Brewing A Contract For Sheets

For the last day or two we have begun to delve deep into the baseball economy and how it relates to fair market value, free agency, and context. This morning, our discussion centered around the necessity to add context in order to more accurately represent free agency analyses. This afternoon, Dave brought forth a great evaluative tool, showing average dollars/win figures for all 30 teams. The figures in the spreadsheet were arrived at after concluding that a team of replacement players would cost $12 mil and win 50 games; that the goal of each team would be to win 40 games above replacement; by subtracting the $12 mil from the estimated payroll; and finally by dividing that difference by the 40 wins above replacement.

The logical next step is to actually put this into action, combining an analysis of fair market value with the context of a specific team. With the news that the Brewers have decided to offer arbitration to Ben Sheets, he seems like the perfect person on which to test our new methods. To make the post a bit easier to read, I’ll break it up into different sections.

Brewers Payroll
Over the last three years, the Brewers have increased their payroll from $57 mil to $80 mil. If we factor in about a 5% markup, their 2009 payroll can be estimated at $84 mil. Therefore, they would have $72 mil ($84 mil payroll – $12 mil replacement payroll) to win 40 games (90 wins – 50 replacement wins). The quotient amounts to an average of $1.8 mil/win. Now, this is just an average, and does not imply that every signing the Brewers make has to be for $1.8 mil/win. However, every player of theirs that exceeds $1.8 mil/win will necessitate an adjustment in what they have left to spend.

Ben Sheets & Fair Market Value
Weighting the Bill James and Marcel projections for 2009 puts Sheets at 180 innings with a 3.60 FIP, very solid numbers. He might not be the guy who, in 2004, produced a 2.65 FIP, 2.70 ERA, and > 8.0 K/BB, but he still has the ability to dominate. A replacement level starter would log 150 innings with a 5.50 FIP while a replacement reliever would pitch the remaining 30 innings at a 4.50 FIP.

Ben Sheets:     180 IP, 3.60 FIP, 72 runs
Replacement SP: 150 IP, 5.50 FIP, 92 runs
Replacement RP:  30 IP, 4.50 FIP, 15 runs

All told, that would put Sheets at 72 runs and the replacement level at 107 runs. This +35 run advantage for Sheets puts him at +3.5 wins above replacement. Normally, we would add a quarter-win or half-win for the fact that the starter in question would pitch the innings and help save the bullpen. Sheets does not get this advantage from me, and given his inability to consistently make more than, say, 22 starts in a season, I’m actually going to dock him a quarter-win, bringing his value to a solid +3.25 wins above replacement.

The going rate right now is $5 mil/win, so if Ben were to sign a 1-yr deal, the appropriate fee would be $16.25 mil. Factor in a 10% discount for a multi-year deal, and his 3-yr deal would be worth $44 mil, an average annual value (AAV) of $14.7 mil. That AAV divided by his 3.25 WAR amounts to a fee of $4.52 mil/win, about two and a half times higher than the Brewers’ average of $1.8 mil/win.

The Contract & The Team
If we knew nothing else about the Brewers, other than that they were striving for 40 wins above replacement and had 73 mil left with which to accomplish the feat, then signing Sheets to this deal would mean they now had 37 wins to add with about $58 mil to spend. We do know about the Brewers, though, and thanks to the guys at BrewCrewBall, calculations about returning players and their salaries can be made.

According to their figures, the Brewers will have 16 players returning to the roster, at an approximate sum of $66,449,000. The link suggests the total is closer to $73 mil, but Salomon Torres retired, and I’m unsure what is going on with Craig Counsell, so they were both removed. Calculating the wins above replacement for all 16 players, the total comes to about 35 wins, at the $66,449,000. This means that the Brewers have $17,551,000 left to spend in order to accrue the five remaining wins necessary to reach 40 WAR.

If they signed Ben Sheets to this 3-yr deal at fair market value, which would be an AAV of $14.7 mil for three seasons, they would have 38 wins above replacement amongst 17-19 players, and about $3 mil left to spend. Because they are getting such great deals on Braun (an astrounding $149,000 per win), Hardy, Weeks, and Hart, they can use the money saved in those areas to afford the inevitable jump in arbitration for the likes of Prince as well as other potential free agent targets.

Based on the projections for those returning, the Brewers appear to be in a solid position for 2009, and with about $14-17 mil remaining, should be able to increase from 35 wins to 40 wins above replacement, bringing their projection to 90 wins. Signing Sheets would be nice, but doing so may necessitate the usage of prospects to fill out the roster, who, could add quality for the league minimum, but might not be very useful.

Moving Forward
The next step in these types of analyses is to evaluate the remaining money in terms of the spots that need to be filled. With their $17 mil remaining outside of those returning, it is quite different in signing starters as opposed to a LOOGY, long reliever, and backup infielder. So, Brewers faithful on the interwebs, what are the positions that are not returning next season? And, on top of that, would you prefer to sign Sheets to his fair market value and fill the remaining spots with farm players, or invest that $14-17 mil elsewhere to fill out the roster, all the while keeping the goal of adding at least 5 WAR to the team?