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Reading a couple of posts over at STLCardinalBaseball this weekend led me into a bit of a debate with Ray over whether the Cardinals routinely pay market value for their players or not. Spurred on by the ongoing discussions about what market value may look like for one Yadier Molina, Ray took a look at some Cardinal player performances versus their salaries and asserted that the Cardinals do not pay their players market value by determining that most, if not all, of them are underpaid, and therefore not being paid “market value”.
My beef is not so much with Ray’s evaluations of whether the players are underpaid or not, everyone’s entitled to their own terms of measurement when it comes to such things. Where I disagreed, and continue to disagree, is in the definition of market value used. It became clear after we went back and forth in the comments a bit that Ray was comparing versus TODAY’S market and/or performance, while I was talking about the market the players were signed in.
Thus, it bears noting that Ray may well be right that the Cardinals are underpaying their players relative to TODAY’S market and even their performance – but the Cardinals absolutely pay market value for their players, otherwise they wouldn’t sign any, right? While Ray thinks that’s “ridiculous” – I think we’re still talking about two different versions of value. Here’s mine:
market value
noun
: a price at which both buyers and sellers are willing to do business : the market or current price
So in other words, the Cardinals offer a price, no other team is willing to match or beat it, so the player signs it. That is market value. No more, no less. So Matt Holliday‘s market value when he signed was seven years, $120 million. His market price if he were a free agent today would likely be much higher, but Holliday traded potential for more money on a richer market for security in dollars and contract length. That’s how it works. If the Cardinals didn’t pay market value, they wouldn’t sign many free agents on the open market, period.
With that out of the way, and looking at the numbers myself, I started to get curious about just how often the Cardinals wind up overpaying for players.
The results for the John Mozeliak years are both positive and reassuring (at least in my opinion). I compared contract prices to FanGraphs WAR dollar value over the course of the contracts and found the “hits” (WAR dollars > salary) and “misses” (WAR dollars < salary) for both open market contracts signed and for big extensions:
2008
Hits: Joel Pineiro, Yadier Molina, Rick Ankiel, Aaron Miles (did you know Miles put up 2 WAR in 2008??), Adam Wainwright, Kyle Lohse, Cesar Izturis
Misses: Matt Clement (blech)
2009
Hits: John Smoltz (this one is kind of a cheat, they didn’t pay him much, but still just over 1 WAR), Ryan Ludwick
Misses: Kyle Lohse (extension), Jason LaRue, Trever Miller (when they re-worked this deal after he had a good 2009, they made it a miss), Dennys Reyes
2010
Hits: Ryan Ludwick, Matt Holliday (more on this later), Felipe Lopez
Misses: Jason LaRue, Brad Penny ($7.5m, really?), Skip Schumaker, Ryan Franklin (extension)
2011
Hits: Lance Berkman, Nick Punto (still wish they would’ve kept this guy)
Misses: Jake Westbrook, Gerald Laird, Kyle McClellan
Some notes:
- STOP GIVING MULTI-MILLION DOLLAR EXTENSIONS TO MIDDLING RELIEVERS.
- LaRue and Laird not outperforming their salaries in WAR doesn’t surprise me – just confirms that the Cards will pay for defense in their backup catcher, something we already knew.
- Nick Punto was a great value sign to be the middle-infield utility guy. Likely benefitted from limited exposure, but productive nonetheless.
- Matt Holliday is one of only three $100m players out of eight that has been “worth his deal” thus far. The other two: C.C. Sabathia and Cliff Lee. Jury is still obviously out on Albert Pujols.
- Holliday is the only player who signed a contract with a total value of more than $30m in the 2009 off-season that has met that deal with his performance. And there are some real stinkers in that bunch.
- Remember when everyone said the Holliday deal was crazy? See those nutjobs on the message boards still saying he’s overpaid and not worth the deal? Introduce them to Jayson Werth and Carl Crawford. And Adam Dunn. And Jason Bay. Holliday will just keep on hitting, thank you.
- Thank goodness Mozeliak didn’t come up with some crazy Jason Bay fall-back plan in 2009/2010.
- It’s important to note that injury is at least partially to blame in a couple of the failures like Lohse and Penny. Not an excuse, because performance is never guaranteed, but worth noting.
So obviously I haven’t covered each and every player that Mo has signed on his watch, but this represents a pretty good cross-section of the larger deals.
Do the Cardinals pay market value? By the definition provided above, absolutely. Are they getting great return on that value compared to TODAY’S market value? In most cases, yes. Again, the players choose to sign these deals. It’s not like they’re leaving money on the table. For their part, the Cardinals appear to have been very particular in the players they extend offers to, and with a little bit of luck, have seen good return. To me, that’s a quality to be cheered and appreciated. Now let’s see how Carlos Beltran turns out…
{ 4 comments }
Good stuff as always. I think I’m not understanding one part, though.
You say that the Cards offer a deal, no other team matches, player signs, that’s market value. Which is completely logical and makes sense, but take Pujols–if he’d had a bigger offer from Miami (as was originally reported) and turned it down, is his market value the contract he could have signed or the contract he did sign?
Great question. By definition, it’s the contract he did sign. The price at which BOTH are willing to do business.
Which means Miami would’ve been overpaying.
Cardinal70 hits my point. Pujols’ market value reached $275M, not $254M. So, in a sense, the Angels underpaid for Pujols, which is bizarre to consider.
You make an interesting case regarding Holliday, and I can see your point. However, just because there were no teams interested in Holliday at that point doesn’t mean a team wouldnt have paid more than $17M a year under different circumstances. Had the Yankees or Boston needed an outfielder, I’m sure Holliday would’ve gotten more than that from them in 2009.
A very good defense of your position, though. I like the discussion.
Right, Ray, but Pujols wasn’t willing to play for the higher price for whatever reason – that’s where the player’s end of defining their market comes in. Miami, in theory, was trying to overpay, perhaps to compensate for some other deficiency in their contract (winning?).
And as for Holliday, sucks for him! Markets are defined by the time and circumstances, so his market didn’t involve the Yankees or Sox. He may well have gotten more from them, could’ve gotten more from the Mets. But 7/$120m was it and the Cards paid it.
It boils down to a study between market value – or what is available to the player under the specific circumstances – versus actual value. I think we both clearly agree his actual value is larger than the contract he signed (and he’s proven that), but for whatever reason, the circumstances didn’t play in his favor. And I’m quite ok with that… 🙂
Thanks for reading, appreciate your leaving a note.
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