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Will the Twins ever sign a top free agent or are we all just wasting our time?

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#481 Brock Beauchamp

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Posted 13 February 2018 - 08:55 AM

You know the Monty Hall Problem, right? On a giveaway show like Let's Make A Deal, there's 3 doors, behind which are two worthless goats and one Fabulous Prize - the contestant picks one at random, Monty (WHO KNOWS WHAT IS BEHIND WHICH DOOR) reveals one of the other doors has a goat, and then asks if the contestant wants to switch his choice to the other un-opened door. Should the contestant accept the swap? Does it matter? The answer is YES, which goes against many people's intuition. His chance of winning the prize goes up from 33% to 50%. A learning experience. :)

But, that's part of the showmanship. Monty knows that he's giving away more money by allowing the contestant to make that change. Absent showmanship, Monty is a fool to allow this swap.

It's a lesson in the economic value of revealed information. If Monty was in the dark about which door to open, then sometimes he'd accidentally reveal the Fabulous Prize. No, he always reveals one of the goats, because he's implicitly imparting new information to the contestant.

Different scenario with an opt-out clause, but same logic. Offering a second-guess after new information (say, 2 more years of performance data) is revealed is costly to the person offering it.

I'm not saying it's wrong to offer an opt-out. But recognize that the cost is hidden: the contract value is static but you've removed some of the upside. The upside being that the pitcher might defy the odds and lead his team to the World Series in Year 3, Year 4, or even 5 and 6. But you're still on the hook for all the risk of the bad things in Year 1 and 2 that perpetuate through the 6-year contract period.

I see your point but your comparison doesn’t really work because prizes are static. Aging pitchers are not. A very good 34 year old Darvish could easily turn into a 36 year old train wreck Darvish.

On top of that, contracts generally pay the player fairly in the first half and then overpay in the second half. If the player wants to reset that contract risk with another team as he ages into his mid-30s and you already got a few seasons of solid value from the player, so be it. Take your modest victory and move on to the next guy. “Past performance does not guarantee future results” and all that.
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#482 jimmer

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Posted 13 February 2018 - 09:02 AM

Brock, in fairness, contracts usually underpay a player at the beginning of FA contract and overpay later. Often contracts that are deemed horrible in hindsight only focus on the end of the contract and fail to recognize how much value the player gave at the beginning of the contract.

And thats before we talk about how much value a team gets from playes before free agency.

The best way for teams to sign guys would be higher salaries during the beginning of the FA contract and lower at the end. And it almost never works that way. In fact, it is often opposite, which makes some FA contracts look even worse at the end.

Edited by jimmer, 13 February 2018 - 09:05 AM.

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#483 Brock Beauchamp

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Posted 13 February 2018 - 09:06 AM

Brock, in fairness, contracts usually underpay a player at the beginning of FA contract and overpay later. Often contracts that are deemed horrible in hindsight only focus on the end of the contract and fail to recognize how much value the player gave at the beginning of the contract.

And thats before we talk about how much value a team gets from playes before free agency.

Yeah, I was being generous and overly simplistic. In the case of a six year deal, this is what I’d expect:

Years 1-2: underpay
Years 3-4: fair pay
Years 5-6: overpay, sometimes vastly overpay
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#484 jimmer

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Posted 13 February 2018 - 09:14 AM

Yeah, I was being generous and overly simplistic. In the case of a six year deal, this is what I’d expect:

Years 1-2: underpay
Years 3-4: fair pay
Years 5-6: overpay, sometimes vastly overpay

yeah,and for me, at the end if the contract,I like to see if a player came close or not to being worth his overall contract before saying wow that was a bad contract. And of course injuries have to be taken into account.

Based on market values, I imagine Darvish will perfrom very close to his contract when it's all said and done.

Edited by jimmer, 13 February 2018 - 09:15 AM.


#485 ashburyjohn

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Posted 13 February 2018 - 09:27 AM

I see your point but your comparison doesn’t really work because prizes are static.

My point is not that Darvish is playing Let's Make A Deal.

 

My point is that new information always has value. And an opt-out gives only one side the chance to use it. Any individual deal could work out, or not. But I'm talking about Expectation Value.

 

Surely you're not saying that you would make the same performance forecast for Darvish in 2023 now, that you would two years from now if he won the Cy both years. That's the cost, in terms of upside, that is disguised by keeping the contract value the same with/without the opt-out clause.

 

I'm not saying never to offer an opt-out. It's a way to keep the total contract value lower than you otherwise would have to offer in order to land the player. But if 6/$126M was already too rich for the Twins' blood (because we're pretty sure the Twins wouldn't go 6), the opt-out isn't even going to help them in that regard.

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#486 spycake

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Posted 13 February 2018 - 09:30 AM

I think we can all agree that the opt out has value to the player. But for a deal like Darvish's, I've read that the value is probably on the order of $10-15 mil, well within the realm of negotiation rather than any kind of red flag or instant dealbreaker.

When you think about it, while we come up with many dramatic scenarios, the opt out (after year 2) basically hinges on year 2 health/performance. But year 2 health/performance is subject to a lot of normal statistical variation, and isn't necessarily a great definite harbinger/predictor of year 3 and beyond (or even year 1, looking back). Take Cueto -- brilliant in year 1, and then basically an average innings eater who missed a handful of starts in year 2. But I'm not sure that his projection going forward would be that much different if you flipped those years (which would have prompted him to opt out), so the fact that he didn't opt out doesn't mean *that* much about the contract's future value to his team.

Edited by spycake, 13 February 2018 - 09:32 AM.

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#487 Brock Beauchamp

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Posted 13 February 2018 - 09:33 AM

 

My point is not that Darvish is playing Let's Make A Deal.

 

My point is that new information always has value. And an opt-out gives only one side the chance to use it. Any individual deal could work out, or not. But I'm talking about Expectation Value.

 

Surely you're not saying that you would make the same performance forecast for Darvish in 2023 now, that you would two years from now if he won the Cy both years. That's the cost, in terms of upside, that is disguised by keeping the contract value the same with/without the opt-out clause.

 

I'm not saying never to offer an opt-out. It's a way to keep the total contract value lower than you otherwise would have to offer in order to land the player. But if 6/$126M was already too rich for the Twins' blood (because we're pretty sure the Twins wouldn't go 6), the opt-out isn't even going to help them in that regard.

Oh, sure, and that's why I see your point.

 

But there's no risk that the Cadillac behind door 3 will turn into a rusted 73 Pinto when you roll it into the lot. That's my point. A twice-Cy winning Darvish has more expected value in the short-term, which stings, but he's also letting you off the hook through his age 34-37 seasons, which removes a boatload of risk from any long-term deal.

 

My point isn't that I'd offer opt-outs to every long term contract, it's that I wouldn't be too worried about it when considering a 30-something player, especially a 30-something pitcher. It's rare that you *want* to lose a good player but in this situation, getting two years of a very good Darvish and then letting him go elsewhere isn't the worst thing in the world because it removes a ton of risk from the second half of the contract. There's upside along with that downside.

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#488 spycake

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Posted 13 February 2018 - 09:36 AM

I'm not saying never to offer an opt-out. It's a way to keep the total contract value lower than you otherwise would have to offer in order to land the player. But if 6/$126M was already too rich for the Twins' blood (because we're pretty sure the Twins wouldn't go 6), the opt-out isn't even going to help them in that regard.


Yeah, it's mostly moot in regards to Darvish. If they had offered 5/135 and refused to even consider the opt out in negotiation, that would have been a problem.

So I guess as worried as I might be about Levine's comments regarding opt outs in general, in practical terms it's never going to come up for the Twins because they are too risk averse to even get into a situation where an opt out clause matters. Not sure whether to be comforted or troubled by that realization, though....
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#489 prouster

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Posted 13 February 2018 - 09:41 AM

Some more thoughts on Darvish.

Many here have said the Twins simply couldn't afford the risks entailed by a larger contract, particularly the risk of "dead money" occupying significant payroll space in the final years and preventing us from retaining any homegrown stars.

The Twins ultimately offered 5 years at approximately $110 million, and assuming it was "serious", I was wondering, how much riskier would a larger contract offer have been? That deal would have risked $22 mil per season for 5 years into the future.

Had the Twins gone with the TD-prescribed contract offer of 5/135, that would have risked $27 mil per season for 5 years into the future. The marginal risk over our actual contract offer would have only been $5 mil per year difference! Unless you think the Twins were prepared to sell Buxton or Berrios into a Dickensian workhouse as soon as Darvish accepted their 5/110 offer, it sure seems like 5/135 and its +$5 mil commitment for year 5 would not have had an appreciable effect on our ability to retain homegrown talent in the future.

How about the much-maligned "6 year offer"? Say, 6/150 (effectively guaranteeing the $24 mil in hard-to-reach incentives from the Cubs deal)? That would be $25 mil per season for 6 years into the future. So, compared to the Twins actual offer of 5/110, it has +$3 mil marginal risk for years 1 through 5, plus $25 mil for year 6. Now, $25 mil is definitely more than $3 mil, or $5 mil, but for only 1 year, and with 5 years to plan for it, it still doesn't seem like much more than a speed bump in terms of retaining homegrown talent. Any long-term deal for Buxton or Berrios could be structured so the largest payments came after Darvish's year 6 (and it might get structured that way just out of convention anyway).

Now I am sure some will say, "But it's a slippery slope! Add a few million or an extra year a few times over and now it's significant!" But I'm not suggesting that we should have added to our offer without limits. In fact, I'm not suggesting we add to our offer at all, after the point of making it -- I am suggesting we make our one offer a more competitive one, with a meaningful chance to actually land the player and his projected 4 WAR for 2018. And it wouldn't have taken that much more marginal risk.

And I am sure some will also say, "But if you add $5 mil extra marginal risk for Darvish this year, then $6 mil extra for Free Agent X next winter, and $7 mil extra for Free Agent Y the following winter, those marginal values add up!" But I am not suggesting the Twins sign a contract like this every offseason, or even every couple of offseasons. The Twins chances of landing the consensus top FA on the market is probably a once in ten years kind of thing, at best. So we can easily afford to splurge a little when those rare conditions present themselves.

For a reference point, after the 2014 season, the Twins effectively added a $14 mil per year risk for Phil Hughes 3, 4, and 5 years into the future. Hughes at the time was almost 3 years younger than Darvish, but he was also coming off the first Darvish-like (4.3 bWAR) season of his career, after a string of mediocre ones including injuries (including "shoulder inflammation" that wiped out his first half of 2011). Now, the GM who signed the Hughes deal has been dismissed, but I don't think of the Phil Hughes deal as any kind of "upper limit" on acceptable risk either.


I won't dispute any of your points, because I generally agree. However, the TD 5/135 figure--like all media predictions--has no grounding in the actual free agent market. Your premise is a hallucination.

#490 spycake

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Posted 13 February 2018 - 11:25 AM

 

I won't dispute any of your points, because I generally agree. However, the TD 5/135 figure--like all media predictions--has no grounding in the actual free agent market. Your premise is a hallucination.

My premise is simply that 5/135, or 6/150, or whatever, would have been a more aggressive offer, while still being reasonable, with a much more competitive chance (but no guarantee) of landing the player. How is that a "hallucination"?

 

What do you think the "actual free agent market" is, if not looking at player production, projections, and contracts to arrive at valuations? Because that's how TD's estimate was born, and MLBTR's, and ZiPS', etc. And they are just that -- estimates -- but they give us a rough idea of what is reasonable. It's not like I had to suggest a 10/250 contract to illustrate my point. Teams will disagree, and markets will produce somewhat different outcomes, but for the purposes of this discussion, I think they are reasonable terms to use.

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#491 prouster

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Posted 13 February 2018 - 12:30 PM

My premise is simply that 5/135, or 6/150, or whatever, would have been a more aggressive offer, while still being reasonable, with a much more competitive chance (but no guarantee) of landing the player. How is that a "hallucination"?

What do you think the "actual free agent market" is, if not looking at player production, projections, and contracts to arrive at valuations? Because that's how TD's estimate was born, and MLBTR's, and ZiPS', etc. And they are just that -- estimates -- but they give us a rough idea of what is reasonable. It's not like I had to suggest a 10/250 contract to illustrate my point. Teams will disagree, and markets will produce somewhat different outcomes, but for the purposes of this discussion, I think they are reasonable terms to use.


The number you cite comes from Twins Daily. It's an educated guess. That it's larger than Darvish's actual contract is indisputable, but irrelevant. The actual market played out differently.

#492 spycake

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Posted 13 February 2018 - 12:47 PM

The number you cite comes from Twins Daily. It's an educated guess. That it's larger than Darvish's actual contract is indisputable, but irrelevant. The actual market played out differently.


I don't know what you are getting at. Were the Twins not allowed to offer 5/135, because the Cubs offer was less than expected? I think it goes without saying that a different offer by the Twins would have altered the resulting market. That's what the market is, by definition -- the sum of all the offers and contracts. It's not some unmovable entity.

If the Twins offer more, maybe Darvish takes it, or maybe the Cubs counter and he takes that, and Arrieta, Lynn, and Cobb get more too. All possible outcomes, but I don't see how they invalidate my argument?
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#493 spycake

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Posted 13 February 2018 - 12:52 PM

Don't know where else to put this, but it turns out the Cubs deal for Darvish is mildly front-loaded: $19 mil and $18 mil due in years 5 and 6, respectively, versus $25 mil in year 1. And the full no-trade becomes only a partial no-trade after 4 years, which gives them some potential to move him in the last 2 years too. (Even as "dead weight" that could be useful, like the Dodgers trade earlier this winter where they effectively traded 1 year of salary obligations for the same obligations spread over 2 years.)

https://www.mlbtrade...yu-darvish.html

#494 Brock Beauchamp

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Posted 13 February 2018 - 01:12 PM

Don't know where else to put this, but it turns out the Cubs deal for Darvish is mildly front-loaded: $19 mil and $18 mil due in years 5 and 6, respectively, versus $25 mil in year 1. And the full no-trade becomes only a partial no-trade after 4 years, which gives them some potential to move him in the last 2 years too. (Even as "dead weight" that could be useful, like the Dodgers trade earlier this winter where they effectively traded 1 year of salary obligations for the same obligations spread over 2 years.)

https://www.mlbtrade...yu-darvish.html

Yay, a front-loaded contract!

It’s about damned time.
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#495 prouster

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Posted 13 February 2018 - 05:01 PM

I don't know what you are getting at. Were the Twins not allowed to offer 5/135, because the Cubs offer was less than expected? I think it goes without saying that a different offer by the Twins would have altered the resulting market. That's what the market is, by definition -- the sum of all the offers and contracts. It's not some unmovable entity.

If the Twins offer more, maybe Darvish takes it, or maybe the Cubs counter and he takes that, and Arrieta, Lynn, and Cobb get more too. All possible outcomes, but I don't see how they invalidate my argument?


Of course they're allowed to make that offer. My quibble is that it's not an appropriate starting place for an argument, because the reality of free agency was different.

#496 TheLeviathan

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Posted 13 February 2018 - 05:06 PM

Whatever other outcomes this weird market produces, I hope it opens the doors in MLB to contracts with a more varied structure like Darvish.Other leagues do it and the players are just fine, it's long overdue for players to start accepting it in baseball.

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#497 spycake

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Posted 13 February 2018 - 05:52 PM

Of course they're allowed to make that offer. My quibble is that it's not an appropriate starting place for an argument, because the reality of free agency was different.


I still don't get what you mean.

When the offseason started, MLBTR (for example) predicted the Cubs to land Darvish with a 6/160 contract. If the market unfolds where the Cubs don't want to offer that much, that creates an opportunity for another team to be aggressive and fill that void. No one else chose (or were unable) to be particularly aggressive with that opportunity, but that doesn't mean it's invalid to speculate how they could have, and how the market might have turned out as a result of that decision -- does the player sign elsewhere? Do the Cubs increase their offer in response?

But maybe I just don't understand what you mean?
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#498 PseudoSABR

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Posted 13 February 2018 - 07:23 PM

 

Yay, a front-loaded contract!

It’s about damned time.

Yes, but the opt-out clause does have a lot more value to Darvish now. In many ways it's really like a two year deal, unless he's horrible to mediocre which it will be a six year deal.  

 

I still think the Twins should have taken that risk.

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#499 spycake

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Posted 13 February 2018 - 08:31 PM

Yes, but the opt-out clause does have a lot more value to Darvish now. In many ways it's really like a two year deal, unless he's horrible to mediocre which it will be a six year deal.

It's not THAT front loaded. 2/45 then 4/81. I'd guess that unless he has a brilliant, healthy 2nd season in Chicago, or the market explodes again, he won't opt out, but that doesn't necessarily mean disaster/mediocre.

FWIW, not a lot of SP have opted out before. Sabathia essentially opted out of 4 years coming off a 7 WAR season, as leverage to negotiate an extension from the Yankees. Greinke opted out of only 3 years, and coming off a 9 WAR season. AJ Burnett is another, but he only "opted out" of 2/24 remaining in his deal at the time -- much closer to the classic "player's option." Kershaw is the one everybody expects next winter, but he will only be opting out of 2 years too -- and I could see a Sabathia-like extension for him in LA.

Tanaka (3 years) and Cueto (4 plus team option) chose not to opt out this winter, but their forecasts are not that bleak as both were brilliant in 2016 but meh in 2017. Price would probably need a great 2018 to opt out next winter?

Edited by spycake, 13 February 2018 - 08:33 PM.

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#500 Nine of twelve

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Posted 13 February 2018 - 08:50 PM

The long term goal being winning a World Series I would hope, which isn't going to happen strictly through scouting and player development.

True, but if you don't have good scouting and player development you'll be in a position where difference-making free agents will never sign with you. You'll never build a winning organization only through free agency with mid-market revenue

Edited by Nine of twelve, 13 February 2018 - 08:54 PM.

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