Archive for the ‘Chicago Cubs’ category

Perverse Incentives

February 22, 2018

On the subject of Kenta Maeda‘s contract with the Dodgers, one obvious problem with the contract, at least as far as Maeda is concerned, is that none of the incentives are applicable to relief pitching.  This could create perverse incentives for the Dodgers going forward.

Two off-seasons ago, Maeda signed an incentive laden deal that guaranteed him $25 million over eight seasons, but could be worth $105 if every performance incentive is achieved.  Maeda made just over $20 million over his first two seasons of the deal, because he met many of the performance incentives.

However, by the end of the 2017 post-season, it’s a real question how much longer Maeda will be a regular major league starter.  He made 25 starts in 2017, but was dropped from the Dodgers’ deep starting rotation several times. At the same time, in 10.2 relief innings pitched in the post-season against the highest level of competition, Maeda allowed only a single run, suggesting that his MLB future may eventually come down to pitching out of the pen.  Needless to say, some Japanese ace starters in NPB have proven more effective as relievers in MLB — see, Kohi Uehara.

Maeda isn’t likely to take the Dodgers closer role from Kenley Jansen in the short term absent the latter’s injury, but it’s easy to imagine Maeda becoming the Dodgers’ top set up man.  The Dodgers will have to make that decision based on what is best for the team, but if Maeda as a top bullpen pitcher comes to pass, Maeda is screwed.

Maeda’s agents negotiated a contract based solely on Maeda as a starter.  If he becomes a top Dodger reliever, he’ll only earn $3.275 a year.  Brandon Morrow, the Dodgers’ top set-up man in 2017, just signed a two-year $21 million deal with the Cubs.  You can see the potential unhappiness that Maeda will feel if the Dodgers decide that his greatest value is in the bullpen.

Precisely because no one can predict the future, if I were the Dodgers management, I would offer to re-open Maeda’s contract now solely for the purpose of creating some performance incentives for relief appearances and games finished.  Maeda wants to be a starter, and the Dodgers want Maeda to a starter, but if it becomes apparent that Maeda’s greatest value to the team is out of the bullpen, then that’s what has to happen.

The Dodgers should get ahead of the situation by negotiating some relief pitcher incentives with Maeda.  They wouldn’t necessarily have to be too generous, since all the parties realize the Dodgers don’t have to renegotiate relief incentives in the first place.

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Boston Red Sox Reportedly Reach Agreement with J.D. Martinez

February 20, 2018

The Boston Red Sox have reportedly reached an agreement with J.D. Martinez on a five year contract that guarantees Martinez $110 million and contains opt-outs after both years two and three of the deal.  The deal is front-loaded with Martinez earning $50 million through the first two seasons and $72 million through the first three seasons but only $38 million over the last two seasons.

Martinez is guaranteed a full $40 million less than mlbtraderumors.com predicted, but he gets the two opt-outs.  The effect of the deal is that it is much more future performance driven that the free agent contracts of old, as Martinez will almost certainly opt out if he has seasons in either 2019 or 2020 in which he plays in 150 game and has an OPS at the average of his last four seasons (2014-2017).

What I find interesting about this contract and to a lesser degree with Eric Hosmer‘s recently reported contract with the Padres is the degree to which the contract is front loaded.  In years past, teams always tried to push the highest paid seasons toward the end of the contract term in order to take advantage of the time value of money.  When added to the 100 year old tradition of paying superstars more as they got older, even as their performances began to decline, the time value of money was a powerful incentive for teams to back-load contracts.

What is clearly going on is that teams no longer want albatross contracts, where the teams are paying massive amounts of money for poor performance later in the contract period.  In particular, wealthy teams like the Red Sox expect to contend every year and certainly do not intend five year rebuilding periods that small market teams resign themselves to.

Teams are now obviously more concerned with paying top dollar for the years they reasonably anticipate getting top performance and paying less as the player gets older.  Teams are realizing that no matter how wealthy or poor they are, they have a certain budget for player salaries each season which increases over time at a fairly predictable rate in line with predicted future revenue increases.  If you push back free agent contract compensation to the later years, those are years in which the team is predictably resigning itself to mediocrity or worse.  Added to this are the incentives in recent collective bargaining agreements which punish teams for going over an imposed salary cap.

In the late 1980’s Bill James wrote an article about how the New York Yankees under George Steinbrenner were on what amounted to a second-place treadmill.  At that time the Yankees were building their teams largely around elite free agents, who were really good only for a year or two and then became expensive mediocrities that prevented even baseball’s richest team from building a truly great ball club.  It’s taken awhile for teams to learn the point that James was making all those years ago, but it now seems the teams have learned it.

As time passes, we will see more contracts which reject the old rules of free agent contracts.  I’m certain of this, because we’ve seen over the years the way in which free agent contracts have evolved, for example using team options, player options and opt-out clauses.

Also, I took a sports law class in law school in which the students negotiated various player contracts.  Coming into the practice negotiations with fewer preconceptions about what the contract should look like and negotiating only on the basis of the factual situations involving the player and the team, we came up with some pretty wild contracts.

In representing an imaginary football player in negotiations with an imaginary team that was hoping to win it all the next season and had the money to spend now, I negotiated a two year deal in which the player received 85 or 90% of the contract amount in the first season with most of the 85 or 90% in the form of a signing bonus, so that the money would already be paid out to the player even if he got hurt as soon as he started play for his new imaginary team, since NFL contracts are typically not guaranteed due to the frequency of serious injuries in football.  Also, I wasn’t taking into account taxation or the fact that young athletes tend to spend money as they make it and won’t necessarily be prepared to save enough in year one to handle the steep drop in compensation in year two.

In the real world, past practice tends to shape contracts in the short term, not to mention the fact that the parties involved in the negotiations are better aware of all the real world variables.  Over time, however, real world contracts will ultimately get to roughly the same place as law school experiments if the factual situations are roughly the same (and taking into account all the real world variables).

Owners would love to get back to the world before free agency, not only when players could not access a free market of teams competing for their services, but also when a player’s compensation was determined a year at a time and was thus largely linked to the immediately preceding year’s performance and thus anticipated next season performance, and could be quickly reduced if the player ultimately had a bad season the next year.

Both Martinez’ contract with the Red Sox and Yu Darvish‘s recent contract with the Cubs require the players to perform at an extremely high level in the early years of their respective deals to fully reap the potential benefits of the contract.  That is well to the advantage of their signing teams, and this year the teams have been able to impose these terms on these players.  We’ll see what happens next off-season, but I think we’ll be seeing more of the same.

 

San Diego Padres Reportedly Reach Agreement with Eric Hosmer for $144 Million

February 18, 2018

The San Diego Padres have reportedly reached a deal with Eric Hosmer that will give him $144 million over eight seasons with an opt-out after year five.  The deal is front-loaded, paying Hosmer a $5 million signing bonus and $20 million a year for the first five years, but only $13 million a year for the final three.

The deal is two years and $12 million guaranteed more than mlbtraderumors.com predicted for Hosmer, and in my mind it tends to support management’s claims that the slow free agency period this year has more to do with advanced analytics than collusion.  Hosmer is younger than most of this off-season’s free agents and his big contract suggests that teams are just a lot more leery of over-30 free agents who are likely entering the down-phase of their careers right quick.

The biggest winners of the Hosmer, even more than Hosmer himself, are next year’s young free agents Bryce Harper and Manny Machado.  They will be two years younger than Hosmer is now, and they’re better players.  If Harper and Machado have typically strong seasons in 2018, I would expect both to beat the $325 million deal that Giancarlo Stanton received from the Marlins three off-seasons ago.

Even with Hosmer’s apparent signing, six of mlbtraderumors’ top ten free agents remain on the board.  Hosmer had the Padres and the Royals bidding against each other for his services.  Now that Hosmer has signed with San Diego, the Royals may decide they need to bring back Mike Moustakas to prevent their fans from revolting.  However, there hasn’t been much chatter about Moustakas or the four remaining top pitchers, and one team obviously in the market for pitching, the Minnesota Twins, just traded not a whole lot for Jake Odorizzi in what appears to be a straight salary dump by the Rays.

With Yu Darvish signing for much less than expected, it looks like Jake Arrieta is going to have to come to terms with the fact that no team is likely to give him a $100 million offer.  My guess is that Arrieta will have to accept a three year offer for a $80 million guarantee with a team option for fourth season.  As for Lance Lynn and Alex Cobb, teams will probably wait to see which of the two is the first to crack and accept what interested teams are willing to pay him.

Evidence of Collusion?

February 18, 2018

A lot has been made of the incredibly slow free agent market this off-season and the fact that teams seem less willing to spend on free agents than they were only a few years ago.  The MLBPA and player agents have expressed their concerns that teams are again colluding, and Scott Boras pointed to recent statements by Commissioner Rob Manfred that several free agents had received offers over nine figures, information he would not have unless teams were sharing information about their offers with each other or the Commissioner’s office.

However, Manfred’s statements don’t mean a whole lot, since he can claim media reports as his source of information that several free agents have received offers over $100 million.  Rumors have abounded that all of Yu Darvish (now proven), J.D. Martinez and Eric Hosmer have received offers above the golden $100 million mark.  In fact, at the start of the off-season, all three were predicted to do well better than a mere $100 million in guaranteed money.  The real dispute is that these players are only getting $100M to $126M guaranteed offers instead of the $140M to $160M guaranteed offers anticipated.

One fact that suggests teams collectively are fighting to keep player salaries down is the 22 salary arbitration cases this off-season that went to decision.  That’s the most salary arbitration cases to go to decision since the 1994 strike, and it beats the previous highs (14 in each of 2001, 2015 and 2017) by more than 50%.

The players went 12-10 in the 22 cases this off-season and went 7-7 last off-season.  Historically, the owners have won 57% of all salary arbitration decisions (319 out of 562) going back to 1974, including the results from the last two off-seasons.  There’s certainly something in both the number of salary arbitration cases going to decision and the outcomes to suggest that for the last two off-seasons at least (while there were 14 salary arbitration decisions in early 2015, the owners won eight of them, and there only four arbitration decisions in 2016) teams are taking a harder line on agreeing to raises for salary arbitration eligible players their teams intend to keep.

Obviously, one can’t make too much out of the salary arbitration results for only two off-seasons.  Each off-season features individual decisions by eligible players and teams in negotiating a salary increase or going to arbitration hearing, and the salary arbitration process is now advanced enough that both sides have fairly good ideas of what are reasonable salary proposals based on precedent and where the arbitrators can accept only one of the two numbers submitted.

At the same time, when taking this year’s exceptionally high number of salary arbitration decisions into account with the obvious drop in interest in and the bidding on free agents this off-season, it does appear that teams are as a group making greater efforts to limit the amount of revenues they have to pay out to players as compensation.  Whether that’s a result of active collusion between the owners, or merely the result of normal market capitalism as effected by better player value analytics and the terms of the new collective bargaining agreement, remains to be determined.

For what it’s worth, even though owners have won roughly 57% of all salary arbitration decisions, the players love salary arbitration while the owners hate it.  The reason is that now even the poorest, stingiest, least interested in winning teams have to pay their good salary arbitration eligible players the same amount of money as the wealthiest teams have to pay.  Salary arbitration in conjunction with free agency has caused the enormous increase in player salaries since 1974.

Also, I strongly suspect that free agents have less value today than they did, say ten years ago, is because we have had the longest period without expansion since MLB’s expansion era began in 1961.  When you add in that MLB teams are bringing in more and more foreign talent from more countries, the level of play at the major league level is extremely high and it’s relatively easier to replace or acquire talent outside of free agency.

I contend that the current circumstances are akin to MLB in the 1950’s when there had been no successful MLB expansion since 1901 and black and dark-skinned Latino stars were allowed to play in the white leagues for the first time since the 1880’s.   The addition of only two additional expansion teams would have a big impact on the relative value of free agents, because there would be more demand for the elite players good enough to reach free agency based on six full seasons of major league service.  You would also see more players like Fernando Abad, who just received a non-guaranteed deal from the Phillies despite a 3.30 ERA with the Red Sox last year, get guaranteed major league deals.

Chicago Cubs Reach Agreement with Yu Darvish for $126 Million Guarantee

February 10, 2018

The Cubs have reportedly reached agreement with Yu Darvish on a six-year contract that guarantees Darvish $126 million, but could go up with performance incentives to $150 million.  The deal also reportedly contains a no-trade clause and an opt-out for Darvish somewhere down the line.

This is a big deal for a number of reasons.  The top free agent pitcher has now signed, meaning that the market has been set for the other top pitchers remaining.  Also, it seems to fulfill the teams’ recent desire to limit the amount of free agency guarantees, while still giving Darvish life-long security and the possibility of making considerably more money than the guarantee if he continues to perform well.

When teams first started giving opt-out clauses to players also receiving record-breaking guarantees, I thought the opt-out clauses were crazy.  Obviously, I was wrong, in that opt-out clauses are clearly now being used as a means to prevent record-setting guarantees.

mlbtraderumors.com predicted that Darvish would get a $160 million guarantee over six seasons, a number to which Darvish ultimately didn’t come close.  However, he gets to opt out if he continues to be a mound stud.

The Players Association and the agents aren’t going to be happy with this deal, but it’s hard to feel sorry for players who are still receiving nine figure free agent guarantees.  It’s been long since past time for teams to start paying free agents based on how they will likely perform going forward, rather than how they have performed in the past.

MLB Teams Want Shorter Free Agent Contracts

January 18, 2018

There has been a lot of talk this off-season about the fact that only two of the top dozen free agents has yet signed a contract. mlbtraderumors.com weighed in again on this issue today.

The one thing that seems obvious to me looking at the players who have signed free agent contracts this off-season so far is that teams want shorter contract lengths (i.e., no more than three years) and will pay more per year to get them.

No team has yet signed a player to more than three years.  However, the players who have agreed to three year deals have done pretty well, at least compared to mlbtraderumors’ predictions for its top 50 free agents, which experience has shown deserve a lot of weight.  mlbtraderumors has a formula it uses and tweaks every off-season based on the previous off-season’s signing results, and their predictions have proven to be well better than educated guesses.

Carlos Santana’s three-year $60 million deal is the biggest free agent signing so far.  mlbtraderumors correctly predicted the three-year term, but underestimated the payout by $5 million per year.  Tyler Chatwood (predicted 3 years $20M; actually received 3 years $38M). Jake McGee (3/$18M; 3/$27M), Mike Minor (4/$28M; 3/$28M), Bryan Shaw (3/$21M; 3/$27M), Tommy Hunter (2/$12M; 2/$18M), Pat Neshek (2/$12M; 2/16.25M), Michael Pineda (2/$6M; 2/$10M) and Miles Mikolas (2/$10M; 2/$15.5M) all did significantly better on two and three year deals than predicted.

Meanwhile, only Addison Reed (4/$36M; 2/$16.75M), CC Sabathia (2/$24M; 1/$10M), Yonder Alonzo (2/$22M; 2/$16M), Brandon Kintzler (2/$14M; 1/$5M) and Howie Kendrick (2/$12M; 2/$7M) have done significantly worse than predicted.  Zack Cozart (3/$42M; 3/$38M), Jay Bruce (3/$39M; 3/$39M), Juan Nicasio (2/$21M; 2/$17M), Jhoulys Chacin (2/$14M; 2/$15.5M), Welington Castillo (2/$14M; 2/$15M), Anthony Swarzak (2/$14M; 2/$14M) and Steve Cishek (2/$14M; 2/$13M) got right around what was predicted.

Finally, both Wade Davis (4/$60M; 3/$52M) and Brandon Morrow (3/$24M; 2/$21m) got one fewer year than predicted, but at a much higher annual rate, so much higher, in fact, that one has to think there wasn’t much incentive to hold out for the extra year.  I think these signings make it likely that each of Lance Lynn, Greg Holland and Alex Cobb will be forced to accept three year offers, although probably for only $3M to $6M less than mlbtraderumors predicted over four seasons.

I suspect that advanced analytics have suggested to teams something they already knew: long-term free agents contract can be a long-term albatross around a team’s neck is veteran player gets hurt or old fast.  Better to pay more per season for fewer seasons so the burden of a bad contract doesn’t hurt the team for as many seasons.

I could see Yu Darvish being forced to accept a five-year deal in the $140M to $150M range, although as the No. 1 starter available this off-season, I think someone will eventually give him a sixth season.  The reported rumors sound as if both Kansas City and San Diego have made Eric Hosmer offers close to the six years and $132M that mlbtraderumors predicted.

The market for J.D. Martinez does not seem to be developing as predicted, but the four years at $100M predicted for Jake Arrieta seems likely to be met since he is the second best free agent starter available.  Scott Boras is representing a number of top free agents this year, and his asks have been pie-in-the-sky, as they always are.  I don’t believe the reports that any free agent will wait until after the 2018 regular season starts to sign, because that is an absolute value killer for a free agent if ever there was one.

It’s likely that a majority of the mid-range free agents (Nos. 20-50) who haven’t yet signed won’t do as well as the predictions, however, based on the fact that many teams have now filled their needs by the free agent players signed to date.

 

The Ten Best Players from Curacao and Aruba in MLB History

January 3, 2018

The islands of Curacao and Aruba have replaced St. Croix and St. Thomas as the tiny Caribbean islands that produce an oversized share of major league baseball players.  I have decided to combine players from Curacao and Aruba, because while both are governed more or less independently, both are part of the greater Netherlands, and they are part of the same island group, the Leeward Antilles.  Besides, it makes for a better list.

Curacao has produced at least 16 major league players, and Aruba has produced at least five.  To my knowledge, the third island in the group, Bonaire, has produced no major league players yet.  Almost all of these players have played recently so I’ll keep my comments relatively brief.

The first player from Curacao to play in the majors was Hensley “Bam Bam” Meulens in 1989.  He didn’t have a great deal of success in the U.S. major leagues, but he had some strong seasons in Japan’s NPB, and also played professionally in South Korea and Mexico.  After his playing career, he became a batting coach, most recently for the San Francisco Giants.

The first player from Aruba to play in the major leagues was Gene Kingsale, when he entered a game as a defensive replacement on September 3, 1996.  Five days later Calvin Maduro became the first Aruban to pitch in the major leagues.

1. Andruw Jones (1996-2012).  The big knock on Jones is that he was one of the early 2000’s steriods boys, and when the Vitamin-S spigot got turned off, his game dropped off sharply almost overnight.  Still he hit 434 major league home runs, plus another 50 in Japan.  He’ll likely remain the best player from Curacao or Aruba until Andrelton Simmons and Xander Bogaerts approach the ends of their respective major league careers.

2.  Andrelton Simmons (2012 to present).  Operating under the assumption that each generation of major league baseball players is a little better than the one that preceded it, it is possible to argue that Simmons may be the best defensive shortstop that major league baseball has yet seen.  He also had his best year with the bat in 2017, although it was his age 27 season.

3.  Kenley Jansen (2010 to present).  Through his age 29 season, Jansen has a career 2.08 ERA and 230 saves.  ‘Nuff said.

4.  Xander Bogaerts (2013 to present)  Bogaerts is no Andrelton Simmons with the glove, but he’s a better hitter, and he’s three years younger.  His bat may be what keeps him in the game long enough to pass Andruw Jones.  He’s the first Aruban on my list.

5.  Didi Gregorius (2012 to present).  Gregorius was born in Amsterdam, where his father was playing baseball professionally in the Dutch League and also working as a carpenter (the Dutch League only plays a 42 game schedule, so even with international play for the Dutch National Team, ball players need to have another job).  Gregorius’ grandfather was a great pitcher in Curacao in the mid-20th Century.  Didi and his family moved back to Curacao when he was five.  Needless to say, both the Dutch pro league and the national team are disproportionately made up of players from Curacao and Aruba.

The only other two players of any note born in Holland, Bert Blyleven and Jack Lelivelt, have perhaps even less claim to being Dutch than Gregorius, as both moved with their respective families to the New World at the age of 2.

6.  Jonathan Schoop (2013 to present).  It is little short of amazing that so many great players have come from such a tiny place (Curacao’s current population is about 150,000) all at about the same time.  Schoop is a 2Bman who hits for power and turns the double play extremely well.  That’s a combination made in heaven for a 2Bman.

7.  Sidney Ponson (1998-2009).  When I first started this blog in 2009, Sidney Ponson, along with Milton Bradley, was one of my favorite whipping boys.  It had a lot to do with his arrest in Aruba during the 2004 off-season for punching out a Judge in a dispute over Ponson’s operation of a motor boat or jet skis, and even more to do with the two DUIs he picked up in the U.S. in 2005.  Ponson had a world of talent, but he ate and drank his way out of taking full advantage of it.

Nevertheless, Ponson hung around long enough to go 91-113 with a career 5.03 ERA.  I once wrote that when Ponson retires “he will become the poster boy for talent wasted.”  I stick by this assessment, but 91 major league wins is 91 major league wins.

8.  Jair Jurrjens (2007-2014).  Arm problems did in Jurrjens’ major league career, but he’s pitching professionally.  He pitched in Taiwan’s CPBL in 2016, pitched for the Dodgers’ AAA team in Omaha in 2017 until he was hit with an 80 game suspension for testing positive for exogenous testosterone.  He’s currently pitching effectively in the Dominican Winter League as I write this.  However, his chances of returning to the major leagues in the future seem slim, particularly if he still needs to serve out any portion of the 80-game PED suspension. Jurrjens went 53-38 with a career 3.72 ERA.

9.  Ozzie Albies (2017 to present).  Albies has had only 244 major league plate appearances, but he makes my list because he was only 20 years old last summer and slashed .286/.354/.456 in those 244 plate appearances.  Unless something really awful happens to him, he’s going to be a good one.

10.  Randall Simon (1997-2006).  Randall Simon could hit, batting .303 with 19 home runs for the Tigers in 2002.  However, he walked less than 5% of this plate appearances and that’s a problem for 1Bman.

Simon famously got in trouble during the Milwaukee Brewers’ “Sausage Race” on July 9, 2003.  He hit the Italian Sausage mascot with a bat hard enough to knock the female college student inside the costume down.  He was fined by the local authorities $432.10 for “disorderly conduct” and fined by his team (the Pirates) $2,000.  Simon later apologized to the young woman and gave her an autographed bat. Even better, the Curacao Tourism Board gave her a complimentary trip to the island for two.  The next time Simon played in Milwaukee, now as a Cub, he purchased italian sausages for an entire section of fans and during that day’s race, his teammates playfully held him back while manager Dusty Baker guarded the bat rack.

Jurickson Profar turns 25 in February and has hit well in the minors, so there’s still a chance he’ll become a major league star.  Wladimir Balentien flopped in the U.S. majors, but he’s become a huge star in Japan, setting the single-season NPB record with 60 home runs in 2013 and belting at least 30 home runs in five other seasons.