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November 5, 2012
Sizing Up a Seven-Year, $175 Million Deal for Josh Hamilton
When the Rangers were knocked out of the playoffs by the Orioles in the AL Wild Card play-in game, Josh Hamilton sounded the part of a politician. The Ranger faithful had booed him during the game in part for his numbers during that play-in game—he went 0-for-4 with two strikeouts, both on three pitches—but really for his lackluster performance in the second half of the regular season (16 homers and an .833 OPS compared to 27 homers with a 1.016 OPS in the first half).
"I always would love to stay here," Hamilton said at the time of the loss to the Orioles. "They understand that. They know that. When we talked earlier in the year, we didn't get things worked out, so we said we'd wait until the year was over. They obviously get first shot. I told them they'd get first shot at the end of the year. We'll see what happens."
What’s happened is that the Rangers have made a $13.3 million qualifying offer to Hamilton, but if what my BP colleague John Perrotto tweeted holds true, the likelihood of Hamilton being in a Rangers uniform next season is thin. For one, the qualifying offer is less than what Hamilton earned last season ($13.75 million). According to Perrotto’s tweet, Hamilton is seeking a 7-year, $175 million deal in his first year of free agency.
The question on everyone’s lips is: Is he worth it? The answer: it depends. The free agent market is unpredictable, except for the tendency of the winning bidder to overpay for the privilege. What Hamilton will earn is what the highest bidder thinks he’s worth, whether that is within the current market norm or Hamilton resets the market with what he is seeking.
In sizing up Hamilton, a team has to decide how often it expects to get the hot-hitting Hamilton, and how often it expects to get the guy who often winds up on the DL and performed as he did in the last half of the 2012 season. That poses a dilemma, as there is some risk that a club is going to be willing to take in hopes of getting a guy who can be an extreme difference maker.
Hamilton’s 2010 numbers were staggering. He led the American League in batting average (.359) and WARP (7.9) and tied for first in True Average (.352) en route to winning the AL MVP. From there, he’s tapered off (which, in fairness, is easy to do after a season like that one). He finished 22nd in MVP voting in 2011, and it’s possible that he could land in a similar spot when votes are tallied for 2012. His batting average has gone from that gaudy .359 in 2010 to .298 in 2011 and .285 in 2012, his free agency platform year. His WARP numbers have declined to 3.5 in 2011 and 3.9 last season.
He’s also no spring chicken. While he’s just now hitting free agency, remember that Hamilton was on baseball’s restricted list for drug use from 2003-2005 after being drafted by the Rays in 1999. Due to that, Hamilton hits free agency at 31 years of age, meaning that he'd be 38 at the end of a seven-year contract.
Thanks to the time he's spent on the DL, Hamilton has not typically come close to giving his team 162 games. In 2012, Hamilton played in 148 games, his highest total since 2008, when he appeared in 156. All told, Hamilton’s career seasonal average (including the 90 games granted him by MLB and the Reds in 2007 after he returned from the restricted list) is just 123.
However, this free agency pool is fairly thin, and given Hamilton’s performance when he’s on, coupled with the fact that there are now several clubs with extra television revenue to toy with (one of them the Rangers), Hamilton’s odds of landing a deal in the range he is seeking are well within the realm of possibility. Here’s where Hamilton would rank among the highest-paid players:
* Where Hamilton would rank if he were to land a seven-year, $175 million contract
So let’s say it happens. Let’s say Hamilton lands a seven-year, $175 million deal. How would he stack up compared to the highest-paid players in the league? Based on total contract dollars, $175 million would rank Hamilton ninth, moving CC Sabathia down to 10th. He would have a lower WARP in the platform year leading up to his high-dollar contract than anyone else on the list.
Hamilton would also be the third-oldest player to command a deal in the top 13 highest-paid contracts, behind only Albert Pujols and Alex Rodriguez, who signed a 10-year, $275 million deal with the Yankees (the highest in the history of the game). In 2007, the year before the deal kicked in, A-Rod posted an 8.3 WARP.
In terms of Average Annual Value (AAV), Hamilton’s $25 million annually would behind only Alex Rodriguez for the highest AAV in baseball.
Hamilton would become the highest-paid outfielder in the league. Matt Kemp, who recently reached an eight-year, $160 million extension with the Dodgers, would be $15 million back in total contract dollars with $160 million or $20 million by AAV. Kemp’s WARP was 8.3 in his platform year, and he was four years younger than Hamilton is today.
The bad thing is this: Hamilton’s PECOTA projections don’t look like the greatest. He is projected to have a 3.4 WARP and 32.8 VORP for 2013. By the time a potential seven-year deal ends in 2020, his projections show a -0.7 WARP and -7.0 VORP. His slash line projects to be an anemic .215/.280/.338.
As more clubs become willing to take on the potential of solid performance early in a multi-year contract while ignoring the overall (ahem, Albert Pujols), clubs that have more revenue at their disposal can absorb the risk posed by a player like Hamilton more easily than others. So, while the Angels seem to have spent beyond their limit, Torii Hunter rolling off the books and the club possibly figuring out a way to move Vernon Wells (this became harder when the Angels declined Dan Haren's option and the possibiity of packaging Wells with Haren went out the window) could make the Angels a potential suitor. The Yankees, who almost assuredly have seen the last of Nick Swisher, are another possible destination. And if the Dodgers are willing to give Brandon League a three-year, $22.5 million deal, it's not out of the question that they could float interest in Hamilton as well.
The bottom line is that there are more clubs with more revenue to play with now than there have been in years past, when it sometimes seemed to be that only the Yankees and Red Sox were throwing dollars around. That means more clubs are in the mix, which in turn means that resetting the free agent market is (yet again) a possibility. While there are many reasons that one might say that Hamilton isn’t worth the amount he appears to be seeking, you can just about bet that he’ll get it, or something very close.