Exploring the insurance calculus of big-money deals.
The Blue Jays' signing of Jose Bautista last week set off a frenzy of analysis in which authors attempted to determine whether or not his projected performance would live up to the value of his new contract. This is a common analytical template, as it allows the writer to determine whether the deal was more beneficial to the team or the player. From the standpoint of the player, as long as the performance-to-currency translation is sound, the calculation generally works. However, there are factors beyond the reported salary that influence whether or not the deal benefited the team. One of these factors is disability insurance. Granted, the amounts of the insurance premiums paid to take out a policy on a player are not common knowledge, but it is important to understand that a team is likely to pay more than meets the eye, and that the insurance introduces a new level of risk.
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The tax rates in various major-league cities can have a significant impact on player salaries.
A couple of weeks ago I discussed “the jock tax” in this space, which is the nickname given to the tax liability incurred by non-residents on income earned away from their home state. The moniker is derived from the simple fact that athletes are much more vulnerable to this tax due to their big salaries and schedules being in the open.
The Cubs didn't necessarily need to empty their farm to acquire another starter.
When news broke last week that the Cubs had acquired Matt Garza from the Rays I sarcastically suggested that the NL Central was all but locked up. Garza is certainly a quality pitcher, but the deal in which he, Fernando Perez, and Zachary Rosscup were sent to the Cubs in exchange for Chris Archer, Brandon Guyer, Robinson Chirinos, Hak-Ju Lee, and Sum Fuld struck me as being one-sided, and not from a talent perspective. No, I considered the deal to favor one side based on the idea of a team recognizing its situation and acting accordingly. The Rays, looking to cut costs, capitalized on the thin nature of the free-agent market by surrendering a better pitcher than was available. Garza was not going to be a key component to their success, and the emergence of Jeremy Hellickson provided a surplus of starters. The Cubs, however, struggled with more than their rotation over the last few seasons yet felt compelled to trade four of their top prospects for a mid-rotation starter. Many have chimed in on which team “won” the deal, but what isn’t being discussed enough is the rationale of the Cubs in a transaction like this and whether their goals could have been achieved by other means.
How are players taxed based upon residency, where their home team plays, and where they play on the road?
When the Cliff Lee saga reached its apex last month, a new type of article began to sprout up across the web. Instead of analyzing how Lee projected to perform and comparing his worth to the offers from the Rangers and Yankees, some writersbegan to calculatewhich offer would actually prove more favorable given the tax rates of the cities and states involved. Based on the tax codes of different jurisdictions it stood to reason that Lee might actually be able to take home more net compensation in an offer that, on the surface, looked to pay less in salary than another. I found this type of analysis intriguing since, by day, I am an accountant for a mid-sized firm in the Philadelphia suburbs. Naturally, articles that marry my two careers are right up my alley, but given the general confusion that arose from many of these pieces, I felt it prudent to do some research of my own and provide a primer of sorts on what is known as the “jock tax,” as well as some key components of how players are taxed.
Are major year-to-year fluctuations in WARP common occurences?
Last week, I wrote an article titled “The Rodrigo Lopez All-Stars” to uncover how many pitchers have thrown 200 or more innings at or below the replacement level after pitching as poorly over the prior three seasons. Lopez pitched exactly 200 innings and finished the 2010 season with a 0.0 WARP; the figure should have been expected given his track record, but the innings total proved surprising. While researching for that article I found the worst WARP totals for pitchers who similarly logged 200 or more frames. Most of the pitchers came from past eras, as it is now far less common for a bad pitcher to record that high of an innings total. Actually, it is far less common for any pitcher to record that high of an innings total these days, which made Lopez’s stats so perplexing.
One of the names on the list of pitchers with the worst WARPs in 200 or more innings was Denny McLain, who produced 1.5 wins below replacement in 1967, a year before famously winning 31 games for the Tigers and adding 8.9 wins above replacement. In the comments of my article, the question was raised as to where that spike in WARP would rank on an all-time scale. After all, it cannot be too common for a pitcher to fluctuate that wildly. Improving from one or two wins to five or six might make sense in the right context, but to go from costing a team over a win and a half to adding approximately nine? That would be like being Pauly Shore’s sidekick in a movie and then landing a starring role in a Scorsese film.
Are there many pitchers who reach the 200-inning threshold without producing wins above replacement-level players?
Every now and then I will come across a statistical line or trend that catches my eye. The numbers don’t necessarily need to be staggeringly positive or negative, either, as I tend to gravitate toward inane accomplishments as well. For instance, Adam Dunn’s bopping of exactly 40 home runs every year from 2005-08 stands out, as does Aaron Harang’s raw unintentional walk totals from 2004-08: 48, 48, 48, 49, 45. Last season, Rodrigo Lopez piqued my interest, as it seemed like he pitched the entire season for the Diamondbacks without being demoted or missing time, and yet he never really pitched all that well. Sure enough, Lopez finished the 2010 season with exactly 200 innings and exactly zero wins above replacement level produced.
Think about that for a second: it is relatively rare for a starting pitcher to stay on the mound for 200 or more innings, and even less likely that a player who accomplishes such a feat would literally add nothing above what a freely available minor leaguer could provide. Lopez has had an interesting career. In his first full season with the Orioles in 2002, he produced a 3.57 ERA and 3.8 WARP in 196 2/3 innings. He followed that successful campaign up with a dismal one, adding a mere one-tenth of a win thanks to an ugly 5.82 ERA. Fortunately, in 2004 he got back on track with a 3.59 ERA and 4.5 wins above replacement in 170 2/3 innings.
A look at the return on investments for relievers given multi-year deals versus one-year contracts.
One of the most interesting aspects of baseball transactions is that every move carries a certain level of risk. Without perfect information akin to an extreme level of accurate prognostication, teams can never be 100 percent certain how a player will perform. The best investment is a player who will produce at a very high level, but who comes as close to guaranteeing that high level of production as possible. Albert Pujols personifies this idea, as a bad season for him still involves above-average defense and a TAv north of .310. I will say right now, with as much confidence as I have in my mind and body, that Pujols will hit, at worst, .310/.370/.530 next season. He has proven himself capable of production far beyond that slash line and is as close to a sure thing as we have.
With Cliff Lee now added to the staff, where does the 2011 Phillies rotation rank all-time?
As Kevin Goldsteinnoted, Monday, December 14, 2010 may go down as one of the 10 best baseball nights in the history of Twitter. The night had it all: accounts successfully replicating those of very reliable sources to pull a prank, subsequently sending everyone and their followers into a veritable frenzy, the cream of the free-agent crop signing a lucrative contract, the revelation of a mystery team akin to a turn in a wrestling story line, and practically anyone that cares about baseball emotionally invested in every twist and turn. When the dust settled, Cliff Lee had agreed in principle to sign with the Philadelphia Phillies, a year to the day after Ruben Amaro Jr. acquired Roy Halladay and 363 days after Amaro traded Lee to the Mariners in a companion deal that drew the ire of every Phillies fan. The news was shocking, as it had seemed for weeks that Lee’s decision would boil down to the Yankees or Rangers. After all, both were contending teams making big offers.
Trying to determine the value of three NL West pitchers and their potential impact for next season.
At the beginning of the year, a Blockbuster Video near my house was closing down and held a liquidation sale for about a week or two. Movies, video games, posters, and even the stands that hold the movies were up for grabs, and it became common to see customers exit the store with 10 or more items in their bag. After a bit of skepticism with regards to the types of movies that would be on sale, I ventured over for the first of my three visits. My skepticism was well-founded, as the movies that remained were not award-worthy by any stretch. Still, they were so inexpensive that I couldn’t help but walk away with a small stash. Traitor for $1? Sure, why not?
There is no risk in the Diamondbacks listening to trade offers for Justin Upton or the Yankees having Derek Jeter test the market.
The Arizona Diamondbacks made plenty of noise a couple of weeks ago when it surfaced that young outfielder Justin Upton could be made available in a trade. The rumor carried shock value and made plenty of fans wonder if the front office had gone senile. Trade Upton? Seriously? After touting Joe Saunders as a key component of the return on Dan Haren, this is the next move to instill confidence? Regardless of personal feelings on the matter, the rumor turned out to be more than mere gossip; it became evident that a wide array of suitors had inquired on what it would take to pry the potential superstar from the hands of newly appointed GM Kevin Towers. The short answer: it would take a heck of a lot for that to happen.
Past performance only tells part of a player's story if not put into the proper context.
With the hot stove about to heat up and the offseason in full bloom, we are entering the time of the year where the majority of baseball articles written attempt to assess the value of a trade or a free-agent acquisition. Those articles dominate the web because the actual game of baseball is in its hibernation state and, frankly, little is more exciting than following which players are signing where, or who might be traded to whom. When conducting these evaluations it has become common practice to compare the production of the player, measured in dollars produced for the team, to the actual salary he was paid. As long as the revenue estimator is sound in logic and development, this is a fine way to begin an evaluation of a transaction, though the method is frequently used as the be-all, end-all in determining whether or not to make fun of a general manager.
Looking for those whose accomplishments in the American League in 2010 flew under the radar.
Last week we built a lineup of National League players who performed really well last season while flying under the radar. The players either put up fantastic numbers without much publicity, improved mightily on their prior campaigns, or in some cases, were overshadowed by players on their own team. For instance, Drew Stubbs would start in center field for the NL’s sneaky good squad because teammate Jay Bruce received the hefty majority of accolades in the Reds outfield. Brad Lidge made the team as a reliever not only because he pitched well, but also because he improved by around 10 wins per WXRL. Today our focus shifts to the American League, and here are the players best fitting the above descriptions in the junior circuit: