Pettitte Returns
Earlier this offseason I penned a couple of posts discussing the similarities and differences of both Andy Pettitte and Derek Lowe. At those stages, both pitchers were being heavily pursued by the Yankees and it seemed more than likely that only one of them would don pinstripes. Many were calling for Lowe to join a “super-rotation” already featuring CC Sabathia, Chien-Ming Wang, A.J. Burnett, and Joba Chamberlain. A few commenters aptly asked what the big difference was between Lowe and Pettitte.
In fact, some outright claimed that Pettitte was the better decision because a) his stats and projection were not unsimilar to those of Lowe, and b) Pettitte would only require a 1-yr deal. Lowe eventually signed a 4-yr/$60 mil deal with the Braves that came very close to properly valuing his projected contributions.
Over the last three seasons, Lowe has averaged +4.4 wins, with Pettitte at +4.2. Factoring in a bit of decline, both appear to be capable of 3.6-4.0 wins next season. At +3.8 wins, Pettitte’s fair market value is $17.1 mil. At +3.4, $15.3 mil. And, at +2.8, $12.6. Why those numbers? Well, Pettitte signed yesterday for $5.5 mil guaranteed with incentives potentially bumping the deal up to $12 mil. Those different win calculations were examples of my own thinking out loud to see how the Yankees are valuing his contributions.
I would venture a guess that the incentives are very easily reachable for someone with Pettitte’s track record. Otherwise, I’m sure he would have worked harder to increase the guaranteed portion of the contract. The Yankees are adding someone with similar win value to that of Lowe, for one year, and a lower average annual value. And, they are apparently paying a +3.7 or so win player as a +2.6 win player, assuming the incentives kick in.
Many are claiming that Pettitte is the “fifth” starter. Well, for all intents and purposes, that is one extremely good fifth starter given his likely #2 or #3 spot on 70% of the remaining teams out there. His signing isn’t blocking anyone outside of, say, Phil Hughes, but perhaps the team feels he needs another year split between the bullpen and rotation before he is deemed ready. Either way, Pettitte’s contract is up after this year, so the roadblock will go away. Overall, a great contract for the Yankees. Many people underestimate how effective Pettitte can be.
Eric is an accountant and statistical analyst from Philadelphia. He also covers the Phillies at Phillies Nation and can be found here on Twitter.
He’ll earn the full $12 million if he throws 210 innings. So now easily reachable, but they pretty much said, “if you stay healthy, you’ll get your cut.”
Yeah, pretty much. And it makes sense. If I were structuring this contract it would have been something like:
$6 mil base
+$1.5 mil for 170 IP
+$1.5 mil more for 190 IP
+$1.5 mil more for 205 IP
+$2 mil more for 225 IP
That way it’s a base of $6 mil, but $12 mil at 205 innings, and if he is off the charts good, $14 mil.
The actual contract is 5.5 mil base
“The bonus breakdown is as follows:
$4.5M in performance bonuses: $0.5M each for 150, 160, 170 IP; $0.75M each for 180, 190, 200, 210 IP
$2M in roster bonuses: $0.1M for 120 days on active 25-man roster; $0.2M for 130 days; $0.25M each for 140, 150 days; $0.4M each for 160, 170, 180 days”
From RAB: http://riveraveblues.com/2009/01/inside-the-pettitte-incentives-7332/#comment-268425
If he’s bad, they can make him a long man (or even phantom injury DL/DFA him) and he doesn’t reach the IP incentives. In addition, in a full year last year in a higher rotation slot he only pitcher 204 innings. He’s not too likely to hit 210, and I don’t think he’ll hit 200 (under 200 innings is probably a good bet for any aging pitcher).
Averaging your 3 projection systems, I get Pettitte throwing around 180 IP. If he does that (and assuming he meets all roster bonuses), he gets $9.75 mil. This is just a terrible deal for Pettitte and a great one for the Yankees. The Yankees deserve credit for realizing that Pettitte only wanted to play for them and was willing to take, almost literally, whatever they offered. Wow.
This is a fairer contract than offering Pettite $10 million flat out. He can (and probably will) earn $12 million. But the low base protects the Yankees against a handful of “disaster” scenarios stemming from his “old age.”
We keep saying all these teams are getting exceptional deals, including extending young players or buying out arbitration years, but maybe it’s just that with this market, be it because of the economy or collusion, teams are not willing to pay 4.5 million for a win and that number needs to be adjusted. We saw that number hold up for the top tier guys like CC, Teix, Lowe, and Burnett, but maybe for the lesser guys that number is just not where they are valued right now.
It’s supply and demand for the most part. A lot of older corner outfielders with really bad defense had their contracts expire at once. A bunch of closers hit free agency at once, and other teams were looking to trade their closer (Seattle did, and Houston listened on offers). Most of the traditional big spending teams were already set in these positions. There aren’t any teams out there that are one piece away from competing. There just aren’t many teams in a position where it makes sense to sign a guy like Adam Dunn to a huge contract.
As for Pettitte, he screwed himself. Before the season ended he said it was Yankees or retirement and that he didn’t care about the money. So no other team bothered to make him an offer, and the Yankees held him to what he said.
Why do we say that FIP is a good measure when it seems to have very few variables, and seems to only reward a certain type of pitcher.
FIP is good because it is consistent from year to year especially compared to ERA. The problem is that it gives a very limited picture, tRA would seem to be better, but I guess it has not been proven enough for fangraphs.