ArmchairGM Wiki

Here's another gem from I Remember Dome-Dogs, go check out their other pearls of wisdom after you peruse this:

This off-season saw a movement towards locking up super-two’s in order to keep them through the first years of free agency and to avoid inflated arbitration awards. Troy Tulowitzki’s contract has set the bench mark for signing these stars in the making. With a club payroll hovering around $90 million, and the commitment to carry Carlos Lee through the next four years, the hometown-nine has to find a way to cut costs, while rebuilding around a core nucleus of younger players.

ROY-caliber Hunter Pence, set Astros records in SLG and Extra-Bases in his limited rookie campaign. Despite his struggles early this season adjusting to batting behind Michael Bourn and generally becoming more patient at the plate, Pence is the leading candidate to become the face of the organization. After hitting his third home-run of the season today, J.R. Towles has already shown flashes of being the kind of prospect turned cornerstone that this team needs to be viable in the future. Given his even more limited sample size, the future of Towles is more of a wait and see proposition, however. That being said: just how much is Hunter Pence supposed to be worth? More than that, should the Astros sign him to a multi year contract after less than a year’s time in the bigs?

We’ll be employing MORP a proprietary statistic from Baseball Prospectus. MORP looks at the recent market fluctuations, and combined with their “deadly accurate” PECOTA projections, determine a dollar value for players. Using Troy Tulowitzki as the foundation, and outfielder Chris Young, who just recently received a five-year deal from the D-Backs, as a comparison of what a less position scarce player might receive, we’ll look at what MORP can tell us about the idea of giving similar treatment to Pence. Keeping in mind a player is eligible for free agency after six big league seasons, and for arbitration after three.

Laying out the specific years and dollar amounts of Tulowitzki’s contract, the numbers look like this:

6 year/$31M (2008-13), plus $15M 2014 club option

The per season dollar amounts are as follows:

2008:$0.75M, 2009:$0.75M, 2010:$3.5M, 2011:$5.5M, 2012:$8.5M, 2013:$10M, 2014:$15M club option ($2M buyout)

Source: Cot's Baseball Contracts

As noted in the aforementioned article, this is the largest deal ever for a player with less than 2 years of service. Shortstop is a position of greater scarcity than most any other position, save pitcher and catcher, so this assuredly weighed into the calculus of Rockies GM Dan O’Dowd and their entire front office.

Utilizing MORP, Tulowitzki’s projected value is:

MORP: $64,875,000 (through length of contract)

So the final tally, with the assumption that the team will pick up his $15 million dollar club option in 2014, stands at a bargain to the tune of $18.875 million dollars. Tulowitzki will be 30 when his current contract expires, and will most likely have begun to experience the regression that is associated with playing a position as demanding as short stop. Regardless, this contract should stand as an excellent decision on the part of the Colorado Rockies. The amount saved on this particular contract may be able to fund an excursion into the free agent market for a pitcher or go to adding a few more dollars to a long term deal to re-sign left fielder Matt Holliday.

Now, let’s take a look at a somewhat more comparable player, Diamondbacks centerfielder, Chris Young:

5 years/$28M (2009-13), plus 2014 club option $1M signing bonus

2009:$1.75M, 2010:$3.25M, 2011:$5M, 2012:$7M, 2013:$8.5M, 2014:$11M club option ($1.5M buyout)

Source: Cot's Baseball Contracts

The main difference between Tulowitzki and Young’s contracts seems to be the rate at which their salaries reach their peak. Young will be paid higher dollar values earlier, but Tulowitzki will have more eight figure seasons than will Young. Maybe this says something about the Diamondbacks confidence in their young centerfielder’s ability to stay healthy and continue to progress throughout his contract. He will be 31 at the end of his buyout year, but given PECOTA’s projections of him Young has many years of high value in front of him, as evidenced in his MORP:

MORP:$62,900,000 (Through length of contract)

Once more, we see a franchise saving themselves quite a bit of money . $23.9 million dollars, to be precise. However, no two or three situations are exactly alike, and our own situation with Hunter Pence needs to be examined in it’s own light, in addition to the actions of other teams. Pence does not play a position that is particularly scarce from year to year as far as sheer volume of productive players is concerned. He does not have the athleticism of Chris Young (insofar as ability to consistently steal bases), nor does he project to be as much of an OPS threat as Young is. Bearing everything we can in mind, a 5 year, $25 million dollar contract extension for Pence seems reasonable. (If it doesn’t, comment on why we’re dopes. We’re thick skinned). Following that line of thought, Hunter’s future projects favorably to either of the aforementioned players.

For Pence:

MORP: $55,700,000 through theoretical extension

This is a lot of prognostication on our part, but given a $8-11 million club option for the last year on his contract, signing Pence to an extension starting next season would save the Astros roughly $21.2 million dollars over the life of the contract. (Using $9.5 million as a median value for the 2014 season option). After years of Carlos Lee’s (amongst others) big contract eating at Drayton’s expense ledger, a value such as this would be hard to pass over. This franchise has been routinely lambasted for making seemingly foolish fiscal choices. While signing Hunter Pence to an extension is not exactly a no brainer, it is a good bet to give the team a degree of flexibility in altering its payroll when necessary.