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Transaction Oracle
— A Timely Look at Transactions as They Happen

Thursday, April 28, 2005

Indians - Extended Sabathia

Cleveland Indians - Signed P C.C. Sabathia to a 2-year contract extension, covering the years of 2007 and 2008.

This one comes in at $17.75, which is a nice price considering that this is buying out 2 free agency, not 2 arbitration, seasons.  It’s hard to believe that Sabathia still is only 24 and a year younger than Johan Santana; it seems like he’s been around forever.  While he hasn’t harnessed his physical tools to the point where he’s had a break-out year, he does have a nice array of pitches and a lot of time left.  His physical conditioning is pretty poor, but as a wise man once said, you can’t pull fat.  (Of course, you can rupture your hamstrings as poor Cal Pickering discovered in consecutive seasons).

Dan Szymborski Posted: April 28, 2005 at 05:37 PM | 23 comment(s) Login to Bookmark
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   1. Matthew Rich Posted: April 28, 2005 at 06:48 PM (#1295752)
A couple of points:

First, this is a huge investment and a very welcome (and, honestly, overdue) leap of faith by Dolan. Rather than allowing Sabathia to become another in a long line of young stars to leave Cleveland as soon as possible, Dolan shelled out for his first 3 years of free agency (although it was virtually assured they were going to pick up the option for 2006). This signing is different than the Martinez and Hafner extensions, in that Sabathia could have walked after next year and the Indians are paying the going rate for an above average free agent starting pitcher.

Second, I think the fact that Sabathia signed this deal represents his maturation as a player and as a person. He's really young. According to an article in today's PD, up through last season he was pretty much content to just go out there every fifth day, not invest too much (read: any) time in mental or physical preparation between starts, and wait for his free agency jackpot. But a couple of things happened -- he got married and had a child, the team started to get back on the right track, and Martinez, the other leader of the team, signed his long-term deal. Yes, the team controlled his rights for the next four years anyway, but the important thing was they committed to paying Victor through 2009. So Sabathia this offseason set about getting in shape, learning to study hitters between starts, and committing to this team by telling his agent to get the extension done.

Much like the qualitative change that Westbrook underwent last season (one which, unfortunately, hasn't netted him much so far this year), I think we'll see a different, more outspoken and hardworking Sabathia going forward. Look at his relationship with Milton Bradley -- when Bradley came to Winter Haven this spring with the Dodgers he and CC had a talk where CC told him that the rest of the team felt he had quit on them when he took his famous $65 cab ride. Would the Sabathia of a year ago have have spoken that uncomfortable truth to his friend Bradley, one which clearly had such an effect on him? I doubt it.

Anyway, I'm sure glad we'll get to root for him for another 4 years.
   2. Mister High Standards Posted: April 28, 2005 at 09:27 PM (#1296164)
I don't like the deal. 2007, and 2008 are still two years off, and there is a ton of down side risk in that contract, with limited upside.

Is a 40 VORP player worth $9m a year 2 years out for 2 years? Especially when that player has larger than normal injury and attrition risk?
   3. Matthew Rich Posted: April 28, 2005 at 09:49 PM (#1296197)
Especially when that player has larger than normal injury and attrition risk?

I disagree that Sabathia has a "larger than normal" injury risk -- the strained ab he suffered in March was the first time he's been on the DL his entire career. The team has been extremely careful with the few shoulder twinges he's felt and it's paid off.

Sabathia is 24 (turns 25 in July), left-handed, throws in the mid-to-upper 90s with a sick curve and change, has averaged 194 IP over the last 4 seasons... How much do you think he would get on the open market? If Shapiro tried to pay him any less than the market rate he would have just said no and walked after next season. No way was he going to come any cheaper.

I get what you're saying, that it seems like a lot for a guy with a career 108 ERA+ who seems to have a lot of wear on his young arm, but even if he stayed at his current level of production he'd be a very valuable pitcher. And personally I expect improvement over the next few years.
   4. Mr. Imperial Posted: April 28, 2005 at 10:03 PM (#1296225)
Right now he's the equivalent of a #3 starter on a very good team. I think it's fair to say that he still has the potential to be a #2 in this league and the ace of an average team. But most importantly, he's a 24-year-old lefty with sustained success at the big league level and there's just no way a guy like that is going to get less than $9 million on the open market, especially two years from now when salaries have had a little more time to escalate.

It's a risk, just like every single signing in baseball. But it's a smart one and will likely pay dividends for the Indians.
   5. Mister High Standards Posted: April 28, 2005 at 10:47 PM (#1296314)
It's smart to committ near market value for a commodity your not going to reap rewards from for 2 years.

Whats the upside here?

He improves and they have to goto 3@36 or 4@48. That is if he improves alot into an ace.

Whats the downside?

He's hurt where he has near zero value, or he's average where he is worth around 5m a year.

Seems like much more downside than upside to me. Your risking 9m a year to maybe save 3m.

Matthew, I realize your an indians fan, but the dude is in terriable shape. Terriable. David Wells wasn't in that bad a shape at his age.
   6. Jake Taylor Posted: April 29, 2005 at 12:25 AM (#1296636)
Rauseo, you're quite the pessimist. You've got to take some risks some time or you're never going to have any good players. In my opinion, it's just as big a risk for the team to not sign him and give him the opportunity to explore the open market. If that were to happen, it's very unlikely Sabathia would have resigned, and then who's the anchor of your staff in '07? Westbrook? Jason Davis? Come on. In other words, the Indians can't afford to lose Sabathia.

After watching him throw extremely well in his two starts thus far, the Indians clearly felt Sabathia was worthy of the long-term committment. If Sabathia were to throw 200 innings of sub-4.00 ERA in '06 in his walk year he would get at least 4/45 and probably 4/50. The Indians will get significant savings over those two years provided Sabathia just pitches comparably to how he has in his career thus far. And the Indians have every reason to believe he'll actually improve. I can't imagine how you could really find something very wrong with this deal.
   7. Joe Cowley's #1 MVP choice Posted: April 29, 2005 at 03:36 AM (#1297091)
17 million? That's a lot of cheeseburgers!
   8. Mister High Standards Posted: April 29, 2005 at 12:10 PM (#1297399)
Jake - In my eyes when a team is taking on SUBSTANTIAL risk, which the indians are by buying something they have limited information about, the lkikely production of CC Sabitha in years 3 and 4 they need to be getting signifigant upside on the deal to way against the risk. I don't see that upside in this deal. C.C. last 3 years have been similar to Matt Clements, not perfect but similar. Clement just signed for 3 @ 25. Which is roughly 1m less than CC Signed for. Of course CC is younger, but I haven't seen any evidence youth is a particular advantge (or disadvantage)for projecting pitchers. The indians have essentially bought a futures contract on CC Sabitha, at a price greater than his current market value. Which means they are expecting him to improve ALOT. To improve that much, enough to offset that injury risk means he needs to be a have a future vaule of something like top 5 or 10 pitcher in baseball to justify that contract, and I just don't see it.

I'm not a pessimist, I just think a lot of teams are taking more risk than they are compensated for taking.
   9. RP Posted: April 29, 2005 at 01:08 PM (#1297428)
I just can't see how this is a bad deal for the Indians. If Sabathia performs exactly as he has for the past 4 years they'll be paying him at pretty close to market value (esp. considering that the market for pitchers like him will go up by 2007), and if he improves, and there's a good chance that he will since he's just entering his prime, he might be a bargain for the Indians.

Sure, he could get hit by a bus tomorrow, but that's true for any player signing a long term deal. Should the Cardinals not have given Pujols a multiyear deal b/c he might get hurt and provide no value?
   10. Mikαεl Posted: April 29, 2005 at 01:53 PM (#1297465)
C.C. last 3 years have been similar to Matt Clements, not perfect but similar. Clement just signed for 3 @ 25. Which is roughly 1m less than CC Signed for.

That seems like the best comparison.

Sabathia is also similar to Clement in that both have "Electric Stuff" that they just need to harness.

Clement's contract was pretty good. Sabathia's looks pretty good, too.

I think you need to put a lot of weight on a pitcher's weight as an injury factor in order to make the claim against the Sabathia contract without damning the Clement contract. What's your basis for that?
   11. Mister High Standards Posted: April 29, 2005 at 02:04 PM (#1297476)
RP - The difference is when you sign another player to a long term deal, your forced to meet the market conditions. Or you won't have the players services for the short term, the next few years.

The indians all ready have the player for the next 2 years. They are taking on additional risk at a market rate. Thats not a good deal.

Longer contracts are a risk, and they are getting no discount. This isn't exactly rocket science.
   12. Matthew Rich Posted: April 29, 2005 at 02:11 PM (#1297491)
The indians have essentially bought a futures contract on CC Sabitha, at a price greater than his current market value.

No, if they were long a CC Sabathia futures contract they would make money if CC's value went up. Instead, they bought CC on the spot market so their cash position in the future will be the same no matter what CC does.

Furthermore, the team has insured all three years of the extension. In fact, the reason the contract does not extend to 2009 is that they could not get insurance that far out.

More importantly, Rauseo, you seem to think that if they didn't sign CC to this contract now they'd somehow be able to get him to sign it a year or a year and a half from now when he's somehow "proven" he's worth the risk. The fact is that if he made it to 2006 without an extension he would become a free agent, period, and he'd get a contract on the free agent market well beyond what the Indians could pay him.

The alternative to this deal is not a cheaper deal but losing CC altogether after next season. And like Jake points out, the rotation would be a hell of a lot weaker without him.
   13. Mister High Standards Posted: April 29, 2005 at 02:11 PM (#1297492)
Clement's contract was pretty good. Sabathia's looks pretty good, too

It would be good if it were for years 1 and 2, not years 3 and 4 of an exhisting contract.
   14. Mister High Standards Posted: April 29, 2005 at 02:44 PM (#1297563)
Matthew - Insurance certainly makes the deal more attarctive, as it elimates a good amount of the zero value risk. Now lets take a look at some scenerio's and maybe figure out if this is a good contract or not.

Let's assume there are 3 possiable outcomes for CC over the next 2 seasons where he is an indian independent of this contract. Obviously there are far more than 3 scenerio's but lets try and keep this basic:

1) Base Case - He continues to pitch as is: - His cost is roughly the same in dollar amount $9m a year in todays dollars, but instead of for 2 years it's for 3 or 4 years. Now A big question here and I'm not sure what the correct answer is, what is the value of CC in years 5 and 6 compared to the cost of giving CC the extention with 2 years less data than you would normaly have. My opinion is that in the base case your better off committing to 3 or 4 years with full information than committing to 2 with partial. So in the base case example I think holding off is slight advantage, but I could be able to be convinced with a good arguement.

2) Reasonable Improvement Case - CC next 2 years are as good as his best season he's 20% better than league average for 200 innings. In that case I would guess he would be worth roughly 11 mil a year for 4 years. In that case the Indians save 4m, and have the option to let him walk rather than commit 22m for years 5 and 6. Obviously in this situation it's a good deal for the indians. But it is NOT the GREAT deal that Matthew claims it would be as CC wouldn't be out of there price range for these dollars.

3) Marginal Decline - He's a league average pitcher for 160-180 innings a year. I'd guess he'd get 7-8m a year in todays dollars for 3 years. That puts him a little cheaper here. But you gain the flexiability of letting him walk if you have better ways to spend your budget. Which is an underrated option IMHO. Obviously if he declines you don't want him at this price, but it's not a disaster.

To summarize, insurance changes my evalutaion of the deal from poor, to OK, but not superlative in any way. At least no the monsterous downside is gone, of course I still don't see much upside.
   15. Matthew Rich Posted: April 29, 2005 at 03:00 PM (#1297596)
Rauseo, are there any circumstances in which you would give a pitcher, say, $9MM a year for 4 years? I'm all for payroll flexibility, but I believe the reason you want to preserve payroll flexibility as much as possible is so that when you do identify the expensive guys that are worth signing or keeping, you have that ability. CC isn't Randy Johnson circa 1997, fine. But when you look at the pitchers that are generally available on the FA market, well... I would honestly rather have CC than any of the starting pitcher FAs this past offseason or next offseason (Burnett I think is the best of the bunch and it thins out quickly after him).

The point of a major league baseball team is to win the World Series, not to maximize dollars per win. I recognize that the Indians and other midwestern teams are at a financial disadvantage, but you have to commit to your best players at some point, or you turn into the Pittsburgh Pirates.
   16. Matthew Rich Posted: April 29, 2005 at 03:01 PM (#1297601)
Er, maximize wins per dollar spent. You know what I mean.
   17. Mister High Standards Posted: April 29, 2005 at 03:26 PM (#1297656)

Rauseo, are there any circumstances in which you would give a pitcher, say, $9MM a year for 4 years?


Yes, without a doubt. And I would have given CC a 4 year 9m dollar a year deal in a heart beat this offseason, if thats what it took to sign him. I would ALWAYS prefer a 2 year, or a 3 year deal to a 4 however, though I realize to sign a player you need to do that, and I would in the right circumstance. HOWEVER thats not the case here.

The point of a major league baseball team is to win the World Series, not to maximize dollars per win.

Ironic you say that, as I more often than anyone here say those exact words. There is nothing wrong with overpaying a player, in the correct circumstance, if there is no similar option available and he is vital to team success. All though your almost always better off doing so on a short deal rather than a long one. My problem with this deal is they not getting a ton for increasing the length of their commitment.

The only way this is a good deal is if: 1) CC vastily improves. 2) Pitchers contracts in the industry as a group hyper inflate.
   18. buddy34 Posted: April 30, 2005 at 02:35 PM (#1299878)
i think your number 2 point has already happened, hasn't it? this past offseason is a prime example. is there any reason at all to think prices will go down? they never have, i don't know you'd think they would in the future.

basically, CC is getting in 2008 what some pitchers of his caliber are getting right now.

assuming health, that's a hell of a bargain. and if he improves, which isn't out of the question because he's so young and his stuff is so good, then it may end up being the best pitching bargain in baseball.
   19. Russ Posted: April 30, 2005 at 02:48 PM (#1299888)
Of course CC is younger, but I haven't seen any evidence youth is a particular advantge (or disadvantage)for projecting pitchers.

This is a crazily asinine statement. When Matt Clement was CC Sabathia's age, he was a below average pitcher. When you evaluate pitchers correctly (i.e. take into account DIPS-related luck), you'll see that it is rare for pitchers of this age and experience to decline unless it's due to injury.

The only risk for the Indians here is injury risk or Blassist implosion (which is the same for ANY pitcher). AND, if anything, the fact that Sabathia has survived 4 years of a reasonable workload should mean he is LESS of an injury risk.

The most valuable thing for any player is experience at the major league level. The older you are, the less experience you can get before you get old. This is a very good deal for the Indians... I'm amazed that people can think otherwise.

Sabathia will be 26 and 27 in year 3 and 4 of the deal... which is two years YOUNGER than Clement is RIGHT NOW.

I've always picture Sabathia having
this sort of career.
   20. Mister High Standards Posted: April 30, 2005 at 04:25 PM (#1299974)
Russ - If you have some kind of evidence that there is a fairly regular career path for pitchers, similar to that of hitters (where they peak 27, 28, 29) then cite it.

No such evidence exhists, that I have seen or found. And I've looked.


There isn't just injury, and explosion risk. There is decline risk as well. It happens as well. No to mention your ocompletely discounting all risk as if it's a non factor.
   21. Russ Posted: April 30, 2005 at 05:04 PM (#1300041)
Russ - If you have some kind of evidence that there is a fairly regular career path for pitchers, similar to that of hitters (where they peak 27, 28, 29) then cite it.


I don't think there is a regular career path for pitchers, mostly because of the risk of injuries and because of the exposure factor. However, I would be surprised if a guy with Sabathia's extensive profile actually got worse between the ages of 27 and 29 without some sort of injury befalling him due to bad luck or overwork.

I'm also certainly not saying that pitchers peak at 27-29. I'd guess that most pitchers would peak somewhere between 33-36, using Steele's UntEsted ModEl for team sports. The precepts of that model would posit that pitchers, because they require less raw physical ability for their position and generally get game-time experience in their careers than hitters, would peak much later. Raw physical ability for hitters probably peaks around 25-27 and roughly equals experience in magnitude of effect. Experience is monotonically increasing (if uninterrupted by injury or demotion). Those two components would shape a curve that gives the standard 27-29 peak. Pitchers, because they require less in terms of athletic physical ability but require more in terms of game experience to be productive, should have a curve that peaks much later. In other words, although physically the two groups of players may have the same rise and decline, because experience is so much more important for pitchers in terms of success than raw athletic ability and they get much less experience than position players per year, the pitchers should have later peaks (which I think most do).
   22. Russ Posted: April 30, 2005 at 05:05 PM (#1300045)
"generally get game-time"

should be

"generally get LESS game-time"
   23. greenback calls it soccer Posted: April 30, 2005 at 09:01 PM (#1300680)
basically, CC is getting in 2008 what some pitchers of his caliber are getting right now.

He's also getting in 2008 what Eric Milton's getting right now. The free agent market looks so thin that the risk of inflation is both real and fantastic.

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