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March 9, 2010

Prospectus Hit and Run

NL Central Competitive Ecology

by Jay Jaffe

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The great Red Smith wasn't a fan of baseball's six division/two Wild Card format. Though he died 12 years before the plan came to fruition, he saw it coming as early as 1978, when he wrote that, "[T]he powers, principalities, and archangels of the game are considering a plan to restructure the major leagues so that almost every team can be a winner, or look like one."

One wonders what Smith might have made of the six-deep NL Central, where three teams—the Brewers, Pirates and Reds—have combined to make just two postseason appearances since 1992, and just one since 1995. The division has been the game's weakest over the past three years; its teams' cumulative winning percentage of .490 is in a virtual tie for last with their AL Central counterparts, but their .480 Hit List Factor is 10 points lower. For the timespan in question, they're the game's basement dwellers, and at the rate some of these teams are going, it might take even more restructuring for them to climb above ground again.

How much the Central's lowly standing has to do with being the game's only six-team division is open for debate, particularly when one of its six franchises (the Pirates, yeearrgh) has failed to produce a winning team since 1992, a string of futility unmatched in professional sports. Excise the Pirates' 197-288 record from 2007 through 2009 and the division comes in with a respectable .507 winning percentage over the past three years, but that still includes those five teams' records (a combined 145-92, a .611 winning percentage) against the hapless Bucs. Do away with that as well and you're left with a .495 winning percentage—enough to climb past the AL Central and the NL East in the three-year standings, but hardly an assertion of dominance.

As with the AL Central, money only goes so far in explaining the division's lowly rank. The grim economy of the past two years has hit the midwest disproportionately hard, and it doesn't help that the Pirates and Brewers operate in two of the majors' smallest markets, with both the Cardinals and the Reds in the lower third as well according to Nate Silver's attendance market model. But what really hampers the division is its poor internal talent development. No division receives less from their low-salaried and largely homegrown resources in terms of either actual WARP or as a percentage of total WARP, thus leading to a higher cost per marginal win ($2.6 million) than any division but the AL East over the past three years.

Again with the boilerplate, for those who were seated during intermission... This series builds on the recent work of colleagues Shawn Hoffman, Matt Swartz and Jeff Euston as well as older work by Keith Woolner, Doug Pappas, Nate Silver, and Neil deMause. Please see Keith's introduction to the concept of competitive ecology, the late, great Doug's introduction to Marginal Payroll Dollars per Marginal Win, Neil's application of Nate's marginal-dollars-per-additional-win curve, Matt Swartz's work on service-time contracts and wins, and Jeff's fantastic Cot's Baseball Contracts.

A couple more notes: I've broken from Shawn's work on Payroll Efficiency (introduced and then revised) by using actual wins instead of third-order ones, and end-of-year payrolls instead of those calculated on opening day. I also normalized the figures on an annual basis such that the yearly average is always 1.0, and I call the result PER' to distinguish it from his original recipe. I've also added something to Matt's work: NM% is the percentage of WARP derived from Non-Market salaried players, a figure by which we can infer teams' relative abilities to produce talent from within and to buy it on the open market, by extension providing something of a proxy for team age via the distribution of the two.

Chicago Cubs


Year  Win%   HLF Attendance     Payroll        MP/MW      PERNM    AM  Total   NM%
2007  .525  .529  3,252,462   $115,943,318   $2,892,948   0.79  19.2  30.1  49.3  38.9%
2008  .602  .602  3,300,200   $130,508,691   $2,440,462   1.30  18.8  40.0  58.8  32.0%
2009  .516  .519  3,168,859   $141,632,703   $3,735,665   0.72  21.2  24.0  45.2  46.9%
Avg.  .548  .550  3,240,507   $129,361,571   $2,953,213   0.94  19.7  31.4  51.1  38.6%

Postseason appearances: The Cubs won the division in both 2007 and 2008, but were quickly sent home from the playoffs, failing to win a single game.

The Cubs have posted the division's best record and the game's fifth-best record over the past three years, and while the added revenue of making the playoffs twice has helped their PER' approach 1.0, it certainly feels as though they have surprisingly little to show for it. Swept out of the playoffs twice in a row, they failed to defend their division crown last year, instead stumbling to an 83-78 record. Meanwhile, their payroll has ballooned at an alarming rate. From 2005, when the Cubs' year-end payroll was $76.6 million, it shot up to $99 million, and then to the figures above—an increase of 85 percent over four years as compared to an industry-average rise of 37 percent. Their end-of-2009 payroll was less than $600,000 shy of being the game's second-highest.

Surprisingly, the sharp rise of their payroll has taken place against the backdrop of one of the more protracted franchise sales in recent memory. In April 2007, the Tribune Co., the nation's second-largest newspaper company, announced that it would put the team up for sale at season's end. In December of that year, Sam Zell took control of the Tribune Co., which he put into bankruptcy a year later. Not until last October was the messy sale to the Ricketts family completed.

Keying the Cubs' rising payroll were long-term deals via which general manager Jim Hendry doled out eight-digit average annual salaries to Derrek Lee, Ted Lilly, Aramis Ramirez, Alfonso Soriano, Carlos Zambrano, Kosuke Fukudome, Ryan Dempster, and Milton Bradley. The Soriano and Zambrano deals, both of which rank among the 20 most lucrative of all time, were locked in just before the economy went south, and look even worse as both players have started to wear down. The Bradley deal was a debacle of a different sort, as injuries and controversy hampered the outfielder all year long, eventually necessitating a trade to the Mariners for sunk-cost pitcher Carlos Silva. Meanwhile, the team's talent pipeline hasn't been very productive. Ryan Theriot and Geovany Soto are the only lineup regulars drafted by the Cubs, and the latter is the only one who's still under 30. The team has ranked 25th in Non-Market WARP over the past three years, as opposed to second in Auction-Market WARP.

This year looks to be more of the same; not including minimum-salary renewals, the Cubs already have $137.9 million in 2010 commitments, and $101.5 committed for 2011, as only the Lee and Lilly contracts will have expired. Luckily, the Cubs play in one of the game's foremost tourist attractions, Wrigley Field, and draw well whether they win or lose; twice in the past six years, they topped three million in attendance while posting losing records. The last of those was back in 2006, however; if they should slide below .500—not out of the question according to the current PECOTA standings—their efficiency numbers are going to look quite ugly.

Cincinnati Reds


Year  Win%   HLF Attendance     Payroll        MP/MW      PERNM    AM  Total   NM%
2007  .444  .459  2,058,593    $73,072,635   $2,676,296   0.87  31.0   8.7  39.7  78.1%
2008  .457  .432  2,058,632    $82,886,440   $2,833,324   0.90  21.6   8.8  30.4  71.1%
2009  .481  .461  1,747,919    $72,693,206   $2,091,606   0.88  26.6  10.0  36.6  72.7%
Avg.  .461  .450  1,955,048    $76,217,427   $2,505,039   0.88  26.4   9.2  35.6  74.2%

Postseason appearances: No visits to the postseason since 1995, though they lost a Game 163 play-in for the Wild Card in 1999.

With nine straight losing seasons, this is no Big Red Machine. Indeed, the Reds have fallen on hard times, ranking in the bottom four in league attendance in eight of those nine years, with the 2003 inaugural of Great American Ball Park representing the only exception. Over the past three years, the Reds have ranked 26th in terms of won-loss record and 25th in attendance while running 19th in payroll.

The organization does have its strengths. Despite a revolving front-office door which saw the team change general managers three times in six years, the Reds have accumulated an enviable amount of young, high-upside talent via the draft, international free-agent signings, and astute trading—players like Joey Votto, Jay Bruce, Homer Bailey, Drew Stubbs, Johnny Cueto, Edinson Volquez, Brandon Phillips, and most recently Aroldis Chapman. Thanks to those players, the Reds ranked 16th in Non-Market salary WARP over the three-year period. The team bought out Phillips' first two years of free agent eligibility (the second via a club option), while Votto, Bruce, Cueto and Volquez won't even reach arbitration eligibility until 2011.

Unfortunately, it appears rather obvious that the Reds don't have the right manager for the job in Dusty Baker, whose track record for overworking pitchers is ominous, and whose record for dealing with young hitters is spotty as well. Volquez underwent Tommy John surgery last summer, Cueto has battled more minor arm troubles while showing plenty of promise, and Bailey and Bruce haven't entirely panned out. Add to that Baker's maddening lineup construction issues, and it's safe to conclude that he's not the man for the current job. He's in the final year of his contract, so it will be interesting to see how that plays out, particularly given that he was hired prior to Walt Jocketty taking the GM reins.

Not including renewals, the Reds have about $71 million committed for 2010, with Aaron Harang, Bronson Arroyo and Francisco Cordero all making eight-figure salaries. PECOTA sees them as no better than a middle-of-the-pack team, so if they gets off to a slow start, it wouldn't be surprising to see Jocketty deal to move some of those high-salaried players—particularly pending free agents Harang and Arroyo—for prospects and a reduced payroll. The future is reasonably bright for the Reds, but they'll have to survive the present first.

Houston Astros


Year  Win%   HLF Attendance     Payroll        MP/MW      PERNM    AM  Total   NM%
2007  .451  .439  3,020,405    $97,213,020   $3,548,075   0.76  27.1  11.8  38.9  69.7%
2008  .531  .489  2,779,287   $100,189,948   $2,386,897   1.12   9.4  27.4  36.8  25.5%
2009  .457  .427  2,521,076   $108,059,086   $3,813,350   0.70  13.9  18.0  31.9  43.6%
Avg.  .479  .452  2,773,589   $101,820,685   $3,127,317   0.85  16.8  19.1  35.9  46.8%

Postseason appearances: From 1997 through 2005, the Astros reached the postseason six times. They came within one game of reaching the World Series in 2004, then did so the first time the following year, only to be swept by the White Sox.

For the Astros, letting go of the limelight has been hard. Spurred by the Killer Bs—Jeff Bagwell, Craig Biggio, and eventually Lance Berkman—they enjoyed a nine-year run which saw them finish in first or second place in the division eight times, making them perennial contenders if not powerhouses. But despite the retirements of Bagwell and Biggio and the dissolution of the core that fueled their 2004-2005 push—Roger Clemens, Andy Pettitte, and Brad Lidge as well as Carlos Beltran and Jeff Kent for the first of those two years—the Astros have shown little stomach for rebuilding. Saddled with a few large contracts and a farm system in dire need of an overhaul, owner Drayton McLane chose to hire GM Ed Wade in September 2007 for what Christina Kahrl famously termed a "kamikaze run" to contention.

As such, the team's roster has evolved into an increasingly top-heavy assortment of stars and scrubs. Last year, four players—Berkman, Carlos Lee, Roy Oswalt, and Miguel Tejada—took up 60 percent of the payroll; their combined salary of $62.5 million was more than the entire payrolls of the A's, Pirate, Padres, and Marlins. It didn't help that Berkman, Lee and Oswalt fell off considerably from 2008, or that Wade couldn't find a way to flip pending free agent Tejada amid his best season in years.

The real problem is the farm system, which over the past three years has ranked 28th, 29th and 30th in Kevin Goldstein's organizational rankings. With a busted pipeline like that, it's no wonder the team has ranked dead stinking last in Non-Market salary WARP over the period. Beyond the solid contributions of Hunter Pence, Wandy Rodriguez, and Michael Bourn, lately they've gotten next to nothing from their cheaper players, who really aren't even all that young. Forced to buy roster stopgaps off the rack, the Astros ranked 25th in MP/MW, and 23rd in PER' over the three-year period.

The skies are clearing, at least somewhat. While Brandon Lyon's three-year, $15 million deal is a facepalm moment, this year's payroll commitments total only $90.3 million. Berkman is in the final guaranteed year of his contract just as long-term concerns about his knee are surfacing, and the farm system is slowly improving. That won't make the Astros more competitive in the short-term, however, and whether they can maintain the discipline to undertake the dirty but necessary work of rebuilding remains to be seen.

Milwaukee Brewers


Year  Win%   HLF Attendance     Payroll        MP/MW      PERNM    AM  Total   NM%
2007  .512  .516  2,869,144    $72,751,641   $1,805,571   1.11  34.0  12.9  46.9  72.5%
2008  .556  .544  3,068,458    $90,324,347   $1,917,979   1.56  32.7  20.4  53.1  61.6%
2009  .494  .474  3,037,451    $90,006,172   $2,509,751   0.86  27.9  11.9  39.8  70.1%
Avg.  .521  .511  2,991,684    $84,360,720   $2,055,244   1.16  31.5  15.1  46.6  67.7%

Postseason appearances: Won the NL Wild Card in 2008, giving them their first trip to the postseason since 1982.

Among the litany of unhappy stories in this series, the Brewers rate among the happier ones. Throttled by a combination of ineptitude and political point-scoring, the team posted losing records during the last 12 years of the Selig family's regime, inducing the good fans of Milwaukee to stay away in droves despite a new ballpark. Since purchasing the team in September 2004, new owner Mark Attanasio has helped turn over a new leaf. The 82 wins the Brewers have averaged during his five years of ownership is their highest since the 1988-1992 era.

Reaping the benefits of groundwork laid by since-departed scouting director Jack Zduriencik (who drafted Corey Hart, J.J. Hardy, Prince Fielder, Rickie Weeks, Yovani Gallardo, and Ryan Braun in consecutive years), the Brewers broke their skid of sub-.500 seasons in 2005, crossed the .500 threshold in 2007, and then went for broke in 2008, with general manger Doug Melvin making a well-timed move by trading prospects for CC Sabathia, who practically carried the team on his back to the postseason. Over that four-year span, Attanasio let Melvin double the team's payroll, and luckily, the long-starved fans rewarded such aggressiveness at the gate. Attendance increased 49 percent from 2004 to 2008 as the team crossed the three million mark despite playing in the game's smallest market—a remarkable achievement. That they ranked ninth in attendance over the 2007-2009 period only underscores the fact that the Brewers are punching well above their weight.

The bounty of homegrown talent—particularly Fielder (16.7 WARP over the last three years) and Braun (15.3 WARP)—helped the Brewers rank 11th in Non-Market WARP, ninth in MP/MW, and eighth in PER' over the past three years, though the times they are a-changin'. Fielder is in the second year of a two-year, $18 million deal, and as his final pre-free agency year looms, the question of whether the Brewers can afford to keep him looms as large as the slugger himself. It's not entirely out of the question, particularly with the horrendous Jeff Suppan contract coming off the books, Braun locked into an eight-year, $45 million deal through 2015, and just $22 million committed for 2011. But like any small-market team, the Brewers will need to catch a few breaks.

Pittsburgh Pirates


Year  Win%   HLF Attendance     Payroll        MP/MW      PERNM    AM  Total   NM%
2007  .420  .415  1,749,142    $51,360,907   $2,099,016   0.86  33.3  -1.2  32.1  103.7%
2008  .414  .394  1,609,076    $50,764,410   $2,165,457   0.83  17.5   1.5  19.0   92.1%
2009  .385  .396  1,577,853    $47,991,132   $2,668,907   0.63  20.8   2.6  23.4   88.9%
Avg.  .406  .402  1,645,357    $50,038,816   $2,275,007   0.77  23.9   1.0  24.8   96.1%

Postseason appearances: They haven't been to the postseason once since doing so three straight times from 1990-1992.

Abandon all hope, ye who enter here. As noted above, the Pirates set a professional sports record last year when they tallied their 17th consecutive losing season. They haven't finished out of last place in the NL Central since 2006, haven't even won 70 games since 2004, haven't finished in the upper half of the division since 1999. Limiting the scope to the past three years, the numbers are just as harsh. Even with the second-lowest payroll in the majors, the Pirates have compiled the second-worst record, and thus rank 27th in PER'. Despite one of the game's most beautiful ballparks, they ranked 29th in attendance during that span. In the words of the immortal James Brown, people, it's bad.

While owner Bob Nutting is often criticized for not understanding the business of the game, his hiring of general manager Neal Huntington, who took the helm in late 2007, has drawn wide praise. Huntington has been charged with the gargantuan task of engineering the franchise's turnaround, The Pirates' farm system wasn't much to write home about when he took over, and not surprisingly, the team has ranked in the bottom quintile of the league in Non-Market WARP in each of his two full years on the job. What Huntington has done is avoid the trap of his predecessors, which was to sign mid-level free agents who eat up payroll without tangibly changing the team's fortunes or even generating much in the way of midseason trade wares. Meanwhile, he's purged higher-salaried vets like Jason Bay, Jack Wilson, Adam LaRoche, Freddy Sanchez, Nate McLouth, Nyjer Morgan, Xavier Nady and more, not only to avoid spending money while going nowhere, but also to acquire building blocks for a winning ballclub.

That squad is still a ways away, though between the homegrown Andrew McCutchen and high risk/high upside  acquisitions like Lastings Milledge, Jose Tabata, Tim Alderson and Charlie Morton—not to mention top 2008 draft pick Pedro Alvarez, who ranked sixth on Kevin Goldstein's Top 101 Prospects list—there are signs of progress. The real key is whether Nutting's patience holds out long enough to let Huntington's plan bear fruit, or whether the team returns to the desperate grabs at mediocrity that have kept them in this rut for so long.

St. Louis Cardinals


Year  Win%   HLF Attendance     Payroll        MP/MW      PERNM    AM  Total   NM%
2007  .481  .459  3,552,180    $99,329,875   $3,016,662   0.85  14.4  22.5  36.9  39.0%
2008  .531  .530  3,430,660   $109,989,046   $2,648,905   1.02  23.8  26.9  50.7  46.9%
2009  .562  .552  3,343,252   $102,678,475   $2,157,511   1.38  24.1  32.2  56.3  42.8%
Avg.  .525  .514  3,442,031   $103,999,132   $2,557,119   1.09  20.8  27.2  48.0  43.3%

Postseason appearances: The Cardinals have made seven trips to the postseason in the past 10 years, though they endured a brief drought between winning the World Series in 2006 and the division in 2009, after which they were promptly swept by the Dodgers.

The Cardinals are the division's big dogs. Though they haven't won a postseason game since 2006, their string of seven division titles, one Wild Card, two pennants, and one world championship during Tony La Russa's 14-year reign has not only set them above their NL Central competitors, it has restored their status among the game's marquee franchises. Indeed, they occupy a unique spot, ranking fourth in the majors in attendance over the period—they've drawn three million or more in 10 of the past 11 years—despite coming from one of the game's smaller markets.

That market size has kept the team's payroll in check. The team ranks just 11th over the past three years, but even with a below-average level of Non-Market WARP, they ranked third among those 11 teams in terms of MP/MW. In other words, if you expand the definition of big spenders to include them, they're one of the more efficient ones. Overall they were ninth in PER' from 2007-2009.

One of the major keys is the amazing Albert Pujols. Over the first six years of his seven-year, $100 million deal (which carries a $16 million option for 2011), he's provided 63.3 WARP for $79 million (ignoring deferrals), an amazing rate of return. That alone has helped offset the expensive wilderness years of Chris Carpenter, Troy Glaus, and now Kyle Lohse, and homegrown bargains like Yadier Molina and Adam Wainwright (acquired from the Braves as a prospect) haven't hurt either.

The day of reckoning is looming regarding Pujols, and one has to assume he'll get A-Rod money, a deal worth more than $20 million per year, perhaps more than $25 million. The Cards must have confidence they can meet his price, particularly having signed Matt Holliday to a seven-year, $120 million deal this winter, because Phat Albert can't be the second-best paid player in St. Louis for very long. To populate the team around those two expensive stars without breaking the bank or compromising their status as perennial frontrunners, the Cards will either need to improve their farm system considerably—particularly given their current last place ranking—or figure out a way to print money.

Jay Jaffe is an author of Baseball Prospectus. 
Click here to see Jay's other articles. You can contact Jay by clicking here

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