Guest Post: Why Not to Overpay Relief Pitchers

This is a guest post from Alex Lewin of Baseball Info Solutions, with contributions from Mr. Lewin’s colleague William Cohen.

Theoretically, a team deciding to sign a player to a multi-year contract should feel confident that the player will provide significant value over those two or more years. These contracts are often times a gamble for the club handing them out, as the contract is guaranteed money, and even if the team holds an option, there are still usually expensive buyouts attached. There have been plenty of times when a long-term free-agent contract has worked out beyond the first year: Greg Maddux, Barry Bonds, Alex Rodriguez, Derek Jeter, and Randy Johnson are just a few names that have produced well after receiving multi-year contracts at some point in their careers. While some position players and starting pitchers have performed at the same level, if not better, after receiving these types of contracts, middle relievers and closers have not.

More teams should realize that it is simply not all about signing a big name on the market. Even big-market teams should avoid this. Jonathan Papelbon is a free agent this offseason, and the Red Sox would be smart not to re-sign him*. In fact, a team that offers him more than two years will most likely not get a great return on investment. There is no doubt that a team out there will spend $35-$39 million on a three-year contract for him, but they will have to deal with a performance decline that is inevitable for a 31-year-old reliever not named Mariano Rivera. Papelbon had a tremendous season in 2011, but it was not too long ago, just last year in fact, that Sox fans wanted Papelbon gone from Boston after a subpar season. It brings us back to the main point that relievers are more of a mixed bag than a sure thing. Though Papelbon is closer to a sure thing when compared to most relievers, he still is very capable of having a lousy season, and with more money and pressure heading his way, you can almost guarantee a decline from the 3.2 WAR season he posted in 2011. Would a team really want to spend $12 million a year on a closer who is almost certainly not going to produce at the same level as his previous season, and who in fact might never produce at such a level again? A team can use that $12 million to obtain a few guys in the bullpen on one-year deals, or better yet on the rotation, lineup, or bench.

*Ed. note: this article was submitted before the Papelbon signing. This doesn’t appear to alter Mr. Lewin’s point at all, however.

If you are running a team hovering around .500, do you really think signing Jon Papelbon will put you over the top? Take a look at Francisco Cordero and what happened with him. The Reds signed Cordero to a four-year, $46 million deal (with a $12 club option in 2012, which of course was declined) in hopes having a lockdown closer to put them over the top in the NL Central. Take a look at Cordero’s first six seasons compared to Papelbon’s first six before Cordero received his aforementioned contract.

	Pap	Cordero
WAR/YR	2.45	2.12
K/9	10.8	10.1
BB/9	2.2	3.6
HR/9	0.6	0.5
FIP	2.45	2.86
ERA	2.30	2.89

Though Papelbon’s numbers are better almost across the board, it is pretty close, probably much closer than one might have thought. Papelbon, as mentioned before, will probably perform better than Cordero in his next contract, but by how great a margin remains to be seen. If Cordero is the close comparison to Papelbon, buyer beware because take a look at what
Cordero did after receiving that four-year, $46 million deal with the Reds:

	Cordero
WAR/YR	0.73
K/9	7.6
BB/9	4.1
HR/9	0.6
FIP	3.71
ERA	2.96

The bottom line is that Cordero has been a shell of himself these last four years as compared to the previous six. Cordero’s numbers didn’t just decrease, they snowballed out of control. Cordero was 32 going into opening day of 2008, Papelbon will be 31 going into opening day, 2012. A team, as mentioned before, could easily make up the 0.7 WAR a season that the Reds got from Cordero the last four with cheaper, and less budget-crippling, deals.

When a middle reliever or closer receives a multi-year contract after hitting free agency, the results are quite surprising. The data that my colleague William Cohen and I have found is that relievers perform significantly worse during their contracts than they had before. We considered 65 middle relievers and closers who hit free agency from 2007-2011 who had at least one year of MLB experience. This ruled out players signed to multi-year deals from overseas. For each player, we looked at up to three years of data prior to signing a multi-year deal, as well as their performance through the duration of their contract. The numbers were striking. Out of those 65 pitchers, 19 of those signed for more than two years.

As you’ll see in the following graphs, the average WAR, ERA, FIP, XFIP, IP, K/9, BB/9, HR/9 all get significantly worse from a reliever’s contract year to the first year of his new contract, and continue on a downward slope.

As you can see, the WAR going into one’s contract year is significantly higher than when the reliever signs a new deal. An almost 1.0 WAR drops to 0.46 in one year after receiving his contract. From the reliever’s contract year to his third year, the WAR has gone from 0.97 to 0.23, a decrease of 0.74.

The ERA, FIP, and xFIP all take dramatic turns upwards. The jump stays that way, as the ERA, FIP, and xFIP never approach the same level as prior to the contract. It can be luck, a lack of conditioning, or simply a decline in skill. Whatever it is, teams should look at this and realize it may not be a romantic honeymoon when signing a reliever to a multiyear deal.

What is interesting is that the average innings decrease so dramatically, which puts the physical factor into play. Out of the 65 cases analyzed, 14 players did not play in the second year of their multi-year contract. That number will only increase in the near future, as there are players on this list who may be close to retiring. Why would a team sign a reliever to a three-year deal at the average age of 32, when by age 35 the player is making $6 million a year and pitching only 39 innings?

K/9 goes down, BB/9 goes up, and HR/9 goes up. Not exactly the formula you want for a guy you just signed to a three-year deal. As mentioned before, the average age for a middle reliever hitting free agency is 32 years old. These numbers are not unexpected, but what is wrongheaded is for teams to think they can get more out of these guys than they really can get while paying a premium fee for them.

It comes as a bit of a surprise that the percentage of multi-year contracts given out per year since the 2007 offseason has increased with middle relievers and closers. In fact, in 2007, 31% of multi-year contracts handed out that offseason were for middle relievers and closers; in 2011, that number jumped up to 41%. This is a bit odd, considering what the data shows us: teams should be looking for undervalued relievers, signing them to one-year and team-option deals, as well as focusing more on player development with their own relievers. They could be spending less and not locking themselves in a financial bind. In addition, teams should hold on to the draft picks they lose in signing type A and B free agents, as even a second-round pick could be more valuable than a reliever who will not perform as well as they did the previous year. Teams should think twice about giving out multi-year contracts to middle relievers or closers past one year unless they sign such players while they are arbitration eligible, thereby eliminating the arbitration years. The Phillies made a smart move by locking up Ryan Madson to a three-year deal after the 2008 season. It was affordable and saved them money, as Madson was clearly the closer coming into 2011 and would have commanded more in arbitration than the $4 million received in this last year of his deal.

The model organizations for this method are the Tampa Bay Rays, Texas Rangers, and Atlanta Braves. The 2010 Rays bullpen was considered one of the best bullpens in baseball. The top five paid players in the Rays bullpen that year were Rafael Soriano, Joaquin Beniot, Grant Balfour, Dan Wheeler, and Randy Choate, who combined to produce 4.6 WAR while collecting a combined salary of only $14.4 million. Only Dan Wheeler signed a multi-year deal, which served to eliminate two arbitration years, and the Rays declined the last year of his option after the season. Conversely, the 2010 Phillies, a team who spent $65 million more than Tampa Bay in total, produced a combined WAR of 1.6 between their top five bullpen guys, for which they spent $24.2 million. Out of Ryan Madson, Brad Lidge, Jose Contreras, Danys Baez, and JC Romero, only Contreras was on a one-year deal. Interestingly enough, Contreras was re-signed for two years at $5.5 million, and his WAR decreased from 0.8 in 2010 to 0.2 in an injury-plagued 2011 campaign.

Going into 2011, the Rays let all five relievers walk as they received two picks for Soriano, two picks for Balfour, one pick for Benoit, one pick for Choate, and even one pick for Chad Qualls, who they added at the trade deadline. The Rays received seven draft picks in total ranging from first, supplemental, and second round picks on their bullpen alone! Those picks are the basis of a tremendous rebuilding process as they keep your farm system well-stocked. Instead of the Rays losing some of those picks on overpriced, overvalued veteran relievers, they picked up Kyle Farnsworth, Joel Peralta, Brandon Gomes, Juan Cruz and Caesar Ramos — not exactly household names. The 2011 Rays spent $5.5 million on those five, which was expectedly worse than the 2010 bullpen, yet still yielded the same WAR as the 2010 Phillies bullpen, which cost $16 million more.

By developing players in their system, and by signing undervalued guys to club control deals, the Rays are in contention every year. The Rays, Braves, Rangers, Twins, Mariners, and Pirates all manage to not get tied up with long-term deals for relievers who for the most part are an unknown year to year. One year you might have the best reliever in baseball, the next, he cannot get an out or he breaks down physically. This is the nature of pitchers who throw only 70 innings in a year. Remember, they are usually only relievers because they were not good enough, or do not have the stamina, to start games. This is what is so interesting about what the Texas Rangers have done recently.

The Rangers are taking prized starting prospects and turning developing them as relievers, with the intention of converting them back to starters in the rotation. This plan only works, however, if you have hard throwing starters who you are willing to convert to the pen for a year or two. The Rays of course did this with David Price in 2008 and Matt Moore this year, but the Rangers have done this already with C.J. Wilson, Derek Holland, Neftali Feliz, Matt Harrison, and Alexi Ogando. Only Feliz remained in the pen this regular season and postseason, but if Wilson were to leave in free agency, the Rangers will likely approach Feliz again to try to convince him to move to the rotation. The Rangers get it, which is a big reason why they are back-to-back AL Champs. This year, they traded for relievers Mike Gonzalez, Mike Adams, and Koji Uehara. Gonzalez’s contract expired after the 2011 season, Adams has a year left of arbitration, and Uehara has a vesting option. Along with Darren Oliver who has an option, the pen could already be set for next year, with no players signed to long term deals. Along with the permanent bullpen guys, the Rangers bring along their top starting prospects and have them throw in the pen for a year or two. The 2010 team bullpen had Derek Holland, Alexi Ogando, and Matt Harrison; all three were in the 2011 regular season rotation, and only Ogando was back in the pen during the postseason. In 2010, Holland, Ogando, and Harrison yielded a 1.0 WAR and cost the Rangers $1,220,520.

As good as the Rays and Rangers might be with this, the Braves might be even better. The Braves subscribe to the same philosophy with even more of an emphasis on developing home-grown talent, while mixing in undervalued relievers on a yearly basis. The combined 2011 WAR of Craig Kimbrel, Johnny Venters, Eric O’Flaherty, George Sherrill, and Cristian Martinez was a shocking 7.2. Kimbrel and Venters were Braves draft picks, O’Flaherty and Martinez were picked up on waivers from Seattle and Detroit, and Sherrill was signed to a one–year deal after the Dodgers non-tendered him. The cost of this? $3,362,500. Without Atlanta’s bullpen, they would never even have been in the position to make the playoffs. They may have blown some games down the stretch, but you can thank the offense for failing to get them in. What is more startling is that in the last five years, the Atlanta Braves have not signed one middle reliever or closer to a guaranteed multi-year contract in free agency, while the Tampa Bay Rays and Texas Rangers have signed only one apiece. Those teams combined in the last five years:

*=Min. 30 Inn
***=Let us also mention that playing in the AL East certainly hurts TB bullpen WAR

I am not at all saying that this method is the golden ticket to the World Series every year, as we all know, the playoffs are somewhat of a crap shoot, and of course, there are many other factors to consider than the bullpen. But more often than not, subscribing to this theory will help teams free up financial commitments in the long term, and leave more money to spend on the rotation, lineup, or simply to save for the next year.