Monday, August 12, 2013

2014 Free Agents--A VERY Early Look

The Chicago White Sox made the following moves in the past couple of weeks:
1. Traded Matt Thornton, due approximately $8.5 million through 2014 to the Red Sox
2. Traded Jake Peavy, due approximately $37 million through 2015 to the Red Sox in a 3-team deal
3. Traded Jesse Crain, a free agent after this year to the Rays
4. Traded Alex Rios, due approximately $32 million through 2015 to the Rangers for Leury Garcia

My approximate values suggest the White Sox cleared around $75 million off their books, which has all of sports talk radio wondering how they will spend that money, with the most frightening asking if "they'll reload with free agents over the winter." The Sox can go many different directions, but I suspect big ticket free agents will NOT be the way they go--if that method was ever in vogue, I believe it is very much in decline. To investigate this, I'll present two types of information:
1. Available free agents for 2014
2. Free agent patterns from 2001-2013 and what they might portend

I'm working from this list, so any omissions are their fault. There are 242 players on the list, and going through it with a VERY GENEROUS eye I see 28 players worth examining. My extremely low threshold includes anyone I believe worthy of more than a 1-year contract, and I'll do it by position:
1B--Kendrys Morales and Justin Morneau (if he's cheap and healthy), MAYBE Adam Lind
2B--Robinson Cano (forget it), Ben Zobrist and Ryan Raburn (maybe)
SS--Stephen Drew and Yunel Escobar (both are stretches)
RP--Jesse Crain, Casey Janssen and Joe Nathan

That's not 28 players, I already knocked some off my list. This is the list White Sox GM Rick Hahn has to choose from if he goes the free agent route and attempts to rebuild quickly. Pitching isn't really an issue for the Sox as they have decent starters, an adequate (and cheap) closer and middle relief is readily available. They could upgrade their outfield and go after Ellsbury, install Avisail Garcia in right and hope that Dayan Viciedo continues to develop. I have no clue on the true availability of Brian McCann since the Braves will have to determine Evan Gattis' future and Saltalamacchia doesn't really do much for me. The wild card could be Ben Zobrist, who will cause great consternation for the Rays--do they sign him for Evan Longoria-type money or roll the dice and see if they can plug in another player? If the White Sox could pick Zobrist up, that could make a very immediate improvement in that position, even though Gordon Beckham is having a decent offensive year. 

I see the White Sox sitting this entire big-ticket free agent offseason out and allocating money to rebuilding a farm system that is about as empty as it can be. I'm not sure ANYONE ever really rebuilt through free agency as much as it was written about, and when I show the last couple of years, it will become clear that GMs as a whole are entering a new period of frugality in both length and amounts of contracts.

This table shows free agent trends from 2001-2013:

I used three different sources to put this table together, which I'll explain at the end for those interested. These numbers aren't meant to be definitive as much as illustrative to give a feel for what free agency really looks like in modern baseball.

Tot=total free agents signed and includes teams signing their own free agents
Regular=major league contracts
MY=multi-year contracts, anything over 1 year
Minor=minor league contracts, regardless of whether the player actually made the roster or not.
Dollars=total value of free agent contracts signed for the year. Since three different data sources are used, take these with a grain of salt, but everything from 2006 on is from the same set, so at least that's apples to apples.

By my numbers, there were just over 2300 free agents from 2001-2013, of which only around 500 or so were worthy of anything greater than a 1-year contract, and just over 100 signed contracts of 4 years or longer--less than 5%. The notion that teams go into free agency with checkbooks open and throwing money at anything that moves is not borne out by the numbers. It's more often a mundane experience of 1-year contracts worth $600,000-800,000. Free agency doesn't transform team direction as much as supplement holes and maybe, MAYBE fill in a glaring hole. A review of those big contracts suggests that is more hyperbole than fact.

There have been 45 pitchers who signed 4-year or longer contracts since 2001:

I'll use Darren Dreifort to illustrate this very informative chart. The Dodgers signed him beginning with the 2001 season to a 5-year contract valued at $55 million. FanGraphs has a column in their Value tab that calculates the dollar value that a player delivered, and from 2001-2005, they estimate Dreifort delivered $3.9 million in value, or about 7.1% of the worth of his contract. Since Dreifort is widely considered to be one of the worst free agent contracts in history (along with another 2001 signee, Mike Hampton), this just helps quantify how bad that contract was. It's one thing to swing and miss, totally another to completely whiff.

In my mind, any player that delivered around 75% or more of contract value delivered. FanGraph $Values only exist from 2002 on, so extrapolations need to be made for the 2001 pitchers to allow that some of them (actually, just Mike Mussina) had decent years that added value. Likewise, contracts from around 2011 on are still works in progress. For example, Anibal Sanchez has delivered about one-quarter of his contract's value in less than one-fifth of the time and delivering value.

Two things should jump out upon a cursory review:
1. Value is delivered at the lower end of the pay scale, which is perfectly logical--it's much easier to deliver $60 million of value than $160 million. Almost everyone that delivers value is in this mid-range.
2. There are 5 contracts of $100 million or more. Cliff Lee is pretty much right there and having a solid 2013 for a mediocre Phillies team, and Sabathia is pretty close. Other than that--not so much. 

I suspect the day of the highly-paid closer might be coming to a close due to a combination of acknowledging that it's an easier (but NOT necessarily easy) position to fill than previously thought and that players like Mariano Rivera are once-in-a-generation talents and not sitting out there waiting to be found. In addition, they haven't delivered the value and will begin to either get shorter contracts or simply used up, tossed aside and replaced with younger (and cheaper) talent.

This is the list of position players with 4-year or more contracts since 2001:

It's a long one but still very informative. The first thing that should be apparent is that absent two very anomalous recent contract, the long contracts seen in the past like the ones for Alex Rodriguez and Manny Ramirez in 2001 have generally gone by the wayside. The trend from 1990-2007 of hitters able to maintain their power into their late 30s seems to be in decline, making teams much more wary of paying power hitters much beyond the age of 35. 

Teams are starting to get burned much more often--consider the $100+ million contracts since 2007. Only one (Matt Holliday) would likely be signed again, and there is significant buyer's remorse for many of these contracts. 

Of course, some have extenuating circumstances--for example, when the Cubs signed Alfonso Soriano, it was with the hope he would be the missing piece to take them to a World Series championship. At the time it wasn't an unreasonable hope as the Cubs of 2007-08 were among the best teams in baseball, just not very good in the playoffs as they went 0-6. Soriano's signing was with the expectation that by the time he reached his decline there would be a fond afterglow--it didn't work out that way.

It's become apparent the number of teams willing to extend Albert Pujols and Josh Hamilton-type contracts is getting down to one. It only takes one to make a market, but the free-spending teams of the past are showing new restraint, reasons for which will leak into another post. Consider two recent in-season re-signings:
1. The Red Sox extended Dustin Pedroia with an 8-year $111 million contract, averaging a very affordable $13,750,000 a year. Pedroia has skills that shouldn't atrophy like a power hitter, and while he may not deliver $111 million in value, he'll be very close--he's 29 now and if he can play like Chase Utley, he'll be delivering value through age 35 (assuming he stays healthier than Utley has).
2. And speaking of Utley, he just received an extension through 2015 at $25 million with options from 2016-2018 at $15 million per year. If he can stay in one piece, he can be an important part of the Phillies, but he's had difficulties doing that since 2009. This is smart on the Phillies part--they've locked him for a very short term, and if they like what they see and he can stay on the field, they can go year-by-year as he hits 37.

I use this graph with great trepidation, but it helps put a picture to this data:

This plots every 4-year or longer contract, with the horizontal axis showing contract value and the vertical the percent of contract value the player delivered. It's obvious from this chart that it's virtually impossible to deliver value on contracts worth over $100 million, even after lowering that threshold to 75% (the dark line is at 100%). Value is delivered when players are signed to shorter contracts worth smaller overall amounts.

This is the future, and EVERY GM IN BASEBALL is aware of these facts. There are special talents that can get two different contracts because they're so good at a young age--Alex Rodriguez essentially did deliver on his 2001 contract and Adrian Beltre received two different long-term contracts and other players can as well. I just can't see the Pujols contract being repeated any time soon--it's such a huge amount of money in a sport that does NOT have an unlimited pool of money, contrary to what many might state (that's a separate post). I'm not sure the $20 million salaries will go away, just the 6 or more years--the Pedroia contract is a good one for both sides because even if he falls off at the end it won't be a significant hit on the payroll.

It will be an interesting offseason. Robinson Cano is deserving of big money, but what the definition of "Big" is will be changing--the Yankees aren't necessarily the Yankees of old and willing to throw huge dollars around. Jacoby Ellsbury and Matt Garza might get big dollars per year, but I'm not sure for how many--already the trend toward pitching contracts is moving to 5 or less, and the same will probably occur with position players as well. Teams have been saying FOREVER their unwillingness to pay for past performance but honored that statement more in the breach than the observance. I think that time is changing, and a 2014 free agent list that is good but not breath-taking just might be the catalyst to that change.

As I wrote, this information came from three primary sources:

1. The 2014 free agent list can be found here
2. Information on 2006-2013 free agents was found here. No matter what year is viewed, the player's age is for 2013, so I made that adjustment.
3. Information on the 2004-05 seasons was found here. I supplemented this info with salary data from Baseball-Reference. I would take all information for these years with a grain of salt.
4. Information from 2001-2003 was found here. There were separate pages for each year.
5. FanGraphs $Value for each player are found at the bottom of each player's page. This is Alex Rodriguez's page as an example.

In all cases, I define the year as the year in which the player began play for his new team. It's not unusual to see references to the "Free Agent Class of 2012" referring to players like B.J. Upton and Michael Bourn who changed teams for the 2013 season. I refer to them as the Class of 2013.

There were no shortage of assumptions and extrapolations made, and any mistakes in presenting or interpreting this data are mine alone. Since I don't plan on defending this as a PhD dissertation any time soon, view it for what it is, an attempt to portray the efficacy of free agency and the impact it's had--much more in column inches than in team success.

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