March 25, 2015
Every Team's Moneyball
Seattle Mariners: Top of the (Free Agent) Market to You!
Every day until Opening Day, Baseball Prospectus authors will preview two teams—one from the AL, one from the NL—identifying strategies those teams employ to gain an advantage. Today: the market-understanding Pirates and Mariners.
You have to hand it to the Seattle Mariners. They aren’t shy about big contracts. Within the past few years, they’ve signed Felix Hernandez, Robinson Cano, and Kyle Seager to contracts that were all in the nine-figure range. There’s a general meme going around that these sorts of contracts in general are a bad idea. It localizes a lot of risk into one player, and if it goes bad, we have a name for that. Albatross. It’s true that when a contract like that goes bad, it can cripple a team’s payroll. Why then have the Mariners, certainly not a poor team, but certainly not located in the New York metropolitan area, been so willing to give these contracts out?
I think that, whether this was conscious or not, the Mariners developed an understanding that the top of the market was priced incorrectly. To put it another way, superstar-level players are under-priced, and the Mariners have been smart enough to invest their chips in superstars. It’s not that the strategy is without risk. It’s that the risk can be managed and you can make a case that the payoffs are worth it.
When the Angels signed Mike Trout to his current extension, most sabermetric commentators pointed out that even if Trout was “only” an eight-win player going forward, at the going rate of $7 million per win on the free agent market (a number which surely will only rise), he'd still be a bargain relative to the free agent market. The problem is that the best players in the league don’t draw salaries in line with what would be a reasonable estimate of their WARP potential. Clayton Kershaw’s recent extension was in the $30 million per year range, not because the Dodgers think he is a 4-5 win pitcher, but because that’s a little bit more than the previous highest paid pitcher got.
What that means is that because the salary scale really only goes up to $30ish million or so per year, anyone who puts up more than four wins is, by definition, a bargain. And anyone who goes well beyond that is a really big bargain. Now, there aren’t a lot of those players out there, and fewer still that can produce in the 6-7 win range, but the Mariners have two of them—Hernandez and Cano—under contract. In the short term, both project to be superstar level quality players. That’s not a guarantee that they’ll both stay there, but if a player declines, it’s nice if he declines from on high.
A general manager’s job is to ensure that his team has talent for this season and for many years to come. Often, we talk about those two desires as being in direct competition for each other. When Cano signed his contract, the generally agreed line, as with all long-term deals of his nature, was that the Mariners were paying for the present value and cost-shifting into the future. Cano will be 40 when his deal runs out, and he will not likely be a superstar level player by that point. The standard line is that Jack Zduriencik was trading future value for the present.
But here’s a question: There is some nonzero chance, perhaps even a good chance, that Cano remains at least a good player at age 40, providing some value at that point. They aren’t great chances but the probability exists. Before you consider Cano’s contract a potential waste, consider the baseline that you should use for that judgment. Even if Cano is completely worthless in seven years, what are the chances that, if given the $25 million in salary back from Cano's seventh year, the Mariners would be able to sign a player (or players) who would outperform Cano? There’s a good likelihood that they might be able to do that, but it isn’t 100 percent either. Everything… everything… has risk in it.
We know from the research that if you want an All-Star on your team in five years, your best bet is to sign a guy who is an All-Star now. Even then, he’s a less-than-even-money chance to actually still be an All-Star, because—and this is perhaps the most important thing to know about baseball—the majority of things that people try in baseball don’t work. But you can’t judge something based on whether or not it worked, or whether or not it has a good chance of working. You have to judge it based on whether it has the best chance of all the available options, even if that’s only a 30 percent chance. We don’t have a name for “the guy whom the team could have signed to a long-term deal a few years ago, but they chickened out and now are stuck with a boringly average guy instead.” You don’t want an albatross, but you also don’t want to have a vengrette. People worry about potential albatrosses, because they know what those are. If only they knew how to counterweight that by worrying about a potential vengrette.
The Mariners signed Hernandez and Seager when they were young and none of the three have much of an injury history. We know that the best predictor of future injury is past injury and that pitchers who have a history of durability are likely to maintain that durability over time. It’s not a guarantee, but it’s a reasonable bet. In that way, the Mariners have signed three players whom they know will be good in the short term, barring as always catastrophic injury which creepeth in the night for everyone. They have also bet on a decent chance that they will still get some value at the back end of the deal, and even if not, that failure should be compared to the chance that they would be able to do better in general. By signing superstar level players, they are getting a very good deal now for their free agent buck, and they buy the right to start the decline years from a higher place. They probably also buy the best chance for having a player retain his mojo five years or so from now, even if that chance isn’t great. In the worst-case scenario, they have cost-shifted. In the best-case scenario, they have exploited an undervalued asset. Just like Moneyball said that they should.