Archive for March 2014

Another Youngster Gets a Long-Term Extension

March 31, 2014

The Indians today signed their inexperienced catcher Yan Gomez to a six-year $23 million contract extension that contains two additional option years for the Tribe.  Gomez has just a little over a year’s major league service time, so the risk to the Indians is that Gomez isn’t really as good as he performed in 2013.  However, after a very strong year in AAA in 2012, Gomez is probably good enough for this to be a great deal for the Indians if Gomez stays healthy.

Since the Royals locked up catcher Salvador Perez long-term in 2012, it has become the rage for teams to try to extend their most promising pre-arbitration eligible players with long-term deals, particularly ones that buy out one or more free agent seasons.  Mike Trouts record-setting deal of a few days ago immediately pops into mind, as does the Jose Altuve‘s mid-2013 extension.  (There are others, of course, but they are not immediately coming to mind.)

These deals obviously bear some risk for the teams making them, but the risks are largely superseded by the tremendous savings teams receive if the young player develops as hoped for and expected.  Young players have made it clear that they will leave money on the table (including even Trout’s nine-figure mega-deal) in exchange for a guarantee that no matter what the future brings they will make at least a small fortune playing professional baseball.

I would think this guarantee would be particularly appealing for foreign players coming from impoverished countries, although of the players mentioned above, Trout was born in the U.S. and Gomez is probably a U.S. citizen since he attended high school in Miami.  In short, it looks like this guarantee is appealing to many, many young players.  One would also think that the strategy is particularly appealing to small-market teams who want cost certainly, although the Angels (Mike Trout) are hardly a small-market team.

I don’t see this new trend diminishing except in the event that a number of these contracts blow up in their teams’ faces all at the same time.  Even then, the strategy looks like one that will save teams money in a majority of cases over time, more money than will be lost on the few contracts where players fail spectacularly after signing.

None of the young players mentioned above needs to get better than they were immediately before signing their extensions for the deals to be good for their clubs; they only need to maintain this value for their teams to come out ahead.  Of course, a majority of these players will, in fact, get better as they move into their age 26-28 year old seasons.

Closers Are Generally Overrated

March 31, 2014

I read a good article by the New York Times’ Tyler Kepner this morning about closers.  What I took away from it is that except for the very best closers, those who are clearly the very best and most consistent relief pitchers in baseball, closers are fungible, since a team’s top set-up man can usually step into the role and perform just as well if the team’s established closer leaves or gets hurt.

This not in the least bit surprising, since most effective closers really only need two plus pitches to be effective.  Since starters need at least three or four good pitches to be effective, there are going to be many, many more effective relievers than effective starters.

The article lists a great number of closers who got big free agent contracts but were replaced in the closer role long before their contracts expired.  No surprise there either — free agents in general are overpaid and entering the decline phases of their careers.

Needless to say, almost all quality relievers prefer to be closers than set up men, not just because closers are much better paid.  In today’s game, closers’ roles are very narrowly defined — they mostly pitch the last inning of games in which their teams have a saveable lead.  Top set-up men pitch more innings each year and pitch in many more different situations, which makes their jobs more uncertain and more difficult.

For pitchers with the talent to be a major league team’s top set-up man, the little bit of extra pressure that comes with being the team’s closer is almost insignificant.  The very act of being a regular major league player means facing daily pressure to perform and win no matter what part of the game is being played.

The lesson seems to be identify good pitching prospects in the draft, develop them as effective major league relievers, and you will have pitchers who can step into the closer’s role when you need them.

The one purported advantage of having an established closer is the “calming” effect it has on the team’s other players.  An established closer gives the team confidence and one less thing to worry about, or so the argument goes.

As the article states, this alleged psychological effect is just about impossible to verify.  I’m not aware of any evidence suggesting that teams actually perform worse in subsequent games after the team’s closer blows a save and loses the game.  Major league players are professionals who have plenty of experience bouncing back from tough losses by the time they reach the majors.  Also, it seems to me that the moment that an untested closer steps in and pitches about as well as the preceding established closer did, the team is going to have the same sense of assurance it had with the established closer.

What is most important about this perception is that many people in baseball still believe this established closer benefit exists.  As long as this is a widely held belief, some teams will continue to overpay for established closers who could be more cheaply replaced by other relievers who are just as effective.

Mike Trout’s $144.5 Million Extension a Relative Bargain

March 29, 2014

The Angels and their young superstar Mike Trout reached agreement on a six year extension for a total of $144.5 million.  Compared to the extension the Tigers gave Miguel Cabrera yesterday, Trout’s deal is a bargain for the Angels.

Trout’s extension kicks in starting with the 2015 season.  It pays him a $5 million signing bonus, a total of $39.75 for his three arbitration years and then a total of $99.75 million for what would have been his first three free agent seasons.

Trout likely would have received far more through the arbitration process for his arbitration years going year by year, and while he gets a market rate ($33.25 million per) for the last three years of the deal, he defers free agency for three  of what should be the most productive years of his career.  If Trout stays healthy, this contract should be a terrific deal for the Angels, making up somewhat for the ill-considered long-term deals recently handed out to Albert Pujols and Josh Hamilton.

Trout’s and his agents’ thinking in accepting the deal seems fairly obvious.  It guarantees him an enormous sum of money very early in his major league career, and he’ll still become a free agent after his age 28 season, when he’ll still be young enough to get another huge contract if he develops as everyone hopes he will.  The deal essentially eliminates the possibility of him becoming the next Grady Sizemore if he suffers major injuries (despite a brilliant start to his career, injuries starting in 2009 have limited Sizemore’s career earnings to date at a little under $30 million).

I definitely think there is a real possibility that Trout will begin to have injury problems in the next few seasons simply because he’s so big (6’2″ and 230 lbs already at age 22).  Obviously, we’ll have to wait and see if that’s the case.

 

Detroit Tigers Agree to Extend Miguel Cabrera for a Gazillion Dollars

March 28, 2014

The Tigers will actually be giving Miguel Cabrera $248 million for the eight seasons commencing with the 2016 season, since he’s already under contract for 2014 and 2015.  It just seems like an outrageous amount of money when you consider that he will be 33 years old when the new deal kicks in.

Cabrera is currently listed as 6’4″ and 240 lbs.  The idea that he’s going to age gracefully through his age 40 season seems just about impossible.  To me, this contract looks for all the world like the deal the Angels gave Albert Pujols two years ago, only it’s for more money.  At some point, this contract is going to be an albatross around Detroit’s neck — I guess the real question is when.

Fangraphs says Cabrera was worth an average of $33 million over the last three seasons, so the average annual rate of the extension seems about right.  What doesn’t make any sense is the length.  Four or five seasons at $33 million per makes sense, given what he’s done for the team and the free market cost of prime talent; eight seasons sure doesn’t.

On the other hand, Cabrera clearly “deserves” this contract in light of the fact that he’s the best hitter in baseball and the contracts Pujols and Robinson Cano received the last two off-seasons.  It just seems to me that the Yankees and the Dodgers are the only two teams in MLB that can really afford to swallow these kinds contracts when they inevitably go bad and continue to pay out top dollar for top talent.  For a team like the Tigers the contract is really going to hurt no later than 2019.

New Penalties for Performance Enhancing Drug Use

March 27, 2014

MLB and the players’ union have reportedly reached agreement on a new penalty regime for performance enhancing drugs (“PED”) use which could go into effect as soon as Opening Day.  The new penalties call for an 80-game suspension for a first-time positive test, 162-game suspension for a second positive test, and a life-time ban after three positive tests.

The new rules also close a loop-hole that allowed suspended players to be paid for off-days during the period of the suspension, but will now allow players to appeal to an arbitrator if they claim that the PED use was accidental.  If the suspended player can prove the PED use was accidental (for example, in cough medicine or a foot cream), the arbitrator can cut the suspension in half.  The upshot is that there will probably be a number of future arbitration hearings, as I would expect many in-denial cheaters to claim accidental use, as, for example, Melky Cabrera did two years ago.

The enhanced penalties are pretty much what I predicted last Fall when the Biogenesis America suspensions were handed down.  I didn’t think then that the MLBPA would allow suspensions of more than 75 to 80 games for a first offense or 150 to 160 games for a second offense, because of the union’s institutional interest to keep player punishment as small as possible to deter the conduct.  If players continue to be caught for PED use at the same rate over the next couple of seasons as they were over the last couple of seasons, MLB and the union can always increase the suspension periods again.

Obviously, the new suspension lengths are more of a deterrent than the old suspension rates.  However, I think it will probably take at least a 150-game suspension for first-time use to really scare all professional baseball players away from PEDs.

Now Would Be a Good Time for Expansion

March 27, 2014

Forbes came out today with its 2014 valuations of major league baseball teams.  What strikes me more than the facts that Forbes now considers the New York Yankees to be worth $2.5 billion and the Los Angeles Dodgers to be worth $2 billion is that the four least valuable teams (the Tampa Rays, the Kansas City Royals, the Oakland A’s and the Miami Marlins) are all valued between $485 million and $500 million dollars.  That’s still an awful lot of money even for the bottom-feeders.

It’s got me thinking that it’s about time for MLB to start thinking about adding two new expansion teams.  Of the four teams at the bottom, it seems that all four could increase their valuations considerably by getting a new, better located stadium (the Rays and A’s), getting an ownership group more interested in winning (the Marlins) or doing a better job of marketing to their broad geographic area of potential fans (the Royals have a large section of the Mid-West essentially to themselves).

At any rate, it seems clear that it should not be difficult to find two new investor groups who would be willing to pony up $450 million each for the right to two new expansion teams.  That would come to $30 million apiece for each of the existing 30 teams.  By way of comparison, the last two expansion teams, the Tampa Rays and the Arizona Diamondbacks, each paid $130 million for the right to join MLB in 1998.

It has now been 16 years since the last major league expansion, which equals the longest previous period between expansions (1977 to 1993) since expansion began way back in 1961.  Assuming that it would take several years to notify the world that another round of expansion will occur, to get submissions from and make choices about proposed ownership groups, and for the new clubs to start their farm systems before actually commencing league play, now would be a good time to make the decision to get the expansion ball rolling again.

About five years ago, I wrote a piece on where the next expansion teams should go, and I concluded that Portland, OR and San Antonio would be the best locations for the next two expansion teams, with Las Vegas, Charlotte and Indianapolis as other possibilities, based on metropolitan size and location relative to existing major league teams.  I still think Portland and San Antonio would be good choices for the next round of two expansion teams.

Obviously, only time will tell if MLB’s current owners think its a good time to expand into new markets.

San Francisco Giants’ Opening Day Roster Shaping Up

March 26, 2014

As we get into the last days of Spring Training, most of the Giants’ roster decisions look pretty clear.  With Tony Abreu having been released and with a little late Spring hitting, it looks clear that out-of-options Ehire Adrianza (.250/.283/.523 in 46 plate appearances) will get the sixth infield spot.

Similarly, Juan Perez (.300/.382/.567 in 68 plate appearances) and Hector Sanchez (.318/.326/.455 in 46 plate appearances) should have the fifth outfield and back-up catcher slots sewn up.

With Dan Runzler and George Kontos sent down to AAA Fresno a few days ago, five candidates (David Huff, J. C. Gutierrez, Derek Law, Yusmeiro Petit and Jean Machi) remain in the running for the three open bullpen spots.

Regardless how well he pitched in the Arizona Fall League last October or this Spring Training, I fully expect that Law will be sent down to AAA Fresno before the season starts, if only because he has yet to pitch about the Class A+ level in the minors.  He isn’t on the 40-man roster either, so a roster space would have to be cleared for him to open the season with the major league club, and he clearly has options left.

Of the remaining four, I think David Huff is the most likely to have a lock on one of the open bullpen positions.  Aside from the fact that he’s pitched extremely well this Spring (1.13 ERA, three hits, one walk and six Ks in eight innings pitched), he’s also a left-hander.

Gutierrez has also pitched extremely well this Spring (1.86 ERA, seven hits, four walks and eight Ks in 9.2 IP), but he isn’t on the 40-man roster, which hurts his chances.  Machi has an ugly 6.75 ERA this Spring, but he’s pitched better than his ERA.  Plus, he’s out of options and pitched extremely well for the Giants last season, so he’s definitely still in the running.

MLB.com opines that Yusmeiro Petit “appears to be a lock” on one of the remaining bullpen spots, but I think it would make more sense to send him to Fresno to start while the Giants find out whether Ryan Vogelsong has anything left.  Vogelsong has been terrible this Spring, but given the fact the Giants gave him a $5 million contract, he’ll get at least three regular season starts before the Giants give up on him.

However, in order to send Petit to the minors, the Giants would have to get him through waivers, and that might not happen.  Although Petit is guaranteed $845,000 on a major league contract, another team might well swallow the contract if they think Petit is better than what they’ve got already.  Petit hasn’t been great this Spring, but he hasn’t been terrible either, and there would likely be some demand out there for him.

My guess at this moment is that J.C. Gutierrez is the one who is going to get send down before Opening Day.