Happy Thanksgiving! Regularly Scheduled Articles Will Resume Monday, December 1
May 17, 2010
Ahead in the Count
The Cost of OPP
After remembering the 1981 hit "Should I Stay or Should I Go" by The Clash with last week’s title on the same topic, we move forward a decade to a 1991 Naughty by Nature hit—and we introduce the money to the equation this time (if you’re down with that). In this article, I will show that players who re-sign with their clubs on multi-year deals provide far more bang for their buck than players who sign contracts with new teams.
To review what I have done so far, remember that I started by showing that players who signed with their own teams aged better, as evidenced by the fact that they provided more of their value late in their contracts. In efforts to go through the data more finely for this article, I made some minor changes to the set of players for the sake of a consistent definition, but I reproduce these updated tables below. For the sake of space and awesome old school rap references, OPP refers “Other People’s Players.”
Here we saw that players who sign two-year and three-year contracts appear to age much better, and are probably superior bets. This is not true of four-year deals, but they are a small sample worth exploring, though difficult to draw conclusions.
Despite the evidence that re-signed players aged better, it was certainly plausible that re-signed players were doing better later in deals, but worse early in deals, making the net effect a wash. I knew that Sean Smith found that those players were underperforming their CHONE projections by 16 percent, so I first checked whether PECOTA had the same problem, and also checked whether there was a difference between re-signed players and OPP. As it turned out, both groups were underperforming their PECOTA projections by equal amounts. This data set was different than the previous one, because I looked only at players who began their multi-year contracts in 2007-09, since this was the data for which I had good PECOTA projections. This analysis compared projected and actual VORP, because WARP3 was recalculated since these projections were generated, and I needed to compare apples to apples.
This topic became even more relevant, after I used the evidence that players who sign extensions with their current clubs as an indication that the Ryan Howard signing may turn out better than most people expect. Many readers asked whether there was evidence that some of the above results may be biased by age, so I checked and found that even within age groups, the effect of extended players aging better remained strong.
Again, we see that with two-year and three-year contracts, players of similar ages continue to age differently. They provide far more production throughout their deals, while players who sign with new teams instead drop in production rather suddenly. Of course, these subgroups are small enough that they do not individually suggest evidence of aging differences, but together they do show that age is not an explanation for this effect. Instead, players who are re-signed by their teams for two-year and three-year deals appear to age better than players signed for similar terms by other clubs.
Although the evidence appears to be that these players are no worse at reaching their PECOTA projections in the first year, and clearly better at outperforming their PECOTA projections in subsequent years, it may be that teams are not actually getting better deals. If teams are re-signing their players for more money than their PECOTA projection suggests, than there is no difference in production. In that case, it is an issue of the limits of computers. Thus, I checked if teams were paying more for production from other team’s players than they are for their own players' production.
Below I list the players involved to give a sense of the talent that was available, and also allow further work on this pertinent and surprising issue. First I list those players who signed two-year contracts.
Looking through the two-year contracts, we see a number of guys who seem to fit the mold of either risky players whose teams correctly determined that they would age well, and a number of players who seem to fit the mold of teams getting caught fooling around with OPP. Andruw Jones at 31 years old seemed like a good bet to rebound from the outside. After putting up matching TAvs of .301 in 2005 and 2006, Jones had fallen to a .257 TAv in 2007 on the back of a .242 BABIP while still hitting 26 home runs. PECOTA saw him rebounding to .278, but the Braves did not like what they saw and opted to go with Mark Kotsay in center field instead. Jones’ TAv fell all the way to .175 with the Dodgers in 2008. Geoff Jenkins had played his entire career for the Brewers but they did not re-sign him after 2007. His TAv had only gone down slightly from .274 in 2005 to .268 in 2006, and PECOTA saw him splitting the difference at .271 in 2007. Instead, the Phillies saw him fall to .241, as he lost his role as the lefty half of their right-field platoon in 2008 and they were on the hook for $13 million either way. Of course, when the Phillies signed Jamie Moyer to a two-year contract as a 44-year old in 2007, they were criticized far more, but his 3.71 ERA in 2008 helped them win a championship. Relievers Ryan Franklin, Trevor Hoffman, and David Weathers were pretty great deals on the dollar when they re-signed with their teams as well.
Looking through these 69 contracts, we get the following data:
Teams who sign other people’s players are paying 2.29 times as much for a win as teams who sign their own players! This effect is similar in each of the three years tested.
Moving on to the players who signed three-year deals, we get the following players:
The Braves kept up with the right Jonses—they dropped Andruw, but re-signed Chipper to a three-year deal for 2006-08 in which he produced 21.0 WARP3 at a cost of $37 million. PECOTA had seen him starting the deal as a 34-year old with a .303 TAv, but he posted .334, .347, and .365 TAvs during the contract and provided the Braves a lot of bang for their buck. Brian Giles and Carlos Guillen provided great values in extensions as well. On the other hand, Jason Schmidt was paid $47 million over three years by the Dodgers to sit on the disabled list and not contribute at all. Adam Eaton and Gary Sheffield were poor values as well.
This data is summarized by the following table, showing the same effect:
For three-year contracts, teams are paying 2.1 times as much for other people’s players on a per win basis! This is a shocking discrepancy, and should not be taken lightly. It must be that either players are taking extraordinary hometown discounts (and it is hard to imagine that this is true on such a large scale), or there is a severe market inefficiency.
This inefficiency does not appear to exist for players who sign four-year contracts. There are only 19 such players, and only six re-signings, so most likely this is just a sample-size issue, but here are those players:
The four-year contract do not really show much of a clear pattern. Of course, with only six extensions in the set, it is difficult to discern much of a pattern. Garret Anderson and Jose Vidro drag the extensions down, while the Johnny Damon and Ivan Rodriguez deals make you want to get down with OPP after all.
The summary statistics are as follows:
Clearly, this is the exact same dollar cost of a win and there is no evidence of this effect among players who sign four-year deals.
Regardless, there is overwhelming evidence that re-signed players and newly signed players are not aging similarly and are being compensated very differently. Please look through the list of players, and discuss in the comments any issues you would like to see addressed in future research. It may be that the re-signed players have something else in common, but it does not appear to be age or anything that teams are aware of when they award heavy compensation to other teams’ free agents.
When you know your own free agents better than other teams' free agents, you can better determine which players will be worth their market rate, and pay them. For their part, players who are safe bets to age well should be asking more from their teams, all the while justifying this by singing “yeah, you know me.”