On the Prospect of Owners Getting “Duped” by PED Users

Dee Gordon‘s recent suspension has renewed the conversation about how to deter and punish PED users. The issue is complicated for a number of reasons. One specific reason — which I discussed this past Friday — concerns the possible benefit to owners of PED suspensions. Teams who employ aging players with large contracts actually benefit when those players are penalized by suspensions without pay. The longer the suspension, the greater the benefit. The principal examples of this at work involve the Yankees (with Alex Rodriguez and his PED suspension) and the Angels (and their frustrations concerning Josh Hamilton’s lack of suspension for substance abuse).

The noteworthy aspect regarding Gordon’s case, of course, is that he had just received a five-year, $50 million extension this winter. Naturally, the Marlins’ decision to offer Gordon an extension was based, in no small part, on his excellent 2015 season. But was Gordon’s success in 2015 based at all on the positive effects of PEDs? And when he returns to the club in the second half, will he be able to match that success without the aid of PEDs? Did Gordon essentially “dupe” the Marlins into $50 million?

The issue has little to do with moral integrity, but is instead purely financial. The possibility exists for a player to use PEDs, sign a big contract, then get suspended and see his performance decline while the owner remains on the hook for the contract. Players object to this sort of scenario because they see money going to players who are cheating instead of those who play clean. Owners, who have had little problem benefiting from players’ performances even if they are cheating, naturally object to the prospect of owing guaranteed money to players who are unable to provide production at a level commensurate with their contract.

While there is certainly a possibility of PED users benefiting from a large extension or free-agent contract, the questions is, has it actually happened? For this post, I attempted to identify situations in which an owner had been “duped” in this manner during the previous dozen years of PED suspensions.

Major League Baseball began suspending players in 2005, but the suspensions at that time were only for 10- days, hardly an indication that MLB was really ready for meaningful enforcement. Beginning in 2006, the penalty was increased to 50 games, and then in 2014, the current 80-game penalty for first-time offense was instituted. While MLB also suspends for amphetamines, the penalties are less stringent, and the stigma is not anywhere near the same. For the purposes of this post, those cases have been omitted. That leaves us with 31 players and 35 suspensions of at least 50 game since 2006.

Fourteen of the suspensions went to relief pitchers, the pair of Guillermo Mota and Jenrry Mejia accounting for five of those suspensions between them. Another five suspensions went to players with less than one year of service time. So, to begin with, we find that roughly half of the suspensions enforced by the league have gone to players who didn’t receive significant salaries or investments from their clubs. Of the remaining 15 players and 16 suspensions, we find one in Miguel Tejada that essentially ended a player’s career. Manny Ramirez’s second suspension more or less did the same thing for him, while he was worth his roughly $17.3 million post-suspension salary in 2009 by putting up 2.5 WAR in just over 100 games. Ramirez exercised his significantly deferred $20 million for 2010 and put up just 1.0 WAR before the White Sox claimed him on waivers. Given his contract and performance, we could argue that Ramirez’s PED use cost the Dodgers around $10 million in performance.

That leaves just 13 suspensions. Here are the recipients of those suspensions, and a brief explanation of their contractual situations at the time.

• Edinson Volquez was making the major-league minimum when he was suspended back in 2010, and the Reds chose to offer him arbitration in 2011 before being the third piece (Yasmani Grandal, Yonder Alonso) in the trade that netted the Reds Mat Latos.
• Marlon Byrd was a free agent at the time of his suspension.
• Melky Cabrera signed a free-agent contract with the Toronto Blue Jays right after serving his suspension with the San Francisco Giants.
• Bartolo Colon was in a one-year deal for $2 million with the Oakland Athletics when he was suspended and the A’s signed him to another one year deal the next season.
• Nelson Cruz was in arbitration and in his walk year when he was suspended. Baltimore signed him to a one-year deal and then the Mariners signed him to a four-year deal before last season that they do not seem to regret.
• Jhonny Peralta was in his walk year when he was suspended and then St. Louis signed him to a four-year contract that the team is not likely to regret.
• Everth Cabrera was still in arbitration with the San Diego Padres when he was suspended and the Padres offered him arbitration the next season.
• Francisco Cervelli was making the minimum when he was suspended. The New York Yankees offered him arbitration the next season and eventually traded him to the Pirates. He will be a free agent after the season.
• Alex Rodriguez was in the seventh season of his 10-year contract when he was suspended, the Yankees got out of paying him for the eighth season, and no realistic expectation regardless of PEDs would have A-Rod worth a $20 million salary at ages 40 and 41.
• Ervin Santana had just signed a four-year, $55 million contract with the Twins. However, ZiPS projected Santana for a 4.74 ERA and 0.9 WAR. Even in half a season, Santana was worth 1.3 WAR so it isn’t clear that Santana won’t meet or exceed reasonable expectations, regardless of the PED suspension.
• Chris Colabello is making the major-league minimum.
• Dee Gordon is in the first year of a five-year, $50 million contract, but at this point, it is not clear that he will not live up to his contract.

That leaves one other contract:

Ryan Braun received a five-year extension two full seasons before he was suspended for steroids. He presents an interesting casel as at the time of the extension — which is now in its first season — a simple weighted (5/4/3) projection with normal aging curves would have Braun putting up 4.7 WAR per season from 2011 to 2014 and 4.2 WAR in 2015, for a total of 23 WAR. He put up 19.5 WAR during those season, nearly meeting those expectations with some front-loaded production. While using the same projection and aging curve would see Braun producing 13.5 WAR over the next five years, he is currently projected for three wins this season. With normal aging, he will be worth more than $86 million, not too far off the $105 million extension in its first season.

It is not even clear that being caught affects future performance. Taking a different angle, I looked at the players with track records who were suspended in 2012 and 2013. What I did was took a look at their projections before they were suspended, and then pretended that was how they performed in the relevant season. I then applied the standard aging curve to the two seasons following the suspension season. I regarded this as their “expected performance” based on pre-suspension levels. Then I looked at their actual performance in the two seasons following the suspension and compared the two.

In more than 10 years, it does not appear that any owners have been taken advantage of financially to any significant degree. The players have great incentive to try and improve PED suspensions in whatever way possible as it is their livelihood. Players who use PEDs are taking money and roster spots away from those who do not. While players could take advantage of owners by signing a contract predicated on PED use, that has yet to cause any owner significant injury in terms of players who have been suspended.