Market Value in MLB

[blue911]

What does the term mean to you?

[HalfSmokes]

The value of a contract a player gets when there are multiple bidders?

[blue911]

The value of a contract a player gets when there are multiple bidders?

Wouldn't that be maximum value or the contracts that teams should shy away from?


For me market value is what similar players have signed for either via free agency or extensions. So Desmond comps to Jose Reyes +/-

[HalfSmokes]

Wouldn't that be maximum value or the contracts that teams should shy away from?


For me market value is what similar players have signed for either via free agency or extensions. So Desmond comps to Jose Reyes +/-

Via free agency would be by definition a market:multiple bidders with price determined by supply and demand. Extensions have a seller unable to negotiate with other bidders, so they may use market prices for comps, but, ultimately, you'd expect the deal to be below market- with rare exceptions (ownership desperate to keep players- i.e. Howard or Cabrera's most recent deal). And yes, I've definitely come around on not bidding on star players on the open market

[NJ Ave]

I think as salaries increase, drafting and development are going to become even more important. If you need 45 WAR to be a playoff team (45 wins is roughly what a team of replacement level players would do), and the free agency cost of a win is $5 million, you can maybe try to be the Yankees and spend $225 million to get your wins entirely in free agency. If wins cost $7 million in free agency as they did this offseason, you're at $315 million to build the same team, and that's only a team on the EDGE of the playoffs, not a sure thing.

In my perfect world, I would just pay overmarket prices to sign our young players to extensions that end by age 32-33. I'd rather just give a bunch of guys $100 million for their primes than face this choice of paying them $30 million in arbitration but losing them unless you pay them another $140 million for their decline years.

[blue911]

In my perfect world, I would just pay overmarket prices to sign our young players to extensions that end by age 32-33. I'd rather just give a bunch of guys $100 million for their primes than face this choice of paying them $30 million in arbitration but losing them unless you pay them another $140 million for their decline years.

I think everybody would endorse such a plan. But and there's always a but, the players that fit that model usually hit free agency by age 29 and they will command much more as a free agent then at age 32/33. The way arbitration works really takes the risk out of not signing extensions. At least in my way of thinking

[Mathguy]

"Whatever a ballplayer and agent can get away with"

What does the term mean to you?

[blue911]

"Whatever a ballplayer and agent can get away with"

I don't disagree with that's the way it's being used. I just think that is how you end up handing out bad contracts. Jayson Werth's is a bad contract. He may provide more value than what he is paid but handing out $126M to a 32 year old isn't a smart investment.

[HalfSmokes]

I don't disagree with that's the way it's being used. I just think that is how you end up handing out bad contracts. Jayson Werth's is a bad contract. He may provide more value than what he is paid but handing out $126M to a 32 year old isn't a smart investment.

you're right, but to compare that to a cost controlled contract, you have to factor in the other costs- what is the cost of either drafting and developing someone of werth's value (somehow factoring in the fail rate,) or using assets to trade for that value. Giving a 32 year old a seven year contract is still probably a bad investment, but it's somewhat unfair to compare to a cost controlled player when cost controlled players require more than just money to obtain

[blue911]

you're right, but to compare that to a cost controlled contract, you have to factor in the other costs- what is the cost of either drafting and developing someone of werth's value (somehow factoring in the fail rate,) or using assets to trade for that value. Giving a 32 year old a seven year contract is still probably a bad investment, but it's somewhat unfair to compare to a cost controlled player when cost controlled players require more than just money to obtain

And there's value in being able to trade prospects because Werth has them blocked. But I'm talking more about the contracts in general and was using Werth as an example.

[Mathguy]

There are other factors involved here.  Except for FACE, most of our young stars came from other parts of the country.  Some of them might like the idea of experiencing playing in other areas, despite whatever contract $$$ are dangled in front of them

In my perfect world, I would just pay overmarket prices to sign our young players to extensions that end by age 32-33. I'd rather just give a bunch of guys $100 million for their primes than face this choice of paying them $30 million in arbitration but losing them unless you pay them another $140 million for their decline years.

[NJ Ave]

There are other factors involved here.  Except for FACE, most of our young stars came from other parts of the country.  Some of them might like the idea of experiencing playing in other areas, despite whatever contract $$$ are dangled in front of them

Not suggesting that every guy is going to sign extensions, just that I wish the Nationals were more proactive about it (much like the Braves seem to be). We wait until a guy has already earned millions in arbitration, which takes the edge off. I'm talking about being more proactive in pre-arb extensions.

Like Rendon now, just go offer the kid the money, even if there's no discount. The discount is in having the contract end at age 32 or 33 and not having to be on the hook for the mid-30s.

[HalfSmokes]

Not suggesting that every guy is going to sign extensions, just that I wish the Nationals were more proactive about it (much like the Braves seem to be). We wait until a guy has already earned millions in arbitration, which takes the edge off. I'm talking about being more proactive in pre-arb extensions.

Like Rendon now, just go offer the kid the money, even if there's no discount. The discount is in having the contract end at age 32 or 33 and not having to be on the hook for the mid-30s.

so much this, anyone can say Boras would never agree, but putting a $75-$100 million offer in front of a kid with career earnings south of $10 million may make them think twice about maxing career earnings vs. knowing they will be wealthy for the rest of their lives. With a guy who didn't get a large signing bonus, I'd think you'd have an even better chance

[NJ Ave]

Rendon is under control for 5 more years and will become a free agent when he's entering his age-30 season.

So you offer him $31 million for the next five years ($5/$10/$15 million for his arb years) and 3 years, $75 million on top.

8 years/$106 million, contract runs out after his age-32 season.

The other possibility is that you pay him $25-30 million for his arb years, only to face a guy who wants 6-7 years and probably $175 million at age 30.

So there's still risk, but I'll take my chances with the risk of 3 $25 million seasons from age 30-32 rather than 3 $25 million seasons from age 35-37, like you face with Werth or any other premium free agent.

Everyone always points to the "unknown" of a young player - what if they regress! - when that's essentially the same "unknown" you'd deal with signing a Desmond to a huge deal, regression in the later years of the contract.

[blue911]

Arbitration has taken all of the incentive out of a player signing a long term deal. Couple that with the earnings difference between a year 29 free agency and year 32 it isn't that much of a risk.


As for the Braves Teheran was a good signing and maybe Freeman but given their payroll constraints 4/42 for the closer and 7/58 for a non hitting shortstop aren't all that special.

[blue911]

NJ, I think with Boras you don't get an arbi eligible discount. It would probably take something like 7/140-150 to get him to the table with Rendon.

[NJ Ave]

NJ, I think with Boras you don't get an arbi eligible discount. It would probably take something like 7/140-150 to get him to the table with Rendon.

I doubt it. Rendon is pre-arb the next two seasons, so he earns $1 million total over those two years, then has 3 arb years. Even Mike Trout is only getting $10/$15/$20 for his arb years from the Angels, so even Mike Trout would only earn $46 million over the next 5 years, and he's the best player in baseball. So you're essentially saying Boras wouldn't sit down unless you tacked 2 years for $100 million on top of that, which is unlikely.

It's possible that Boras wouldn't sit down unless you brought more free agent years, like a 12-year deal or something - essentially tacking a full free agency contract on top of the team control years - but you never know unless you present the offer to the player.

[NJ Ave]

I think I gave Rendon roughly Zimmermann's arbitration salaries, which seems like a good comp. I also think $25 million is a fair number to bring as far as free agency years.

But I don't think anyone in the history of baseball has ever gotten free agency salaries during arbitration years. Not even Mike Trout. The other teams would crap themselves over the precedent.

[blue911]

I doubt it. Rendon is pre-arb the next two seasons, so he earns $1 million total over those two years, then has 3 arb years. Even Mike Trout is only getting $10/$15/$20 for his arb years from the Angels, so even Mike Trout would only earn $46 million over the next 5 years, and he's the best player in baseball. So you're essentially saying Boras wouldn't sit down unless you tacked 2 years for $100 million on top of that, which is unlikely.

It's possible that Boras wouldn't sit down unless you brought more free agent years, like a 12-year deal or something - essentially tacking a full free agency contract on top of the team control years - but you never know unless you present the offer to the player.

Rendon made $1.2 in 2014 with a club option for this season. He was never a league minimum guy.  The problem with surmising the Nats don't offer is nobody knows if that's correct or if they make offers that elite players, and that's what we're talking about, feel harm their long term earning potential.

[HalfSmokes]

The nats haven't had a guy come through who both looked good early enough and who wasn't already wealthy because of a signing bonus to make an extension more appealing to both sides. With Rendon, if he has a career ending injury tomorrow, he's still in good shape financially thanks to the signing bonus/major league contract. Yes there is a world of difference between $100 million and $10 million, but no where near the same downside risk as for a second round pick with a $500k bonus followed by a few years of minor league salaries and a year or two at the major league minimum.

[NJ Ave]

Rendon made $1.2 in 2014 with a club option for this season. He was never a league minimum guy.  The problem with surmising the Nats don't offer is nobody knows if that's correct or if they make offers that elite players, and that's what we're talking about, feel harm their long term earning potential.

I didn't know he had a major league contract. Regardless, his contract doesn't affect his team control years. Once that contract runs out, he enters arbitration. So he's not getting market rate money for arbitration years, regardless of whether he makes $500K or $1.2M this year.

Also, I think the reason most guys don't sign extensions is less about free agency years and more about teams wanting them to accept discounts in both arbitration years and free agency years in extension offers. Gio Gonzalez is going to make $12 million a year in his free agency years. That's 60% of his market value (maybe lower).

I think a lot more guys would sign the extensions if you went in and offered market rate for the free agency years, just fewer of them.

[blue911]

The nats haven't had a guy come through who both looked good early enough and who wasn't already wealthy because of a signing bonus to make an extension more appealing to both sides. With Rendon, if he has a career ending injury tomorrow, he's still in good shape financially thanks to the signing bonus/major league contract. Yes there is a world of difference between $100 million and $10 million, but no where near the same downside risk as for a second round pick with a $500k bonus followed by a few years of minor league salaries and a year or two at the major league minimum.

This really is the crux of the situation. Gio received an contract offer similar to what Jon Lester signed with Boston, what was offered Zimmermann I haven't a clue but Leatherpants says this is the 4th year the Nats have tried to lock him up. Desmond was terrible early and isn't worth the 7/107 that was offered him. What I do mind is when the excuse is made that they need to save for Strasburg/Harper and Rendon. Those guys are gone and nobody should expect anything ales. 

[JCA-CrystalCity]

Arbitration has taken all of the incentive out of a player signing a long term deal.

Blue - I just don't think you can show this.  There are numerous guys who sign early either before arbitration or in their first year of arbitration and give team control for a year to 3 years of free agency through guarantees or option years.  Heck, Trout did it, two out of the 3 big FA pitchers this year did it (shields and Lester), I cited about 7 or so pitchers in the first post of the Extennd thread (and more as time went on). It is practically routine for the Rays and Red Sox  to try to do it (pedroia is a good example).  It was done all the time.  Are the incentives now under the current CBA so different that it now doesn't make sense when it did before?  Arbitration hasn't changed that much (he says when Price signs for $19.75MM today). 

I've heard your argument that the money you can get out arb now is so great that a guy like JZ doesn't need to sign long term to minimize risk since he's set for life after his first round of arbitration, but the incentives aren't that radically different than Evan Longoria had or Homer Bailey more recently.  Maybe you are right about JZ,  but as a general matter there are still guys who sign in pre-arb years and in their first arb round who allow for their first year + of free agency to be bought out in exchange for the security of the money.  Just ask Wade Davis, who will be working off an option this year.

[blue911]

Blue - I just don't think you can show this.  There are numerous guys who sign early either before arbitration or in their first year of arbitration and give team control for a year to 3 years of free agency through guarantees or option years.  Heck, Trout did it, two out of the 3 big FA pitchers this year did it (shields and Lester), I cited about 7 or so pitchers in the first post of the Extennd thread (and more as time went on). It is practically routine for the Rays and Red Sox  to try to do it (pedroia is a good example).  It was done all the time.  Are the incentives now under the current CBA so different that it now doesn't make sense when it did before?  Arbitration hasn't changed that much (he says when Price signs for $19.75MM today). 

I've heard your argument that the money you can get out arb now is so great that a guy like JZ doesn't need to sign long term to minimize risk since he's set for life after his first round of arbitration, but the incentives aren't that radically different than Evan Longoria had or Homer Bailey more recently.  Maybe you are right about JZ,  but as a general matter there are still guys who sign in pre-arb years and in their first arb round who allow for their first year + of free agency to be bought out in exchange for the security of the money.  Just ask Wade Davis, who will be working off an option this year.

According to Bowden this is the 4th off season the Nats have tried to lock up JZ it's pretty obvious that the team has had interest. He signed a 2/24 which is what Lester received for his year 7 & 8. But other than him there hasn't been a Nat that fits the mold of any the players you mention. Longoria is such an outlier that he probably has hurt teams more than helped. As for Trout and Freeman, I don't consider $130-145M contracts as team friendly. In fact they are the two contracts that came to mind when I was discussing what it would take to sign Rendon then added 10% Boras ego fee. Players sign early but few are signing team friendly deals and more are signing fair deals which really put most of the risk back on the owners. The Lerners aren't risk friendly.

[blue911]

The Nats run such a leak proof front office we don't get the standard gossip. We never know what's going on until it happens. Somehow people have taken not signing players to not trying. We have seen what Zimmerman signed for twice,what Gonzalez got and what was offered Desmond. None of these seem to scream underpaid or low balled to me. But then again I'm cheap