M’s Reportedly Re-Sign Felix for 7/175
The Mariners have been clear that they want to re-sign Felix Hernandez. Felix has been clear that he wants to re-sign. This was the winter where we all expected a new contract to get done. Well, according to Bob Nightengale, the two sides have agreed to a new deal that totals $175 million over the next seven years. Felix was already under contract for $40 million over the next two seasons at $40 million, so this is really an extension of 5/135, assuming Nightengale has the numbers right and part of the money isn’t a vesting option or something.
There’s no way around it – this is a huge contract, and for any pitcher, a contract this large could easily turn out to be a disaster. 5/135 means that the Mariners are going to start paying Felix $25 million per year starting this season, so he’s either going to take up nearly 30% of the payroll or the payroll is going to have to go way up. Tying up a huge chunk of a team’s total budget in any pitcher has a chance to go south, even one as special as Felix.
That said, this is a gamble the team had to make. There’s not much evidence that teams can attract fans with big splashy free agent signings, but there’s no question that getting rid of franchise players that the fan base is attached to can have an extremely negative effect on a fan base. The Mariners have been hemorrhaging fans for years, and they have a serious credibility problem in the area, as people are tired of losing teams and skeptical of the ownership’s motivations. Trading Felix would have been a knife in the heart of what’s left of the fan base in Seattle, and it would have taken a long time to get those fans back, even if the team started winning again.
The Mariners best hope for relevance is to win with Felix, and the only way to do that is to keep him around for the long term. If they can put a quality roster around the city’s beloved son, they have a chance to get people back to Safeco, get the revenues flowing again, and get the franchise back on track. Had they let Felix go, they very well could have just been the new Cleveland Indians, who haven’t drawn since the mid-90s even when they won because the fan base left after the team went into perpetual rebuilding.
Now, at least, the Mariners have given the city of Seattle a reason to believe that they’re actually trying to win, rather than simply seeking profit maximization. That, in and of itself, won’t get the fans back to the ballpark, but putting a winning team around Felix has much higher revenue potentials than trying to win with whatever young players they could have traded him for.
The Mariners needed to keep Felix. Keeping Felix has turned out to be very expensive. That said, a bet on Felix’s health and future is a better bet than hoping you can convince an exasperated and alienated fan base to come root for players that they associate with organizational greed and an unwillingness to spend.
The point of developing young, cost-controlled players is to free up a majority of the budget to retain your best players. Getting rid of Felix to get more young, cost controlled players wouldn’t have pushed the team closer to winning. They needed Felix and young, cost controlled players. Now they have Felix, and they have him for a long time.
Correction – now we have Felix, and we have him for a long time.
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The next time we have a Hamilton or Upton situation, at least we will be able to say “Felix will be around as long as you are around.” I think that has value. It may not be decisive value to some players, but there have to be plenty of free agents and people who have no-trade clauses who would want to have Felix as a guaranteed teammate.
This isn’t aimed *just* at BPhipps, because several others have made the same point (this is far too risky a move when we already had Felix for the next 2 years at roughly $20M), but the main point of Dave’s post – which I agree with – is that FOR THE MARINERS this could no longer be simply a baseball decision. It has to be a business decision as well, and I think Dave made the case for why that is so very well.
Somebody above asked about attendance differences when Felix is pitching, and it is a good question that illustrates Dave’s point well. Last year, the Mariners drew 1,171,920 (an average of 21,258 over 81 games). In 18 home starts by Felix, the Mariners drew 436,515 (an average of 24,251 per game). However, Felix’s impact isn’t measured by the difference in those two averages, because Felix was a big part of why the overall attendance per game average was as high as it was. If you subtract the attendance in games pitched by Felix, the Mariners drew 735,405 over 63 games – an average of only 11,673 per game. Basically, on average, attendance DOUBLED in 2012 when Felix pitched. Do you really think the Mariners could afford to leave their fan base with the impression that they might let Felix go?
Beyond that, this is a pretty fair contract, in terms of Felix’s expected value over the life of the contract.
By fWAR, Felix has averaged 6.0 WAR over both the last 3-year and 4-year periods (his age 24-26 and 23-26 seasons, respectively), and rWAR has him a bit lower (4.9 WAR/year over the last 3 years, and 5.1 WAR over the last 4). Felix is still a year away from what most aging curves would say is his expected peak, and he has been extremely durable and mostly injury free for his MLB career (since his first full year in MLB, he has never failed to make at least 30 starts, and hasn’t thrown less than 200 innings in a season since his age 21 year, when the Mariners were restricting his innings; even then, he has never thrown less than 190 innings in any full MLB season).
Apart from a discussion of which version of WAR you prefer, there is no projection system which would not peg Felix in 2013 as less than a 5-win player, with 6 WAR probably a fairer projection.
If you peg dollars per win at somewhere between $5.25M and $5.5M per year (I think it is closer to $5.5M per year this year), assume a 5% increase per year in the dollar value of a win, and an average decline of 0.5 WAR per season, you find that Felix’s contract is pretty damn fair.
At the rosy end of the projections (assuming a 2013 starting point of 6.0 WAR, with the dollar value of wins at $5.5M), Felix will be “worth” $197.25M over the life of this contract – over $20M more than the Mariners paid. On the other end of the spectrum, if you assume the dollar value of a win is $5.25M and Felix starts at 5.0 WAR instead of 6.0, his value over the life of the contract is $146M.
A more moderately conservative projection, using $5.25M per win, and Felix’s starting value in 2013 at 5.5 WAR, shows Felix being worth $167M over the life of the contract – pretty close to what the M’s paid. If the value of a win is $5.5M to start – as I think it is – and Felix is a 5.5-win player now, the expected value Felix will produce is *exactly* $175M over the life of the contract.
Of course, you can’t really assign any particular “expected decline” to any pitcher, because they can get hurt at any time. However, assuming Felix doesn’t have a career-ending injury in the first five years or so, from a baseball perspective this contract should work out just fine. And really, from a business perspective, they had no choice.
I’ve lived in Seattle for 24 years. I really enjoy the Mariners. I follow them closely. But my favorite team is the Cubs. When Maddux left after the ’92 season because the Cubs were screwing around and decided not to re-sign him, it was an absolutely crushing blow to the fans of the team. To know that your team’s best player, one of the best players in baseball, clearly a guy who was looking like he was on the way to the hall of fame, was allowed to leave, showed everybody that the team wasn’t interested in winning. It showed we were all being played for suckers, and that we shouldn’t really care.
I understand all of the rational, WAR based $ arguments. They’re all well and good. But if they had traded Felix, or let him walk, it would have been emotionally devastating to the vast majority of people who care about this team. The guy busts his ass. He sets the tone for the organization. He loves playing here as much as the fans love him back. He’s emotional. He’s loyal. He’s the best. Screw the risk. Thank God they’ve kept him.
Maybe I have become jaded. I remember when the M’s lost Randy, Arod and Junior. Each departure was like a dagger in my heart. I loved that Mariner team and desperately wanted to keep the gang together. But now, after years of losing, I just want to be the Tampa Rays. A smart franchise that evaluates talent well and doesn’t hesitate to trade a player when it makes good business sense.
Wow guys, we make a great move by locking up Felix and all the naysayers and negative nancies come give thier opinions.
I love the move! Felix is our best player.
Great write up Dave!
When you say you want to be Tampa, make sure you’re clear about what you mean. You want their brain trust. You don’t really want anything else. It’s a terrible market that has never supported the team and likely never will. If keeping Felix isn’t what Tampa would have done, that’s okay with me.
i/r/t Bryce: I hear you about the emotional attachment to our team’s best players, and feel the same way. I think that’s a BIG reason why the business side of this made this deal imperative for the Mariners – most of their fan base feels the same way.
All I was suggesting is that, for those who do NOT feel that way, this is not a bad deal or a huge overpay. The M’s are essentially giving a raise over the next two years to a player who is currently underpaid (and will still be *slightly* underpaid even at $25M/yr over those two years, even if you are pessimistic about his projected performance and the dollar value of a win during that time), and then extending him for five more. He’s not only their best player and the face of the franchise, he’s one of the most – if not THE most – consistent, durable and injury-free players they have, and has not yet hit the age that should be (statistically) his peak years. By fWAR, he’s had 6+ WAR seasons in 3 of the last 4 years (averaging 6.0 over the last 4 and 5.6 over the last five), and even models of his projected value that are pessimistic (5.5 WAR next year, $/win = $5.25M when the market is probably showing us it is a little higher than that, an assumed decline that is probably too steep for a player his age), he will earn every penny of this deal.
I don’t want to diminish the fact that Felix is a pitcher and pitchers can blow up, but unless Felix gets hurt within the first five years or so of this deal (and I would assume the Mariners will hedge against that heavily with insurance), there is a decent chance that Felix will significantly outperform even this HUGE contract.
i/r/t BPhipps: I understand your “jaded” feelings, but remember this about the Rays: it took many, many years of picking in the top five every year to build that vaunted farm system. Granted, the Mariners are pretty far into a stretch that is nearly that bad (and may not have made as much hay with their higher picks), but I would say that is not a rebuilding “mode” I would want to adopt as an owner, at least in a town that has shown they WILL support a winning team.
I think everybody here would support smarter, more sabermetrically-inclined moves, but I don’t think this market is the kind where you would want to adopt the Tampa or even the Oakland model of re-stocking the farm every few years by trading away promising young stars who are exiting their cost-controlled years. This is a market that WANTS to get to know their team, WANTS them to stay around, and has shown that they will come out to support a familiar team, especially if they win. I believe there are better models to follow that are still sabermetrically friendly (SF, maybe?), and I don’t think this deal falls outside of those kinds of models.
Basically, I’m answering you by saying that *given where the Mariners are in the career cycle of most of the rest of their core,* this is more than a defensible position from a purely baseball perspective (and an absolute MUST from a business perspective). It is scary and risky only because Felix is a pitcher, but unless you would rule out ANY deal of such size and length to ANY pitcher, this is about as good and safe a deal as you can make for a pitcher of Felix’s caliber.
I highly recommend Dave’s Fangraph article on the “frictional costs” of continually rebuilding as it applies to this signing:
http://www.fangraphs.com/blogs/index.php/felix-hernandezsuperstars-and-frictional-costs/
Basically, Dave might say that my analysis above is flawed to the extent that it doesn’t consider some kind of market discount to reflect the fact that you are paying a non-free agent (with two years of club control left) market price as if he were a free agent, but that the “frictional costs” of revenue losses experienced by the continually rebuilding clubs also needs to be considered, and may very well exceed whatever that discount might be. He argues that MLB clubs’ recognition of this is perhaps a reason why Felix (and before him Votto, and others) were extended at arguably market prices before they hit free agency.
Good article, worth reading as part of this discussion.
Pete – I also read Dave’s article and thought it was interesting. Since some here have mentioned Tampa, I tend to think that they are a somewhat unique outlier in how they can operate. They have very smart people running the team, to be sure. But in the end they can make the sort of decisions they do on a purely rational level because they really don’t have to worry about alienating their fans. They don’t really have any fans, or at least nowhere near as many as most other teams, so who cares about what the fans think?
In a weird way, it frees their management to make decisions that no other organization would make. At least that’s how I see it.
This was wrote today on the Mariners home page “Mariners reiterate no extension imminent for Felix”
http://seattle.mariners.mlb.com/news/article.jsp?ymd=20130208&content_id=41496268&vkey=news_sea&c_id=sea
Bryce – I see the Tampa situation the same way you do, and judging from Dave’s comments in the comments section of the Fangraphs article, I think he does too (he also doesn’t see Washington as analagous, given the recent move from Montreal).
thedude1987 – It is hard to know what to make of that, because we know the Mariners have been working on an extension with Felix, and the reporters and sources saying the deal is essentially done are usually very reliable. I could see there being some minor differences once the deal is officially announced (maybe front- or back-loaded, incentives, maybe *slightly* different length or AAV), but I think it probably is done and pretty much done as reported. YMMV.
BTW, I have to correct my attendance figures above. I got lazy – I reported the accurate overall attendance per game (copied from a chart), but then misread the overall attendance figure (1,721,920 and not 1,171,920) and then did my math from the incorrect lower figure. When the math is done correctly, the actual difference is 24,251 with Felix vs 20,403 without; viewed simplistically – perhaps too much so – a 19% attendance bump when Felix pitches. I still think a potential 20% dip in revenue, whether due entirely to Felix’s absence or to some of the “frictional costs” that Dave talks about in his Fangraphs article, is simply something the Mariners could not risk. They could not even risk *the perception* that they might *consider* letting Felix go at this point.