Evaluating the Red Sox Spending Spree

The Red Sox came into the winter with a clear need for starting pitching, and a lot of money to spend. Yesterday, they spent a big chunk of that money, adding $41 million in AAV to their payrolls for the next four or five years. And yet, today, they still have the same glaring need for starting pitching. Evaluating the wisdom of the Red Sox spending spree is an interesting challenge, because unlike most free agent signings, these feel like half of the transaction.

We can still evaluate the signings of Pablo Sandoval and Hanley Ramirez based on the production the Red Sox should expect going forward and the money that was surrendered to acquire that future production, but we don’t really know the whole picture here. The signings of two of the winter’s premier free agent hitters very likely mean that Yoenis Cespedes is getting traded, and I think Mike Napoli might be on his way out of town too. What the team gets back in trade, and how they choose to reallocate money that could be saved through those trades, will affect what else the Red Sox can choose to do this winter. They know they need pitching, and it seems essentially impossible that they won’t make further moves to address that need; moves that were made possible by these signings.

So without those pieces of information in place, I’m hesitant to draw any strong conclusions about the new contracts given to Sandoval or Ramirez. If the team trades Cespedes and Napoli for young arms, then spends the $25 million in savings on Max Scherzer, then these moves start to more clearly address the team’s need for a frontline starter. But we don’t know if they’re going to do that. We don’t know what they’re going to do, so we can’t be too strongly convicted about whether these signings were a wise use of resources.

But that doesn’t mean we can’t say anything about the prices the team paid, because while the Red Sox have done a very good job in signing free agents of late, these deals did not come cheap. Ramirez’s deal is shorter than expected, but if he plays well and the option vests, this is a 5/$110M deal, $15 million more than the $95 million that Sandoval was guaranteed. The fact that the fifth year is a vesting option protects the Red Sox to a degree, but there’s probably not a scenario where this contract works for them and they don’t have to pay the full $110 million; they only pay $88 million if Ramirez is a bust.

And while both Ramirez and Sandoval are talented hitters who appear to be a very good fit for the team’s ballpark, projecting their future performance is not such an easy task. Both have struggled with injury problems, and probably shouldn’t be looked at as 150 game per season players. Ramirez is changing positions, and we really don’t have any kind of idea what he’ll be as a defender in the outfield. Sandoval is oddly shaped, and his weight presents some additional risk beyond what is normal for other players.

There are probably more variables here, and more places to make differing-but-reasonable assumptions, then there are with most free agents. But let’s start off by looking at the projections, and seeing what Steamer’s expectation is as a starting point.

Both players project at essentially +3.5 WAR per 600 PAs, though that was forecasting Ramirez as a shortstop. To maintain his -5 projected DEF, he’d have to be a slightly above average defender in left field, since the LF positional adjustment starts him out at -7.5 DEF per 600 PAs. Ramirez seems athletic enough to be an above average corner outfielder, but there are plenty of good athletes who take poor routes or get lousy jumps and aren’t actually assets in the field despite their speed. So, perhaps after moving to left field, Ramirez projects more reasonably as a +3 WAR player, though if he takes to the OF well, that could easily go up.

Sandoval doesn’t have the positional issue to contend with, but he does have durability concerns, given his injury history and his size. He’s averaged just 563 plate appearances per full season during his younger years, so forecasting him for 600 PA as he ages seems too aggressive. If we project the Panda as more of a 500 PA per year guy going forward, then his +3.5 WAR Steamer600 forecast goes down to around +3 WAR as well. In other words, we can say that the Red Sox probably bought something like +6 WAR for 2015, and probably quite a bit less than that as the contracts get older.

If you start out at +3 WAR and apply the standard half-a-win-per-season aging curve, then you end up with +10 WAR over five seasons. At $95 or $110 million, that would put the pair at $9.5 and $11 million per win respectively; even if we just do 4/$88M for Hanley, assuming the option doesn’t vest, that still puts him at $9.7 million per win, and there probably aren’t a lot of scenarios where Ramirez is worth +2 WAR in the fourth year but doesn’t get enough playing time to guarantee the fifth season. In other words, based on the standard calculations, these deals look like they’d cost the Red Sox about $10 million per win, well above the prices we’ve seen other teams pay for talent of late.

But, as we said, there are a lot of places to make adjustments to the assumptions. If you start at +3.5 WAR apiece, then the five year projection comes out to +12.5 WAR, and almost exactly equals the pay scale that we’d expect based on $7 million per win with 5% inflation.

Year	WAR	$/WAR	Value
2015	3.5	7.0	24.50
2016	3.0	7.4	22.05
2017	2.5	7.7	19.29
2018	2.0	8.1	16.21
2019	1.5	8.5	12.76
Total	12.5	7.6	94.8

If you don’t think Sandoval’s past health problems are particularly predictive, then this deal looks very much like what the model would have predicted. It still looks a bit high for Ramirez, but again, we don’t really have any idea what kind of defensive value he might offer as an outfielder. If you wanted to project him as a +3.75 WAR player based on the expectation that his athleticism would translate well out there, then the contract looks reasonable, and that’s not really a point I think we have enough evidence to stridently argue against.

And, again, there are just too many other variables here to know whether or not these prices make sense. If Cespedes lands a high quality pitcher at a better price than the free agent pitchers are going to go for, then signing the hitter and trading for an arm could make sense even if you somewhat overpaid for the bat. It’s also quite possible that none of the premium arms on the market would have taken four or five year deals, so these contracts will leave the team with fewer long-term obligations, since they can trade for shorter-term pitching upgrades as well.

Neither Ramirez nor Sandoval came cheap, and if you think Pablo is injury prone and Ramirez is likely going to be a meh defender even in the outfield, these deals might look like pretty significant overpays in the not too distant future. The Red Sox signed two good players with flaws, neither of whom look likely to be great players even after adjusting for Fenway, and both come with significant risks. Whether these deals work or not is probably dependent on what the team gets for Cespedes, and what the price of acquiring pitching via trade is going to be.

If they end up paying through the nose for Cole Hamels too, then they’d likely have been better off just using their free agent dollars to sign starting pitching, rather than going through the process of buying more bats to setup hitting-for-pitching trades. If they know they can land some good pitching at a good price in trade, though, then perhaps overpaying slightly for these two will make sense in the long run.