You have a choice. I’ll give you $100 right now, or you can let me flip a coin. If it lands on heads, I’ll give you $250. But if it lands on tails, I’ll give you $20. I’m using a fair coin, so the expected value of flipping the coin is $135 based on the 50/50 odds it lands on heads or tails. If you like risk or are a risk-neutral person, it’s an easy decision to take your chances with the coin because the odds are strongly in your favor. If you’re a risk-averse person, however, you’re more likely to take the sure thing because $135 isn’t a whole lot more than $100, and $100 is a whole lot more than $20.

Let’s add another wrinkle. It’s the same choice, but if you choose the coin flip, you have to wait a month. The dollar amounts are the same, but now there’s a time component. To get the value of the coin flip, you need to apply a discount factor to the $135. For some people, that discount factor is pretty close to one, but it might be much lower if you’re strapped for cash and the $100 would dramatically improve your life in the present.

Major league players face a much higher stakes version of this decision when their club comes to them with a contract extension. Do they take a sure thing now, or do they wait and gamble on themselves? While we’re focusing a lot on the 2015-2016 free-agent class this month, there are eight players who could have been free agents for the first time this year but instead chose to cash out early by signing extensions. Did they make the right decision?

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The Boston Red Sox didn’t trade Henry Owens during the Winter Meetings. They still might trade him, depending on what kind of offers they receive for the 23-year-old lefty. While there’s no such thing as too much pitching, Boston does have depth in that department, and Dave Dombrowski likes power arms. Owens isn’t necessarily velocity deficient, but he’s more finesse than flamethrower.

Once viewed as untouchable, Owens is no longer looked at as sure-thing stud. He failed to dominate in Triple-A, and his 11 big league starts were a mixed bag. The club’s former top pitching prospect split eight decisions and finished with a 4.57 ERA and a 4.28 FIP.

As expected, Owens showed off an excellent changeup, which he threw 24.7% of the time after being called up in early August. How well he commanded his fastball largely dictated whether he was rock-and-rolling or getting rocked by opposing batters. The fastball averaged 89.1 mph, a tick or two less than in past years.

Owens talked about his first two months of MLB action in the closing days of September.

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Owens on pitch sequencing: “It’s definitely an evolving process for me. When I came up and pitched against the Yankees and Detroit – the teams I faced early on – I was predominantly fastball. I was trying to establish my stuff and see how it played up here. After a few outings, I started mixing it up more. Not my repertoire, per se, but the sequencing changed. Of course, it can change in any game, and depend somewhat on the lineup.” Read the rest of this entry »

It’s an interesting thing in life when we can look at someone’s behavior and immediately identify its causes based on what we know of their past. Like when an actor tries to do a serious movie because they’ve only been seen as a comedian, or when a guy hits 40 and rushes out to by that ’86 Firebird he’d wanted since he was 11. These things are easy to diagnose, no degree required.

So, too, with Dave Dombrowski’s first offseason in Boston. He’s spent the balance of the last decade, it seems, losing in the playoffs because his bullpen failed him when he needed it most of all. So how do you counteract that? Easy! Get all the best relievers, or a good number of them, anyway. That was easy!

First, there was the Craig Kimbrel deal which did two things. It (a) caused the internet to freak out because Dombrowski dealt a seemingly silly amount of prospects to San Diego, and (b) added Kimbrel to the Red Sox bullpen. Then yesterday he traded Wade Miley for reliever Carson Smith (covered here by Jeff Sullivan). It’s easy to picture Dombrowski sitting down for the first time in his Fenway Park office, visions of David Ortiz’s grand slam flying just beyond the outstretched glove of Torii Hunter flickering in his brain like an old newsreel. He grabs a napkin out of his pocket and jots down the word “bullpen” over and over until he builds up then pops a blister on his finger. “The most dominant, unimpeachable, and impregnable bullpen yet seen on earth will be mine,” he thinks, “just as soon as I find a band-aid. OW! That smarts.”

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Most of the time, when you hear about a transaction, you think “yeah, that makes sense.” Free-agent contract terms are seldom surprising. And trades between teams are also seldom surprising, in terms of how much each side seems to be worth. Every so often, though, a move will give you pause. There was a trade between the Red Sox and the Mariners, Monday, and it arrived a little differently than usual. It didn’t make immediate sense for both sides.

After having lost out on Hisashi Iwakuma, the Mariners turned around and picked up Wade Miley, along with Jonathan Aro. They wanted a starter, and they recognized that the Red Sox had some excess depth. Nothing surprising there. Nor was it surprising that the Mariners were willing to include Roenis Elias. The part that engaged the eyebrows was the final piece, that being Carson Smith. What this is, today, is the Wade Miley trade. What this very well might end up looking like is the Carson Smith trade. The Red Sox did well to add a reliever with many years left.

From time to time, you’ll see a move and you’ll think it favors one side. Some moves do favor one side. You can express yourself and stop there, or you can try to think about why the one team might’ve been a willing participant, given that every team has so much information. What it looks like is that either the Mariners are quite fond of Miley, or they’re a little down on Smith. It’s smart to at least try to understand from both perspectives.

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I was listening to a relatively prominent podcast a few days ago, just before David Price signed with the Red Sox, on which one of the commenters who has connections inside baseball said he knew Price wouldn’t go to the highest bidder. He isn’t that kind of guy, the commenter stated, matter-of-factly (that’s a paraphrase). To further paraphrase: he cares about location, about comfort, about winning. Then Price took the highest offer from a last place team, the most prominent player on which he’s reportedly had a feud.

As it turns out, Price is exactly that kind of guy. Which isn’t to say that being that kind of guy is bad, wrong, or indeed anything negative at all. [Insert boilerplate about how Price has earned everything he can get and also blah blah blah.] Even so, David Price’s seven year deal with the Red Sox makes some loud statements about the nature of free agency, statements that will almost assuredly be ignored by many, but statements that shouldn’t be. Because they are true, and the truth will set you free, and freedom is not free, like this bagel I’m eating, and bagels are delicious. So there.

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On Tuesday, David Price signed the largest contract for a pitcher in baseball history, getting $217 million over seven years to join the Red Sox. But the value of his deal isn’t just the $217 million dollars he’s now guaranteed; he also obtained an opt-out which gives him the right to hit the free agent market again in three years, if he believes he’ll be able to get a raise at that point. If he pitches well over the next few seasons and opt-outs, he may very well be able to replace the final $127 million of this deal with another $175 to $200 million commitment, pushing the total he’d collect between the two contracts close to $300 million.

Yesterday, Eno Sarris looked at the opt-out from a few different angles, estimating that it added something like $10 to $15 million in value to Price’s deal. Clearly, the opt-out is a perk to the player, as it allows them to reset their salaries if they play well and the market inflates, but doesn’t give the team the same option if they struggle or get injured. The team assumes the full risk of the guaranteed money, but does not get the same potential return if the investment goes well, as the opt-out reduces the upside for the team.

But could an opt-out clause also reduce a team’s risk? Over the last few days, both on Twitter and in (and after) my chat yesterday, a significant number of people have argued that including the opt-out increases the odds that the Red Sox avoid the riskiest years of this deal, and that the opt-out could help the team if they’re willing to let him leave after he opts out. After all, at that point, they’d have signed the best pitcher on the market for $90 million over three years, which is obviously a pretty great outcome for the team.

This assertion often conflates correlation and causation, though. While it’s true that getting three years of Price at $90 million without carrying the longer-term risk is a good outcome for the Red Sox, Price only opts out in situations where his market value is greater than the remaining $127 million left on his contract. In other words, at that point, the Red Sox wouldn’t be able to replace Price’s expected future performance by spending $127 million; they’d either have to pay more to keep him in Boston, or pay a lesser player (or players) that amount in order to fill the hole that the opt-out created. The opt-out occurs at a point when the original contract has turned out well for the Red Sox, but the opt-out is not the cause of the contract turning out well, and it does not improve the team’s situation at the point the opt-out is exercised.

From a purely accounting standpoint, the only way including an opt-out can be a positive for the team is if the player takes a larger discount in guaranteed money than the value of the opt-out is expected to provide. For instance, if Price would have demanded $250 million without the opt-out, then signing him for $217 million and including an opt-out is very likely a better decision for the Red Sox, since the math suggests the value of the opt-out is less than $33 million. For a team, whether to include an opt-out should mostly be a calculation based on the difference in guaranteed money the player is willing to leave on the table in order to have the opt-out included.

But while I’ll disagree with the sentiment that including the opt-out without getting a financial offset can ever be a net positive for a team, I do think a few interesting counterpoints were raised about the difference in expected long-term outcomes for a team when an opt-out is included. In particular, this comment from Josh yesterday explained a somewhat different perspective pretty well.

Certainly, if Price opts out, it’s because there’s a market for his services that may or may not include the Red Sox. In theory, if he had positive value, the Red Sox could trade him to one of those other teams interested in picking up the back end of his deal, no doubt.

The problem is that the market doesn’t work that perfectly. There are relatively few teams that can absorb a $32M pitcher and it’s possible that they are undesirable trade partners (division rivals, poor relationship between front offices, etc). If there is a trade partner, there’s no guarantee that the available return is greater than the value of a qualifying offer. There’s also a chance teams would be less than excited to acquire an asset at full price that’s only being dealt because of the risk he’s about to decline. If he opted out, it’s likely more teams would get involved at a sub-32M AAV in exchange for years. Perhaps he’d take 6/150 rather than 4/128.

I tend to think along the same lines as Dave on this — that the opt out is obviously player friendly — but the argument that there is no conceivable benefit to the team is a little too black and white for me. They definitely won’t be able to acquire a package of players from an interested trade partner this way(versus “might have been able, otherwise) but I’m sure the Red Sox would get over the grief of being out from under pricy decline years and their newfound payroll flexibility and draft pick quickly enough.

In the scenario where Price opts out, it is a given that there’s a market for his services that would result in a larger payday awaiting him in some other city. I’m not particularly convinced by the annual average value argument, as if a team was willing to pay him 6/$150M, they’d likely be willing to trade for Price at 4/$127M and then sign him to an extension that pushed some of the present money back into the new years of the deal; Price doesn’t have to be a free agent for an acquiring team to re-work his contract, after all, and plenty of trades are made contingent upon a player agreeing to a contract with their new team as part of the deal.

But I think Josh raises a point about the potential frictional costs of making a deal that are worth considering. In the scenario where Price has positive value in three years, he’s clearly pitched well to that point, and teams are often reluctant to trade star players who are performing at a high level, even if you could argue that there are signs that point to it being a rational decision in order to do so. The opt-out could force a rational decision upon the Red Sox where irrationality would prevail otherwise. While a team owning a positive-value contract without an opt-out always has the option of essentially forcing an a similar outcome if they so choose — MLB has the waiver system, and any player claimed on waivers could always be given away at any point, so a team is never really stuck with a long-term contract that has positive value relative to the market rate — often contracts at this valuation come with no-trade clauses, which complicates the ease of making a trade, even if a team decided they wanted to do so.

There are frictional costs to trying to trade highly paid star players, and regularly, teams end up hanging onto expensive aging players beyond their sell-by date because of the perception backlash that comes with trading a face-of-the-franchise type of talent. So, perhaps the theoretical upside of the potential trade value is overstated, if a team isn’t willing to act on that trade value. And the point about the qualifying offer is completely correct; even though a team doesn’t get to trade a player who opted out, in the current form, they are compensated with an asset valued at roughly $10 million in exchange for the player leaving for another organization.

We don’t know that the qualifying offer system will survive the next round of CBA negotiations, so a team signing a player to a deal with an opt-out this winter shouldn’t count on the fact that they will get draft pick compensation if the player outs out, but it is a potential benefit that could be realized by a team that has a star player opt-out in the future. The draft pick isn’t going to wholly compensate a team for the entirety of a player’s positive trade value in most cases, but we shouldn’t also assume that a team who has a player opt-out gets nothing in return; it’s the marginal gap between the potential crop of prospects and the draft pick that matters.

But beyond that, the increased likelihood of the team’s ability to walk away from an extension versus choosing to trade the final years of a deal also have to be factored in. And when we look at how irregularly teams choose to trade these types of players, it’s a fair point to suggest that the opt-out may force them into a good decision more frequently.

Overall, the opt-out is still always going to be a player-friendly perk, and one that benefits the player more than it benefits the team. But given the frictional costs involved with actualizing the trade value of a star player versus receiving compensation if the player forces the team into walking away from the risk of the longer-term commitment, the marginal cost of an opt-out to a team may be diminished somewhat. And if a team can get a player to leave $15 or $20 million in guaranteed money on the table — especially by taking a lower annual salary up front, and pushing more of their compensation to the end of the deal, after the opt-out decision has to be made — in order to obtain the opt-out, then it can be a perfectly rational decision to include one in a contract.

The Red Sox just paid an enormous amount of money for the baseball-throwing services of David Price. The deal makes sense, as Boston struggled last year in that department, and now they’ve basically ensured, barring injury or anomalous performance, that they’ll struggle less in that department next season. Price is a an exceptional pitcher. That was a well-established fact before he was handed $30 million a year — dating back to his breakout 2010 campaign with the Rays, in fact. However, this past season provided glimpses at a repertoire that might facilitate the next stage of David Price, Pitcher, and it was centered around the use of his cutter and the improvement of his changeup.

Jeff went over the changes in Price’s cutter usage in late September, but the main premise is this: Price started throwing more cutters, throwing them harder, and locating them further inside to right-handed hitters toward the end of last season. As we’ll see, that impacted how successful his changeup was in different parts of the zone.

Now, the changeup: we often hear about how difficult they’re to learn. They’re a “feel” pitch, and we’re told that, because of that, they need a lot of work — work that usually comes from experience. It takes confidence to throw any type of pitch well, and when confidence is lacking in a particular offering, the pitcher is reluctant to throw it very often. This is a little different for left-handed pitchers: as Eno pointed out in this piece, left-handed starters throw changeups 65% more often than right-handers do. Lefties inherently have a difficult job because the majority of hitters are right-handed; to combat this, they throw more changeups, the pitch with the best reverse platoon split.

Price has always thrown a changeup, going back to his debut in the league. And, fitting the narrative that changeups are found with more experience, he’s thrown them with increased usage every season of his career. Take a look at his pitch usage every season since 2010:

In 2015, he cracked the 20% mark with his changeup usage, and he’s now transitioned firmly away from using his curveball as his main secondary pitch. In truth, he had already transitioned away from that approach beginning in 2013, but this year marked not only another increase in usage, but a few other adjustments that merit attention from us.

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On Tuesday night, the Red Sox made David Price the highest paid pitcher in baseball history. Dave Dombrowski is clearly a Price fan, having previously traded for him while running the Tigers, and made good on his stated desire to bring a #1 starter to Boston. Of course, at $217 million over seven years, Price certainly isn’t coming cheaply, and the Red Sox throwing money at free agents certainly didn’t solve their problems a year ago, so it’s fair to be somewhat skeptical of this kind of team-building approach. But, rather than simply paint with broad strokes, it’s instructive to look at how pitchers who have performed similarly to Price have fared during the same stretch of their careers as the Red Sox just signed Price for.

To identify a list of similar pitchers, I used the FanGraphs leaderboard to identify pitchers in the last 20 years who had compiled between +26 and +34 WAR in their age-24 through age-29 seasons; this gives us a group that approximates the +30 WAR that Price put up during his six years as a full-time starter. Nineteen pitchers have accomplished this feat, Price included, though a couple of them — Felix Hernandez and Clayton Kershaw — are present-day peers, and thus, don’t have anything to tell us about how pitchers like this perform in their early 30s. So, excluding those two, we’re left with 16 pitchers who were comparably dominant during their 24-to-29 seasons.

How’d they do from ages 30 through 36? Well, take a look.

David Price Comparisons

Pitcher	Innings	WAR	WAR/200 IP
Mike Mussina	1,444	36	5
Roy Halladay	1,413	35	5
Andy Pettitte	1,282	28	4
John Smoltz	813	24	6
Javier Vazquez	994	19	4
Roy Oswalt	832	16	4
CC Sabathia	861	15	3
Dan Haren	958	12	2
Kevin Appier	930	11	2
Justin Verlander	557	11	4
Zack Greinke	425	10	5
Johan Santana	482	8	3
Jack McDowell	327	5	3
Jose Rijo	86	2	3
Ben Sheets	168	1	1
Brandon Webb	4	0	0

At the top, we see four very obvious success stories, with Mussina, Halladay, Pettitte, and Smoltz all maintaining their dominance, putting up performances as good or better than they did early in their careers. This is the kind of performance the Red Sox are clearly hoping for, and if he pitches like any of these four, this will go down as maybe the most successful free agent pitcher contract in baseball history. These four represent the best case scenario, and show that yes, it is indeed possible for a pitcher to maintain greatness even after turning 30.

Read the rest at FOX Sports.

David Price can opt out of his seven-year, $217 million contract in three years? That’s either terrible for the Red Sox or a boon for the Red Sox, depending on how you think about it.

It’s terrible for the Red Sox!

It’s power in the hands of the player, since it’s a player option. If Price plays well, and the market continues to grow, they’ll have paid $30 million a year for three years and will have to get right back into negotiating with their ace, along with every other team.

If he gets hurt or plays poorly or the market doesn’t perform the same way going forward, they suddenly have to pay yesterday’s going rate for an overpriced, possibly hurt, aging ace… for another four years.

And before you say that it’s great for the Sox to be able to walk away if they feel the market will overvalue their pitcher… they could trade him if the market valued their under-contract ace more than they did. They would have a way to react other than just walking away, and they’d presumably get some sort of return for their asset.

It’s great for the Red Sox!

The opt-out makes it more likely that they get three good years from their investment and move on. It has to make it more likely than it would if the team gave him a seven-year confirmed deal, at least. That might be a matter of semantics, but it’s a fact. And teams prefer fewer years and higher average annual salaries, since it allows them to avoid larger commitments and work with greater flexibility.

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So David Price and the Red Sox have agreed to a seven-year deal worth $217 million, pending a physical that Price will presumably clear with some ease. As part of the terms, Price can opt out after year three, and sometimes pitchers do that, and sometimes they don’t. We’re in a weird place, where this was entirely predictable, for any number of reasons, and at the same time, we’re talking about the biggest pitcher contract in the history of the sport. That shouldn’t be something you just calmly nod at, but though this wasn’t a foregone conclusion, it was at least a popular guess. Price reunited with Dave Dombrowski on a team in need of an ace. Word is Boston blew the competition out of the water, which is what they figured to do.

Writing about these giant free-agent contracts is always a challenge. People want to know, “is it worth it?” and the bigger the contract, and the longer the contract, the more assumptions there are being made. You have to guess a player’s skill, and decline. You have to guess what a win is worth, now, and many years down the road. You have to guess at inflation, and around everything, you have to guess at a team’s success or failure. In the end, you’re left guessing. The teams themselves are left guessing. It’s not like they know the future much better than we do. It’s not like they understand injury risk much better than we do. Numbers are put on paper, and players sign on lines, and, subsequently, life happens. Each contract might turn out to be good, bad, or anywhere in between.

People want answers. There aren’t answers. Not that we know. Years down the road, we’ll all have opinions of the David Price contract with the Red Sox, but we can’t know what those opinions will be. I’m sorry to have to put it like that, but let’s leave this uncertainty behind, shall we? Let’s just focus on what we do know. That’s as much as can be done.

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