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Saturday, January 06, 2018

The case for going beyond 5 years for J.D. Martinez | WEEI

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Jim Furtado Posted: January 06, 2018 at 10:25 AM | 39 comment(s) Login to Bookmark
  Tags: j.d. martinez, red sox

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   1. snapper (history's 42nd greatest monster) Posted: January 06, 2018 at 11:57 AM (#5601874)
The extra years are just a way to defer salary. Total PV of cash flows is what really should matter to the player. Extra years has a benefit to a large market team, because it lowers the luxury cap hit.

If the Red Sox are willing to pay 5/150 for Martinez, they really should be willing to go 7/175. It's only $10M more in PV (at 8%, assuming equal annual salaries), and you get 2 more years that might have some value. Plus, you lower your luxury tax hit from $30M to $25M.

Extra years can actually be teams friend in this current luxury tax system.
   2. Joyful Calculus Instructor Posted: January 06, 2018 at 12:26 PM (#5601887)
Extra years are also good if the player is still good in those extra years.
   3. Nasty Nate Posted: January 06, 2018 at 12:44 PM (#5601894)
A discussion about "years" without the associated AAV is woefully incomplete. The years are what a team buys from a FA, but it has become misleading shorthand for what a team spends on a FA.

It's worth remembering that JD Martinez is still unsigned because he is holding out for more money, not years. He'd sign even a 2- or 3-year deal if the money was enough.
   4. snapper (history's 42nd greatest monster) Posted: January 06, 2018 at 01:15 PM (#5601911)
Extra years are also good if the player is still good in those extra years.

Sure. I'm just saying they can also be good if the player is worthless. A $5M lower luxury tax number for 5 years, by itself, is worth over $10M in PV for a luxury tax paying team.
   5. Fancy Crazy Town Banana Pants Handle Posted: January 06, 2018 at 01:49 PM (#5601937)
Sure. I'm just saying they can also be good if the player is worthless. A $5M lower luxury tax number for 5 years, by itself, is worth over $10M in PV for a luxury tax paying team.

Err, you lower it by $5m for 5 years, but then you increase it by $25m for 2 years. By my math, that is net negative of $25m on the cap overall...
   6. Nasty Nate Posted: January 06, 2018 at 01:59 PM (#5601950)
What happens in 6-7 years is worth considering, but I don't think net affect on the luxury tax level is necessarily the best way to look at it. It's more about timing.
   7. snapper (history's 42nd greatest monster) Posted: January 06, 2018 at 02:01 PM (#5601953)
Err, you lower it by $5m for 5 years, but then you increase it by $25m for 2 years. By my math, that is net negative of $25m on the cap overall...

But you've got time to plan for that. If you're near/over the cap now, and want to add an impact player, every dollar you pay him costs you between $1.25 and $1.50. You can make that not true for the last 2 years of the deal. There's also a compounding effect given the way the luxury tax rates work for repeat payers.

   8. eddieot Posted: January 06, 2018 at 02:44 PM (#5601977)
It's worth remembering that JD Martinez is still unsigned because he is holding out for more money, not years. He'd sign even a 2- or 3-year deal if the money was enough.

What evidence is there of this? I would think there are plenty of "one bat away" teams that would jump in at 3/$120 rather than 5/$150. You minimize the drop-off risk and have absolute cost certainty for 3 short years. Three years is a blink in MLB contracts. Plus, the Disney money.
   9. snapper (history's 42nd greatest monster) Posted: January 06, 2018 at 03:06 PM (#5601987)
I would think there are plenty of "one bat away" teams that would jump in at 3/$120 rather than 5/$150. You minimize the drop-off risk and have absolute cost certainty for 3 short years. Three years is a blink in MLB contracts. Plus, the Disney money.

I don't know about that. If you're paying the luxury tax, that's very expensive.

Is there a competitive team that's $40M below the tax threshold?
   10. Nasty Nate Posted: January 06, 2018 at 03:20 PM (#5602000)

What evidence is there of this?
Common sense. If you don't think he'd sign for 3/$120, make it 3/$130, 3/$140 or whatever.

I would think there are plenty of "one bat away" teams that would jump in at 3/$120 rather than 5/$150. You minimize the drop-off risk and have absolute cost certainty for 3 short years. Three years is a blink in MLB contracts. Plus, the Disney money.
No team thinks they can pinpoint the drop-off of a player his age to a specific offseason some years in the future. And the risk isn't the years, it's the money. $120m and $150m are very close in risk - so the teams might as well get as much production (i.e. years of control) for the risk.
   11. cardsfanboy Posted: January 06, 2018 at 03:48 PM (#5602015)

Is there a competitive team that's $40M below the tax threshold?


Houston Astros, St Louis Cardinals, Cleveland Indians, Arizona Diamondbacks, Kansas City Royals, Milwaukee Brewers, Tampa Bay Rays, Colorado Rockies and Minnesota Twins. (of course only about two of those teams would be willing to spend money)
   12. The Yankee Clapper Posted: January 06, 2018 at 04:06 PM (#5602028)
Houston Astros, St Louis Cardinals, Cleveland Indians, Arizona Diamondbacks, Kansas City Royals, Milwaukee Brewers, Tampa Bay Rays, Colorado Rockies and Minnesota Twins. (of course only about two of those teams would be willing to spend money)

That's a rather expansive definition of "competitive" teams. Four finished 2017 between 13 & 22 games off the pace.
   13. Walt Davis Posted: January 06, 2018 at 04:31 PM (#5602034)
In NPV, even at 8%, one handy online NPV calculator puts 3/$120 at a NPV of 103 and 5/$150 at $120. So they're not equivalent offers. To make them equivalent, you've got to offer about 3/$140. Once you've offered 3/$140, you'd be silly not to offer 5/$150.

Presumably there's a sweet spot in there somewhere below 3/$140 where Martinez is willing to gamble that he can do better over 5 years than $150. That might well be around $120, figuring he can probably do better than 2/$30 after the contract is over. Very likely around 3/$130, he's probably (on average) better taking the shorter deal. But he's probably not going to blow it away so risk aversion might take over.

Beyond the deferred payment structure, the other "reason" to give him 7 years is that it would be pretty standard. Teams sign position players through age 36. It has happened so often that it's pretty clear that teams collectively decided that they are reasonable risks through 36. (Maybe it was that secret insurance report all those years ago.) Maybe the statnerds have convinced them not to go behind 34 or 36 now -- or at least to only do so for deferral reasons.

At 8%, break-even between 3/$120 and 5/$150 is 2/$24 for years 4 and 5. That is 40/40/40/12/12 is about the same NPV as 30/30/30/30/30. But again at that point a team decides (a) given $/WAR and inflation, he's probably worth 2/$24 at ages 33-34 and (b) would they prefer the first structure or the second structure or (as seems more common) a back-loaded structure that makes it a 5/$155-160 deal with the same NPV?

BTW, if you think 8% is too high, lowering the discount rate increases the size of the gap between 3/$120 and 5/$150. At 5% return, you'd have to go to about 3/$143 to match the NPV of 5/$150.

I assume there's also a precedent/psychological barrier teams don't want to cross. If Martinez is "worth" $40 M a year, then what do teams say when Machado says (a) I'm as good or better than JD; (b) I'm 5 years younger; so (c) I want 8/$340 (4 year $40; 4 years $45)? Teams don't like crossing major AAV barriers and it seems particularly unlikely they'd want to do it with a flash in the pan like Martinez. Even if it makes financial sense, there's no way a team will make Martinez, by far, the highest-paid player in the game. (I believe this year, Trout will officially have the highest AAV among position players at $34 followed by Miggy at $32 then I think it's either Cespedes or Stanton at <$30. In a market like that, I don't think teams want to find out what happens after somebody offers Martinez $40.)

If anything, I'd think teams would be more interested in these types of contracts for older pitchers. They could go bust/injured at any time and, at that age, once they do they rarely bounce back. Maybe 3/$105 for Arrieta is sufficiently more attractive than 5/$125 ... though still we're talking just 2/$20 for the extra years which is Jason Hammel money.
   14. cardsfanboy Posted: January 06, 2018 at 04:34 PM (#5602038)

That's a rather expansive definition of "competitive" teams. Four finished 2017 between 13 & 22 games off the pace.


The Rays and Royals finished 80-82, every other team on that list finished over .500. In the AL 85 wins made it to the post season last year, 87 in the NL. I'm pretty sure every one of those teams I listed believe they are competitive.
   15. ptodd Posted: January 06, 2018 at 04:53 PM (#5602047)
Extra years for a lower AAV makes perfect sense for the Red Sox at DH. Especially if Boras hands Them Arrieta for 4 years and there is no NTC for JDM

That said JDM will get pull happy at Fenway and mess up his swing. Sign Matt Holliday for 1/12 or whatever or maybe Bruce if the years and dollars drop
   16. 6 - 4 - 3 Posted: January 06, 2018 at 05:57 PM (#5602102)
According to Fangraphs' projections, the Rays are projected at 80-82 again. However, only 5 teams are projected with winning records (BOS, CLE, HOU, MIN, NYA). Along with the Rays, the Angels and Royals are also projected at 80-82.

It's not ridiculous to think that the Rays have an outside shot at a WC in 2018. Although obviously they'll need a lot to go right. On the other hand, the fact that the Rays just traded their franchise player for a guy who may not quite be ready for prime time suggests that they're not expecting to compete in 2018.
   17. Jose is an Absurd Doubles Machine Posted: January 06, 2018 at 06:04 PM (#5602110)
With the second wild card th ere should be very few teams that are giving up on 2018 on January 6th.
   18. Ziggy's screen name Posted: January 06, 2018 at 06:10 PM (#5602115)
Trout signed his extension prior to his FA years kicking in, so the AAV of his contract is lower than the 34 he's going to make this year. He only made 20 last year.
   19. cardsfanboy Posted: January 06, 2018 at 06:10 PM (#5602116)
Four finished 2017 between 13 & 22 games off the pace.


You are looking at the wrong standings, every team I listed finished either in the playoffs or within 5 games of making the playoffs.
   20. Daniel in Toronto Posted: January 06, 2018 at 08:48 PM (#5602205)
Case against: Baseball-Reference’s “similarity scores” through age 29:
1) Jason Bay
2) Geoff Jenkins
3) Kevin Mitchell
4) Bobby Higginson
5) Aubrey Huff
https://www.baseball-reference.com/players/m/martijd02.shtml
   21. The Yankee Clapper Posted: January 06, 2018 at 09:48 PM (#5602213)
It's not ridiculous to think that the Rays have an outside shot at a WC in 2018.

Anything can happen, but the Rays path to the playoffs is extremely steep. They're in the same division as the Yankees & Red Sox, against whom they were 7-12 & 8-11 last season, before they traded away their best player. Very tough to get 3 playoff teams from the same division, so something catastrophic would probably have to happen to the 2017 AL East playoff teams for the Rays to have a chance.
   22. Buck Coats Posted: January 06, 2018 at 10:10 PM (#5602223)
Didn't we just have 3 playoff teams from the NL West last year?
   23. cardsfanboy Posted: January 06, 2018 at 10:17 PM (#5602227)
Didn't we just have 3 playoff teams from the NL West last year?


forget it, he's rolling...
   24. Misirlou doesn't live in the restaurant Posted: January 06, 2018 at 10:23 PM (#5602233)
The Rays and Royals finished 80-82,


The Rays traded away 3.6 WAR in Longoria and got essentially nothing (for this year) in return. They lose another 2.4 with Cobb. Logan Morrison is extremely unlikely to repeat his 3.6 WAR season. The Rays are far from one impact bat from being competative.
   25. The Yankee Clapper Posted: January 06, 2018 at 10:29 PM (#5602236)
Didn't we just have 3 playoff teams from the NL West last year?

The point is that it rarely happens. Those here who are bullish on the Rays can get some pretty good odds. Have at it. I think Fangraphs has it about right.
   26. SoSH U at work Posted: January 06, 2018 at 10:29 PM (#5602237)
before they traded away their best player.


I agree it's a difficult road to the playoffs, but Kiermaier has been significantly better than him in each of the last three seasons.


The point is that it rarely happens.


Three out of 12 in the two WC era.
   27. cardsfanboy Posted: January 06, 2018 at 11:49 PM (#5602268)
Those here who are bullish on the Rays can get some pretty good odds. Have at it. I think Fangraphs has it about right.


The point is that someone asked a question about whether there where any contending teams who were 40mil under the cap, I listed a few teams that could be reasonably considered contenders that were 40mil under the cap. The Rays happened to be one of them. Being within 5 of the post season is pretty much the definition of competitive.
   28. LA Podcasting Hombre of Anaheim Posted: January 07, 2018 at 04:54 AM (#5602298)
Being within 5 of the post season is pretty much the definition of competitive.
That was true last season. That's not true now, and it's not going to be true this coming season.
   29. Misirlou doesn't live in the restaurant Posted: January 07, 2018 at 11:30 AM (#5602334)
That was true last season. That's not true now, and it's not going to be true this coming season.


Right. The team that fell 5 games short last year has to replace 6 wins from Longoria and Cobb just to get back to where they were.
   30. 6 - 4 - 3 Posted: January 07, 2018 at 12:04 PM (#5602345)
Right. The team that fell 5 games short last year has to replace 6 wins from Longoria and Cobb just to get back to where they were.

Not according to Fangraphs, who project them to go 80-82 again. They have taken into account the departures of Longoria and (likely) Cobb.
   31. cardsfanboy Posted: January 07, 2018 at 12:16 PM (#5602348)
jeezus it was just a quick ####### list of teams that were under 130mil payroll and finished within 5 games of the post season last year. I don't know the specifics about each team. Nor do I know their makeup or plans going forward. Or their developmental plan, or other potential off season plans.

I was just pointing out a list of teams that can reasonably be considered competitive with payroll room to sign a difference maker for 40mil a year. If Archer returns to his 2015 form, he alone makes up the loss of Cobb's 2.4 war. Odorizzi returns to his 2016 form and he makes up 3 war difference. Blake Snell, a guy who was as highly rated as 12th prospect in baseball is young enough he could easily morph into an ace level talent. As it looks now, the Rays could potentially have one of the better rotations in baseball, even without Cobb. (Faria had a 121 era+ last season, a full season of him could be another quality cog.) They lose an offensive piece in the 100 ops+ hitter Longoria and would be looking to replace him with JD Martinez as an offensive cog, so that seems to make up some of the lost, and could be reasonably thought of as a team that could gain ground.

Of course that is just a quick bb-ref way of looking at the team, I don't know crap about the make up of the team or their plans or other changes they have made, but it seems reasonable to think that they might still consider themselves to be competitive.
   32. Misirlou doesn't live in the restaurant Posted: January 07, 2018 at 12:31 PM (#5602353)
If Archer returns to his 2015 form, he alone makes up the loss of Cobb's 2.4 war. Odorizzi returns to his 2016 form and he makes up 3 war difference


IOW, if 2 guys who were terrible last year repeat their career years.
   33. cardsfanboy Posted: January 07, 2018 at 01:28 PM (#5602372)
IOW, if 2 guys who were terrible last year repeat their career years.


They are 28, 29 year olds one or two seasons removed from very good years, a rebound of some sort isn't out of the question. And again, we are talking about the viewpoint of the ownership group/management.
   34. Misirlou doesn't live in the restaurant Posted: January 07, 2018 at 01:53 PM (#5602381)
They are 28, 29 year olds one or two seasons removed from very good years, a rebound of some sort isn't out of the question.


Which, even if that happens, will likely be offset by regression from Logan Morrison (3.6 WAR career best by far) and Steve Souza (4.2 WAR, career best by far).
   35. snapper (history's 42nd greatest monster) Posted: January 07, 2018 at 03:00 PM (#5602409)
I think the bigger point is the Rays are not attempting to compete. They're likely to shed additional talent at some point.
   36. 6 - 4 - 3 Posted: January 07, 2018 at 03:08 PM (#5602413)
I think the bigger point is the Rays are not attempting to compete. They're likely to shed additional talent at some point.

But should they?

The problem with the tank-and-rebuild strategy is that it becomes increasingly less effective as more and more teams try to do it. Only 5 teams are projected to have winning records (per Fangraphs--see previous post). If they go 77-85, the Rays could still find themselves in the middle-of-the-pack in terms of the 2019 draft. So why not try to get over the hump to stay above .500 and see what happens?

As a Giants fan, I'm quite happy to have Evan Longoria, but I wouldn't have made that trade had I been GM of the Rays. Christian Arroyo just isn't that good.
   37. snapper (history's 42nd greatest monster) Posted: January 07, 2018 at 03:12 PM (#5602415)

But should they?


Yes. But it's harder now that they dumped Longoria.
   38. Misirlou doesn't live in the restaurant Posted: January 07, 2018 at 03:19 PM (#5602418)
If they go 77-85, the Rays could still find themselves in the middle-of-the-pack in terms of the 2019 draft.


The tank and rebuild strategy has less to do with the draft, and more to do with getting prospects from trades. Yes, the Cubs got Bryant, Schwarber, and Happ with high draft picks, but they got Rizzo, Russell, Hendricks, Arrieta, Strop*, and Edwards by trading etsablished players for prospects or reclamation projects.

* Also included in the Arrieta and Strop haul was international bonus money, which they used to sign Eloy Jimenez, who was the centerpiece in the Quintana trade.
   39. 6 - 4 - 3 Posted: January 07, 2018 at 03:36 PM (#5602423)
The tank and rebuild strategy has less to do with the draft, and more to do with getting prospects from trades. Yes, the Cubs got Bryant, Schwarber, and Happ with high draft picks, but they got Rizzo, Russell, Hendricks, Arrieta, Strop*, and Edwards by trading etsablished players for prospects or reclamation projects.

The Cubs didn't get much from the draft (at least not yet), but the Astros did (even if Appel was a bust).

EDIT: And with respect to the trade market, if too many teams are attempting to tank, then supply exceeds demand (i.e., too many sellers, not enough buyers). That dynamic is possibly how the Giants were able to acquire Longoria so cheaply.

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