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Be Careful of Contract Lunacy

Written by , Posted in General

This weekend I was signing/selling books at a local summer festival. (Trust me; it’s not as glamorous as it sounds) All weekend, as I sat at my booth numerous non-book buyers would comment to me about the Chicago Cubs. Sox fans, would assert their “one World Series title in 100 year dominance” by taunting me.  Cardinal fans would give me their arrogant disapproving glances.  I also heard from the Chicago “meatheads”…one in particular who was quite amusing.

A fella came up to my booth with a combination swagger/drunken stumbling…and announced to me that he had the simple wisdom that apparently my book lacked.

“They never spend any f#&king money…that’s what it is…same thing with the f#&king Bears. V#gina(a very clever pun on Virginia) McCaskey won’t let em’ spend any money.” I found his rambling so entertaining that I decided to engage this guy with a very subtle response.

“But the Bears just signed Jared Allen…and Lamar Houston”, I stated in a calm purposefully understated tone.  The man used his right hand to simulate an obscene gesture around his nether regions, spouted a few more expletives, and staggered away from my booth.  He did not purchase my book, and apparently isn’t impressed with the Bears offseason moves thus far.  This seems to be the default mode for assessing blame of the Chicago fan base…when in doubt, just call them a bunch of cheap b#stards! In regards to our Cubs, this has been an accurate portrayal for portions of their history (see the 1970s); while the late 2000’s Zell spend-a-thon had the team with a $144 million payroll by 2010, its highest ever.

This “cheap” label has re-emerged during the Rickett’s era. The Cubs’ salary has dropped 35 percent from 2010…down to just $93 million. Considering that $14 million is going to Alfonso Soriano, the club essentially has a $79 million dollar Major League payroll…a number much too small for most fans’ liking. Possessing a $79 million dollar payroll for a big market team makes the organization an easy target… for fans like the gentleman who visited my booth.  To avoid being labeled a Kool-Aid drinking Ricketts’ apologist, perhaps that $79 million payroll does warrant criticism.  The question I always come back to though is; who would they be spending on?

  1. Do you spend to lock up Samardzjia?

I think with every outing my thoughts on this change.  At 30, even with limited arm wear and tear…I still think you only extend him if there is a bit of a “hometown discount”. The contracts that are brought up most often when discussing a Jeff Samardzjia extension are Homer Bailey and Matt Cain…the consensus being that a Samardzjia contract would be comparable or even higher.  Homer Bailey is 28 years old, and has a 4.68 ERA over 84 plus innings thus far in 2014.  Bailey has allowed 93 hits and struck out 76.  Bailey’s 2014 season is far from over, and he may yet prove to be a solid pitching investment.  Here is what the Reds will be paying Bailey:

2015-$10 million, 2016-$18 million, 2017-$19 million, 2018-$21 million, 2019-$23 million, and 2020-$25 million (mutual option…that I highly doubt will be exercised)

Considering the vile directed at the contract of Edwin Jackson, who is owed $13 million for each of 2015 and 2016, how might Cubs’ fans view a player with Bailey’s current performance and future earnings?  Now we look at Cain:

2014 through 2017- $20 million annually, 2018 $21 million club option

Bailey and Cain will be 33 and 34 respectively at the end of their deals…will they be worth it?  If I were a betting man (…I am actually), I would bet strongly against it.  This does give us a base-line for a Samardzjia extension; it will take $20 million annually and at least four years. At that price…I just don’t see it.  I don’t care how “young” his arm appears to be, pitching is too volatile.

  1. 2.     Do you sign a free-agent pitcher to a big deal?

How unpredictable is pitching? If Justin Verlander had been a free-agent in 2013, the Cubs would have been highly criticized for not attempting to sign him?  Verlander never hit the free market as the Tigers decided to lock up their ace. Verlander, a 31 year old former Cy-Young award winner, has struggled mightily this year to the tune of a 4.98 E.R.A. Verlander has allowed 111 hits in 97 innings and his strikeout rate is at its lowest, while his walk rate is at its peak.  Here is what the Tigers will paying Verlander until 2020:

2015- $28 million, 2016 -$28 million, 2017 -$28 million, 2018-$28 million, 2019-$28 million, 2020- $22 million vesting opt…sorry, I just burst out laughing at the idea that this “option” will be exercised

Yikes!  That contract is sheer lunacy…that’s $140 million dollars guaranteed after this season.  Verlander may well rebound from his horrid start to 2014, but unless he visits the same Roger Clemens’ fountain/pharmacy of youth, I don’t see a happy ending to this contract.

Ironically, while working on this piece, I was listening to Theo Epstein being interviewed on 670 AM the Score.  Theo was asked specifically about the Verlander contract:

It is a core tenet of our organizational philosophy that we can better predict positional player performance than pitcher performance. It’s hard for either one, but there’s more consistency with positional players. You can’t ignore pitching. Once we start to turn the corner and have the makings of a competitive team, it is possible to go out and get good, healthy, effective pitching – we’ve had some success before doing that. For a top of the rotation starter, you have to take on more risk. That’s just the nature of the beast – it’s a huge contract or a huge trade.”

Wow.  That doesn’t sound like a ringing endorsement for Samardzjia or a big free-agent pitcher.  Earlier in the interview Epstein stated his fondness for Samardzjia, and that they had never “stopped talking extension”…we will know what the truth is sometime before July 31st.

  1. 3.     Do you spend on free-agent hitting?

For us older folks who have watched baseball since the dawn of the free-agent era, we have witnessed a huge shift in free-agency: teams rarely allow good players to reach free-agency prior to the age of 30. Although the deals of Anthony Rizzo and Starlin Castro might have looked a bit shaky and premature last year…how do they look now?

RIZZO                                                                        CASTRO

2014              $1.535M                                                      $5.9M

2015              $5.286M                                                      $6.85M

2016              $5.286M                                                      $7.85M

2017              $7.286M                                                      $9.85M

2018              $7.286M                                                      $10.85M

2019              $11.286M                                                    $11.85M

 

Five full seasons from now, Castro and Rizzo will not be making collectively what Verlander will be earning in a single season. Let’s look at the Cubs core “two” (yeah, that’s really it right now) compared to all three pitchers:

Homer Bailey 5 years $91M, Matt Cain 5 years $100 M, Justin Verlander 5 years $140 M= 15 years of team control for $331 Million

Starlin Castro 5 years at $60 M, Anthony Rizzo 5 years at $40 M= 10 years of team control for $100 Million

Yes, I know, we are comparing apples and oranges (or however that saying goes), but simplistically…where is the most value?  Pitching is extremely expensive and highly unstable.  So let’s examine some hitting contracts…how would you like to have these on your teams’ “books”?

PLAYER                     2015              2016              2017              2018              2019             

Albert Pujols          $24M                        $25M                        $26M                        $27M                        $28M

Josh Hamilton        $25M                        $32M                        $32M                        FA

Prince Fielder         $24M                        $24M                        $24M                        $24M                        $24M

Shin-Soo Choo        $14M                        $20M                        $20M                        $20M                        $21M

Robinson Cano       $24M                        $24M                        $24M                        $24M                        $24M

All of the above players were free agents during the first two and a half years of Theo Epstein’s tenure…and I will admit I would have been excited had they signed any of them.  With hindsight, I am not sure any of them look like deals that you would like now.

I have to give one more example of sheer “contract lunacy”…let’s look at what the Dodgers will have on their ledger at the start of 2016:

Clayton Kershaw $34.5M, Zack Greinke $26M, Adrian Gonzalez $21.8, Matt Kemp $21.7, Carl Crawford $21.6, Andre Eithier $18M

Throwing in some other contracts, the Dodgers already have $170 million for the 2016 season!…I don’t care how much money your team has…good luck with that.

Reason 84 in my book of “105 Reasons It’s Been 105 Years” is the 2010 team, or what I call; The Worst Team Money Could Buy.  The Cubs’ team with the aforementioned $144 payroll included Alfonso Soriano $19M, Carlos Zambrano $18.9M, Aramis Ramirez $16.7M, Kosuke Fukudome $14M, and the following four; Ryan Dempster, Derek Lee, Ted Lilly and Carlos Silva all right at about $13M. Some highlights from this pathetic assortment:

–         Only one top 10 finisher in ANY offensive category(Soriano 6th in doubles)

–         Not one of these players finished in the top ten in voting for ANY major award.

–         None of these players were All-Stars

–         Back to the first one…no really, not one other offensive category did any of these players crack the top 10.

I apologize to you for bringing up this squad if you have already blocked it out of your memory.

Have the Cubs been cheap in the past? Absolutely. Have they also spent like mad? Check.  I will give the team the benefit of the doubt that they are currently taking a measured approach to future expenditures.  Although I am skeptical as to how much they were really “in” the Masahiro Tanaka sweepstakes last winter. (See what I did there? I played both sides of the fence) 2014 has been painful to watch, yet aside from landing Tanaka…I am not sure where money would have mattered.  The fan base has been assured that when it’s time to spend…the team will be able to do it…and with how smoothly the remodeling and expansion of Wrigley is going we are assured the Cubs’ coffers will soon be overflowing. (Where is that sarcasm font?)

  • You should write a book about this stuff.

  • You should write a book about this stuff.

  • Doc Raker

    I would like to see a spreadsheet on free agent contracts. What percentage of seasons in a free agent contract is the performance of the player of the value of the contract or better? I would say it is less than 50%, maybe even 30%.

    Barry Zito didn’t have any years in his mega 6 (7 or 8?) year deal that were of contract value. Has Albert Pujols had a season of value yet with his contract? I say no.

    • Dusty_Baylor

      Great point..hmmmm.. Maybe Pujols first season for $12 million in 2012?
      But then 9 years of pain….ouch.

  • Doc Raker

    I would like to see a spreadsheet on free agent contracts. What percentage of seasons in a free agent contract is the performance of the player of the value of the contract or better? I would say it is less than 50%, maybe even 30%.

    Barry Zito didn’t have any years in his mega 6 (7 or 8?) year deal that were of contract value. Has Albert Pujols had a season of value yet with his contract? I say no.

    • Dusty_Baylor

      Great point..hmmmm.. Maybe Pujols first season for $12 million in 2012?
      But then 9 years of pain….ouch.

  • Seymour Butts

    Love the pharmacy of youth.
    No, few of these contracts make sense in the long run, but as the Cub prospects come up they will not be getting the top 5 draft picks anymore. Some cash will need to be spent and the market dictates that it will be way too much for what you are getting. That the price of playing in a big sandbox.

    • I’m looking forward to that era. Celebrating being better at losing in order to get a better 19 y/o kid is sort of Stockholm syndrome-ish.

  • Seymour Butts

    Love the pharmacy of youth.
    No, few of these contracts make sense in the long run, but as the Cub prospects come up they will not be getting the top 5 draft picks anymore. Some cash will need to be spent and the market dictates that it will be way too much for what you are getting. That the price of playing in a big sandbox.

    • I’m looking forward to that era. Celebrating being better at losing in order to get a better 19 y/o kid is sort of Stockholm syndrome-ish.

  • Doug S.

    Locking up Shark? is an excellent question. Real glad that smarter people than me will figure out the right move.

    • Eddie Von White

      They’re not necessarily smarter than you, they just specialize in a different area.

    • Dusty_Baylor

      Fangraphs had an interesting piece on this…basically that even the 5 year/$85 million was an overpayment.

  • Doug S.

    Locking up Shark? is an excellent question. Real glad that smarter people than me will figure out the right move.

    • Eddie Von White

      They’re not necessarily smarter than you, they just specialize in a different area.

    • Dusty_Baylor

      Fangraphs had an interesting piece on this…basically that even the 5 year/$85 million was an overpayment.

  • Dork

    I think that Shark is smart in turning down the offer, I think someone will pay him what he wants. I am not sure what to say on should this be the cubs. It sure would make a statement that the cubs are trying to compete at the major league level. Right now the biggest need on this team is productive outfielders, I don’t know if that changes after Shark and Hammel are gone.

    • If the best competitive statement the Cubs can make is re-signing Samardzija they are in worse shape than I thought. I agree he’s doing well, but he’s not the second coming of Christ. Even if he tries to channel Jesus with his hair.

      • Jeff of Indiana is of non-virgin birth.

      • Jeff of Indiana is of non-virgin birth.

      • Dork

        I always feel a little mis-understood on this samardzija discussion. I am not saying that the cubs should absolutley sign him at all costs. I am saying that free agent pitchers get paid 7 mill per projected war. Fangraphs projected his war over the next 5 years at 11 in the latest article. I think that might be a bit low,and I am sure that is the argument that the agent is making. As for the competative statement, again I am not saying do or die, just that it would be a statement. It would be nice to see them make “a” statement in that direction.

      • Eddie Von White

        I would call that el Diablo hair. I think we could look at Jesus and not get that icky feeling and want to go wash our eyes out with soap.

      • You have a point there EVW.

      • You have a point there EVW.

  • Dork

    I think that Shark is smart in turning down the offer, I think someone will pay him what he wants. I am not sure what to say on should this be the cubs. It sure would make a statement that the cubs are trying to compete at the major league level. Right now the biggest need on this team is productive outfielders, I don’t know if that changes after Shark and Hammel are gone.

  • Dork

    I would go back to the article Joe wrote on pitchers WAR. It seemed like succesfull teams had a war for starting pitching around 15-16. I don’t know if Jedd and Theo think that you can get that with 5 midlevel starters all at 3 war, vs one at 5 or 6 (top of the rotation guy) and the rest at 2ish? I just don’t know where that TOR pitcher comes from if we don’t extend Shark.

    • PLCB3

      I took it more as 4 starters who qualify for the ERA title equals success than a 15-16 WAR from the rotation. But I agree you need an ace or 2 at the top.

  • Dork

    I would go back to the article Joe wrote on pitchers WAR. It seemed like succesfull teams had a war for starting pitching around 15-16. I don’t know if Jedd and Theo think that you can get that with 5 midlevel starters all at 3 war, vs one at 5 or 6 (top of the rotation guy) and the rest at 2ish? I just don’t know where that TOR pitcher comes from if we don’t extend Shark.

    • AC0000000

      I took it more as 4 starters who qualify for the ERA title equals success than a 15-16 WAR from the rotation. But I agree you need an ace or 2 at the top.