Dayton Flyers vs North Carolina Tar Heels in NIT Finals Tonight
April 1, 2010Indians Drill White Sox 10-1 In Spring Action
April 1, 2010It’s that time of the week where we ignore the byline and check out the ever-insightful world of Jon Steiner. This week, there’s still a ton of depth, but with a lot less math. Consider yourself pardoned this time around…
Last time we tried to correlate a player’s performance (how many wins he adds to his team) to his salary. Along the way, we uncovered two important nuggets that will guide us today: (1) on the free agent market players make about $4.5 million per win added; and (2) Shin-Soo Choo and Asdrubal Cabrera are two immensely valuable players to the Indians, worth 5.0 wins and 3.1 wins respectively last season. This week, I want to take a look at what the Indians might be looking into as far as keeping these two stars in the red, white, and blue in the years to come. It already sounds like a patriotic endeavor.
Let’s start by making sure we all understand a few things regarding service time, contracts, free agency and arbitration, since all of these will play heavily into both Choo and Cabrera’s status over the next several years.
Basically, players go through three major phases in their big league careers. The first phase is usually referred to as a player’s “pre-arbitration” years. During this period, a player makes right around the league minimum ($400,000 per year). The length of a player’s pre-arbitration period is determined by how many days he’s on his team’s active Major League roster. He needs to have at least three full years (defined as 172 days per year) of service time before he’s eligible for arbitration, which comes to 516 days (172 times 3). As an example, Michael Brantley currently has 34 days on the Tribe’s active roster from his September call-up last season. If he stays with the big league club for the entirety of each of the next three seasons, he will have accrued about 550 days on the active roster. So by the end of the 2012 season, he’d be eligible for arbitration. If they keep him off the active roster for about 40 games at any point over the next three seasons, he won’t be eligible for arbitration until after the 2013 season.
So what’s arbitration, you ask? Well, it’s the second phase of a player’s big league career, and it happens in the off-season after his initial 516 days have been completed. Arbitration is the first time a player can become expensive to retain, since teams no longer get to pay him the league minimum. Once he’s eligible, if a player goes to arbitration with his team, both sides (player and team) come to the table with a salary they think is fair. Then they argue it out in front of a third party—called the arbiter, who, incidentally, rarely knows anything about baseball—and then one of the two figures is settled upon by the arbiter, leaving the other side bummed and without recourse.
Players on the path we are talking about are eligible for arbitration for three consecutive seasons. After those three seasons, they can enter free agency and sell their services to the highest bidder. So in essence, a team has guaranteed control of its young players for about six years (three pre-arbitration years and three arbitration years), before the player can play for someone else and make his $4.5 million per win added. Until then, his salary is controlled by either the team (pre-arbitration or a contract extension) or the arbiter.
Obviously, all teams deal with these rules differently, but over the last several years, the Indians have demonstrated a fairly consistent philosophy toward young players and their arbitration status. Here’s the gist of that strategy with a few parenthetical players that serve as examples:
- Delay “arbitration clocks” (Michael Brantley): Essentially, this is when a team “manages” a player’s time on the active roster to keep him from hitting his 516 days, giving an extra year of cheap control. The Front Office will never admit to doing this because the player’s union would throw a fit, but believe me, they do it all the time, and they were trying to do it this year with Brantley until Branyan’s back gave out. They may still do it once Branyan is “healthy.”
- Give contract extensions before players get to arbitration (Fausto Carmona): This strategy accomplishes a few things. First, you avoid a contentious arbitration hearing where a team has to tell its own player that he’s not as good as he thinks he is. Kinda awkward. Second, the player will often give up some money he might make in arbitration for the exchange of a contract that guarantees him a paycheck, since if he gets hurt (or underperforms) he might get nothing. The Indians haven’t gone to arbitration with a player since 1991, and they’re extremely proud of this fact.
- Lowball the “40/60/80” rule during a player’s arbitration years: It’s a made up rule, but it goes something like this: If you lock a player up through his three arbitration years, in the first year, you give him 40% of his “market value” (determined by $4.5 million per win added), in the second you give him 60% and in the third 80%. Players usually take this deal, because it’s guaranteed money (not to mention that going to arbitration is not any player’s idea of fun).
- Sign players beyond their arbitration years into the first few years of what could have been their free agency (Grady Sizemore): This is the big one. If a player starts accumulating consistent service time when he’s 22, he’s going to be eligible for free agency when he’s 28—or at the height of value. The Indians know they can’t afford a 28 year-old Grady Sizemore on the free market—the Yankees would just outbid them. But if they can lock him up when he’s 24, they can get a huge discount on his first few free agency years by offering him a guaranteed salary until he’s 29, regardless of his performance or injuries. Sometimes you hit with these (Sizemore), and sometimes you miss (Carmona?), but either way, it’s been the Indians M.O. with their youngsters—especially those they consider budding stars.
Which brings us to Choo and Cabrera. Interestingly, they are both likely to hit 516 days of service time during this season, which would make them eligible for arbitration in the fall. According to Cot’s Baseball Contracts, Choo needs only 53 more days to qualify while Cabrera needs 145.
So what are the Indians going to do with these two, now that arbitration is nearly upon them? Should they lock them both up? What are they worth? And how the heck does Scott Boras play into any of this? Let’s check it out, one at a time. We’ll look at Cabrera first.
Entering the 2010 season, Asdrubal Cabrera will be 24 years old. In 2009, he had a breakout year with the bat, posting a .354 wOBA and a .308/.361/.438 slash line (his .799 OPS ranked 3rd among AL shortstops). While the defensive metrics didn’t love his glovework last year, most scouts and fans believe that he’ll be an above average defender at a premium position for most of his 20s.
For these reasons, projections have Cabrera continuing to contribute about 3 wins above replacement for the next several years. These projections suggest that his offense likely won’t stay as strong as it was in 2009, but his glove will likely be stronger. With that production, he’d be worth about $13.5 million per season on the open market, but since he’s not eligible for free agency for a few years, the Indians are likely looking at a 40/60/80 rule situation. That would make a three year contract for Cabrera look something like this:
2011: $5.4 million (.40*3*4.5)
2012: $8.1 million (.60*3*4.5)
2013: $10.8 million (.80*3*4.5)
That contract would average about $8 million per year and carry us through Cabrera’s age 26 season. Personally, I’d like to lock him up beyond that, since he’s young and (hopefully) getting better. If we were to add a few years of security to his deal on the back end, we might be able to get a further discount on his annual cost, especially in the early years of the deal. If I were the Indians, I’d be thinking along these lines:
2011: $1.5 million
2012: $3.0 million
2013: $5.5 million
2014: $7.5 million
2015: $9.5 million
2016: $10.0 million (club option)
This would give the team control over Cabrera until he’s nearly 30-years old, or right about the time that most players begin to lose their offensive skills. The option year in 2016 would give the team some flexibility on the back end, while keeping him from getting too expensive too quickly. Furthermore, it would give Cabrera the peace of mind that comes with never having to worry about money again. Remember that he’s one injury away from not receiving another paycheck, so $27 million guaranteed may be pretty hard to turn down. If I were a betting man, I’d think something like the above is offered to Cabrera before the trading deadline this season. Time will tell, but if I were the Indians, he’d be a priority.
Onto Big League Choo. In some respects, Choo’s in a very similar position to Cabrera: he had a breakout 2009, posting a .389 wOBA and a .300/.394/.489 slash line. He’s a decent defensive outfielder, with a strong arm, even if he tends to “overuse” it from time to time by throwing a ball away. All told, he was worth 5.0 wins above replacement last season—by far the most valuable player on the team. Since 2010 will certainly be his final pre-arbitration year, the Indians must also begin to address his status.
Despite the apparent similarities, there are two significant differences between Choo and Cabrera that the Indians should take into account. First, Choo is no spring chicken: he turns 28 this summer, making him four years older than Cabrera, and right around his offensive peak. Second, Choo picked up Scott Boras as his agent before reporting to Arizona this spring, and Boras is known for eating babies getting his players to free agency as quickly as possible, meaning that he probably won’t be receptive to a long-term deal for his new client without getting other teams in the bidding to drive the price up.
So while the Indians’ first impulse may be to try to offer a long-term back-loaded contract to Choo like they did with Sizemore and Carmona (and like what I’m advocating for Cabrera), they might not be able to get the extension done due to Boras’s desire to get Choo to free agency ASAP.
So how worried should we be about Boras trying to get Choo to free agency? Not too worried, for a few reasons. First, like I said, Choo’s offensive peak is likely right now (due to his age). That means in a long-term extension we might be paying for what Choo did rather than what he will do (Travis Hafner, anyone?). Second, arbitration will not likely be kind to a player like Choo. Sure, they’ll smile on his batting average, but because they don’t know much about baseball, the arbiters won’t see all of Choo’s “hidden” attributes (his base-running, his defense, his OBP, etc). The arbiters typically look at things like HR and RBI, and when you look at those, Choo looks a lot more like Ryan Garko than Ryan Howard. These are exactly the sorts of numbers the Indians will cite if they end up going to arbitration.
There’s always the possibility that the team and Chooboras could agree to a contract that only buys out Choo’s arbitration years, without dipping into his potential free agency years. Again, using the 40/60/80 rule and a slight decline in production from Choo (accounting for both regression to the mean and effects of aging), that contract would look something like this:
2011: $7.0 million (.40*3.9*4.5)
2012: $10.0 million (.60*3.7*4.5)
2013: $12.6 million (.80*3.5*4.5)
Personally, I don’t see the Indians wanting to commit that sort of money to another player given that Hafner will still be on the books through 2012. I would bet they lowball Chooboras with a deal that looks more like $15 to $20 million for three years, and they end up going to arbitration for the first time in 20 years.
But even if they go to arbitration and Choo wins all three of his cases (which is unlikely; players only win about 56% of their hearings), the worst case scenario is that we pay Choo close to his market value for his age 28-31 seasons, at which point, I’d have no problem letting him walk due to his age and probable performance-decline. Because of Choo’s relatively late start, he’s entering his arbitration period later than most “star” players. Players obviously hate this scenario since they can’t make their $4.5 million per win until after they’ve peaked, but teams absolutely love it (why else delay a player’s arbitration by manipulating his service time?). And I expect the Indians to manage Choo’s arbitration years aggressively—as aggressively as Scott Boras will be trying to suck every last penny out of them. It should be fun to watch. If you’re into gore.
So what’s your take? Would you lock up Choo, considering the risks of keeping him with the Tribe, or take the arbitration road? Does the Hafner precedent worry you at all about signing another long-term deal? Is Scott Boras really the devil he’s made out to be, or is he just trying to make misers like Dolan open the pocketbook for players who have been chronically underpaid? If you had to choo-choo-choose between Cabrera and Choo, who ya got? I’m curious to hear your reactions.
As always, feel free to ask questions, especially regarding the arbitration process. It can be a bit confusing if this is the first time you’re being exposed to it.
Next week’s topic TBD, but I’m thinking either a piece on Acta’s managing style (bunts, stolen bases, etc.) or Justin Masterson’s pitching splits. We’ll see. Either way, we’ll get back to the mathy stuff. See you then!
-Jon Steiner
27 Comments
nope. save the big bucks for the pitchers.
Great article
Best article I’ve read in awhile. Great read!
BTW — Spend the money on Cabrera. Go to arbitration with Choo for the next three seasons. Send Brantley down to the minors once Branyon is healthy to save 45 days and another year of service. If we are building for 2012, that is the smartest thing to do. Tribe fans may not like it, but that is what needs to be done. Business is business.
I hear the “Indians haven’t gone to arbitration since 1991” a lot, but out of curiosity… who was it who they went to arbitration with in 91?
I’d have to try to sign Cabrera to the deal mentioned above. A solid defensive shortstop with a decent bat is hard to come by. Also I’d just keep Choo through his arbitration. I hope they don’t worry about going to arbitration and trade the dude. We need him for the next 2-3 years, but after that a corner OF is easier to replace than a SS.
Jeez dwhit, that’s a good question. I just tried looking it up but couldn’t find the team’s last arbitration case anywhere. I guess I was doing the lazy thing by repeating the mantra. Anybody know who it was?
Also, I wanted to pass along the following link, in case any of you are interested in forecasting playing time for the Indians this year.
http://www.tangotiger.net/survey/index2.php?teamid=114&team=Cleveland Indians
Check out the results…quite interesting at to who Tribe fans think will be playing this season.
If I remember right it was Mark Lewis.
No, come to think of it, wasn’t it a pitcher? Maybe it was Candiotti or Swindell?
@dwhit – the players were Greg Swindell and Jerry Browne.
Source (halfway down):
Sorry about the missing link. http://mlb.mlb.com/news/article.jsp?ymd=20070118&content_id=1781637&vkey=perspectives&fext=.jsp&c_id=mlb
Thanks for the link! Seriously. I can now rest. My dang OCD wasn’t letting me forget about it. I promise I won’t forget Jerry Browne’s name ever again.
Good stuff, nobody. Thx.
Don’t forget about Choo’s Korean military service issue, which makes his case even *more* interesting than any of the other cases.
Great article, I love the SABR-toothed series so far.
I also have a question about the $4.5M per win. Doesn’t that number increase each year, especially if you are talking about a 5-6 yr contract?
Great article. Thanks for all the info. I give Cabrera a deal before Choo. Age and position both favor Cabrera.
An article perfect for the Mark Shapiro computer people. To bad this doesn’t all translate onto the field and winning games because if it did the Shapiro led Indians might have made the playoffs more then what once the last 8-9 years?
I’d like to hear analysis about Acta and his managing style next week.
Mike L beat me to it. I don’t like Boras, but I would love to hear/see the negotiations going on if both the team and agent/player don’t even know if playing in the US is a possibility at all. Seriously, does that even have a parallel, let alone a precedent?
I just want lots of math next week. Long as it doesn’t involve gauge theory it’s fine by me. Another possible idea for a future article would be something involving minor league predictors for major league success – what types of advanced metrics correlate best with staying at the major level, being a successful (highly paid) player, or an all-star. Something that could help give an idea with concrete thoughts of why, for instance, Santana is a better prospect than Rondon. The thought occurs that I could probably look into this, but I’m much too lazy to do so.
To all those concerned about Choo’s military service requirements, I can only say that both Choo and the team have said it won’t be a problem. As far as I can see, that would mean one of two things.
First, he could establish permanent residency in the U.S. Basically, this is defecting from S. Korea to escape his military serivce requirements. Second, he can play in the Asian game tournament this fall, and if S. Korea wins, he’ll be given an exemption by the S. Korean military.
I was worried about this too, but all signs point to it being a non-issue, which, I would guess, means that Choo has already agreed (with the Indians) to defect if he’s not granted an exemption. Obviously, he can’t make this public, but I don’t foresee it being a huge issue. We’ll see.
This was one of my favorite write-ups on the subject, if you’re interested:
http://espn.go.com/blog/sweetspot/post/_/id/2477/if-called-clevelands-choo-unlikely-to-serve
You have to sign up Cabrera first, there are replacement possibilities in the system for Choo. I’m looking at you Weglarz. Additionally, position scarcity in the system at middle infield. There is no great prospect for SS or 2B for that matter that is anywhere close to the bigs. Cabrera is worth more to this team in the future then Choo especially in three years.
I am living in Korea right now, and have been here for last 12 years. Choo’s military requirement is not an issue here although it is a very sensitive issue for most Koreans. Everyone expects him to stay and play in the Majors one way or the other. The consensus(over 90% in a poll done last year on a popular internet site)is that he worked hard to get to where he is, and he deserves the money. As someone mentioned above, he can play in the Asian Games and win the gold medal, but this is more an issue with the Indians than Korea.(why risk injury to one of your key players for Asian Games) He can choose to stay in the states, but this is not a defection because Korea (South) is a staunch ally of the USA. He already makes millions of dollars doing commercials for major companies in Korea, so I don’t think money is that much of an issue (although singing with Boras points otherwise). He just wants it to be done in a way that does not offend lot of Koreans. Obviously, I am a huge fan of Choo and the Indians, but after reading your article I must admit that going after Cabrera is the right answer for the Indians. Still I hope Choo and the Indians find the way to stay together for a long time. By the way, Indians keep insisting that they are a small market team, but you have over 40 million people willing to support you here in Korea because of Choo. I wonder if there is a clause with MLB that forbids individual teams to market themselves in foreign countries.
How useful is the 4.5 mill/WAR number if we think we can realistically throw out contracts where a guy doesn’t even make 75% of that?
@ Richard: Thanks! That was really good information; I wasn’t clear on the “defecting” vs. not serving; thanks for clearing that up. I’ve also never thought about the Indians marketing directly to S. Korea, though I can’t see why they shouldn’t. Perhaps a new source of revenue?
@ Charles: I’m not sure what you mean. Which contracts are you throwing out? Confused…
Really? Am I the only one who looked at the number for Cabrera’s worth and then suggested contract and thought that doesn’t make sense? I figured the 6 year deal suggested for Cabrera was about right, maybe a bit low the first couple years. Don’t tell me fangraphs says he’s worth 13.5 mill a year, and then suggest a contract where he doesn’t come close to making that, or the 40/60/80 percentages that one gets in arbitration.
I gotcha Charles. Here’s the difference. He’d be worth that amount ON THE FREE AGENCY MARKET. Since he’s not eligible for free agency this offseason, there’s a significant discount off of his worth. That’s the part of the “40/60/80” rule. If other teams were allowed to bid on him, his value would obviously go up, but since they can’t, his value is more controlled.
This is why people often misunderstand what the “value” figure means on FanGraphs (and elsewhere). Not all players are eligible for free agency each offseason, so those that are are necessarily “worth” more. It’s a supply and demand thing.
Think of it this way. If you wanted to add a player via free agency that contributed as many wins as Cabrera, you’d have to pay about $13.5 million per year. That’s what the value column means, but as long as he ISN’T a free agent, he can’t expect to make that.
Hope that explains it a bit better.
No, I fully understand how it works and how the system works. But the suggested Cabrera contract never reaches the 13.5 mill he’d receive, even when he would be a FA and he doesn’t get the 40/60/80 marks in the appropriate years. And then when we look at Fangraphs, we see them praise or belittle a team for spending less or more per WAR than they “should have”. Except the only analysis put in is WAR. Maybe, just maybe there’s more to the picture.
@ Charles:
The argument, borne out by the numbers, is that players often accept discounted contracts for the security of a long-term deal. You seem to think that discredits $/WAR. It doesn’t, because $/WAR is a way of valuing what would happen on THE FREE AGENCY MARKET, not to pre-arbitration players.
So I’m not so sure you “understand how it works” because you keep mentioning how Cabrera can’t make his $13.5 million in his first deal (which would cover his arbitration years and first years of what WOULD HAVE BEEN his free agency). But you miss the point entirely. He cannot make that money unless other teams bid on him. That cannot happen now, and cannot happen if he signs a long-term contract before filing for free agency. That’s the entire point of these early signings–to sign them for less than their market value since the signing team doesn’t have any competition.
Finally, I think you’re hung up on the 40/60/80 thing. That comes from the average arbitration case. Players can expect to win their first arbitration case at about 40% of their free market value (what we’re calling $/WAR; you might want to start calling it “free agent value” to clear things up). But if you offer long-term security, players will accept discounts from their arbitration value.
I’m trying…
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