Yoenis Cespedes: High Volatility And Opt Outs

It has been about a month since I have thrown together a comp model for a top end positional player.  However, now seems to be a good time to revisit the approach as light rumblings have associated the Orioles, in their undying desire to being merely unreasonable in resigning Chris Davis, with talking to Yoenis Cespedes' agent about maybe the weather or his impression of the Force Awakens.  Let us pretend though that this is legitimate interest in Cespedes and what pray tell we might expect from a Cespedes clad in Baltimore orange.

The comp model in this case was focused on all outfielders with particular weight to walks, strikeouts, isolated power, and defense.  The comps were rather loose for Cespedes, but not as tenuous as Nick Markakis' were.  Only one player really lined up well with Cespedes and that player was Adam Jones.  Being the same playing age, that comparison does not work well for our exercise here.  Anyway, here were the ten best comps.

Sammy Sosa

Jesse Barfield

Don Lock

Tony Armas

Derek Bell

George Foster

Tommie Agee

Raul Mondesi

Richard Hidalgo

Aaron Rowand

 On first look, this is a rather scary grouping.  Strong bats, all of them, but most faded out quickly.  The most optimistic outlooks would be those attached to Sosa, Armas, and Foster.  Most did not see significant time in their fifth year. Here is the mean outcome of this population:

Year	Age	PA	HR	AVG	OBP	SLG	WAR
2016	30	529	25	.255	.326	.466	3.2
2017	31	496	22	.254	.325	.456	2.8
2018	32	420	19	.276	.349	.486	3.2
2019	33	456	17	.226	.294	.397	1.0
2020	34	442	17	.218	.278	.386	0.4
2021	35	410	15	.206	.263	.367	-0.3
2022	36	402	12	.191	.248	.332	-1.0
2023	37	382	11	.177	.231	.312	-1.6

 There is one caveat to the above table.  Cespedes is considered an excellent defender (+10 runs over a full season) for the 2016 season and that measure has an age curve applied to it.  His 2023 season has him slightly above above (+1).  That mean gives the appearance of three strong years, one make do season, and then him considering retirement.  What the mean obscures though is the range of what we can reasonably expect.  That is below:

	Low	Mean	High
2016	1.2	3.2	5.3
2017	1.5	2.8	4.2
2018	-0.1	3.2	6.6
2019	-0.5	1.0	2.5
2020	-1.1	0.4	1.8
2021	-1.6	-0.3	1.1
2022	-2.1	-1.0	0.1
2023	-2.8	-1.6	-0.7

This is an incredibly wide range.  Cespedes might be a monster for three seasons and then be usable for three more seasons or he might be done after two middling years according to this comp approach.  With such a wide range of possibility, Cespedes is probably one of the more ideal players to be seeking a player option.  He needs to find a club that either believes he is a monster performer one that will let him walk out if he winds up being one.

BORAS, which yesterday missed Alex Gordon's 4/72 contract by predicting 4/69, thinks Cespedes should see a six year contract (just barely) for 18.8 MM (6/113).  However, the comp model thinks the following:

Length	Low	Mean	High
1	8	23	37
2	19	43	68
3	18	68	119
4	14	76	139
5	5	79	154
6	-10	77	164
7	-30	67	165
8	-57	51	158

BORAS is right between the Mean and High ranges, which is not exactly the most ideal place to be.  This is particularly true when the low end projection sees Cespedes as a net negative player.  Again, this seems like an area where a player option might make sense.  With an 18.8 MM AAV, a four year deal with that final fourth season a player option could make a great deal of sense.  Risk would be even for both sides with the total surplus value probability equaling with the total negative value probability.  For the team, a four year deal at 75 MM would also be right in line with Cespedes projected mean worth.  If Cespedes continues on his late blooming tear, then after three seasons BORAS thinks he would be able to garner himself a 6/155 deal.  At that point, his comps would like look incredibly different.  Amazingly, the numbers all seem to magically come together on this one.

Anyway, it would be interesting to see if the market continues to play to the BORAS model or if the uncertainty in Cespedes future makes team weary and a confidant player bets on himself for a big payday in a few years.

How Much Is A Player Opt Out Worth?

Depends.  That is the answer to the title.  Player opt outs (which used to be housed under the term player option) are not new and have always been a bit controversial.  The conventional wisdom is that the team carries all the risk.  If the player does well, he leaves.  If he does poorly, then he sucks at the teat of the poor club.  Of course, this is an amazingly simple way to look at the situation.  Player options, like team options, have cost and benefit associated with them and it helps to perhaps think a bit more on this.

The Player Perspective
For players, the option is about providing themselves a safety net for earnings to protect them against a collapse in their market value.  To that end, so does a  guaranteed year or more tacked on to the end of the deal.  What makes the player option so ideal for the player is that if he is able to improve upon his market value then he is able to option out and benefit from that increase in value.  Past examples of successful option outs include J.D. Drew, Alex Rodriguez, and Zack Greinke.  Past examples of successful option acceptance include Jorge De La Rosa, Brian Wilson, and Dan Haren.

To carry this forward with a concrete example, let's look at Justin Upton who our BORAS model pegged at a 5/85 deal.  From our past use of a comp model (which thinks the BORAS model is underpaying Upton by 28 MM), we had projected three general paths for him:

Year	Low	Mean	High
2016	3.0	3.4	3.7
2017	3.5	3.4	2.9
2018	2.7	2.7	2.5
2019	2.4	3.0	3.2
2020	0.5	2.2	3.6
2021	1.0	2.4	3.4
2022	-0.1	1.7	3.1
2023	-0.7	0.4	1.3
2024	-1.2	-0.4	0.2
2025	-1.8	-1.1	-0.5

That translated to these cumulative values:

Length	Low	Mean	High
1	21	24	26
2	47	49	48
3	68	70	67
4	88	94	92
5	92	113	123
6	101	135	153
7	100	151	182
8	93	155	195
9	81	151	197
10	61	139	191

Let us assume the general framework the player and club is considered is a 7/151 contract, which happens to be the Mean expected value during this time frame.  So the question is where on each of these generalized track would Upton want the ability to reenter the free agent market?  Can he find a sweet spot that would enable him to make his true value or even more?  That largely depends on what the team might consider in its interest.

The Team Perspective
From the team perspective, the issue is about not being saddled with responsibility for the worst case scenario.  Again, we will use the three tracks to consider where it makes sense for the club to agree to an option out.  From our perspective, this is done by considering the probability of value in the Mean and Best cases evening out with the losses potentially accrued.  With a 7/151 contract, the worst track results in a loss of 51.9 MM.  There are no points along the way for the club to come close to that value.  The greatest probable gain is 30.2 MM after the final season of the contract.

Are there any lengths of contract where it would work?  Yes, roughly.  A 4/85 deal could have an opt out any year of that deal.  A 5/106 deal would make sense to allow an opt out after four seasons.

How much less would Upton need to lower his annual earning in order to have an option out make sense with a seven year contract? 
7/142; option after six years
7/137; option after five years
7/134; option after four years
7/127; option after three years
7/124; option after two years
7/116; option after one year

Bringing the Two Sides Together
Let us say that the starting point is a 7/151 contract.  How much should Upton expect to make over the remainder of his career?  Depending on his performance, BORAS (adjusted to make it think 7/151 is the expected deal) thinks he will earn somewhere between 155 and 230 MM over the course of his career with a 7/151 deal.  With the suggested salary structure and Upton's projected career marks, there are really only two points at which he might expect to benefit from an opt out: after Year 1 where if he excels he stands to sign another seven year contract with a 1 MM AAV raise or after year 6 where he stand to make a million less (20.6 MM), but have that converted into a four year deal.  The first option increases his total potential earnings to 233 MM, a 3 MM increase.  The second path puts him in line for a 236 MM payday, a 6 MM increase.

When you put it all together, the deal that makes most sense for the club and for Upton together would be a seven year deal with a player option for that seventh year.  The first year option would simply be cost prohibitive.  For the seventh year option, Upton has that 6 MM buffer which would put the break even point at 145 MM.  One might think there is wiggle room in there for both sides.  For the club, it matters little and for Upton it might make him feel more comfortable in having a say over when he chooses to go into free agency.

All in all, this exercise proved not to be as thrilling as I was hoping it would be.  Even Upton's most optimistic likely career path did not show much reason for him to opt out.  I think the question is slightly more complex than what I show here.  There is value to having control over your own future and when you decide to look for employment elsewhere.  Some players enjoy that control and one would think there is value in it.  Would Upton think that having a four year opt out was worth 17 MM?  Maybe.  It is not an ungodly sum and maybe, just maybe, he is quite unique and performs at a much higher level justifying a larger pay day.  Or maybe it is worth 17 MM to be able to leaving flailing team in search for a more successful franchise.  That sort of thing, I cannot measure.