December 8, 2003
Is He Worth the Money in Today's Market?We still don't understand how good Alex Rodriguez is. When he signed a $252 million, 10-year contract in December 2000, there were two prevalent reactions: "The sky is falling!" and "He's really good, but Texas overpaid."
Still, you could argue that A-Rod was worth it at the time. The sky seemed the limit for salaries, and A-Rod at $25 million made a lot more sense than Manny Ramirez at $20 million or Derek Jeter at $19 million.
Since the new CBA was signed in 2002 though, the market has corrected itself, and the days of the $20 million contract are over, no matter what Vladimir Guerrero's agent thinks. In the new market, you'd think A-Rod can't possibly be worth $25 million a year, no matter how well he plays. You can sign two A-list studs for that kind of money now, not just one plus Darren Oliver.
There seem now to be four widely held opinions about Rodriguez and his contract:
Opinion A, though widespread, is irrelevant. Your third-grade teacher might be helping more people than A-Rod, but nobody's signing a $250 million cable deal to televise her classes. Among baseball fans, Opinion B is perhaps the most popular, but it's also wrong--it's obviously not A-Rod's fault that the Rangers wasted the other $75 million they plowed into various Chan Ho Parks.
The 'learned' view is Opinion C. Most baseball fans who have thought reasonably about this question defend this stance, and it seems to make sense. When premier free agents now sign for under $15 million annually, it seems impossible that A-Rod could be a better value than two top-tier free agents.
The notion that C isn't impossible--Opinion D--is what we're going to explore today. It's relevant because the seven years and $180 million (plus $6 million deferred from 2011-2020) left on A-Rod's contract may be about to change hands, with the Red Sox feverishly trying to trade for him. The contention is this: If I gave you $25 million a year to play with, you'd be better off taking A-Rod than jumping into the free-agent pool to get the market-corrected studs there.
Let's look at a list of Value Over Replacement Player (VORP) leaders for the past three years.
2001 2002 2003 Player VORP Player VORP Player VORP Barry Bonds 154.0 Barry Bonds 146.6 Barry Bonds 114.6 Sammy Sosa 116.0 Alex Rodriguez 90.9 Albert Pujols 97.3 Jason Giambi 105.0 Jim Thome 86.9 Alex Rodriguez 86.3 Luis Gonzalez 100.5 Randy Johnson 86.9 Gary Sheffield 78.9 Alex Rodriguez 97.3 Jason Giambi 84.0 Javy Lopez 75.9 Chipper Jones 92.4 Jeff Kent 83.8 Bret Boone 75.8 Rich Aurilia 90.4 Brian Giles 81.6 Esteban Loaiza 74.7 Bret Boone 86.7 Derek Lowe 79.0 Carlos Delgado 72.2 Randy Johnson 86.0 Manny Ramirez 74.3 Pedro Martinez 71.9 Roberto Alomar 80.3 Bernie Williams 71.6 Tim Hudson 69.5
Every year, there are a few guys out there who approach (and once in a while exceed) A-Rod's production. But here's the thing--it's not the same guys every year. Aside from Barry Bonds, A-Rod is the only player to appear on all three lists. Not only doesn't he fall out of the top 10, he doesn't even fall out of the top five.
The last three years, A-Rod has made $18, $19 and $20 million. Given that money, could you find better production each year? Sure, but that's not how baseball works. You can't pick and choose your players every year. You don't get to have Jason Giambi for 2001, then switch to A-Rod for '02 and '03. You can't just grab Gary Sheffield's 2003 season without having had him for the previous years. And you can't have Barry Bonds at all, because the Giants aren't letting him go.
In the same vein, there are always breakout players like Esteban Loaiza who are enormous bargains. But it's not fair to bring them into the argument, either; you can't retroactively have Loaiza for 2003 once you find out he was a Cy Young candidate.
This debate is about cost certainty. In the past A-Rod has been the best bet in baseball for getting your money's worth. That matters for the question we're asking, which is whether or not he still is, and will be until 2010.
We can use the PECOTA forecasting system to have some fun with this question. PECOTA uses a complex set of comparisons to predict a five-year forecast for a player, which is exactly what we're trying to do.
If you traded in A-Rod, what could you get in this new market? Let's look at some possibilities. We'll include free agents from this year and last and three other prominent players who have come up in trade rumors lately, and look at their average expected Wins Above Replacement Player (WARP) from now until 2007, or until the contract ends, whichever comes first. (For Garciaparra I have used the five-year WARP.)
(We list A-Rod's salary at $25 million annually, even though, for the first couple of years remaining on the deal, it's a bit less.)
Name Avg. Salary Contract Ends Avg. WARP, 04-07 A-Rod $25 million 2010 7.4 Garciaparra $11.5 2004 5.1 Ramirez $20 2008 4.4 K. Brown $15 2005 1.1 Alfonzo $6.5 2006 3.1 Durham $6.775 2006 2.6 Floyd $6.5 2006 3.4 Glavine $11.667 2005 1.1 Thome $14.166 2008 4.1 Millwood $10? 2007? 2.5 Pettitte $12? 2007? 1.9 Colon $12? 2007? 2.8 Foulke $7 2007? 1.6 I. Rodriguez $10? 2006? 3.2 Cameron $8? 2007? 2.2 Tejada $10? 2007? 4.1 Sheffield $14 2006 2.7 Guerrero $15? 2008? 5.2
That's impressive. Almost any combination you can make for $25 million won't get you as many wins as A-Rod alone. You're probably scratching your head: How can that be? Ivan Rodriguez, Keith Foulke, and Bartolo Colon combined just barely beat A-Rod? Is that really true?
Well, it isn't, not exactly. PECOTA uses a couple of neat metrics that are particularly relevant to any debate on cost certainty: Attrition and Drop Rates.
PECOTA looks at these metrics and adjusts a player's long-term forecast accordingly. Let's isolate them, so you can easily see what we're talking about (A=Attrition, D=Drop):
Player 04A 04D 05A 05D 06A 06D 07A 07D A-Rod 0.0 0.0 8.4 0.7 9.1 2.9 9.1 3.8 Garciaparra 5.0 0.0 8.3 3.3 18.5 12.0 27.5 11.5 Ramirez 0.3 0.0 6.3 6.2 11.6 5.6 38.7 13.5 K. Brown 60.3 33.1 66.2 58.9 Alfonzo 11.1 2.7 20.5 5.9 31.4 14.1 44.1 25.1 Durham 9.1 3.5 28.0 12.0 33.4 19.8 49.4 25.3 Floyd 9.3 2.7 22.1 11.5 27.4 15.2 40.8 17.9 Glavine 35.0 15.4 43.2 36.8 Thome 9.7 0.9 21.7 7.3 24.5 11.2 43.0 26.4 Millwood 12.3 5.2 21.4 9.4 25.8 14.9 33.3 19.4 Pettitte 34.4 8.5 38.5 13.3 46.1 25.2 59.7 37.9 Colon 17.9 5.5 23.7 12.1 30.0 18.5 37.4 21.7 Foulke 13.8 1.8 28.2 7.9 44.0 18.7 53.9 33.4 I. Rodriguez 15.0 3.8 17.9 6.3 29.3 9.6 34.3 21.1 Cameron 6.3 3.3 25.9 10.0 42.3 23.9 53.3 29.1 Tejada 1.4 1.4 3.6 1.4 8.2 2.1 24.6 4.1 Sheffield 14.8 5.9 32.3 16.0 51.7 31.8 Guerrero 1.5 0.0 2.5 0.0 6.6 2.3 9.0 1.0
PECOTA doesn't really think that A-Rod can single-handedly compete with Pudge, Foulke and Colon put together if they're all at full strength. But they might not be--in fact, it's unlikely that all three will--and aside from Miguel Tejada and Guerrero, nobody is anywhere near as sure a bet as A-Rod. (Guerrero's rates are even better than A-Rod's...hey, maybe his agent is onto something.) And Guerrero is still worth over two wins less per year. A-Rod's combination of production and cost certainty is jaw-dropping.
We've all known that Alex Rodriguez is an incredible player. But maybe we haven't realized how much: He's so good that even after a drastic market correction, the $252 million man still isn't overpaid.
So let Texas deal him for Manny and cash. They'll probably spend it on someone who won't make up the difference.