Howard Heading To Court
Ryan Howard of the Philadelpia Phillies is no stranger to the arbitration process. After a Rookie of the Year 2005 season, an MVP Award in 2006, and a 2007 campaign in which he smacked 47 HR with a wOBA of .396, Howard set an arbitration record by jumping from $900K to $10 mil. This past season, his numbers declined quite a bit, but the numbers that tend to overrate players, such as HR and RBI, tell a different story. Despite his impressive output of 48 HR and 146 RBI, Howard saw his wOBA fall to .366 and his OPS drop almost 100 points to .881.
He played in all 162 games, amassing exactly 700 PA in the process. Combine the adjustments accompanying those playing time indicators with average first base defense and solid-albeit-declining offense and Howard was worth +3.1 wins in 2008. Even in a down year relative to his standards, the burly slugger proved to be over a full win above average. At fair market value, he would have earned $14 mil… which is an interesting number given that the Phillies submitted the same figure as their bid for his 2009 contract.
Howard disagrees, as he and his representatives submitted for $18 mil. The $4 mil difference between player and team is the largest gap of any arbitration-eligible player, and the only gap above $2 mil. Does Howard have a case here? Before even delving into the calculations, it seems the answer is yes, given that his offense will likely regress closer to the 2007 levels and his playing time isn’t going to diminish.
The three projection systems offered on our site see Howard capable of a wOBA between .380 and .410. Let’s settle on .395, essentially a midpoint. At that mark, Howard would produce +37 runs above average with the bat. Add in +22 runs for his 680 or so PA and -12.5 runs for a full season at 1B, and prior to defense, Howard is worth +46.5 runs. His defense has been right around the average mark according to both UZR and Dewan, though he certainly does not look average. However, even with a pessimistic -5 run defensive projection, Howard still projects to be worth +4.2 wins.
At $4.5 mil/win, Howard’s +4.2 wins commands a fair market value of $18.9 mil. He requested $18 mil. The Phillies submitted a figure that seemingly suggests Howard’s offense will not regress, and all other evaluative aspects held constant, perhaps even worsen. The likelihood of that occurring is very low unless he has some injury the public does not know about.
He broke the bank last year around this time, and I wouldn’t be surprised to see him repeat the feat. He more than earned the $10 mil last season despite largely being overrated. We tend to forget that overrated does not necessarily mean “bad.” Howard had a down year compared to what he had shown himself capable of, but he was by no means a scrub. If his projections come to fruition and he produces +4.2 wins, even his submitted figure would not properly value his contributions.
Of course, we have been using a 40/60/80 modifier here for players eligible for arbitration, meaning Howard would make 80% of his FMV right now. 80% of $18.9 mil = $15.1 mil. Howard is only entering his second arbitration year, so he really should be closer to 60%, but I do not think he is currently on the 40/60/80 track, completely. Suffice it to say, 80% simply is more realistic.
It’s closer to the Phillies side of things but in between both figures. The ideal situation would see the two sides settle, but I cannot see that happening.
I’m not sure exactly how the arbitration judges think, but if you couple the idea that his offense will regress and improve to the tune of ~+4 wins, and that he finished second in MVP voting (hey, maybe that matters to them), this could easily tilt in Howard’s favor again.
Eric is an accountant and statistical analyst from Philadelphia. He also covers the Phillies at Phillies Nation and can be found here on Twitter.
So you think Howard deserves a 8 million (44%) raise after he had a significantly worse year?
It sounds like you think the arbitration judges think more like the MVP voters than fangraphs analysts.
It’s a different situation given the fact that the last few years he has made significantly less than he deserved. Based on our projections, next season will be closer to Howard’s 2007 season, when he was worth $17 mil at fair market value. At a slightly higher dollar/win total this year, combined with very similar performance, the same win contribution is worth more. We use a 40/60/80 modifier for players under club control, but at FMV, Howard would command $18.9 mil. 80% of that is $15 mil, what he should get in arbitration or if the teams settled.
“And his production is very likely to merit the money, too.”
Except that you all have been applying a modifier (40/60/80% of free agent value) to arbitration eligible players. So his fair value should be .8 * 18.9 = 15.12 million. If you suppose that all players are worth what they would get as a free agent, your whole system would fail. The only reason teams can afford to pay free agents $4.5 mill/win is because they have other players under club control whom they pay less.
Actually, it’s only his second year of arbitration, so the multiplier should be 0.6. However, based on last year’s figure of $10 million, you’d tend to think he isn’t quite following the .4/.6/.8 paradigm, so using the 0.8 multiplier is probably more accurate and I think your ~$15 million figure is just about right. That being said, Howard’s performance in the popular stat categories may translate to a win in arb court. Credit the Phillies for coming in with a more reasonable figure this year, however, to try and lower the chances of losing the decision.
“Actually, it’s only his second year of arbitration, so the multiplier should be 0.6.”
My mistake. Thanks.
I completely agree with you: Howard is overrated and will be overpaid, relative to his situation under club control. The argument that “he is correctly paid (or underpaid) because he would have made $X if he were a free agent” is not sound. The fact is, he’s _not_ a free agent, so his free agent value is not relevant here.
I should say, it doesn’t look like anyone is making the unsound argument any more, so what I just wrote is not a criticism of Eric’s analysis.
I’m not exactly sure how the 40/60/80 modifier works, but this is only Howard’s second arbitration year and the first one was a Super Two year. Shouldn’t he be at most at 60% rather than 80%?
Theoretically, yes, but given how he broke the bank last year, the comment above yours pretty much sums my sentiments up exactly. Howard is on his own track right now.