Comparing the Cost of Zack Greinke to Cole Hamels

Zack Greinke is one of the best pitchers in major league baseball, and as a result, he had no shortage of suitors before ultimately signing a contract in excess of $200 million. In addition to money, the Diamondbacks also surrendered their first-round pick next year, the 13th overall selection. While it would not be quite true to say that Greinke cost “only money,” the Diamondbacks did not give up a single active player in order to acquire Greinke.

Cole Hamels, both the same age as Greinke and roughly as effective over the course of his career, was traded over the summer. Hamels’ cost was not “only money,” as the Texas Rangers gave up six players, including three high-end prospects (and Matt Harrison’s contract), for Jake Diekman and the opportunity to pay Cole Hamels around $100 million over the next four years. While the costs come in different forms, we can compare the two to see how the trade market this past summer compared to this offseason’s free agent market for Greinke.

The Los Angeles Dodgers prioritized Cole Hamels at the trade deadline, but subsequently missed out by refusing to part with their best prospects. The team then prioritized bringing Greinke back, only to be outbid by division rival Arizona. The cost for both players was high, and it is difficult to say whether the Dodgers made a mistake passing on both players, but we should be able to compare the costs for both to see if the Dodgers could have kept a comparable pitcher for less than the amount Greinke received in free agency.

As far as comparisons go, Greinke did have a better year in 2015, but their cumulative WAR graphs (shown below) reveal two remarkably similar careers in terms of value.

In addition, both players are projected to do well next season. By Steamer, Greinke is set for a 4.2 WAR while Hamels comes in a bit behind at 3.6 WAR for the 2016 season. Using those projections as the baseline for future production, we can get an estimate for their value over the next few years. With deferrals, Greinke’s deal turns out to be $194.5 million over six seasons, per Ken Rosenthal. Given the consistency of both Greinke and Hamels, for the purposes of this analysis, we will assume the players will age well.

First, Greinke.

If Greinke ages in the manner typical of pitcher, he would produce slightly fewer wins than the dollar amount of his contract would suggest (although he could still make up the difference by means of defense and hitting). If he ages slightly better than the average pitcher, Greinke will be worth the terms of his contract.

We can repeat the same exercise with Hamels, and for these purposes will assume that Hamels’ contract vests for 2019.

In addition to the above, the Rangers received 1.4 WAR from Hamels ($11.2 million in value) while the left-hander was paid $8.2 million for his time in Texas. In terms of money, the Phillies kicked in $9.5 million and agreed to take on Matt Harrison’s $32.8 million remaining on the contract. Add in a win and a half ($12 million value) from Jake Diekman over three seasons in exchange for $6 million through arbitration, and we have an estimate for how much the Rangers paid for Cole Hamels as well as the value they expect to receive before we consider the prospects.

Let’s sort through the numbers.

For value, we have $110.7 million for Hamels in the future, $11.2 million for Hamels last season, and $12 million for Diekman, totaling $133.9 million in value. Meanwhile, the cost for Hamels includes $91.5 million of future salary plus $8.2 million for 2015 salary plus the $6 million for Diekman minus the $9.5 million in cash the Phillies paid minus $32.8 million for taking on Matt Harrison, totaling $63.4 million in costs. So, the difference between the value and costs comes to about $70 million in favor of Texas — a difference which was accounted for by means of prospects, particularly Jorge Alfaro, Jake Thompson, and Nick Williams.

Regarding that last point: putting a monetary value on prospects can be tricky, but Kevin Creagh and Steve DiMiceli have done a few studies on the subject, including one last winter that Dave Cameron discussed. The results of that latter study are summarize here:

In his write-up of the prospects in the trade, Kiley McDaniel rated the three main pieces as 55 FV, putting Alfaro and Thompson in the 26-50 range and Williams in the 51-75 range. Putting the surplus values of those three guys based on the table above, we can add their value and come to $53.5 million. Taking that total away from the $70 million, we would get a $17 million surplus. However, it might be useful to make a few adjustments to the numbers above. First, the prospect table uses $6.5 million as the present value of a win instead of $8 million. In addition, the prospect table calculates the full present value and discounts the future while the table with Greinke and Hamels are not discounted to produce a present value.

To put the different values on the same level, I took out the discount that turned the future value to present value on the prospect side and then adjusted the cost of a win to represent the $8 million which the current market is exhibiting. By doing this, the future values of the prospects are on the same level as the future values for Hamels and Greinke. Making those changes made quite a bit of difference in the value of the prospects.

By this new methodology, the three prospects are now worth $116 million in pre-free agency dollars based on their respective prospect-ranking tiers. Putting in that context, that the Phillies would be willing to kick in money and take on Harrison’s contract — with a view towards get better prospects — makes a lot of sense. Using these numbers, the table shows the amount paid, plus the value expected in both deals. While there are different estimates for the value of the pick Arizona gave up to sign Greinke, for these purposes, we will go with $15 million.

Cost for Cole Hamels and Zack Greinke

Name	Expected Value	Contract	Outside Money	Prospects/Draft Pick	Total Amount Paid	Surplus/Deficit
Greinke	$192.6 M	$194.5 M	$0.0	$15.0 M	$209.5 M	-$16.9 M
Hamels	$133.9 M	$105.7 M	-$42.3 M	$116.5 M	$179.9 M	-$46.0 M

These are not hard and fast numbers. They can be massaged this way or that to give Greinke and Hamels more or less production in the coming years. The numbers for prospects or draft picks could be moved a little bit depending on the situation. Moving the numbers around is not going to make either of these deals a steal, although there is always tremendous downside when the cost is high. No matter how you shape the numbers, as is often the case in a bidding war, the Diamondbacks and Rangers both paid a high cost and expect to receive a significant return.

The Hamels deal might seem like a steal at this point given the contracts recently given out to David Price and Zack Greinke, but the cost in prospects serves to even out the monetary value. To be clear, not receiving a surplus — or perhaps running a small deficit in terms of value — does not mean the team “lost” the deal or should have avoided making it. When the cost is this high, getting close to value can be an acceptable outcome. The opportunities to get pitchers like Cole Hamels and Zack Greinke are not common and the cost is high. It would be easy to justify passing on both players due to cost, but in the near term, both teams are likely to be happy with their aces.