An Extension for Bedard?
As part of the never-ending rumor mill surrounding Bedard and the trade, there are now reports that Baltimore is considering offering him a long term contract, and will only go ahead with the trade if he turns it down. The Baltimore Sun threw out 7 years and $100 million as a possible figure. Since many people assume that the M’s would want to work out a contract extension with Bedard after acquiring him, I figured we should answer the question of what Bedard’s worth in terms of a long term deal.
Figuring out what a players worth is simply combining several calculations – how many wins will that player add to the roster and how much are those wins worth? Due to a lot of hard work by guys like Tango and others, these questions are actually pretty easy to answer.
If we assume Bedard stays healthy, then for 2008, he’s worth about 5 wins above what you could expect to get out of the Baek/Morrow/Ramirez/Rowland-Smith crop of pitchers – in other words, he’s a +5 win player when compared to replacement level. That’s his 2008 marginal win value.
How much is a marginal win actually worth in 2008? Approximately $2.5 million. Major League Teams are going to spend about $2.7 billion on their payrolls next year, when they would only spend about $360 million if everyone paid the league minimum to every player. So, they’re spending that extra $2.34 billion to try to win more games than their opponents. Since we know that a team full of replacement level, minimum salary guys could win about 50 games, the amount of wins a team buys beyond that 50 win mark are the marginal wins. So, there are approximately 930 wins in MLB to be bought, and teams will spend $2.34 billion to try to buy as many of those 930 wins as they can. $2.34 billion divided by 930 = $2.5 million. This has been the dollar value of a win for several years now – it hasn’t changed all that much.
So, if Bedard’s a 5 win pitcher, and a win is worth $2.5 million, then basic math tells us that Bedard is worth something like $12.5 million in 2008. That’s his actual value to the team in dollars.
However, market value doesn’t care so much about actual value, because MLB’s system is setup to steal money from young players and give it to older players. Since teams have these low cost young talents making far below their actual value, the extra cash savings from those players goes to the guys who are eligible to have their contracts decided either through arbitration or free agency. Since teams have money to fight over a limited pool of players, inflation kicks in, and the market value for a win is more like $4 million. That is, teams will pay $4 million for a win in free agency to fill out their rosters, hoping that the sum of their 25 man roster works out to something less than $2.5 million per win.
So, if we say that market value is $4 million per win, and Bedard’s still a 5 win player, that makes his market value for 2008 $20 million. You can see why the M’s want him so badly – a $12.5 million player (with a market value of $20 milllion) who could only ask for $8 million in arbitration is quite the bargain.
Now, because Bedard doesn’t have free market leverage yet, no team is going to want to get anywhere close to that $20 million per year figure by locking him up now. And Bedard, knowing that he’s only 12 months away from being able to demand something close to market value, isn’t going to want to give up his big payday for something close to his actual value.
So, in reality, an extension for Bedard will have to come in north of $12.5 million per year (to encourage Bedard to sign) and less than $20 million per year (to encourage the team to sign). If Bedard was only one year away from free agency, he could probably get closer to his $20 million figure, but since he’s two years away, the line will be closer to the $12.5 million mark.
In reality, I’d expect that neither the Mariners nor the Orioles will be willing to go past $14 million per year on an extension and for no longer than five years. That would put the deal at 5/70, far short of the 7/100 that has been tossed out as a starting point. After all, if Bedard will only command (estimates of) $7 million this year and $15 million next year, then both teams would have him under control for 2 years and $22 million, then by offering him 5/70, they’re really buying out his first three years of free agency for $48 million, or $16 million per year.
This is the decision Bedard will have to make – does he believe that the extra $4 million (or so) per year he’ll be able to command next winter after a successful, healthy season is worth the risk of having him blow out his arm and potentially lose out on a big payday. If he can get 5/70 now, or he can wait 12 months and try to get 5/100 then, is the shot at another $30 million worth the risk?
If I’m Bedard’s agent, I tell him its not – this is a guy with a long history of arm problems coming off the year of his life. The nature of pitching is so fragile that his $70 million could turn into $30 million very quickly, even if he stays healthy – just ask Dontrelle Willis or Josh Beckett.
So, if 5/70 (or something close to it) is the magic number at which Bedard should be signing a long term deal, is that a deal the M’s should be interested in?
Its a big risk, but I’d lean towards yes. I wouldn’t do much beyond 5/70, but at that point, I’d swallow hard and hope his elbow stays glued together.
“…he’s worth about 5 wins above what you could expect to get out of the Baek/Morrow/Ramirez/Rowland-Smith crop of pitchers”
So Morrow is now ready to contribute at the major league level? 😉
One thing that hasn’t been brought up in the marginal wins Jones v Bedard debate is the variance in performance projections. For example, Jones may have a high ceiling but he may or may not have more risk associated with projecting him 3,4 or even 6 years down the road because he doesn’t have much of a track record to project off of, whereas Bedard does. On the otherhand Bedard’s projections could also have more variance because he is a pitcher and one serious arm injury could put an end to his career. Thoughts?
vr, Xei
You’re right, if there’s one thing we haven’t talked about ever on this blog, it’s projecting young players…
53. Snark?
vr, Xei
One of the difficulties with some of the marginal wins discussion here is that it assumes teams have relatively easy options to deploy the money available to purchase marginal wins.
Steve’s points are all correct, except I disagree with this part – no one here is advocating for decision making to be 100% based on dollars per win calculations. Obviously, there are scenarios where its worth it to overpay, and you still have to be efficient with your resources.
However, it’s important to start from the basis of real value, then work your way from there. There are times when it’s a viable decision to make a “bad” decision based on dollars per win because of a factor that isn’t included in that analysis.
However, you still have to do the dollars per win analysis so that you know just how far you’re straying from actual value. Dollars per win needs to be the starting point, and from there, you can adjust for other factors.
52:
Include too many hypothetical variables and the end result is goulash. It’s worthless. There has to be a base model, a foundation to build upon, something that keeps the numbers in line across the entire player universe. That base model starts and ends with money/time/performance. Variables like risk and “what if†should definitely be considered, but not until after you can compare the apples in question to the rest of the orchard.
Do you think our FO conducts said dollars per win calculations? If not, do others?
huh.
“Landing Bedard not a cure-all for Mariners”
58 – He didn’t take into account the rebound that Sexson will have this year nor the new life that Raul will find in his legs. Irresponsible reporting if you ask me.
Wow, that’s pretty well thought out. Good for him.
Did you see the first comment? After reading it I clicked on the ‘report inappropriate content’ link. Jeez, if you have NO idea what’s going on don’t type anything.
Logger:
All FO’s calculate $/win . . . but individually, faith in its validity and the role it ultimately plays in the decision making process probably spans the board.
“One thing that hasn’t been brought up in the marginal wins Jones v Bedard debate is the variance in performance projections.”
Jones minor league stats offer a wealth of data with which to refine his performance projections. He’s got good size chunks of 2 seasons in AAA, and it’s generally quite easy to use those numbers to project major league performance. Bedard, on the other hand, is a pitcher with a not-exactly-spotless injury history. I think Bedard is an absolute ace, and yet I’d have to say projecting HIM 5-6 years down the road is a crapshoot.
“However, it’s important to start from the basis of real value, then work your way from there. There are times when it’s a viable decision to make a “bad†decision based on dollars per win because of a factor that isn’t included in that analysis.”
How does this help you/me/any of us evaluate a trade like this one? If they simply refuse to do that $/win analysis (and say so publicly), sure – that’s a clear process failure. But this ‘exemption’ that Steve talks about seems to cast some doubt about the value of the tool. Let me be clear: Steve’s right – there are times when you need to make a move that doesn’t quite pencil out for a $/win standpoint.
But if that’s so, then is the ‘league average’ $/win or not-position-specific $/win process the right one? In your mind, would a team tailor the broad idea to the specifics of how many ‘wins’ their core is likely to produce + problem areas in the roster + ETA/quality of top prospects? Or does that sort of tweaking lead to tunnel vision wherein only a right-handed starter who throws GBs will do, and you end up spending 3x what you ‘should’ have?
40 – Reminds me of the general store in Alaska that had a motto, “We cheat the other guy and pass the savings on to you.â€
Not a general store; a bar. Chilkoot Charlie’s in Anchorage. ‘Koot’s, to locals.
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64 – source?
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How does Tango decide He’s worth 5 wins? wouldn’t there be a variable based on what team he goes to? ballpark? which league? etc.
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“He’s on the downside of his career and might have injury problems, but he’s the best we can get that’ll accept our offer since we were stupid enough to trade away our RF without planning for his replacement?
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OppoField, just watch every fifth day to take the sting out.
With the Wilkerson signing it’s now official…the FO doesn’t have an answer for replacing the offensive and defensive contribution of Jones. This fact alone annihilates the notion that adding Bedard will help the team win now — and I seriously doubt the M’s will be able to sign him to an extension. Basically they are hanging their hopes on Richie Sexson hitting 40 home runs. Not to mention hoping that none of the players over 30 years of age on this roster spends any length of time on the DL. This move is going to be completely ineffective…but at least it’s really expensive too. Is there any other kind of move this team knows how to make?
They have an answer in year one-cross your fingers. It worked well last season….
BTW, this has been a fascinating thread.
I understand that the whole world revolves around stats. I get that Bedard is worth maybe about 5 extra wins, but could it be more?
I do feel that Adam Jones could very well come back and make the Mariners decision a bad one. Shocker! I can’t help but wonder why he has been thought off as such a solid fielder. He is still young, but I don’t see him winning any gold gloves any time soon. I don’t mean to be trashing on Jones. I think he can be a very good player in this league, but I can’t help but wonder why no power hitters want to play in Safeco. That’s right.. It’s a pitchers park.
Bedard may be worth 5 extra wins, but how about the pressure he will be taking off Hernandez as the #1 guy. Maybe we see Felix pitch without the pressure this year, and maybe he hits 20 wins.
I don’t think this is the greatest trades in the history of trades, but I don’t think it’s the worst.
Probably not. That sort of uber-production is quite rare…that’s Randy-Johnson-in-his-prime level…maybe. He’s not at that level. Too, a lot of the wins Bedard will get would have been gotten by the bullpen. Lastly, there’s his durability….ain’t gonna get wins if he’s on the DL.
What’s the single most important attribute for an outfielder? It’s not his arm. It’s not his glove. It’s being able to get to the ball. That means speed and taking good routes to the ball. We know he has speed. Scouting reports indicate that he has learned to take good routes.
And focussing on Bedard as a pitcher ignores the effects of poor outfield defense on the other three starters (and the bullpen for that matter).
Make no mistake about it…this is a very bad trade to make.
Just out of curiousity, if Bedard is lights out in April-May-June, and the M’s are totally out of it, does anyone think the M’s would consider trading him again? Maybe they could recoup some or even more talent than they just gave away? It’s kind of the baseball equivalent of day trading, but just wondering what the M’s might fetch in return? If not this year, then next year if it becomes apparent he will not sign an extension.
Wow.
I can’t think of a single thing in that whole analyses that I could take argument with. I mean, really, really excellent breakdown of what could happen with Bedard and his contract situation. Sort of a back-of-the-envelope, pencil sketch of the possibilities, but one that captures the issues facing both sides, and will likely end up close to actuality.
Unless some team goes apeshit and offers him 8/160 or something stupid.
Fascinating thread. I would HATE to lose Jones but isn’t it easier to find a good OF than a top-of-the-rotation pitcher? Seems Bedard could be a rare chance to put the rotation into the elite. Am I wrong?