The Dempster Contract

Nothing against the Jeremy Affeldt signing from yesterday (that was a great deal for the Giants, by the way), but we have our first notable free agent signing of the winter. Well, it’s actually a re-signing, but it still gives us a pretty good insight into where the market for starting pitchers might be headed. Ryan Dempster re-signed with the Cubs for a guaranteed 3 years and $38 million and a player option for 2012 that could make the deal worth $52 million over four years, if he wants to exercise his option.

Really, though, the Cubs have put themselves on the line for 4/52 for Dempster, since they don’t control the option, so that’s what we’ll call the contract.

Dempster was certainly outstanding in 2008 – his 3.41 FIP ranked as the seventh best mark in the National League, sandwiched right between Ben Sheets and Johan Santana. That’s some pretty solid company for a guy who had been a rather pedestrian reliever the two years prior. He elevated his game by cutting a walk per game off his BB/9 and elevating his strikeout rate simultaneously, leading to a career best 2.46 K/BB rate. His improved command helped him control the strike zone in ways he never had.

However, the real key to his run prevention was keeping the ball in the yard. His 0.61 HR/9 rate was 8th best in the NL, putting him in a group with guys like Brandon Webb, Derek Lowe, and Aaron Cook. They limit homers by inducing a ton of groundballs, but Dempster is not an extreme ground ball pitcher. He leands towards the GB side of the spectrum, but not nearly to the same degree. He just got more than his fair share of flyball outs, which is represented by his 7.7% HR/FB rate. That kind of performance isn’t sustainable over a long period of time and should be expected to climb in future years.

If we bump his HR/FB rate up to 10% (which is basically league average) for 2008, he’d have given up 18 home runs, four more than he actually gave up. Each home run has a run vlaue of about 1.4 runs, so it’s fair to say that we can expect a regression in Dempster’s home run prevention to cost him about six runs from his ’08 value. Even if he maintains his new found command, he’d still be a bad bet to repeat his 2008 season.

But that’s the beauty of this deal for the Cubs – they’re not paying him like they expect him to repeat his 2008 season. At $14 million per season, they’ve essentially valued him as a +2.5 win pitcher, which would translate to a 4.25 FIP over 180 innings. In other words, they’ve built a regression of almost a full run per nine innings into Dempster’s expected performance, based on this contract.

If Dempster really did establish a new level of performance in ’08, this is going to go down as a massive steal for the Cubs – they’d be getting an all-star pitcher for the same price that Carlos Silva got last winter. He can take a pretty sizable step back and this still would be a positive value contract. Essentially, for this to be a bad deal for the Cubs, Dempster’s going to have to get injured. If he stays healthy, this looks to be a big winner for the north side club.