioles' farm system did not really have a lot of major-league ready players in the higher levels. Several of the players they did have had failed in previous chances. When holes opened up at second base, left field, and in the starting rotation, there weren't obvious solutions at Norfolk and it made sense for them to take chances.

And of the four such players who made contributions to the major-league team, the Orioles signed two of them. That's nearly twice the "success" rate of the entire set of teams. There are several possible reasons for this:

• Luck. Dan Duquette and the Orioles just stumbled upon the right players.
• Skill: Dan Duquette and his staff spotted and signed the players who had the best chance of helping.
• Safety in Numbers: By signing as many as they did, they increased their chances of finding players who could help not merely in total but as a percentage.
• Opportunity: The Orioles gave more of their retreads a major-league chance, and so more of them had a real opportunity to contribute.
• Bias: I either considered too many or too few players, or identifed too many or too few as contributors.

All of these reasons can be examined more closely, and that's a task for another researcher and/or another day. To answer the question posed at the beginning of this article, the Orioles did gamble on more last-chance players than other teams, and they were more successful with them.

The New Moneyball: Paying Players Lots of Money?

Yu Darvish

An assumption I have made in the past may not exactly be completely accurate.  I was thinking last week about Yu Darvish and how much he would be worth on the open market.  I casually increased price per win because I think the economy is rebounding (arguable) and that scarcity causes elite players to be paid at a higher rate.  The first assumption is one that is beyond me.  If I was in tune enough to properly predict the market, I would probably own my own team by now.  The second assumption I can test in a slightly less casual way.

I decided to compare cost per win of free agents in general against cost per win of elite free agents.  I calculated average cost per win by back calculating fWAR and the value attributed to it.  I then produced a weighted average for the performance of elite free agents over the three years prior to free agency.  Elite players were defined as players who have received contracts in excess of 100MM in the free market from 2007 until now.  Here is the list:

2007 (average 4.09 MM / Win; elite 5.86 MM / Win)
Carlos Lee - 6/100MM (5.85 MM / Win; +43%)
Barry Zito - 7/126MM (6.97 MM / Win; +70%)
Alfonso Soriano - 8/138MM (4.77 MM / Win; +17%)

2008 (average 4.47 MM / Win)
Alex Rodriguez - 10/275MM (3.5 MM / Win; -22%)

2009 (average 4.42 MM / Win; elite 3.62 MM / Win)
Mark Teixeira - 8/180MM (3.99 MM / Win; -10%)
CC Sabathia - 7/161MM (3.25MM / Win; -27%)

2010 (4.10 MM / Win)
Matt Holliday - 7/120MM (2.79 MM / Win; -32%)

2011 (average 4.53 MM / Win; elite 3.39 MM / Win)
Cliff Lee - 5/120MM (3.43 MM / Win; -24%)
Carl Crawford - 7/142MM (3.25 MM / Win; -28%)
Jayson Werth - 7/127MM (3.5 MM / Win; -23%)

Based on this data and a quick overview of the years before 2007, it appears that prior to 2008 that elite players were paid about 30-40% above market rate for wins.  From 2008 and onward, elite players are now paid 24% less than market rate for wins.

Are elite players undervalued?
I don't think so.  I think what this list might show is that the thinking change for a large number of teams around 2007-2008.  Revenue streams were drying up which limited the number of teams able to spend top dollar for players, but also, I think, there is a greater understanding of player aging.

How does this affect the project value I threw out for Yu Darvish?
If his pitching the past three years translates as a 3.50 ERA over 200 IP / year, he is worth about 4.4 WAR per year.  With a 24% decrease in cost per win, we are looking at him being worth 75MM over five years if he was a free agent.  If you believe in the prediction from the translation model (2.97 ERA), then you are looking at a five year worth of 102MM with the elite reduction applied.