Do large dollar, free-agent pitching contracts actually work out?

[twinssporto]

With all the talk and speculation around Yu Darvish the last few months it got me thinking about large free-agent contracts for starting pitchers that have actually worked out.  This is a Forums post and not a blog so I did not spend a lot of time researching the answer to this question but did come up with a few (not necessarily large dollar contracts either) that did work out well. 

 

Greg Maddux - 5 years $28 million.  Leaves Cubs for Braves (3 Cy Young awards first three years of contract).  Impressive.

 

Randy Johnson - 4 years and $53 million.  At 34 signs the contract and wins the Cy Young all 4 years of that contract.  Amazing especially at that age.  Darvish turning 32 at the end of the contract doesn't look so bad now.  

 

Roger (The Juice) Clemens - 4 years and $40 million.  Like Johnson signs contract at 34 years old with Toronto and first two years goes 41-13 with a 2.33 ERA.  Oh, and two back-to-back Cy Youngs.  

 

Other notable good free-agent pitching signings included:  CC Sabathia, NYY 3yr/$60mm, Zach Greinke ,LAD 3yr/$70mm

 

Hey, if we land Yu Darvish you never know how it will go.  I'll stay positive and hope we land him.  If we do I'll remain hopeful he can turn a 5yr/$25mm or 6 yr/$25mm contract into no brainer.

 

I was too lazy to research all of the dud free-agent pitcher signings that have occurred the last 20 years but I'm hopeful someone will post a few in their responses.  

 

Is it Spring Training yet?  I'm ready to watch some baseball!

 

 

[Mike Sixel]

The last few years are likely to be bad. But if you know that and plan for it, and see it as the price you have to pay, yes. If you want real value the last year or two, no.

[Physics Guy]

 

The last few years are likely to be bad. But if you know that and plan for it, and see it as the price you have to pay, yes. If you want real value the last year or two, no.

Given that fact, I'm surprised we don't see more front-loaded contracts to 30+ year old pitchers.    I'm not sure it would be enough, but the Twins should offer Darvish something like 5/$130M in the following increments:    $25M, $30M, $30M, $25M and $20M.    I say less the first year because the Twins still have $23M contract of Mauer on the books for 2018.

[amjgt]

The sample will be small enough that nothing will be conclusive, but my gut says "its complicated"

 

Do they work out for teams that are already very likely to make the playoffs? Probably not. Do the Dodgers need the four more wins next year they would get by signing Darvish instead of using whoever would be their 5th starter? No. Their "success" will be determined by how they do in the post season. Those samples are small enough that anything can happen and Darvish will likely have a very small percentage impact on what occurs.

 

Do they work out for teams that are on the fringe of the playoffs? Maybe. Do the Twins need the four more wins next year they will get by signing Darvish instead of using..... Slegers? Yeah. They do. That would significantly increase their odds of making the playoffs and go towards catching the Indians for the division. Those 4 games make WAAAAAY more difference than the 4 games the Dodgers would get. 

[Taildragger8791]

I'm not sure the logic follows. I mean...those guys were exceptional even for Hall of Famers. And one was buoyed by steroids. By definition of being exceptional they are outliers and should be considered the best possible outcome, not a likely one. Plus those contracts were 3-4 years typically, not 5-6. So unless you think Darvish as good as those HoFers (or has the hookup on some new fancy undetectable steroids) I don't see how the comparison lends confidence to the 6-yr $150 million contracts being speculated about.

[Taildragger8791]

 

Given that fact, I'm surprised we don't see more front-loaded contracts to 30+ year old pitchers.    I'm not sure it would be enough, but the Twins should offer Darvish something like 5/$130M in the following increments:    $25M, $30M, $30M, $25M and $20M.    I say less the first year because the Twins still have $23M contract of Mauer on the books for 2018.

 

Doesn't the union frown heavily on these types of deals? It would make sense to be able to taper off the guaranteed salary in the later years of older players' contractcs, maybe making up the difference with incentives. But I think the union pushes back on that for one reason or another (maybe to keep the AAV up, or avoid a slippery slope of conditional deals that would be abused by teams).

[Mike Sixel]

 

Doesn't the union frown heavily on these types of deals? It would make sense to be able to taper off the guaranteed salary in the later years of older players' contractcs, maybe making up the difference with incentives. But I think the union pushes back on that for one reason or another (maybe to keep the AAV up, or avoid a slippery slope of conditional deals that would be abused by teams).

 

Teams don't want front loaded deals. Inflation, etc......it's just how the world works.

[Taildragger8791]

 

Teams don't want front loaded deals. Inflation, etc......it's just how the world works.

 

Certainly. But the idea of a contract that reduces salary or shifts money to incentives in the later years is still pretty foreign across sports, at least for stars. Sometimes you'll see it in the NFL when they're playing games with bonuses for salaray cap purposes.

[gunnarthor]

Earlier this offseason, I listed the (IIRC) 13 contracts between 12-16 that were greater than Erv's. Maybe 4 worked out. 

[amjgt]

 

Earlier this offseason, I listed the (IIRC) 13 contracts between 12-16 that were greater than Erv's. Maybe 4 worked out. 

 

What was the definition of "worked out"

[gunnarthor]

 

What was the definition of "worked out"

Didn't suck. Here's the list of guys who got roughly what Erv got or more - Edwin Jackson, Anibal Sanchez, Zack Greinke (twice, actually),Tanaka, Ubaldo Jiminez, Matt Garza, Ricky Nolasco, Max Scherzer, Jon Lester, James Shields, David Price, Johnny Cueto, Jordan Zimmerman, Jeff Samardzija, Wei-Yin Chen, Mike Leake, Ian Kennedy, Scott Kazmir (Kazmir got fewer years, more AAV). 

 

Of that group, Greinke and Scherzer were/are pretty good. Tanaka has been solid although hurt a bit, Lester is sliding down. Price is already breaking down. Shark has been healthy but average, but that's about it. The rest are probably bombs.

[Mike Sixel]

 

Didn't suck. Here's the list of guys who got roughly what Erv got or more - Edwin Jackson, Anibal Sanchez, Zack Greinke (twice, actually),Tanaka, Ubaldo Jiminez, Matt Garza, Ricky Nolasco, Max Scherzer, Jon Lester, James Shields, David Price, Johnny Cueto, Jordan Zimmerman, Jeff Samardzija, Wei-Yin Chen, Mike Leake, Ian Kennedy, Scott Kazmir (Kazmir got fewer years, more AAV). 

 

Of that group, Greinke and Scherzer were/are pretty good. Tanaka has been solid although hurt a bit, Lester is sliding down. Price is already breaking down. Shark has been healthy but average, but that's about it. The rest are probably bombs.

 

How does that compare to signing bad FAs? Or using only prospects? I'm guessing that's a better ratio than either of those. 

[gunnarthor]

 

How does that compare to signing bad FAs? Or using only prospects? I'm guessing that's a better ratio than either of those. 

Not sure what you are asking. If the Twins had signed Anibal Sanchez, for example, it would have precluded them from signing Ervin Santana and probably Castro.  I think the damage of a large contract can be pretty impactful. They would never have realistically been able to sign Scherzer, Price, Greinke or Lester.

 

I generally feel that a team should use FA sparingly and only to bolster the final nucleus. I'd be ok with the Twins going all-in on Darvish this year because I think it makes sense to add a bigtime starter to this group of young players, even though I know it will impact payroll greatly down the line and if Darvish fizzles out, we won't get another big FA pitcher. But now would be the time to make that gamble. And from that list of players it seems to me that two types of pitchers are better bets - the really, really good ones and the durable ones. Obviously, that doesn't always work but Sanchez had never topped 200 innings before his big contract and hadn't made 30+ starts until he was 26. Santana, meanwhile, was doing that at 23 and had 5 200+ inning seasons before his Twins deal.

[Mike Sixel]

People say that expensive FAs are bad, because they don't always work out. I'm suggesting that those people probably don't compare that to other avenues of acquiring talent, to see what avenue is the best.

 

Obviously, context matters. Really bad teams shouldn't sign a guy like Darvish. But, imo, it's hard to say that SP FA contracts are bad, per se, w/o comparing that to other options for acquiring talent.

[diehardtwinsfan]

I would say they are generally fine in the beginning, not so much towards the end. The real moral is that this what you have to do to compete if you have no talent in house to fill it with or surplus talent to acquire via trade.

 

It sucks, but that's MLB. If avoiding FA is the goal, then an org needs to do a better job developing in house.

[Riverbrian]

The highways are littered with deals that "Didn't work out" as hoped. 

 

The highways are littered with prospects that "didn't work out" as hoped. 

 

It isn't just pitching...it's every position. Carl Crawford, Jordan Zimmerman, Danny Hultzen, Jesus Montero. 

 

Every time you put pen to paper it comes with risk. It isn't a question of "do free agent pitching contracts work out". It's all about the CBA and how things are structured. 

 

Players have no free agent rights for 6 years. During this time they are controllable. 3 Years at Minimum Salary, Arbitration for the next three years. There is very little they can do about it. 

 

Once a player reaches Free Agent Status... it's a free for all. The player finally has some say.

 

It isn't a question of will it work out? It's a free market question of how much do you pay to acquire the player. The price is the price. The Risk is constant... it isn't enhanced... it isn't diminished... it's just more expensive. 

 

Small market teams can and do stay away from the big free agent contracts and it a lot of cases they are lucky because things don't blow up in their face expensively if they stay away. However... in the end... it simply closes the door on another source of acquiring talent that the larger market teams keep open and this makes it harder to compete. I'm not saying they can't compete but it's like cooking something without ingredients that others are using. They can come out a little bland in the end. 

 

When you sign someone to a big contract... like Darvish... When you extend someone... Like Hughes. When you trade a big name player for prospects... Like DeLeon. There is risk every single time. 

 

That risk just is what it is and you got to do what you got to do... but they are risks you have to take...

 

The risk has to be baked in. Use all the ingredients when building your baseball team.  

 

 

[amjgt]

 

Didn't suck. Here's the list of guys who got roughly what Erv got or more - Edwin Jackson, Anibal Sanchez, Zack Greinke (twice, actually),Tanaka, Ubaldo Jiminez, Matt Garza, Ricky Nolasco, Max Scherzer, Jon Lester, James Shields, David Price, Johnny Cueto, Jordan Zimmerman, Jeff Samardzija, Wei-Yin Chen, Mike Leake, Ian Kennedy, Scott Kazmir (Kazmir got fewer years, more AAV). 

 

Of that group, Greinke and Scherzer were/are pretty good. Tanaka has been solid although hurt a bit, Lester is sliding down. Price is already breaking down. Shark has been healthy but average, but that's about it. The rest are probably bombs.

 

If anything that should bolster the case for signing Yu and go against signing Cobb and/or Lynn

[Respy]

It's really hard to do a full historical analysis of payoff of free agent signings, specifically because of the ever-increasing contracts, and the constantly-fluctuating average $/WAR in the league.  Even just in 3 years, from 2015 to estimated 2018, free agent contract $/WAR has increased almost 30%, which would be the equivalent of saying Ervin Santana's original contract of $13.5M/year would have been close to $17.5M/year in today's money.

 

Greg Maddux - 5 years $28 million ($5.6M/year).  In 1993, that was a lot of money.  1992 NL MVP Barry Bonds made 'only' $4.5M his first year in San Francisco in 1993.  Two-time World Series hero Kirby Puckett made 'only' $5.3M in 1993.

 

The thing is, in today's analytical world, these contracts are heavily calculated on many factors.  Any team paying any contract is hoping and expecting to get their money back, and then some.  (Except maybe for the Bobby Bonilla contract, oops).  And often it's not directly attributable to WAR or other statistics (e.g. Castro making the pitching staff better, Gimenez or Dozier's veteran presence).  

 

Reference: https://www.fangraphs.com/blogs/the-recent-history-of-free-agent-pricing/

[Guest]

Re OP: Greg Maddux was heading into his age 27 season and coming off winning a Cy Young when he signed his 5-year deal. $100 in 1993 is about $170 today, which means that $28M is about $50M. If that’s the metric for success- a 27 year-old pitcher coming off a Cy Young who gets a 5 year, $50M deal, then nobody will give a good but not great pitcher like Darvish 6-$150 when he’s heading into his age 32 season.

[Richie the Rally Goat]

With all the talk and speculation around Yu Darvish the last few months it got me thinking about large free-agent contracts for starting pitchers that have actually worked out. This is a Forums post and not a blog so I did not spend a lot of time researching the answer to this question but did come up with a few (not necessarily large dollar contracts either) that did work out well.

 

Greg Maddux - 5 years $28 million. Leaves Cubs for Braves (3 Cy Young awards first three years of contract). Impressive.

 

Randy Johnson - 4 years and $53 million. At 34 signs the contract and wins the Cy Young all 4 years of that contract. Amazing especially at that age. Darvish turning 32 at the end of the contract doesn't look so bad now.

 

Roger (The Juice) Clemens - 4 years and $40 million. Like Johnson signs contract at 34 years old with Toronto and first two years goes 41-13 with a 2.33 ERA. Oh, and two back-to-back Cy Youngs.

 

Other notable good free-agent pitching signings included: CC Sabathia, NYY 3yr/$60mm, Zach Greinke ,LAD 3yr/$70mm

 

Hey, if we land Yu Darvish you never know how it will go. I'll stay positive and hope we land him. If we do I'll remain hopeful he can turn a 5yr/$25mm or 6 yr/$25mm contract into no brainer.

 

I was too lazy to research all of the dud free-agent pitcher signings that have occurred the last 20 years but I'm hopeful someone will post a few in their responses.

 

Is it Spring Training yet? I'm ready to watch some baseball!

http://www.sportsonearth.com/article/251459026/most-valuable-players-in-the-majors

 

I was hoping to find tables or something of relative value, but at least this is something.

 

The article is about excess value of actual contract compared to WAR. The part i’d like to point out is Scherzer’s honorable mention at the bottom.

 

He’s outperforming a 22 mil salary according to the metric.

 

Just cuz it’s big money doesn’t mean it’s going to be a bad value:

[jimmer]

 

http://www.sportsonearth.com/article/251459026/most-valuable-players-in-the-majors

I was hoping to find tables or something of relative value, but at least this is something.

The article is about excess value of actual contract compared to WAR. The part i’d like to point out is Scherzer’s honorable mention at the bottom.

He’s outperforming a 22 mil salary according to the metric.

Just cuz it’s big money doesn’t mean it’s going to be a bad value:

Scherzer made 15M last year and provided 6 WAR. Worth 48.2M.

 

What I don't like about articles like this is that it combines pre-arbitration and pre-free agent players with players who have hit the open market and/or gone past their 6 year control.  Obviously even average players in pre-arbitration status, and many even in arbitration status, are going to greatly outweigh their salaries.

 

And, as a side note, there is never any outrage about how little they are being paid compared to their value :-)

[Rosterman]

The right pitcher can demand a big contract. But what is to stop you from overpaying for one or two years instead of carrying a contract for 5-7 years.

 

What is more important...money or having a job and showing up to work seven years from now?

[Mike Sixel]

The right pitcher can demand a big contract. But what is to stop you from overpaying for one or two years instead of carrying a contract for 5-7 years.

 

What is more important...money or having a job and showing up to work seven years from now?

Players want the most money, especially older ones. You'd have to pay yu like 100 million for two years in a short deal, I'd guess. Then he could sign a three year deal at fifty...... Maybe even a four year at sixty.

[Richie the Rally Goat]

Scherzer made 15M last year and provided 6 WAR. Worth 48.2M.

 

What I don't like about articles like this is that it combines pre-arbitration and pre-free agent players with players who have hit the open market and/or gone past their 6 year control. Obviously even average players in pre-arbitration status, and many even in arbitration status, are going to greatly outweigh their salaries.

 

And, as a side note, there is never any outrage about how little they are being paid compared to their value :-)

agreed, pre arb, arb, and free agents should be viewed through different lenses. How can you possibly compare relative value between players who freely negotiate their contract and players who have their salary handed to them arbitrarily?

 

I do like the calculation, but the criteria for sample selection needs work.

 

And yeah, these articles are always on the side of management. Why we side on the “super rich” over the “just rich” i’ll never get. I’m most irked over minor leaguers. Most of them never make the bigs and make peanuts.

[mikelink45]

Let me add some more names - I have put urls in many of the conversations about Darvish and free agents.  So considering you went to the HOF free agent or big contract list lets put together another list and I would suggest that when the contracts were signed there were some expectations that never got met:

 

1. To keep this controversial - start with Johann Santana and the Mets last big contract.
2. The historic contract or money dump for Mike Hampton
3. The continuing saga of the James Shields heist
4. Another old Twin Carlos Silva bedazzling Seattle for four years and too much
5. John Danks - yuck
6. Edwin Jackson - double yuck
7. Josh Beckett - world series hero to helpless on the mound
8. Barry Zito - Cy Young winner who lost his smoke and mirrors. 
9. Igawa - Yankees - similar to a shortstop and a slugger we signed and only had play in the minors before going home.
10. A. J. Burnett - Yankees, who knew he could only pitch in Pittsburgh
11. How about one more former Twin who cashed in and checked out - Carl Pavano, Yankees.
12. Kevin Brown was a star pitcher, his contract became an albatross
13. Matt Cain took one good year and got 6 great pay checks for an average of less than 1 WAR per year.
14. Homer Bailey is cruising along with .2 WAR per year.  Good thing his paycheck has enough to drown those sorrows. 
15. Another ex-Twin - Matt Garza - got a nice contract from our neighbors to the East and has earned a total of negative WAR in return. 

For your own continued enjoymend - The 10 worst contracts in MLB - https://www.foxsports.com/mlb/story/worst-contracts-mlb-history-050316

2013 MLB's worst Pitcher contracts https://www.cbssports.com/mlb/news/mlbs-worst-contracts-pitchers/

 

Top 20 worst contracts - https://www.thesportster.com/baseball/top-20-worst-contracts-in-mlb-history/

 

This article attempts to find a metric to measure poor contract performance - 

http://bleacherreport.com/articles/2700091-mlb-metrics-101-exposing-the-worst-contracts-of-baseball

[Otto von Ballpark]

The job of the Twins front office is not to identify the number of bad FA pitching contracts and simply sit the whole market out. Their job is to do their best to make one of the good FA SP contracts. Maybe that's not Darvish specifically, but citing Carlos Silva et al doesn't refute that.

 

Most of us here are cueing on the fact that the FO has expressed interest in Darvish, even when it is pretty apparent what kind of contract he should achieve (i.e. $120+ mil). If the FO thinks that's a good deal to improve the team, it is their job to get it done. If they don't think it is a good deal, they should bow out of the Darvish sweepstakes and get a top SP by some other means. Ultimately, their job is to DO things to improve the team, not simply to identify things not to do.

 

Unless you are also going to argue that there are bad trades for SP too, so we should sit out that market, and the vast majority of SP prospects fail too so we probably shouldn't bother...

[twinssporto]

 

Let me add some more names - I have put urls in many of the conversations about Darvish and free agents.  So considering you went to the HOF free agent or big contract list lets put together another list and I would suggest that when the contracts were signed there were some expectations that never got met:

 

1. To keep this controversial - start with Johann Santana and the Mets last big contract.
2. The historic contract or money dump for Mike Hampton
3. The continuing saga of the James Shields heist
4. Another old Twin Carlos Silva bedazzling Seattle for four years and too much
5. John Danks - yuck
6. Edwin Jackson - double yuck
7. Josh Beckett - world series hero to helpless on the mound
8. Barry Zito - Cy Young winner who lost his smoke and mirrors. 
9. Igawa - Yankees - similar to a shortstop and a slugger we signed and only had play in the minors before going home.
10. A. J. Burnett - Yankees, who knew he could only pitch in Pittsburgh
11. How about one more former Twin who cashed in and checked out - Carl Pavano, Yankees.
12. Kevin Brown was a star pitcher, his contract became an albatross
13. Matt Cain took one good year and got 6 great pay checks for an average of less than 1 WAR per year.
14. Homer Bailey is cruising along with .2 WAR per year.  Good thing his paycheck has enough to drown those sorrows. 
15. Another ex-Twin - Matt Garza - got a nice contract from our neighbors to the East and has earned a total of negative WAR in return. 

For your own continued enjoymend - The 10 worst contracts in MLB - https://www.foxsports.com/mlb/story/worst-contracts-mlb-history-050316

2013 MLB's worst Pitcher contracts https://www.cbssports.com/mlb/news/mlbs-worst-contracts-pitchers/

 

Top 20 worst contracts - https://www.thesportster.com/baseball/top-20-worst-contracts-in-mlb-history/

 

This article attempts to find a metric to measure poor contract performance - 

http://bleacherreport.com/articles/2700091-mlb-metrics-101-exposing-the-worst-contracts-of-baseball

Thanks Mike, good information.  I read a few of those links yesterday as well.  As mentioned I got lazy and didn't bother with some of the bad FA signing but two jumped out at me yesterday (because of the Twins affiliation) that I almost wrote about.  Thanks for mentioning them both...Sanata/Mets and Silva/Seattle.

 

One point about these long-term FA contracts that hasn't really been discussed is the guaranteed money aspect.  MLB is unusual in that these contracts are all guaranteed.  Unlike other sports where that is not always the case (some or very little of the large contracts are guaranteed).  Its gotta drive the finance guys within these clubs nuts doing forward time value of money calculations and future cash flow analysis.  I'd love to see the insurance policy premiums on some of these contracts as well.  It probably adds another 10% to the cash outlay these teams make when doing these big contracts.  Maybe they self-fund the insurance pool to save costs...

[Doctor Wu]

Call me old school, but all these huge contracts and high figures makes my head hurt! Maybe we can talk Jim Kaat into pitching a few innings this year!

[markos]

 

Not sure what you are asking. If the Twins had signed Anibal Sanchez, for example, it would have precluded them from signing Ervin Santana and probably Castro.  I think the damage of a large contract can be pretty impactful. They would never have realistically been able to sign Scherzer, Price, Greinke or Lester.

 

I generally feel that a team should use FA sparingly and only to bolster the final nucleus. I'd be ok with the Twins going all-in on Darvish this year because I think it makes sense to add a bigtime starter to this group of young players, even though I know it will impact payroll greatly down the line and if Darvish fizzles out, we won't get another big FA pitcher. But now would be the time to make that gamble. And from that list of players it seems to me that two types of pitchers are better bets - the really, really good ones and the durable ones. Obviously, that doesn't always work but Sanchez had never topped 200 innings before his big contract and hadn't made 30+ starts until he was 26. Santana, meanwhile, was doing that at 23 and had 5 200+ inning seasons before his Twins deal.

Signing Sanchez probably would have precluded them from signing Nolasco and Hughes, not Santana and Castro. Also, it is a little misleading to say Sanchez never topped 200 innings, because 1) he topped 195 innings three years in a row prior to his contract, and 2) he did top 200 innings in 2012 if you include the 20 playoff innings.

 

Overall, I think the Sanchez deal worked out fine. He produced between 7 - 12 WAR (depending on the flavor) over the 5 seasons of his deal - basically, one elite season, one elite but injured season, and three mediocre to crappy seasons. For $16M/yr, that is more or less market price. And honestly, given his age and injury history, that's kind of Darvish's, well, not best-case scenario, but a good-case scenario. 

 

[Otto von Ballpark]

 

Overall, I think the Sanchez deal worked out fine. He produced between 7 - 12 WAR (depending on the flavor) over the 5 seasons of his deal - basically, one elite season, one elite but injured season, and three mediocre to crappy seasons. For $16M/yr, that is more or less market price. And honestly, given his age and injury history, that's kind of Darvish's, well, not best-case scenario, but a good-case scenario. 

Yup. Sanchez posted 6.3 bWAR in 2013, when the Tigers won the division by 1 game (only 1 game up on the 2nd wild card too).

 

Then he posted 2.4 bWAR in only 21 starts in 2014 when the Tigers again won the division by 1 game, and only 2 games up on the second wild card.

 

Plus 2 solid starts in the 2013 ALCS (albeit 1 clunker in the DS, but it was against Oakland so the Tigers were destined to win that series anyway ).

 

2014 he was injured late in the season, so he only made a relief appearance in the DS, but it was a good one -- a perfect 6th and 7th innings protecting a narrow lead in game 2, down 1-0 in the series.

 

For all of his struggles from 2015-2017, 2016 was the only one that particularly mattered to the Tigers overall fortunes. 3 games out of the second wild card, with Sanchez contributing -1.2 bWAR in 26 starts.

 

Obviously not a wildly successful contract, but a pretty fair one, overall.  An example of a bad one would be Jordan Zimmermann, brought in for 2016 when Sanchez was fading, but has contributed nothing thus far in a Tigers uniform, and it may have been poorly timed, as he likely won't get much of a chance to make a difference in the standings (he could still rebound enough to make himself tradeable, though).