Sunday, February 28, 2021

Using the WARpM Stat to Show Why Big Contracts in Baseball Don't Work

This article is (c) Copyright 2021 by Izzy Meth. All rights reserved.

by Izzy Meth

In a rapidly changing game, nothing has grasped the baseball world with no intention of leaving more than the relatively new, massive contract we’ve seen distributed over the last decade. While baseball has always been a very advanced sport in terms of economics, this recent outburst of the massive contract has had as large of an effect on baseball as any occurrence since 1969 when Curt Flood declared himself the first “free agent”. Despite being a career .293 hitter with seven gold gloves, Flood’s importance to the game lodged in his willingness to stand up to MLB ownership, an act that paved the way for countless contracts to come.
Once free agency arrived, not much changed. Although contracts became more pricey over time, that wasn't spurred by a change in the game but rather due to inflation. Some milestones included Dave Parker’s 1978 signing of the first contract to provide a $1 million AAV, and Albert Belle becoming the first player to rack up $10 million for one season. While those numbers were impressive for the time, they can’t compare to what superstars earn now. Albert Belle’s contract in 1997 made him the highest paid player in the game, and yet if he played today, that $10 million is only equivalent to about $16 million now; he’d only be today’s 33rd highest paid player.
The first major step toward the contact structures we are seeing today was when on December 11, 2000, Alex Rodriguez, the Texas Rangers young superstar shortstop, signed a whopping 10-year $252 million contract. The next $200+ million deals were distributed to sluggers Albert Pujols and Prince Fielder. Ironically, neither of those contracts paid off to any extent as Pujols’ numbers rapidly and drastically declined to a near mediocre level and worse, while Fielder's career was cut short by a tragic career-ending injury. Using WARpM (WAR per million), a stat I created to evaluate a player's value in terms of salary, you see that for each of the first three $200+ million deals signed, each team drastically overpaid these players.
The formula for my stat is (2/4,000,000 = WAR/X). The 2 represents the average WAR set on a scale that represents starters and bench players equally over a 162-game season. The 4,000,000 represents the average MLB player salary on the same scale just listed. Here’s an example of how to use this stat: In 2018, Andrelton Simmons posted a stellar 6.3 WAR while being paid $11 million. Using WARpM, he deserved $12.6 million. Now plug in A-Rod’s, Pujols’ and Fielder’s numbers. During the seven years of his original contract (before he opted out), A-Rod earned $158 million while posting a 56.4 WAR. While many of those seasons were on an elite level, several weaker seasons lowered his total value over those years to $112.8 million. He earned approximately $45.2 million over his WARpM value.
With Fielder, it wasn't as much an overpayment as bad luck for the Tigers and Rangers who paid an average of $23.5 million per season to a declining and soon-to-be-retired slugger. Out of Fielder’s six $23+ million seasons, he never once played up to his contract’s WARpM value; in fact, he posted two negative WAR seasons, and missed all of 2017, his final season. Overall, in those six seasons of Fielder's contract, he earned $142 million for a total of 7 WAR. At that level, his total WARpM was $14 million for those six years. All in all, the Tigers and Rangers overpaid a whopping, combined $128 million in what may go down as one of the worst contracts in MLB history.
As for Albert Pujols, when the Angels signed him to a 10-year, $240 million contract, they were signing a career .328 hitter with a staggering 1037 OPS, a 170 OPS+, and an outstanding glove at first base. Over Pujols’ first nine years in LA, he only posted a .257 AVG, with a mediocre 761 OPS and 109 OPS+, while his defense declined tremendously. During those 9 years, he posted a total 14.1 WAR making his average WAR on a 162-game scale approximately 1.6. When plugging those numbers in, Pujols’ WARpM becomes $3.2 million per season, or $28.8 million for the 9 seasons. A difference of $211.2 million separates Pujols’ actual contract from his adjusted contract, the largest ever on the negative side. This is why I consider this Baseball’s worst-ever contract. After watching two of the first three $200+ million contracts epic failures—and the third not quite failing but still over spending nearly $50 million—you would think teams would have learned their lessons… but they didn't.
While large contracts had become frequent by 2014, there had not been a $200+ million deal distributed to a pitcher until reigning and two-time Cy Young Award winner Clayton Kershaw became the first to do so in 2014. Kershaw, who was coming off of three consecutive ERA titles, seemed like the perfect pitcher to break this contract barrier; he was the established, once-in-a generation ace, and pitching for a top-budget, World Series contender. But with only one year left until he hits free agency, Kershaw has still not produced up to the level of his contract. He has earned approximately $200 million over six years since his contract extension, averaging about $33.3 million/season. Over those six years, he has accumulated a 29.6 WAR adjusted over a 162-game season, giving him an average WAR of ~ 4.9/season. When plugging those numbers in, Kershaw’s WARpM is $9.8 million/ season, a staggering $23.5 million less than what he actually earned. Although much of Kershaw’s shortcoming in value was due to injuries, this contract was yet another example of why big contracts tend to benefit a player more than a team.
Following Kershaw's contract, the next pitchers to jump the $200 million mark were Max Scherzer, David Price, and Zack Grienke. While it's safe to say that Price’s and Grienke’s contracts did not pay off, Scherzer’s actually did. In terms of WARpM he comes off a bit short of his contract, however he brought home two Cy Young Awards and a World Series title to Washington. For a franchise that had never won a title before, Scherzer was as important any player. His contract was ultimately a success.
Following all these $200+ million deals, the first man to break the $300 million milestone was Miami's super slugger Giancarlo Stanton. Stanton was already prone to injuries so locking him up for a contract of that length was a desperate attempt for a franchise long missing a face to craft one where it did not exist. The contract failed despite Stanton’s posting an all-time great season in which he slugged 59 home runs in his final year in Miami before being dealt to the Yankees for an embarrassing return.
Soon after, $300+ dollar deals went to Manny Machado and Bryce Harper. How the Padres and Phillies didn't learn a lesson from the Marlins and previous teams listed is shocking, but they were more than happy to lock up Machado and Harper for the long run during 2018’s offseason. In Harper's case it is somewhat understandable; there are stretches where Harper’s game rivals Mike Trout’s. But when signing that contract, Harper had posted sub-900 OPS seasons in two of three recent years. For someone paid to be a top-five player, a sub-900 OPS doesn't cut it. In Machado’s case, the Padres were desperate to establish a new superstar. While Machado is as talented as any player, to give someone with a career .823 OPS that kind of money was a mistake. Although it is far too early to evaluate Harper’s and Machado’s contracts, through each of their first two seasons with their new teams, both players have underperformed given the value of their contracts.
To get it out of the way, Mike Trout's $426.5 million contract is in a league of its own. Although it is too early to evaluate the financial wisdom of Trout’s contract, he has been the best player in baseball for nine seasons without any signs of slowing down.
The off-season of 2019 saw multiple superstars seeking big contracts. I will not go into much detail about Anthony Rendon's $245-million contract, but I expect it to be one of the better big contracts we'll seen in recent history as Rendon is a shockingly consistent hitter and, in the words of former Met AllStar Ron Darling, “He has a slump-proof swing.” The other two big names on the board were Nationals’ postseason hero Stephen Strasburg, and his World Series rival Gerrit Cole. In Strasburg’s case, while he was coming off an excellent season, in which he finished 5th in Cy Young voting, and an even better postseason that ended with him taking home the World Series MVP trophy (unlike the Scherzer contract, which the Nationals had signed nearly five years earlier), this contract was not a very promising one. Strasburg, who at the time had ten seasons on his resume, had only managed to start 30 or more games in three of them. Throughout his career he suffered from injuries, but that didn't stop the Nationals from giving him a $245 million deal. His rival Gerrit Cole, who was coming off of two stellar seasons and postseasons, took $324 million from the Yankees—the largest contract ever for a pitcher. While like Strasburg, Cole had a history of injuries early in his career, but he was coming off three consecutive 30+ game seasons; the latter two with a sub-3 ERA. The Yankees finally got the ace they'd been seeking for so long. Although it's too early to tell, it's hard to believe Cole will play up to his record-breaking AAV throughout the entirety of his contract. If he leads to the Yankees winning number 28, his contract will have been a success.
The final contract worth examining is the recent 14-year $340 million contract extension of young Padres superstar Fernando Tatis Jr. While I believe Tatis is exceptional, offering a 22 year old with just 143 games on his resume that lengthy and expensive of a contract was extremely risky. While he may continue to play on a superstar level for years to come, in which case his contract will have been a massive success for an emerging powerhouse of a team, there is an equal chance that he will not continue to play at this elite level, in which case the Padres will be in big financial trouble. Let’s not forget that many young players in recent history have emerged and put up big numbers before rapidly declining and never matching those numbers again. Consider Yasiel Puig, Gary Sanchez, and even Kris Bryant. Puig posted a .305 batting average along with an elite 888 OPS over his first two seasons, and Gold Glove caliber defense. He did all that over 252 games in his first season, more than 100 games greater than Tatis has played. Puig's numbers dropped off quickly and since those first two years he’s posted only a .264 average along with a 792 OPS.

Gary Sanchez established himself as the best offensive catcher over his first two seasons with an incredible 923 OPS and 139 OPS+ over 175 games. Since then he's been far from the best offensive catcher and he's actually posted slightly below average numbers with a 748 OPS and a 99 OPS+.
Kris Bryant, once baseball’s top prospect, began his career as well as anyone could, winning Rookie of the Year and MVP in his first two seasons, and followed that with a career high 946 OPS in his third season. Since then he's posted a strong 846 OPS over the last three seasons. While his numbers have still been good, he's had a 79 point drop off in OPS, and is far from the MVP he once was.
The above examples should make it plain why one should be skeptical about giving Tatis a contract of such magnitude after just 143 games.

Baseball is a sport filled with inconsistency and unpredictability. This is why long contracts nearly unanimously benefit the player over the team. While these massive, lengthy contracts are likely here to stay, it's worth looking back critically on how similar contracts played out in the past. Will future massive contracts favor teams over players? No shot.

This article is (c) Copyright 2021 by Izzy Meth. All rights reserved.

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