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In my last two columns, we discussed when rebuilding teams should sign free agents. Two weeks ago, I explained that teams with outside shots at competing could be doing themselves a favor to sign free agents who would be tradable for prospects at the trade deadline. Several insightful readers pointed out that signing free agents may be a way to work towards improving in the future. I investigated this claim in last week’s column, in which I looked at how well free agents who signed multi-year deals performed in subsequent years of their deals. The overwhelming likelihood was that the biggest value from a free agent comes from the first year of their deal; in many cases, they declined considerably after the first year. Thus, the logical next question in my view is how winning teams are comprised. In this article, I grouped each type of player based on their service time-implied contract status, and checked how each team did at getting wins via each type of player.

Before we dig into the results, let’s discuss how a baseball player’s salary is determined. The rules of baseball contracts are quite unique. Players are initially drafted or signed by their first teams, and their teams then have the rights to their first six years of major-league service time before the players are then granted free agency. For roughly the first three years of a player’s major-league career, their teams can pay them the league-minimum salary of a shade over $400,000. After that, they have either three years of major-league service time, or close enough to three years of service time while also being among the better players with similar service time, their teams can take them through the arbitration process. In the arbitration process, they receive salaries that are generally less than the salaries they would receive for one-year deals as free agents. Typically, during their first year of arbitration eligibility, players earn approximately 40-50 percent of what their salary would be through the auction process of free agency. In their second, third, and rare fourth years of arbitration eligibility, players earn between 60-70 percent of what their market salary would be if they were given one-year deals. Once they have accrued six years of service time, players are granted free agency after the season is over, unless they have agreed upon a contract with their teams.

Thus, there are three levels of service time that are relevant for contract status. Firstly, you can have between zero and three years of service time and receive something similar to the league-minimum salary. Secondly, you can have approximately three to six years of service time and receive higher salaries than the league minimum in most cases, but generally receive lower salaries than free agents receive for comparable performances. Thirdly, players can receive their market salaries. For this article, I did my best to group players into these groups and look at how each team did with each type of player. Of course, many players do not fit perfectly into one of these categories. Sometimes players are non-tendered and granted free agency, but if a player with less than five years of service time signs a one-year deal after being non-tendered, their teams still have the right to take them to arbitration the following season, so I group them with arbitration-eligible players. Players who accepted arbitration offers by their previous teams as free agents were still counted as free agents in my study because their choice to accept arbitration was based on their subsequent salaries being at least about as high as they would be as free agents. Players who signed minor-league contracts were still grouped based on their service time because I treated this as teams expecting those players to be worth this type of value (and presumably generating nearly zero wins on average).

Let’s begin by listing every team in order of total WARP3 accumulated and breaking down how much they received from players with minimum-salary service time (M), arbitration-eligible service time (A), or free agent-eligible service time (F). I also separated out players who were from Japan or other Asian countries (J) who had less than six years of service time, because teams were still required to bid on these players through the posting process. These players required teams to pay market value, even if much of this market value was received by the posting Japanese team (i.e. Daisuke Matsuzaka was valued at $103 million for six years, but he only got $51 million of this, before even paying his agent anything). After these four categories, I lumped together non-market salaries (NM) from minimum-salary service time and arbitration-eligible service time players, and lumped together auction-market salaries (AM) comprised of free agency eligible service time and Japanese and other countries’ players. Then, total WARP3 was listed (T).


Rk by Total WARP3     M    A    F    J   NM   AM   T
1.  Yankees          7.8 10.8 46.3  0.0 18.6 46.3 64.9
2.  Dodgers         15.8 13.6 31.5  0.2 29.4 31.7 61.1
3.  Cardinals        9.0 15.1 32.2  0.0 24.1 32.2 56.3
4.  Braves          19.1 19.3 15.5  2.1 38.4 17.6 56.0
5.  Red Sox         19.2 16.5 14.1  4.5 35.7 18.6 54.3
6.  Rockies         25.4 12.5 12.4  0.0 37.9 12.4 50.3
7.  Phillies         8.0 32.2  9.5  0.0 40.2  9.5 49.7
8.  Angels          19.2 12.7 16.2  0.0 31.9 16.2 48.1
9.  Rays            28.8 10.3  7.9  0.8 39.1  8.7 47.8
10. Twins           13.7 23.6  9.9  0.0 37.3  9.9 47.2
11. Cubs            20.9  0.3 19.0  5.0 21.2 24.0 45.2
12. Blue Jays        5.7 25.2 14.1  0.0 30.9 14.1 45.0
13. Giants          19.3  7.4 16.0  0.0 26.7 16.0 42.7
14. Rangers         20.8 13.5  8.3  0.0 34.3  8.3 42.6
15. White Sox       18.1  2.7 19.4  0.0 20.8 19.4 40.2
16. Brewers         10.9 17.0 11.9  0.0 27.9 11.9 39.8
17. Marlins         10.6 29.0  0.1  0.0 39.6  0.1 39.7
18. Mariners        15.5  7.5 14.0  2.4 23.0 16.4 39.4
19. Tigers           7.8 22.1  9.1  0.0 29.9  9.1 39.0
20. Athletics       26.4  6.4  4.2  0.0 32.8  4.2 37.0
21. Reds            19.5  7.1 10.0  0.0 26.6 10.0 36.6
22. Mets             5.4 13.0 16.9  0.0 18.4 16.9 35.3
23. Diamondbacks    19.5  9.3  6.1  0.0 28.8  6.1 34.9
24. Indians         13.8 13.1  5.5 -0.1 26.9  5.4 32.3
25. Astros           5.0  8.9 16.5  1.5 13.9 18.0 31.9
26. Orioles         16.3  4.8  6.7  1.1 21.1  7.8 28.9
27. Padres          14.5 13.8 -0.1  0.0 28.3 -0.1 28.2
28. Royals           9.4 16.1  1.5  0.0 25.5  1.5 27.0
29. Nationals        9.1  8.7  7.3  0.0 17.8  7.3 25.1
30. Pirates         10.5 10.3  2.6  0.0 20.8  2.6 23.4

Unsurprisingly, the best team in the league in 2009, the Yankees, had the highest total WARP3. However, despite the common perception in the last few years that the Yankees have improved by learning to build on young players, the Yankees had fewer WARP3 earned by players with less than six years of service time than every team in the league other than the Mets, Astros, and Nationals. The Yankees earned more of their WARP3 from free agency-eligible players than any team in the league, with a whopping total of 46.3 WARP3 from their free agents. That is more than the total WARP3 of 20 teams in the 30-team league. This was also nearly 50 percent more than the team that earned the second-most from free agents of any team in the league, the Cardinals, who received 32.2 WARP3 from free agents.

Let’s have a detailed look at the rankings of teams by how much they received from free agents and foreign-born players who played in Japanese and other countries’ leagues first.


Rk by Auction-Market  M    A    F    J   NM   AM   T 
1.  Yankees          7.8 10.8 46.3  0.0 18.6 46.3 64.9
2.  Cardinals        9.0 15.1 32.2  0.0 24.1 32.2 56.3
3.  Dodgers         15.8 13.6 31.5  0.2 29.4 31.7 61.1
4.  Cubs            20.9  0.3 19.0  5.0 21.2 24.0 45.2
5.  White Sox       18.1  2.7 19.4  0.0 20.8 19.4 40.2
6.  Red Sox         19.2 16.5 14.1  4.5 35.7 18.6 54.3
7.  Astros           5.0  8.9 16.5  1.5 13.9 18.0 31.9
8.  Braves          19.1 19.3 15.5  2.1 38.4 17.6 56.0
9.  Mets             5.4 13.0 16.9  0.0 18.4 16.9 35.3
10. Mariners        15.5  7.5 14.0  2.4 23.0 16.4 39.4
11. Angels          19.2 12.7 16.2  0.0 31.9 16.2 48.1
12. Giants          19.3  7.4 16.0  0.0 26.7 16.0 42.7
13. Blue Jays        5.7 25.2 14.1  0.0 30.9 14.1 45.0
14. Rockies         25.4 12.5 12.4  0.0 37.9 12.4 50.3
15. Brewers         10.9 17.0 11.9  0.0 27.9 11.9 39.8
16. Reds            19.5  7.1 10.0  0.0 26.6 10.0 36.6
17. Twins           13.7 23.6  9.9  0.0 37.3  9.9 47.2
18. Phillies         8.0 32.2  9.5  0.0 40.2  9.5 49.7
19. Tigers           7.8 22.1  9.1  0.0 29.9  9.1 39.0
20. Rays            28.8 10.3  7.9  0.8 39.1  8.7 47.8
21. Rangers         20.8 13.5  8.3  0.0 34.3  8.3 42.6
22. Orioles         16.3  4.8  6.7  1.1 21.1  7.8 28.9
23. Nationals        9.1  8.7  7.3  0.0 17.8  7.3 25.1
24. Diamondbacks    19.5  9.3  6.1  0.0 28.8  6.1 34.9
25. Indians         13.8 13.1  5.5 -0.1 26.9  5.4 32.3
26. Athletics       26.4  6.4  4.2  0.0 32.8  4.2 37.0
27. Pirates         10.5 10.3  2.6  0.0 20.8  2.6 23.4
28. Royals           9.4 16.1  1.5  0.0 25.5  1.5 27.0
29. Marlins         10.6 29.0  0.1  0.0 39.6  0.1 39.7
30. Padres          14.5 13.8 -0.1  0.0 28.3 -0.1 28.2

This list definitely looks similar to the overall win total list at the top, but many of the other top teams earned their wins from players not bid on through the free agency or posting processes. The Phillies, despite being among the top 10 in overall payroll and seventh in overall WARP3, were only 18th in how many WARP3 they received from free agents. The Astros were somehow seventh, despite not being competitive at all this year.

Looking at the rankings by WARP3 totals of teams with non-market salaries, we see that these rankings look quite different.


Rk by Non-Market      M    A    F    J   NM   AM   T
1.  Phillies         8.0 32.2  9.5  0.0 40.2  9.5 49.7
2.  Marlins         10.6 29.0  0.1  0.0 39.6  0.1 39.7
3.  Rays            28.8 10.3  7.9  0.8 39.1  8.7 47.8
4.  Braves          19.1 19.3 15.5  2.1 38.4 17.6 56.0
5.  Rockies         25.4 12.5 12.4  0.0 37.9 12.4 50.3
6.  Twins           13.7 23.6  9.9  0.0 37.3  9.9 47.2
7.  Red Sox         19.2 16.5 14.1  4.5 35.7 18.6 54.3
8.  Rangers         20.8 13.5  8.3  0.0 34.3  8.3 42.6
9.  Athletics       26.4  6.4  4.2  0.0 32.8  4.2 37.0
10. Angels          19.2 12.7 16.2  0.0 31.9 16.2 48.1
11. Blue Jays        5.7 25.2 14.1  0.0 30.9 14.1 45.0
12. Tigers           7.8 22.1  9.1  0.0 29.9  9.1 39.0
13. Dodgers         15.8 13.6 31.5  0.2 29.4 31.7 61.1
14. Diamondbacks    19.5  9.3  6.1  0.0 28.8  6.1 34.9
15. Padres          14.5 13.8 -0.1  0.0 28.3 -0.1 28.2
16. Brewers         10.9 17.0 11.9  0.0 27.9 11.9 39.8
17. Indians         13.8 13.1  5.5 -0.1 26.9  5.4 32.3
18. Giants          19.3  7.4 16.0  0.0 26.7 16.0 42.7
19. Reds            19.5  7.1 10.0  0.0 26.6 10.0 36.6
20. Royals           9.4 16.1  1.5  0.0 25.5  1.5 27.0
21. Cardinals        9.0 15.1 32.2  0.0 24.1 32.2 56.3
22. Mariners        15.5  7.5 14.0  2.4 23.0 16.4 39.4
23. Cubs            20.9  0.3 19.0  5.0 21.2 24.0 45.2
24. Orioles         16.3  4.8  6.7  1.1 21.1  7.8 28.9
25. White Sox       18.1  2.7 19.4  0.0 20.8 19.4 40.2
26. Pirates         10.5 10.3  2.6  0.0 20.8  2.6 23.4
27. Yankees          7.8 10.8 46.3  0.0 18.6 46.3 64.9
28. Mets             5.4 13.0 16.9  0.0 18.4 16.9 35.3
29. Nationals        9.1  8.7  7.3  0.0 17.8  7.3 25.1
30. Astros           5.0  8.9 16.5  1.5 13.9 18.0 31.9

The Phillies led the league in this category, with a total of 40.2 wins from players with less than six years of service time. However, despite the Phillies’ high total in this category, they were better than only five other teams in the league in WARP3 from players with less than three years of service time. If there was ever a team in a situation where their team was about to get much more expensive, it is the Phillies, who will see Joe Blanton and Jayson Werth reach six years of service time after 2010 and then Ryan Howard, Jimmy Rollins, and Shane Victorino will all do so one year later.

Interestingly, the second-, third-, and fourth-ranked teams in this category all fell out of playoff races despite putting up strong seasons. The Marlins showed that they did not believe it would be profitable to spend on free agents, even though it was clear that a few signings would have put them over the top. The Rays also were not free spenders, and clearly would have been closer to competitive had they done so. The Twins managed to sneak into the playoffs despite few WARP3 earned by players who had reached six years of service time because they got such a strong contribution from players with less than six years of service time.

The teams that are the most concerning are teams like the Astros, Nationals, and Pirates, who are all rebuilding and yet have a small foundation on which to build. The Pirates have taken steps to get young recently, tossing out the majority of their roster over the past couple seasons, but they are still far away, even though they are likely on the right track. However, the Astros continue to behave like a competitive team who need just a few more wins to get them over the hump despite having a small foundation on which to build. Even a very high salary total would not have made the Astros competitive.

The key to winning still seems to be having more money. The correlation between the percentage of WARP3 earned by players with at least six years of service time and total WARP3 received was +0.52 (and -0.52 naturally for the percentage earned by players with less than six years of service time). Even removing the anomalous Yankees from this data, the correlation still remains strong at +0.39. The correlation between total WARP3 earned by each of those two broad subgroups is -0.30, which means that teams are clearly specializing, but the fact that teams with more of their talent from players with less service time are doing relatively worse indicates that it is still better to be rich than clever at this stage. Perhaps no team has become a symbol of being cheap but clever than the Athletics, who were second only to the Rays in WARP3 accumulated by players with less than three years of service time. However, they still finished in last place in the AL West. Of course, the other three teams in their division were all in the top half in this category as well.

Overall, these tables should paint a better picture of how teams become winners and what needs to happen. Every winning team received at least some wins from their young players, and approximately two-thirds of all WARP3 were earned by players with less than six years of service time. However, this needs to be supplemented by free-agent talent at some stage to push most teams over the hump into the playoffs. Teams like the White Sox and Cubs did well with writing checks, but they received too little support from their systems, and teams like the Marlins and Rays were unable to put themselves into the playoffs despite a host of young talent. The lesson for rebuilding teams should be this: scout and develop with the best for several years and save your money; you will need it later.

Thank you for reading

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tkniker
1/04
Great article on this. Something I've wondered.

The typical comment would be interesting to see how this has looked for the last five or so years (at least for the playoff teams and near-playoff teams).

One interesting question (possibly) would be in the last few years, what's the most WARP3 that any team has gotten from NM.
philly604
1/04
It's always easy to second a request for an author to do more work!

If the effort to simply do every team by brute force doesn't seem worth it, I'd still suggest doing some selective teams. I'd like to specifically see if a changing relationship between M, A, F wins could tell us something about how a team enters and exits a success cycle. Or better yet, if that provides clues to how a team can keep from exiting the cycle.

A real long term study of the Yankees would be interesting as once upon a time the Jeters, Riveras, Posadas etc were generating cheap wins. A timeline that showed wins moving from the cheaper to more expensive categories would speak both to the importance of that initial homegrown core and then the money to keep it and augment it with more expensive wins due to a somewhat fallow farm.

That can be contrasted with smaller revenue teams like the A's (would love to see thier timeline from the Moneyball 100 win teams to the recent last place ones) or the Twins who have maintained a pretty good, but never great team for a good stretch.

It's always the extremes that are easiest to point to, but I'd also like to see a closer look at the balanced teams. The Braves, Red Sox, Angels and Brewers were the only teams with between 10-20 wins in all three segments. The Sox and Angels have been a longterm consistent winner. Is this balance a key that has helped them do that (along with a lot of big market money)? Are the Braves well positioned to start a sustainable run because of this balance? Are the Brewers an example of a well balanced team that can't get over the hump because of a lack of money?

The other team that jumped out was the Dodgers. Considering all the talk of the good Logan White home grown Dodgers and the bad wasteful Colletti FA Dodgers it was interesting to note that thier M, A, F was so eighted towards the F.

Lots of angles for further investigation.
swartzm
1/05
I wouldn't say it's balance per se. Check out the Yankees! But definitely you need something from NM and something from AM to amount to anything. The Yankees AM WARP3 total was still less than 10 teams in the league and 2 in the AL East. You need something from both. The Braves are probably in a good position-- that would definitely be my conclusion. Checking out the projections from the players they have in different contract statuses over the next couple years really should paint that picture clearer. I think the Brewers are an example of a team that needs a homegrown core to win because even getting 12 wins from auction-market contracts, which was about average for the league, didn't make them contenders.
Oleoay
1/04
Hey Matt, is there anything instructive about the percentages of AM or NM of T that might indicate roster construction quality?
swartzm
1/05
I looked at the percentages and basically found that winners tended to have more of their wins from AM contracts, but that this was mostly because there was more variation in WARP3 totals from AM contracts than wins from NM contracts.
tkniker
1/05
Or is that from the fact that more of the winners are from big markets and they have a tendency to be more active in the Free Agent market.

Obviously Twins/Rays are still "winners" but have very little AM WARP3
Oleoay
1/05
... in other words, people swing and miss on their valuation of AM contracts quite often, but the winning teams tend to be better gamblers. Is that a fair statement?
matuszek
1/04
Thanks for this, Matt. A great breakdown of how to get those marginal wins.

Jimmy Rollins came up in 2000 and has passed his six years. Was this a mistake in the text only, or did it make it into the numbers?
antoine6
1/04
This is an issue. Rollins was signed to an extension by the team before he hit free agency. It seems the author counts this as Non-Market salary, but, of course, these extensions often take them past six years of service time, and they do reflect some (but not all) market considerations.

This was a really interesting article. I'd like to see the author talk about this specific issue, because it seems like it'd be important to further understanding, especially as more and more teams try and lock up their young guys long-term, to take them past free agency.
swartzm
1/05
Rollins had more than six years of service time and was thus an AM contract. He had the ability to be a free agent and happened to be the victim of an excellent buy low strategy from the Phillies. His numbers exploded the second he got his contract and he could have earned a lot more had he waited.
jdtk99
1/04
Great article Matt! The Yankees only bought 52% of a championship. The Yankees are the only team that can purchase enough free agent wins to get close to 90 wins and the playoffs.
workermonkey
1/04
i'd love to see a historical take on this as well. i think it would show nicely if trends have emerged of better decision making and more focus on prospects or not.
kcboomer
1/04
So if the Yanks got less from the players with less than 6 six of service time than anyone and more from the players they purchased you can say they bought the pennant.

The Yanks do have to be credited with overspending to be sure their home grown core (Jeter, Rivera, Posada, Pettitte, Williams, etc) didn't go to free agency during their primes.
morillos
1/04
The comments about the Yankees -- and a closer look at the Cards, a big chunk of whose F wins must be Albert's -- point out that the lessons for *building* a team are more complicated than this chart might indicate, since the most productive F wins may often (usually?) be those from home-grown players a team has retained. This does not nullify the importance of money, of course, but it does require that money be backed by good scouting (and vice versa). Matt's own column on the value provided by free agents in multi-year contracts shows this, too.
Slingerland65
1/04
Anybody else think the results aren't just interesting, but rather depressing? As a fan of one of the have nots, I'm starting to feel like a Washington Generals fan...
Korisu
1/04
I would like to see some information on Warp3 by salary type per dollars spent on salary type. Did the Yankees outperform everyone simply because they outspent everyone else or because they spent that money wisely? For instance the Yankees have a 46.3 AM Warp3 compared to the Tigers 9.1 AM Warp3. I doubt Matt's data would show that the Yankees outspent the Tigers 5 to 1 in AM dollars. Also I would guess that there is some sort of minimum AM Warp3 required for a team to be a playoff caliber team and, vice versa, a pratical limit to the amount of Warp3 a single team can expect to generate via NM players.
swartzm
1/05
I definitely like the suggestions from several commenters to go back and check this out for historical years. I'm going to work on gathering this data as well as I can, but it's much harder to get service time data. I also have my eye on looking at how much money was spent on each category of contract too, and I appreciate that suggestion as well.

Most people would like to see historical information so that we can draw conclusions about changes in what it takes to build a winner. I guess given the description of the A's success in Moneyball, that's certainly worth checking. I do think, though, that what this current snapshot shows is that you clearly can't win by just throwing money at free agents without a solid homegrown group (White Sox, Cubs) and you can't build a winner without spending money on free agents (Marlins, Rays). At this stage the winners all seem to have decent showings in both NM and AM contract status players, and that's certainly worth knowing. It goes back to how to build a winner, and the answer is that players drop off as they go further into their free agent contracts but you need a number of guys in those contracts who are still producing.
Oleoay
1/05
If you do further research, one avenue that might be interesting is an equivalent of MORP. Basically, the average AM per million dollars spent for each team over the last 3-5 years or so. This kind of stat might suggest some teams are better at valuing auction-market salaries than others (which can make or break a team).
McDosey
1/06
It's tough to conclude quite so strongly, though. The Rays made it to the WS in 2008 without significant help from the auction market, no? There will be exceptions when teams accumulate enough talent in one bucket, even if the other bucket is dry. The '08 Rays are a good example of this. A lot depends on circumstances too. The '10 D-Backs will likely have relatively little in the AM bucket, but have a chance to win a weak division, for example.

I do like the general conclusion that teams with high NM potential could buttress their odds with a well-placed acquisition of AM talent - definitely support the historical study idea.
Oleoay
1/06
Is the NL West still a weak division?
rawagman
1/05
I enjoyed the implications of this article very much. Much food for thought. I think that the conclusion drawn were false, though. Using only one year of data, we have not seen if this type of information is at all consistent. We would need at least 5-10 years to even start considering conclusions.
On the other hand, what we can do is use that information as a means of spotting future trends. For example, I see that the Blue Jays have spent very little in both M and F, and have most of their production in A players. This tells me that they are peaking now and their re-build will conclude when their current stars (of which Halladay was likely included from last year's numbers) will be past their primes. The re-build may take longer than AA thinks. Or, the Rays (no surprise there) the A's and the Rockies may be primed for long, successful runs due to the immense value stemming from their M players.
One year of data is sufficient for that kind of analysis.
swartzm
1/05
I considered this, and I'm certainly going to explore some historical analysis on this type of stuff as I dig up the data. I think that it's dangerous to draw conclusions about the current market from what it looked like. The point here is that this year all eight playoff teams had contributions from both NM and AM contract status players. It may not be possible to say that will be necessary for 2010 or anything like that. It's pretty much descriptive, but the likelihood is that the data is pointing at something accurate about how to build a winning team, even if you can't say for sure or carry it forward.
moscow25
1/05
Nice article, as always!

Would it be possible to link the beginning part about salary percentages into the tables somehow? Could we see a column for what % of full value a team payed for their wins? Or maybe just an estimate based on the 10%-40%-60% breakdown for league-min & arbitration eligible players? It would be nice to see a figure showing what percentage of full value the Phils & Marlins are paying for their wins, vs the Yankees.

Thanks!
swartzm
1/06
Thanks. These are all good ideas and things I'm working on trying to do.
pimmel
1/05
a
pimmel
1/05
Sorry for the noise...left the computer unattended...
misterjohnny
3/12
What jumped out to me was the AM ranking almost perfectly showing large markets in rank order. Obvious exceptions are the St. Louis Pujols and the NY Mets (whose AM's were all injured).

Giants, Angels, and Phillies were out of place, both west coast teams needing to spend less money to be competitive in a less competitive division.