The Cubs and Yu Darvish Needed Each Other
“You don’t want to make a living or habit out of trying to solve your problems with high-price pitching free agents because over the long run there’s so much risk involved that you really can hamstring your organization. But we have a lot of players who have reasonable salaries who contribute an awful lot who might put us in a position to consider it going forward and in the future… It’s not our preferred method. We would prefer to make a small deal and find another Jake Arrieta, but you can’t do that every year, either.”
The Cubs know the pitfalls of free agency.
Yet, as I wrote back in November and as esteemed colleague Craig Edwards also noted more recently, the Cubs needed Yu Darvish.
And on Saturday afternoon, they acquired Darvish, FanGraphs’ No. 1-rated free agent, who remained available on Feb. 10 in the most bizarre of offseason markets. Top-end starting pitchers are typically among the first big-ticket items to go in free agency, and yet FanGraphs’ top-three free-agent starting pitchers remained unemployed entering Saturday.
While it took a while for this marriage to be arranged, this is typically how it plays out in free agency: a large-market club with World Series aspirations addresses a possible weakness with a top-of-the-market signing.
Sources: Chances of Darvish getting to $150M with #Cubs quite slim; would need to win multiple Cy Young awards. His guarantee is $126M over six years, making contract the longest and richest free-agent deal of off-season.
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Yu Darvish’s deal with the #Cubs includes an opt out clause and no trade protection, according to a source. There are escalators that can take it from $126M to $150M, as @Ken_Rosenthal reported.
— Jerry Crasnick (@jcrasnick) February 10, 2018
The Cubs were built to do this.
Following several consecutive down years, the organization purposefully used their premium draft picks on position players, knowing that they represent safer assets that tend to follow a more predictable and productive development path. The Cubs would ultimately address their pitching voids by means of the club’s considerable financial resources. It’s not a model that works for so-called mid- or small-market clubs, but it can succeed in Chicago.
And it did succeed. Chicago signed Jon Lester and John Lackey en route to breaking their World Series curse in 2016. But Lackey’s gone now. As is Jake Arrieta.
It’s not that Cubs would have necessarily entered the season with a poor rotation: Jose Quintana, Kyle Hendricks, Jon Lester, and company were forecast as the 12th-best rotation in baseball entering the offseason (14.6 WAR). With the addition of Darvish, Chicago’s rotation jumps to fourth (16.6 WAR), trailing the Dodgers, Astros and Indians.
Chicago entered the day with a four-win edge over the Cardinals, according to FanGraphs’ forecasts. Darvish projects to add two more wins to that advantage. Cubs now match the Dodgers with an NL-best forecast of 94 wins. With Darvish, the Cubs look more like a super team.
While the Cubs have the resources to sign such arms, they also need to sign such arms. They have also suffered from unusually poor pitcher development. As Sahadev Sharma found in a piece for The Athletic earlier this offseason, the Cubs have produced the least amount of homegrown pitching production among any club in the Epstein era. Consider the chart Sharma produced:
Sharma examined the number of innings recorded for every major-league team by pitchers they’d acquired via the draft since the arrival of the current curse-breaking Cubs regime ahead of the 2012 season. During that timeframe, which includes six drafts, the Cubs have produced a total of 30 homegrown innings. Thirty! The Blue Jays lead the majors with 1,299 such innings. The Cardinals are second in the majors and lead the NL with 872.
The Cubs have voids to fill and they needed to fill them with high-end talent. So, with Darvish, they filled a void. But did they do so at too great a cost? Was it a good deal for the Cubs? For Darvish?
Perhaps it’s best categorized as a necessary deal for both parties.
Former FanGraphs editor Dave Cameron forecast that Darvish would receive a six-year, $168-million deal back in November. The crowd predicted a five-year, $125-million deal. But as Carson wrote in an InstaGraphs post on the signing of Darvish, the crowd is typically conservative on big-item deals. So it’s possible the Cubs have actually benefited from a modest New Year’s discount effect. The maximum guaranteed dollars are $42 million below Cameron’s estimate. (It was reported after this post was initially published that Darvish has an opt-out after the 2019 season, which is a player-friendly feature).
Moreover, with large-market teams like the Dodgers and Yankees seemingly determined to remain under the luxury-tax threshold, Darvish probably did not have the market for which he had hoped. Even after agreeing to pay their new starter up to $25 million per season, the Cubs remain under the tax threshold, according to Cot’s Baseball Contracts.
Darvish also lacked the track record of recent free-agent aces — like Zack Greinke or David Price or Max Scherzer — who have exceeded $200 million in terms. Darvish ranks 24th in pitching WAR (14.5) since 2013, whereas Greinke (20.8), Price (22.8), and Scherzer (29.8) have all exceeded 20 WAR.
But what is also interesting about Darvish is there still might be more upside residing in his right arm — if the club can help him extract it.
As documented by Eno Sarris at this site and also by Andy McCullough of the L.A. Times, Darvish made some changes to his pitch type and sequencing after joining the Dodgers, embracing some of their data-based suggestions. He lowered his arm slot and began burying his breaking ball even deeper.
Consider where he located his curve against lefties while with the Rangers:
And with the Dodgers:
The result? Darvish was excellent in the latter part of the season. And while he fell flat in the World Series, let us not forget that the right-hander struck out 61 and walked 13 in 49 innings with the Dodgers in the second half.
He ranked 15th among qualified pitchers with a 19.6-point differential between his strikeout and walk rates (K-BB%) this past season, but he ranked 12th in the second half (23.7 points).
So while the Cubs ideally would like to not be signing a nine-figure free-agent deal, they need a player like Darvish. The Cubs have short-term needs, and it’s possible Darvish might have even more to offer. For both parties, it seems a necessary fit.
A Cleveland native, FanGraphs writer Travis Sawchik is the author of the New York Times bestselling book, Big Data Baseball. He also contributes to The Athletic Cleveland, and has written for the Pittsburgh Tribune-Review, among other outlets. Follow him on Twitter @Travis_Sawchik.
Come on, you know that the reason he signed so late was because he wasn’t getting the offers he wanted…and NOT that he didn’t get the offers he wanted because he signed so late. The causality runs in opposite direction as the “New Year’s discount” (or more specifically, a third factor, the labor market more generally, caused both the late signing date and the total dollars).
EDIT: Due to question below, this in reference to this:
“So it’s possible the Cubs have actually benefited from a modest New Year’s discount effect.”
It’s pretty clear that the “discount” is because of market conditions, and not because of the New Year, as the link suggests.
Huh?
Agreed. Market conditions now are that teams are paying for the 50-75th percentile projected outcome, instead of the 75-100th (sic) percentile.
That’s not true at all- AAV/WAR has remained steady.
Most recent FA classes have around 120 FAs, who sign for around $5m AAV, for an average of a bit more than 2 years, with an average value per contract around $12- slightly increasing around 5% year-to-year and on 3-year rolling averages.
This trend is still true for the 2018 offseason, despite a slow market and a pull back on years for the select top FAs.
The “New Year’s Discount” has everything to do with the player getting antsy and not being willing to wait it out longer. That still applies here, but obviously the weird market this offseason plays a role as well.
There is no data to suggest the psychological “antsy” narrative. Further, there is no reason to think that players would become more “antsy” than clubs- it’s just narrative, and incorrect.
The data suggests that the 80th FA signed usually signs for less AAV/years than the 20th FA signed- that is simply to say, higher end FAs tend to get signed more quickly in the offseason than the lowest end FAs. Therefore the players signing later are often worse, and therefore take less money.
There is nothing special about January 1st – most any date will show this same pattern. FAs signed after March 7th will typically make less than those signed before. FAs signed after February 4th will typically make less than those signed before, etc. Since the top FAs at their positions usually sign in November or December, it is true that FAs signed after those periods generally sign for less. This offseason the signings have simply been delayed by the Boras PR campaign against Clark.
The empiricism on these nonsense narrative-driven talking points is shocking in poor quality.
Agreed, Travis’s articles always push the same counter-factual talking points.
When you say counterfactual do you mean…what? Counterfactuals are theoretically driven “control” groups and it is confusing to me to see it used like that here.
Fair, I mean unsubstantiated.
Yes.I think a panic signing of unsigned guys will happen (maybe did with frazier) but that is mostly the lower level guys,the upper level guys did not lower their price because it was late, it is late for them because they never got a better offer.
Btw using the minus 0.5/0.7 per year age curve model darvish will be worth around 13 war/120M so he got what he is worth.
Really good Players still get close to their age curve expectation, they just don’t get 50m over that anymore.
For example look at the pujols contract.it was worse than expected but still it was underwater from day one.
He was projected for around 6 war or so in 2012 so it would have been
12: 6
13:5.5
14:5
15:4.3
16:3.6
17:2.9
18:2.1
19:1.3
20: 0.6
21:-0.1
That is worth like 200 m but his contract is 40m more than that. That doesn’t happen anymore, probably because teamsthey understand aging better but also because there are hardly any bidding wars anymore.
The 9th ranking in projected SP is using the rotation without Darvish, at 14.6 WAR. The depth charts projections that have been updated peg the rotation at 16.6 WAR, which would have them ranked fourth.
Further, the day began, or at least yesterday concluded, with a 92 win projection for the team and a four game advantage over the Cardinals. Thus far, it remains the same after acquiring Darvish. That’s odd.
Yes, the Cubs’ SP WAR projection increased to 16.6 WAR. I fixed this in the post. So I suppose that 92-win projection will become a 94-win projection when it updates.
Thanks for the correction. Cheers.
On another note, I’ve been thinking a lot about the Cubs and their use of opt-outs lately. The Darvish deal has an opt-out after 2019, which means he can opt out after two years. It’s the same basic idea they did with the Heyward contract, where hopefully the player opts out before they have to pay for the decline years. It’s really smart if it works because it gives the team a slight chance to escape the bloated back end of the contract which mostly just subsidizes the front end. It’s really smart.
More generally, I think the big picture is:
A) The Cubs are likely the favorite in the NL Central, in an offseason where (up to this point) the Cardinals had closed the gap and the Brewers were also aggressively making moves.
B) The Cubs now have a playoff rotation worthy of the super-team era
But also, Jason Heyward is now barely above replacement-level and will never opt-out.
Yeah, that didn’t work. But at the same time, I think the downside of giving him the opt out in this situation is pretty low.
If you give him the opt out and he’s great, he opts out and you don’t pay for the decline years. If you give him the opt out and he’s terrible, you’re stuck paying for the decline years no matter if he has an opt out or not.
The only scenario under which it would have been a bad idea to give him the opt out is if he was still putting up 4-5 WAR seasons in the later part of the contract, which isn’t a common scenario.
Agreed, the fangraphs ‘opt outs are always bad for the team’ narrative is wrong because of three assumptions: (1) efficient opt-out decisions by the player;
(2) efficient FA pricing that is equal to actual value; and
(3) efficient trade markets.
First, the ‘opt outs always bad’ narrative assumes that ‘if the player opts out, the player must have a market value greater than his remaining contract value’ – the assumption that player’s will only opt-out when the market will pay them more than what they have. But we’ve seen that this isn’t true- players/agents err on the side of self-belief far more often than is efficient, as we can see in both the QO, draft signing and arbitration markets. Players often pass up a good contract to try to get a great one, and fail. Therefore a player may opt out even when they do not have surplus value remaining on their contract- an inefficient choice.
Second, the narrative assumes actual value is equal to FA market value. The marginal value of an added win tops out around $7m- that is, the improved chances at playoffs, WS, plus added wins, adds about $7m to a club’s pocket if that club is ideally positioned on the win curve. FA market value, however, is around $9m/war. What if a couple rich and dumb front offices start spending big, and FA values spike to $12m despite actual value remaining constant? Then there can be tons of players with slightly under-water contracts who would, nevertheless, have incentives to opt out in order to take advantage of the spike in FA spending. Consider the NBA spending spree a few offseasons ago- tons of players who were not actually worth the deals that they had with their clubs would have, potentially, done very well to somehow get out of their over-priced deals to get super-over-priced-deals. It is not true that only players with legit surplus value will opt out.
Third, the narrative assumes an efficient trade market and often ignores the fact that players with opt-outs almost always have no trade clauses. The argument is, ‘only players with legit surplus value will opt out, therefore the club losing the player could have traded that player for value if they had not opted out.’ But as we can see with Stanton and others, this isn’t true. A no trade clause can kill the value, and further, politicking by agents and the like can make trading a name player less efficient. Even if Stanton were, without a doubt, worth $80m in surplus value this offseason- the Marlins would have trouble getting that value on the trade market because of the no-trade clause and the substantial PR clout of Stanton and his agent.
Arod opting out of his Texas mega-deal is a good example of how an opt out can benefit a club. A big name player gets caught up in his own ego, is allured by the typical idiocy shown on the FA market, and opts out of a brilliant contract that already overpays him, in hopes of seeking a stupid buyer. Ironically, the Yankees proved to be that buyer, and it cost them huge. If the Yankees had let some other club be the inefficient buyer suckered by the big name, the opt out would have hugely benefited them.
As for your first assertion, this is not a narrative it is supply and demand and its basic, we have not seen a single player opt out and make less money, also by comparing regular FA’s, the QO system, the draft and the arb markets to a player’s decision to enter the market is comparing apples to bowling balls. In the case of a player opting out, that’s a decision they make it’s not a contract running out, or control finishing, this player is walking away from a guarantee because he believes he can earn more over a long period of time.
Your second point is not an argument to your hypothesis, I’m not sure what the hell you think that has to do with if an opt out is valuable to the player or the team. Obviously there is a chance that a player that opts out could theoretically not get a better contract but that hasn’t happened yet and I have a hard time seeing a player agent suggesting it unless he truly believes he can get a bigger pay day. Also you point out Stanton but the unique case of Stanton is an outliner not a norm, Stanton was getting traded, he knew it and so did everyone else, also he has a back loaded contract, the Marlins had no leverage. That is why that contract was hard to move, he makes most of the money on the back end and if the market pushes his value beyond even those numbers (making his current contract a bargain) he can opt out at his leisure and it’s A-Rod all over again – whom I would be remiss to not mention he beat his previous historic contract – if he under preforms or gets injured he’s covered.
On you’re third point you add a qualifier, you can’t add qualifiers to statements and then say by extension it covers my original point. An opt out, a no trade clause, a skybox, a free can of coke, ect… is a perk the team gives the player in lieu of more money and there is nothing more valuable then to be under contract making loads of dough and then be able to walk away from said contract to put your services on the open market to the highest bidder. UNRESTRICTED FREEDOME HAS A COST!
This is not that hard, opt out are basically player options that usually cover multiple years, have you ever heard of a player not exercising his option to be a FA if the market looks good? You assume that a player would opt out and then some magical force will change his market but that only happens when you get hurt playing pickup basketball and such.
You can add all the qualifiers you want but that fact is that players give up money for an opt out, meaning an opt out has a cash equivalent value and the player paid for it soooooo that would leave us to believe that the player benefits from it and the team does not, in the same way that if Weiters contract had a team option it would have been declined but it was a player option so Weiters gets to bring down WAS overall play this year.
There is no scenario that a player opts out that is good for the team unless under some unique situation where the player sucks and his contract is untradeable but hates the team and knowingly leaves a boat load of dough on the table to play somewhere else.
Giving a pitcher an opt out is very expensive, because when they get hurt it is often a year-long recovery and sometimes even a permanent loss of effectiveness. This would be a hard decision for a starting pitcher to screw up. Cueto had a somewhat borderline call and did not opt out, and I doubt he cost himself money.
The Cubs can afford a lead weight of a contract (obviously) but many teams do not want to embrace six years of downside for two years of upside.
lol unreal that theres still so much confusion on these pages about how opt-outs work.
An opt-out is a player-friendly provision, not a team-friendly one. A player only opts out if he thinks that his market value is higher than his remaining contract. It does very little to limit a team’s downside risk, and it cuts off a certain range of team-friendly outcomes where the player outperforms his contract.
What you’re proposing is a “greater fool theory” sort of reasoning, which is a very dangerous way to go about any sort of valuation decision.
Apologies for massive wall of text:
I think this is a cousin to the greater fool theory, but I don’t think it is the same. Greater fool theory would suggest that you sign a player to a contract justified entirely by the belief you can flip them later (because of speculation, because the price of free agents always goes up, etc). That’s not what I’m saying here. But there is a common thread in the sense that players/agents will sense that there is a “greater fool” and opt out of a secure contract.
I think you’ve accurately summarized the conventional wisdom, which I think is at least partially wrong. The reason why is because the back half of contracts subsidize the first half. There are rare situations (Max Scherzer, someone pointed out on another thread) where you’re happy paying for the “decline” years because the decline doesn’t happen. However, that is the only scenario in which the team is better off without a player opt-out, and it is an unlikely one.
1) If Darvish performs at a 4 WAR level in years 1 and 2, and performs at a high level in years 3-6, then the team gets an enormous bargain if he doesn’t have an opt out (or opts in) and the team loses out if he opts out.
2) If Darvish performs at a 4 WAR level in years 1 and 2, and then tails off in years 3-6, then the team is subsidizing the early years of the contract with later years if he doesn’t have an opt-out (or opts in) and the team wins if he opts out (on the sense that someone out there is the greater fool).
3) If Darvish bombs in years 1 and 2, the player is never going to opt out (Jason Heyward, Johnny Cueto). This makes the opt-out meaningless, because they won’t use it. In that case, it makes no difference whether the opt-out is in the contract, because the team is stuck with the lousy deal anyway.
Here’s why I think the conventional wisdom is at least partially wrong: Everyone winds up comparing scenario #1 to scenario #3, when they should be comparing scenario #1 to scenario #2. In scenario #3, having the opt out makes no difference. You lose nothing in scenario #3 by including it. So the question becomes, is scenario #1 or scenario #2 more likely? The Cubs likely think scenario #2 is more likely, and I am very much inclined to agree with them.
(This logic, BTW, only makes sense for massive FA contracts. There’s no way that giving an opt out to Jose Ramirez would have made sense, since that was a contract that didn’t stretch into the decline years).
There is an asymmetry to the information available to player and team when commitments are made to the out years of a contract. The team is committing to the out years two years before the player. That asymmetry always benefits the player (two years more of data on which to base a decision). The only exception is based on the greater fool theory: the team would have to believe the player and representative will have a positively biased assessment of the player’s future performance (and market). That assumption of bias is likely wrong based on the opt outs we’ve seen used.
The only exception is based on the greater fool theory: the team would have to believe the player and representative will have a positively biased assessment of the player’s future performance (and market). That assumption of bias is likely wrong based on the opt outs we’ve seen used.
This is incorrect. There is a small sample of opt opts, and we’ve already seen several players make a mistake and opt out when their contracts were already under-water: but indeed, they did find greater fools. Looking at draft signing, QO, and arbitration data, many players/agents make foolish mistakes and have inefficient positive biases regarding their value- it happens frequently.
Just look at this offseason FA market- it is not some rare, hypothetical for players/agents to pass up a deal that already overvalues them based on the incorrect and over optimistic hope that they can get more.
I sort of agree with you, but the player can have an accurate view of the market, which itself can be distorted. There has to be a fool somewhere and it doesn’t have to be player. It can be another team. Either way we are looking at scenario 2.
That’s a thoughtful take on it. I see your point, but I still respectfully disagree with it because point 2 still requires misjudgment by someone: either another team overvalues the player, or the player/agent misjudges the market.
On the former point, perhaps that was a better bet a few years ago, but it now appears that teams have gotten pretty savvy in thinking about aging curves. As has been discussed frequently this off-season, there aren’t really any more Dave Stewart / Ruben Amaro types left as GM’s, nor do there seem to be any Mike Ilitch / George Steinbrenner types owning teams.
As for point 2, I don’t think that’s ever really happened so far in contracts with opt-outs. I can’t think of any occasion when a player has opted out and then ended up with a worse contract, though I could be wrong. I also suspect that this off-season could be a catalyst for a lot of agents to develop much better understanding about how analytical front offices value players.
Another point is that if Darvish does opt out after two years, that also very likely puts the Cubs back in the same year’s free agent market (or at least trade market) to find a replacement (or alternately to try to re-sign Darvish). So if there’s a certain amount of general market froth, that can be a problem for the Cubs because they probably need to find another starting pitcher in those same market conditions.
What I could see in the particular case of Darvish is that Darvish simply valued the opt-out at more than the Cubs think it costs them. Logically, the player opt-out was just one piece of the full negotiation and ultimately was what Darvish received in the contract instead of something else such as a few extra few million dollars over the term of the contract). The Cubs may have taken a view that a 33 year old Darvish is unlikely to opt-out because teams aren’t very likely to pay up for him in free agency versus the 4 years left on his contract at 33 years old, which I suppose is a different way of saying that not many scenarios will end up fitting either situation 1 or situation 2.
So if your argument is that scenario #2 isn’t likely to happen because players won’t use the opt out for whatever reason (they know teams are getting smarter about aging curves, they like their home team, they know they’re going to lose their stuff soon, etc), then you’re in a slightly different version of scenario #3: The opt out will not be used, so it doesn’t matter if you give it, and you should give it away in negotiations whenever you have one of these long-term contracts that is ugly at the back end (you touch on this already, I think). It’s of no consequence to the team because it won’t be used either way.
On the other hand, if your argument is that when Darvish opts out they’ll just need a replacement, then that would be either #1 or #2. If you think he is still a top starter for the next couple of years, then it’s scenario #1. If he’s going to start declining really hard, it’s scenario #2. But even if it is #1, the Cubs will then have the money to repeat this cycle with some other 30 year old pitcher (Bumgarner?). The question is whether it is likely to be #1 or #2, and I think in that scenario the odds of #2 are a lot greater than people suspect.
“I think in that scenario the odds of #2 are a lot greater than people suspect.”
The common argument being made as fundamental to the ‘opt-outs are always bad’ stance is that the odds of #2 is zero.
It’s just a belief that inefficient decisions won’t be made by players/agents or the market. This zero chance assumption obviously is incorrect as you point out.
@sadtrombone – yes, my view on the opt-out in this particular contract is specific to Darvish’s circumstances. He’ll be 33 when he has the ability to opt-out, with 4 more years left on his contract at an AAV that’s presumably ~$20 million unless his deal is unusually front-loaded. IIRC, there’s research indicating that TJ surgery tends to “last” for about 6-7 years before serious elbow problems recur, so Darvish will be in that window in 2021-22.
One opt-out that I think projected to be very valuable to a player at the time of the contract was, interestingly enough, Heyward. He could make 3/$78 million in the first 3 years of his contract, then opt-out and re-enter free agency at 29 if he thought his market was above the 5/$106 million remaining on his contract. Right now, of course, it looks like he’ll be getting the “tails you lose” side of that “heads I win, tails you lose” bet.
Kershaw’s opt-out is one that looks like it will add quite a bit of value for the player. The Dodgers would almost certainly much rather pay the 2/$65 million that would remain for 2019-20 and then assess how Kershaw looks entering his 33 year old season than have to make the call on going long-term with Kershaw again as he’s about to enter his 31 year old season.
Greinke is an opt-out that worked out well for the player and looks to have cut some surplus for the team off the post-opt out years. The Dodgers would have had Greinke for a total of $71 million from 2016-18 (plus a few million of incentives tied to Cy Young voting and accumulating 1000 innings in the first 5 years of the contract) if he hadn’t decided to opt out. Greinke has totaled 7.3 fWAR in the the first two of those three years, so barring a collapse in 2018 the Dodgers would have been happy to have him.
Another approach for a player with an opt-out and several contracted years after it is what Upton did with the Angels, which is to avoid the risk of full-blown free agency but tack on money with another year at the end of the contract.
There are tons of players who turned down a draft bonus/deal; QO; or arbitration offer who then ended up with less money.
That it hasn’t happened yet with opt-outs simply illustrates that opt outs are relatively new, so there is a small sample. If the Yankees hadn’t made a poor decision on Arod’s 2nd mega contract, he’d perhaps been a prime example of how opt outs can help a club.
Players generally don’t have a realistic concept of their own decline- agencies similarly do not operate yet on realistic age curves. Therefore opt outs can capture an advantage for clubs in exploiting this inefficiency on the part of players/clubs- it happens frequently with QO/arbitration decisions, and there is no reason to think that it won’t with opt outs.
@DaveT
Your argument assumes efficiency:
“That’s a thoughtful take on it. I see your point, but I still respectfully disagree with it because point 2 still requires misjudgment by someone: either another team overvalues the player, or the player/agent misjudges the market.”
Empirically, mistakes are made- look at any data set on QO decisions, draft signing decisions, or arbitration decisions. Arod already opted out of an under-water contract, as the opt-out sample grows we will see more and the frequency of inefficient decisions/mistakes on opt-outs will likely measure up with similar mistakes on QO/draft/arb.
Having a 15% chance that a player/agent makes a mistake on the opt out (or that the market overvalues the player and therefore makes a mistake) has tangible value to a club.
Further, since nearly all opt-out players have no-trade clauses, the supposed benefit that opt-outs might cause a club to lose in trade value is overstated.
So the empirical analysis is:
(1) what % chance is there that a player/agent or the market inefficiently prices a player such that he opts out;
(2) how much does a typical scenario (1) save a club;
(3) how much trade value, in light of applicable no-trade clauses, would any opted-out player have if he didn’t have the choice to opt out;
(4) how much surplus value does the typical team lose when a high performer opts out of a surplus value contract.
If the value from 1 and 2 above is similar to the value of 3 and 4, then opt-outs are neutral.
Gotta pop in to present the first ever “Civil Internet Discussion Award”. The CIDA is presented every thirty five years to the only two people who’ve disagreed without resorting to douchebaggery.
Congratulations. Your prize (bronzed copies of Aristotles Nicomachaen Ethics) will be mailed by the 15th of this month.
I don’t know which one of us get it, but I appreciate that I was a part of the first ever civil internet discussion.
From me my end, I really appreciated Dave T taking this seriously. It’s clear this was not my most popular theory, but I really liked that people at least responded to it.
It probably helps that this theory depends on “scenario #2” being much more common than is currently recognized, and that’s an empirical question as much as theoretical one.
I, personally, think the reality of opt out value to the players has, in fact, been less than what was expected when they first started popping up.
Also, of course, it really boils down to if you want the player these are now standard clauses in elite player contracts so it’s really a moot point.
A-Rod is IMO a very poor example here. He opted out after 2007 when he had 3 years left on his contract. He then signed a 10-year / $275 million contract. Whatever the wisdom of that contract from a team’s standpoint, A-Rod and Boras read the market very accurately.
I don’t actually think that the remaining 3 years of his contract even looked to be underwater when he opted out. He was coming off a nearly 10-fWAR 2007 season, 2006 had been a down season (just shy of 4 fWAR), and 2005 was a great season (9 fWAR). He was 32 when he opted-out, at a time when teams certainly didn’t understand post-PED aging curves. I don’t know what the FA cost per WAR was then, but even with what we know now about aging curves he projected to be somewhere between “certain All-Star” and “league MVP” over the age 33 to age 35 seasons covered by the 3 years from which he opted out.
Agreed.
The issue is the cost-benefit analysis of the contract. If he does well and opts out you get a modest win (good performance for two years at a nice-but-big price). If he needs surgery or just starts to stink, you have a massive loss. It is not how often you win or lose, it is the magnitude of the win or loss weighted by the probabilities [insert any applicable political analogy here]. There is no especially likely scenario where you get a big win from the contract. However…
The Cubs are not any team in any situation. They can outspend any of their division rivals, and Darvish was the best pitcher on the market by a fair amount. Sign him and get a huge projected edge with depth to survive any injury, or let him land in Milwaukee or St. Louis and have a three team race for the division. So it doesn’t matter if they overpay Darvish or set themselves up to be screwed by an opt out, because his marginal impact seems to be enormous. This is especially true if they also plan to bury their division rivals with free agent spending next year and beyond (which seems reasonably likely). Efficient spending is great, but this was certainly a situation for the Cubs to put efficiency on the back burner.
What about this from a bit more human-error and informational asymmetry point of view. If you assume that front offices have a lot more analytic information to evaluate this decision than the player and the agent then you could put a value to the option that’s lower than what you truly believe it to be since:
1) It’ll be harder or less likely that the agent can correctly value the market and
2) The agent is more likely to side with not opting out as this is not their only client and no one wants the long term damage of explaining to other clients how you totally missed the mark on opting out
Basically I think that’s what he’s trying to say above that there are reasons why a front office might throw something like that in instead of raising the base pay (at little cost) and you can only assume the market is mostly efficient, not perfectly-so.
lol no
I’m inclined to agree that teams would usually be better off if these mega contract players opt out.
Has anyone done a study of how the players did after opting out or opting in?
The Rangers are talking about giving Andrus a huge extension to keep him from opting out. They’d likely be far better if he opted out.
B) The Cubs now have a playoff rotation worthy of the super-team era
That is narrative. The currency of baseball is runs, not ‘SP name value.’ Adding Darvish improved the Cubs ability to have more runs then their opponent by about 20 runs. There are tons of other options the Cubs had to do the same. Darvish came at a fair price, so I don’t think the move is poor- but the narrative that the Cubs needed to keep up with their rivals is simply narrative.
Does Cleveland ‘need a closer worthy of the super-team era?” Of course not, that’s antiquated and needlessly narrow. Does Boston ‘need a power-hitter worthy of the super team era?’ Again, of course not, adding Yelich at a cheap price would be great for Boston would be much better than adding Martinez at a poor price, they don’t need HRs or a power bat, they need to have more runs than their opponent.
Further, the Cubs were already heavy favorites in the NL Central- the Brewers are far off, behind the Pirates.
They were only a few games up on the Cards in a projection system with big error bars and with a lot of very favorable projections for a lot of players, many of which are really questionable.
Sometimes I think we are too quick to take the team projection as a matter of course.
The Brewers are a weirder situation since they were a young team with a good BaseRuns record but Steamer thinks everyone had a career year. Whether the Brewers or Steamer is right I am not sure, but I wouldn’t rule it out
This isn’t really that complicated.
Darvish pitches to 5 WAR next 2 years. Opts out of 4 years 80 mil, gets 4 yrs 100 mil. Then pitches 2 WAR per next 4 yrs.
Cubs bring up minor leaguer (maybe hatch or lange) who pitches 2 WAR per next 4 years at league minimum.
The player opt out was team friendly in this case.
I don’t know if its happened before, but it’s obviously what Epstein has in mind.
I don’t know that Hoyer/Epstein are even thinking along those lines. The assumption that they are counting on any specific outcome is overly simplistic. I think the primary calculation is:
Since the opt-out has negative value for the team, it has positive value for the player. In other words, opt-out = $x. As long as the team can subtract $x (or more) from the total value from the contract, adding the opt-out is worth it, and even beneficial because it keeps AAV down.
For a team in the Cubs’ position, suppressing AAV is worth a bit, due to the impact on luxury tax calculations.
Interesting to note that 4 of the bottom 6 teams in Sharma’s chart regarding in-house pitcher development are shoe-ins (or nearly so) to win their division and/or make the playoffs: Nationals, Indians, Red Sox and Cubs.
The Indians are a bit different in my opinion. While they only drafted/originally signed 2 of their 6 starters, all 6 of them did pitch in the Indians’ minor league system. And only Bauer pitched at the major league level for another team (18.1 innings with the Diamondbacks). So it seems to me that they were responsible for at least some of the in house development for all of their starters.
Exactly. They made Carrasco, but because he wasn’t technically drafted by then, he doesn’t count. He’s been with them since 2009.
Kluber has been with them since 2010, but his development happened during the time frame here.
They get credit for Salazar and the detritus at the back of the rotation over the last few years: Tomlin, House, Merritt, etc.
Obviously, you have to make rules on whom to count and these guys don’t match the parameters. But it’s not like the Indians can’t develop pitching.
Hendricks pitched in the Cubs minor league system, and Dallas Beeler (though unimpressive) projects for 1.9 WAR/200 next season. CJ Edwards is a Cubs farm guy who could potentially start if need be.
The idea that ‘drafted SP IPs’ is something that clubs need is counterfactual- it has a correlation with losing. Alot of top clubs (HOU, LAD, ChiC) have done extremely well acquiring veteran SPs and improving their production (Arrieta, Verlander, Morton, Hill, Hammels, etc)- thus bumping some of their ‘home grown’ guys to the bullpen or swing roles. The top clubs have identified a ‘draft and develop SPs’ approach as an inefficiency- every club would like to bring stud SPs through, but there is so much variance to the process that it is less effective than acquiring MLB ready or near-ready arms.
If you draft Strasburg and keep him, you are doing better than many in drafted-starting-pitcher value. The metric is extremely noisy because bad teams draft first and sometimes have to rush prospects, while good teams will trade many of their prospects away.
“Even after agreeing to pay their new starter $25 million per season…”
By my count he’s only guaranteed $21m per season. (126/6=21)
The contract was initially reported to be for $150 million. It was later clarified to be for $126 million with incentives that could lead to $150 million. I assume Travis posted the article before the clarification was made.
Gaurantee is 126/6
Agree to pay is 150/6
According to Rosenthal
Rosentahl reported that Darvish will need to win multiple Cy Youngs to reach the full value of the contract. Seems unlikely.
https://deadspin.com/report-free-agent-yu-darvish-signs-150-million-deal-w-1822899915
If he wins multiple CY Youngs, the Cubs won’t mind paying the extra 25M
Seems like it’s easier to develop position players and buy pitching. A position player can be good almost right away, but it’s rare for a starting pitcher to be good even in his first two or three years. By the time he’s good, he’s arbitration eligible and soon to be a free agent
Anecdotal claim without supporting evidence.
he also went to the NL, so hold your horses on the second half improvement thing.
Projecting the Cubs to be at parity with the Dodgers is just silly, and, at least to me, raises significant questions about the projection methods.
Please quote this when the Dodgers have a significant win advantage over the Cubs in September.
Morbo out
Why is it silly?
I agree with this, as someone who isn’t a fan of either team. But that’s what happens when Steamer projects Heyward, Russell, Baez, and Schwarber to all be above average players. In Steamer world Addison Russell is going to have more WAR than Cody Bellinger.
I just don’t like Steamer.
I believe Bellinger was exposed, and short is far more valuable than 1st. Not a stretch at all by steamer.
FanGraphs still going with the Cubs Super Team narrative? Did last year’s first half not happen?
This signing should help the Cubs make the postseason in the short term, but in the long term you’re looking at paying Darvish and Heyward $44 M for the next six years. Heyward already looks to be essentially useless, and Darvish is already coming off a career-worst season at age 31. Hard to see how this is going to be a significant improvement from Arrieta last year.
I get that #Steamer loves the Cubs, but this looks to me like a team that’s a lot more anxious about the Cardinals and Brewers than the author makes it seem like (Sullivan’s article about how the projections have massive error bars is useful in this context).
Frankly I’m a Cubs skeptic. There are already a lot of warning signs Bryant and Rizzo with xwOBA (Bryant w/ BABIP, Rizzo w/ his BB/K numbers) and the offense outside of those two is shaky. The Cardinals look good. We’ll see.
Thanks for this, I have been arguing this point myself. I see the Brewers really threatening this year, and the Cards are stronger. Seeing this post with a negative tally thus far is just evidence that a healthy proportion on FGs readers are still on the same Steamer Cubs bandwagon. I really wanted to take that Vegas under on CHC, but the Yu deal gives a bit of pause. I still think those bats you mentioned above are mediocre in sum, so 90-91 wins feels about right, if they can get good bullpen work
I’m a Cards fan, and I don’t see them as stronger. They replaced Piscotty and Grichuk with Ozuna, Lynn with Mikolas, got a bullpen arm who could be great or terrible…I don’t see them as any better than last season, really.
Ozuna replacing Piscotty certainly makes them stronger. Reyes should be back, full seasons from Weaver and DeJong. It seems to me that the Cardinals are clearly better than Milwaukee and not that far behind the Cubs. I definitely expect them to exceed the 83 wins they got last year.
You’re letting a couple of small sample sizes influence your thinking.
This is the same team that’s gone 202-115 (.637) since the 2015 break, minus the first half hangover last year. Nobody else in the league is even close to that, even with their worst half taken out.
Same team that handled the Dodgers in 2016 and the Indians (that went undefeated prior to that series).
Don’t let 5 NLCS games make you think the Cubs are mediocre.
OK that graph is kinda misleading.
If you have other needs and good pitching, you don’t focus on getting quality pitching via the draft.
PS – whoever replaced Theo in Boston apparently didn’t shoot the lights out either.
That “homegrown innings” chart is definitely wrong about the Mets, since at a minimum Mets draftee Matt Harvey pitched all his innings for the organization in the 2012-present period. It’s also wrong in a broader sense that the Mets illustrate pretty well, in that “homegrown” in the sense of spending the entire draft-to-majors period in the organization doesn’t necessarily matter — if you can acquire a young Noah Syndergaard, it doesn’t matter who drafted him (in the sense that it says nothing about who’s reaping the benefit of his talent in his pre-FA period of control).
It’s misleading. It’s showing innings for players drafted since 2012. Harvey was 2010 (as was deGrom).
Yeah, I don’t understand the value of the Sharma article. He only looked at drafted players and only players drafted since 2012. Most of these guys are still in the minors. And those that aren’t, have only just begun their MLB careers.
Beyond that, the Cubs have had 4 top 10 draft picks in the Epstein era. Here’s who they’ve chosen:
2012: Albert Almora (6th)
2013: Kris Brynat (2nd)
2014: Kyle Schwarber (4th)
2015: Ian Happ (9th)
So is the issue not being able to develop pitching or not prioritizing pitching relative to position players? Seems to me that it’s more of the latter than the former.
One final note. I find this sentence by Travis to be confusing/misleading:
“Sharma examined the number of innings recorded for every major-league team by pitchers they’d acquired via the draft since the arrival of the current curse-breaking Cubs regime ahead of the 2012 season.”
I suppose the sentence could be interpreted in a few different ways. To me, it implies that Sharma only counted innings pitched for the team that drafted the pitcher. But that’s not the case. The only way the Blue Jays get to 1299.2 innings is if you include Matt Boyd’s innings with the Tigers and Kendall Graveman’s innings with the A’s.
Yeah. That’s just a terrible, vague and fuzzy description of the Sharma chart. It’s ambiguous about what “since…2012” is meant to modify — as we’ve already discovered thanks to RoyalsFan’s answer to my confusion it was meant to be the 2012 and later draft classes only — and it doesn’t even mention that the IP in many cases seem to be accrued post-trade, with other organizations, but are (I think you’re right) being credited back to the drafting organization anyhow. So… it’s basically a picture of which teams have consistently prioritized drafting predictably MLB-ready older pitchers over all other kinds of player, I guess?
It’s a weird piece of research and I am honestly not that convinced by this article that Sawchik even understood it well enough that he ought to be citing it.
The draft isn’t the only source of pitcher development. There is also the international market. Those 16 year olds from latin america that make the show are as home grown as draftees. They just take a bit longer to develop.
Also, high school draftees take longer to develop so focusing on mlb innings over the six years Epstein has been in charge doesn’t give much time for High School draftees to make a mark. A 2012 HS pitcher would be lucky to have a full year of service time by 2017. Most are still riding the AAA shuttles.
Not a very useful chart.
Nice, Sawchick, I like how you link to your own blog article to make it look like “New Year’s Discount Effect” is some scientifically tested theory.
Travis and Craig are the only fangraphs authors I’ve ever seen who – if they did as they advocate in their articles- would be poor MLB GMs. You never have to guess what their articles are about- always the same thing (eliciting the same objections- apologies for my own redundancy, but they really only play one song and it’s a poor one).
Generally fangraph’s authors are always suggesting insightful, clever, fact-driven approaches- but with Travis and Craig, ‘spending big on FA is the new market inefficiency.”
The Cubs’ didn’t “need” Darvish specifically. They already had a very healthy 4 game advantage over their closest division rival. Clubs always “need” to improve, but only efficiently- and a club with a comfy 4 game margin is not under any extreme duress to make a specific improvement. Only detailed empiricism can illustrate the wisdom of this exact transaction versus other options- but instead this article only delivers narrative.
There’s almost never any empiricism in these Travis articles. Why not write how much adding Darvish moved the Cubs odds to achieve their goals? The answer appears to be that, if Travis were to write about how adding Darvish effected the Cubs’ playoff and World Series odds, the impact would be shown to be marginal- which cuts against this repeated narrative that the Cubs “need” Darvish, supposedly because their staff today on paper looks a tad worse than top competitors. But arms are so high variance- consider only Verlander and Morton- that it’s poor analysis to get caught in the moment and hung up over big names. The idea that ‘ace SPs’ are needed for the playoffs is also unsubstantiated- and the projections show that the Cubs have high quality pitching only a couple WAR short of the very best in staffs in baseball. The narrative that the Cubs need an ace is like the narrative that the Indians need a closer- it’s just wrong and antiquated.
Fangraphs has generally been outstanding at rejecting narrative, and rejecting ‘tree over forest’ analysis. Fangraphs has excelled, generally, at saying ‘a club doesn’t need a certain type of player, it needs good players,’ that is to say, for example, the Red Sox don’t need HR hitters, they need wins in any form.
A leadoff hitter need not be fast, he needs to be good and add runs, etc. So as applied to the Cubs, it’s not true that they need Darvish specifically because of some meaningless narrative- i.e. that they haven’t developed home-grown SPs if you define home-grown in such a way as to exclude Hendricks. Clubs don’t need to develop SPs that they have drafted- just look at the chart, it has a negative correlation with success and even pitching success, as the teams who have developed the least draft-SPs include the Indians, Cubs, Red Sox, and Nationals. Of the clubs that have developed the most ‘draft-SPs,’ most are poor save the Cardinals- Blue Jays, Mariners, White Sox, Orioles, Rockies, Braves, Phillies, etc. Why would the Cubs need to improve ‘IPs by drafted SPs’ when it has something like a -0.3 correlation with team success? The answer is: they don’t. Further, why would the Cubs need Darvish specifically to cure this supposed defect- as opposed to obtaining another pre-turn-around Arrieta, or picking up another Hammels, or picking up another Hendricks? Again the answer- they don’t, this article is purely agenda driven narrative.
The Cubs had lots of options as far as improving. They didn’t need to improve right now, but at the right price improvement is of course welcome. Their 5th SP by projections, prior to Darvish, was Dallas Beeler with 1.9 WAR/200. Darvish is a 2+ WAR upgrade at a decent price. The Cubs have tons of smart options to improve by roughly 2 WAR. Simply demoting Chris Gimenez and transitioning to Victor Caratini as the backup C/utility bat (450 PAs), while also promoting Alec Mills to get a full season in the bullpen, would provide a similar 2 WAR gain. Do we see smart articles about how the Cubs need to transition to Caratini and promote Mills, while not taking Beeler for granted? Nope, instead Travis plays this one note only- FA spend.
Very poor writing, near-zero empiricism, tired narratives and bad analysis- consistently.
Obviously finding the next Arrieta is preferable to paying Darvish. It’s not exactly easy to do. I don’t think the Cubs should sit on their hands just because they have a four game lead in a projection system that has error bars of +/- 7 wins. Those moves you mentioned can be made in addition to signing Darvish—they’re not mutually exclusive.
Fangraphs should hire you. I might agree to “donate” if they had writers who could compose like this.
Also, the link to the ‘buried breaking balls deeper’ narrative is poor empiricism.
The data is not contextualized or anchored- we are talking about 31 pitches, after a move to the NL, with no discussion of improved efficiency or anything. Is there any quant work to show that (a) this change is significant as opposed to 30-pitch-noise; (b) this change was beneficial; (c) the degree to which the change helped; or (d) that this change is predictive going forward? Nope.
But we get some links to ESPN twitter and a bunch of Travis articles- outsourcing the empiricism to other writers.
My grocery store discounts milk when it gets closer to the expiry date cc Dave Cameron
Given the sample size of his LA stint, there is no significance to the slightly improved rates cited in concluding that “Darvish was excellent in the latter part of the season.” In fact, including his postseason starts, his ERA was actually worse with LA (4.06) than with Texas last year, thanks largely to a 4% HR rate.
Darvish was and remains an excellent pitcher, regardless of results in any particular 9-start stretch.
The cubs had to do that after focussing so much on position players. The prospect guys now pretty much have the top100 60/40 hitters and katoh has it 2/3rd hitters. Hitting prospects are much more prized now than pitching prospects, other teams now focus on hitters too (like the marlins so far).
That makes sense but rosters are still almost 50% pitching so you got to have the arms. That means that mlb ready pitching gets more expensive (a real young ace costs a hitting prospect like acuna/vlad jr AND another top 50 as seen in the sale and Q trade so it is almost unpayable in a trade).
I wonder if that trend now hurts the cubs a little. They thought they could maybe get an ace for one like schwarber (and a lower level prospect) straight up but now prices are so high that there is little alternative to buying 30+ year olds.
I actually think the Q trade was great. Sure it cost a top5 prospect that some consider untouchable (basically of the acuna/vlad class) and another borderline top100 but they got a cost controlled tor starter and that is huge.
Pitching prospects break often and if you trade for a quintana you pay for that attrition, basically you have to pay for the other two pitching prospects who broke too. That is why the Q trade was great even though it cost about the highest price there is (a top5 hitting prospect which probably is more valuable than a package of three 50s and one 45).
No lie I bet he just wanted out of the ALW and generally AL if he wasnt blown away. Career 3.27 vs 29 teams ERA 4.6 vs OAK pushing his lifetime ERA up to 3.5, and Im pretty sure the Astros are another team he would rather never pitch against again!
Is it me, but how is the Cub projection just 89?
And btw, the Jays are projected at 88? Is that right?
This contract is a near certain disaster. Teams never learn.
This really seems like a big deal to make over a guy who’s produced 6.3 WAR since 2014.
Only a troll starts his analysis the year the player in question is out for Tommy John.