Indians

How the Andrew Miller Deal Helped the Indians Steal Edwin Encarnacion

David Richard-USA TODAY Sports
David Richard-USA TODAY Sports

The Andrew Miller trade promises to be one of the most discussed, most analyzed acquisitions of the past decade. This makes sense because paradigm-shifting trades should be recognized for there vision and risk.

The July-deadline price was steep—a top-50 prospect in Clint Frazier, a top-100 arm in Justus Sheffield and two interesting pen arms. In return, the Indians received Andrew Miller for two-and-a-half years at $9 million per-annum.

When Miller signed a four-year, thirty-six million dollar deal with the New York Yankees, articles were written about the heightening cost of relievers, the changing model in baseball. Retrospectively, Miller’s deal looks like peanuts. This occurred for a few reasons, but one of the most compelling is how the Indians foresaw a different usage for an asset that would cause significant appreciation.

First, it is necessary to establish that Miller is the best reliever in baseball, just for fun. From 2014-2016 while Miller had the best xFIP and second best FIP, the ERA sparkled too. Check it out below:

Courtesy of Fangraphs

Courtesy of Fangraphs

If you want to argue Miller is only one of the three best relief pitchers, that is fine. I would counter that Miller is the only one who has displayed an ability to slay over multiple innings in the playoffs which, in my mind, is dispositive.

The second piece necessary to establish is that WAR undervalues top-end relievers. WAR is a counting stat. Dominating in high-leverage scenarios is not properly rated in the metric which understates the value of a pitcher like Miller. Even so, Miller’s fair market value based on WAR in 2016 would be roughly $24 million. The Indians are paying $9 million. If one posits further that WAR does not completely encapsulate high-end reliever production, the price could look more like $27-30 million in fair market value.

A four-year contract would likely exceed $80 million total, perhaps reaching $100 million. The Indians have him at two years and $18 million. This is insane.

If this sounds crazy, that is fine. Let’s just agree he is worth $25 million per year over the next two seasons, not including postseason maximization. This means the Indians dealt for more than $30 million in surplus value, part of the reason for the inclusion of Clint Frazier in the trade, plus the $8 million dollars of surplus he provided in 2016. If Miller was a free agent following 2016, a reasonable contract expectation for a two-year contract would be $45-50 million. A four-year contract would likely exceed $80 million total, perhaps reaching $100 million. The Indians have him at two years and $18 million. This is insane.

What is particularly brilliant is that the Indians both acquired the best reliever in baseball and inflated the offseason price of all other above average relievers. For instance, the middling left-handed, one-out guy.

Over the next two years, Andrew Miller will only make $7 million more than Zeppo. Zeppo has 2.9 career WAR—the same as Miller’s 2016 season. Zeppo can only get lefties out and Miller can get absolutely anyone.  Aroldis Chapman a pitcher with enormous baggage, an arsenal likely to age worse than Miller’s will received a five year eighty-six million dollar deal. For the Indians, gains are two-fold.

Mark Melancon, arguably a top-15 reliever, signed today for what is reported to be four years and $62 million. Melancon is the same age and has been half-run-to-a-run worse in FIP/xFIP over the past three years compared to Miller. Indeed, Melancon and Cody Allen are more similar relievers than Melancon and Miller. Over the next two years, however, Melancon will make $12 million more than Miller and also is signed for significant money through age 35. The Giants just swallowed a lot of financial risk because the Indians manipulated the value of Andrew Miller.


The Cleveland have the best reliever in baseball, as well as top-20 reliever Cody Allen, locked in on unbelievably favorable contracts. The result: Other teams are chasing the same advantage. The difference, of course, is that other organizations will have to shift the proportion of assets expended on bullpen improvements while the Indians are now seeking other pieces.

When the proportion of other teams budgets shift towards relief help, it naturally shifts a proportion away from another position. What this position is or how the Indians proceed is unclear, but it is the Indians forcing a market shift heading into Winter Meetings is undeniable.

On Thursday, December 22, 2016 the Indians signed Edwin Encarnacion to a three year deal worth at $60 million with a fourth year team option. For context, MLB Trade Rumors projected Encarnacion to receive 4 years and $92 million from the Red Sox for an annual average value of $23 million. Fangraphs projected Encarnacion at 4 years and $84 million with an annual average value of $21 million.  Fangraphs was close the the annual average value but was a year longer in financial commitment, with the Indians significantly outperforming the MLB Trade Rumors projection.

Of course, the Indians also relinquished a pick which has monetary value but that will be discussed later.  In order to avoid a 4 year commitment, one would expect the Indians to have to exceed the projected annual average value to balance risk. However, the Indians were able to get Encarnacion for $20 million less in guaranteed money than the market would suggest which is a significant boon in long term flexibility. Once again the Indians struck at a market inefficiency where power with contact skills is being undervalued by the marketplace.

The delightful part of this market hole is that the Indians helped create it when they traded for Andrew Miller. When the Indians dealt for and optimized postseason usage of Miller it caused a market cost for elite relievers. This effectively removed one of the biggest market competitors, the New York Yankees. The Yankees were determined to bring in another elite high leverage reliever be it Chapman or Jansen, understanding that they would be forced to allocate over $80 million to address this problem the Yankees signed Matt Holliday and removed themselves from the market place. Encarnacion would have fit beautifully in Yankee Stadium and traditionally would have been expected to land there but the Yankees shifted resource allocation to the bullpen due to its postseason value and removed themselves as players in the top end hitter market.

Encarnacion is really an A.L only player with designated hitter written on his bat and a few days at first base likely. Crossing off the largest market A.L. team completely changed the marketplace, especially when considering that the Red Sox, the second biggest market where pushed up against Major League Baseball’s new punishing luxury tax. The Indians could cross off the two biggest spending organizations in the 1B/DH market when it was flooded with useful contributors. The Indians acquisition of Andrew Miller had essentially deflated the cost of DH types, a position the Indians needed to address. By winning one trade and beating the market to the relief pitcher spot, the Indians then leveraged that advantage to acquire Encarnacion, an elite hitter at a below market rate.

Though the Indians’ postseason strategy was predictable in many ways, it serves to emphasize the way playoff baseball is changing. By taking advantage of off days and implementing progressive bullpen usage, Chris Antonetti and Terry Francona inflated the value of above-average relief pitchers as they reached each new round.

Antonetti beat everyone to a market evolution then forced an expansive market shift which will force significant asset allocation by competing organizations. These are the sort of nuanced market victories which drives multi-year contention for the Indians.

  • jpftribe

    Excellent post.

    In addition, the Hill deal makes Clevinger look like $16M a year. Jansen and Chapman want opt out clauses in their deals. The only downside is KC will likely get a higher return for Davis.

  • mgbode

    WAR undervalues RP
    WPA overvalues RP

    I think we might need a stat specifically for RP that helps even these discrepencies out

  • mgbode

    The upside there is they won’t have Davis on their team anymore

  • mgbode

    Great job here Mike. One of the many reasons the Indians FO absolutely nailed their acquisitions in 2016. I’m still unable to fully grasp how they could have a near flawless year in acquisitions.

  • Hopwin

    I am kind of worried the Jays are about to swap out red and black pieces for white and black, but with a bigger budget. It will take them a bit to retool the organization for this but not as long as one might expect.

  • jpftribe

    Cecil was a decent loss for them and Grilli is their Perez. Osuna is very good, but not great IMHO. Bautista may be addition by subtraction, but losing EE would be a major blow to them. Their rotation will keep them in everything, but on paper they would be looking like a weaker team than 2016.

  • jpftribe

    They made plenty of mistakes, but they were low risk to start. Uribe, Byrd, Cowgill, Thatcher, Joba. They hit on all the big ones, including the Lucroy deal. Glad that didn’t happen.

  • scripty

    Melanconin just got 4 yrs $62mm. Good heavens

  • Chris

    The Indians are also playing nickel-slots while the Red Sox and Cubs are playing poker in a private room.

  • mgbode

    I would argue Byrd was a big hit. 1.0 WAR while Chisenhall was hurt was a huge one.

    Uribe also arguable as a minor hit as he allowed J-Ram to help in OF those early months too.

    The rest, I agree but those were so low-profile, I don’t really count (filler deal / lottery tickets). Good point that I shouldn’t ever use absolutes though.

  • jpftribe

    Brett Cecil is getting $7.5M a year for the next three years. But he does have the best intro music in baseball.

  • Steve

    ” An appearance in the middle of the fifth inning against the bottom of the order counts just as much as shutting down the heart in the bottom of the ninth”

    WAR gives credit for higher leverage situations.

  • jpftribe

    Your point is a good one. I’m just trying to talk myself into not getting too excited about the offseason moves (or lack thereof).

  • jpftribe

    Does WAR give credit for 30 SO in 19 IP and .88 WHIP in the posteseason?

  • jpftribe

    BTW Bode, here’s a suggestion for doing a piece on the Astros. They are going for it this year and could be the team to beat.

  • Steve

    There is no official number, but 30 IP at that FIP is worth about 1 WAR, and his WPA was just over 1, so I feel pretty good about that number.

    Andrew Miller is very valuable. So are the things that it cost us to have him here.

  • jpftribe

    So if we are saying Andrew Miller is worth one playoff game more than his replacement, WAR is essentially meaningless.

  • mgbode

    Agree with Part-A of your thesis; unsure about Part-B there

  • mgbode

    My main reason to temper my 2017 enthusiasm is that I don’t see how the FO can match what they did in 2016.

  • mgbode

    Lose EE & Bautista -> no longer scary offensive team

    They can still be decent and can rebound quickly, but I agree it would take quite a bit to not be weaker in 2017.

  • mgbode

    $6.5m per year for multiple years of Rzepczynski!

  • mgbode

    We bought a nice broom with our winnings and used it on Boston though

  • mgbode

    what if you need to win one more playoff game?

  • jpftribe

    That’s easy. You sign EE. I don’t care what his numbers are.

  • Hopwin

    I didn’t mean next year 🙂

    I meant we exported Shapiro up there and he’s going to set up a system similar to the Indians but with more $$$ available.

  • jpftribe

    That I agree with. But I’m also starting to think (hope) that it’s not a coincidence that this team started getting a lot better as soon as Shapiro started talking to the Jays.

  • Hopwin

    We were less conservative with our scant resources, but with a bigger budget Shapiro can afford to be less conservative in Toronto too.

  • Steve

    I’m not sure I follow that logic. He was worth about a win in 15 games, or 11 wins over 162. That’s a rate equivalent to one of the top 10 pitching performance since integration. I’d say that’s about right.

    The Indians protected leads at an extraordinarily high rate before Miller was acquired. This idea that they were destined to lose a bunch if he didn’t pitch is not so obvious to me.

  • mgbode

    also, using “our system”

    Boston
    Arizona
    Texas
    Atlanta
    NY Mets
    Minnesota
    Milwaukee
    Pittsburgh
    LAD
    CHC
    Toronto (mentioned)

    et cetera

  • Hopwin

    There is a difference between inferring our system (or reverse-engineering it if you will) and having one of it’s chief architects implement it.

    Is that fair?

  • jpftribe

    Steve, I respect your view and appreciate you explaining because I am just not wired that way. In my mind, no Miller, no WS. They had a gaping hole in LHP and went out and got the second best arm and one of the most valuable contracts in the league. He was lights out dominant against the best lineups in the league. Yeah, Tito used him in some unconventional ways, but he also lost most of his starting rotation. I don’t know how you put a metric on that.

  • Mongoose

    Very interesting. It seems one of the assumptions is that, as the cost of relief pitchers goes up, the cost (or money available) for other position players goes down. That may be the case for small market teams like the Indians…but in the long run wouldn’t it just add to the existing divide between the small and the large market teams; making it even harder for the Indians to compete after the next 2 years are up?

  • “WAR gives credit for higher leverage situations.”

    Sure, half of a leverage index that is set based on stated run probabilities. When Miller enters the game in the fifth to face the heart of the Cubs’ lineup, the leverage is much higher than he’s mathematically given credit for due to the time of the game.

  • Mike Hattery

    Definitely a short term advantage not a long run advantage. In this time the Indians have to find their next advantage.

  • Steve

    We won seven of eight games to get to the WS. Miller, no doubt about it, played an important role. But a lot of credit needs to go to the other guys who knocked around two very good teams as well.

  • mgbode

    that is why the new CBA attempts at bridging the gap to some degree

  • mgbode

    Everyone on that list utilized one of our chief architects (or architectural assistants) to setup their system. Teams like NYY, Houston and St. Louis reverse engineered it.

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  • Harv

    Great, Michael. I was fully expecting Boston (or Texas) to be chuckling in the weeds, just waiting for the Indians to give it their best number and then make the call to trump it.

    Does this mean that the new luxury tax more effectively levels the playing field between biggest and smaller markets?

  • Steve

    I’m not sure WAR undervalues RP. Leverage is accounted for in WAR.

  • scripty

    If he’s traded, they aren’t a playoff team, which’d de facto mean CLE and by a slim chance – DET has the division on ice.

  • scripty

    TOR faces an even more severe tax rate and has an awful one for local pro athletes. They are going to have to get it done via trades and internal development and then re-sign their own players.

    The Donaldson trade was an outlier than they won’t be able to repeat with regularity. I’m not saying they’re gonna be the Twins or Padres but they’ve also had some good fortune.

  • scripty

    Side note – I’d encourage people to read the recent Sweetspot David Schoenfield article. It’s gist is all teams are analytics driven so execution and bold strategies will have to be even more important. Very intriguing.

  • mgbode

    That was my argument when I read the CBA details