Friday, January 18, 2008

Arbitration Battles: Phillips and Belisle

The Reds are taking two cases to arbitration this year: Brandon Phillips and Matt Belisle. I thought I'd try to apply a sabr-style approach to see if we can predict who will win! :)

I'm generally going to follow the methods used in this thread over at Tom Tango and MGL's blog. I am also relying heavily on the player salary scale estimates here, which usually seems to work quite well.

Brandon Phillips

John Fay reports that the Reds offered $2.7 million. In general, players make ~40% of their free agent value in their first season of arbitration eligibility, which means the Reds are claiming that he's got the value of a $6.75 million free agent. Based on Tango's salary scale, that pegs their valuation of Phillips as a 1.5 Win Above Replacement (WAR) player.

Phillips countered with $4.2 million, valuing him as equal to a $10.5 million free agent, which would pay for 2.5 WAR.

Phillips had what might have been his career year last season, but also might have been a breakout season. Hard to tell. Recent stats:
Year Age Team PA %K %BB %LD BABIP AVG OBP SLG ISO OPS SBRuns R/G RAR
2005 24 CLE 9 44% 0% 0% 0.000 0.000 0.000 0.000 0.000 0.000 0 -2.8 -2.2
2006 25 CIN 587 15% 6% 19% 0.297 0.276 0.324 0.427 0.151 0.751 3.441 4.8 16.0
2007 26 CIN 702 16% 5% 19% 0.303 0.288 0.331 0.485 0.197 0.816 1.864 5.5 32.5
3yrs --- --- 1298 15% 5% 19% 0.299 0.280 0.324 0.455 0.175 0.780 5.305 5.1 46.4

I'm going to be simple-headed here and project that Phillips will play at ~his 2-year average next season. This corresponds well to his Marcel and CHONE projections. So that puts him at ~48/2 = 24 RAR next season, or about 2.4 WAR on offense.

Defensively, the Fans see him as excellent, 15 FRAA via the Fans Scouting Report, or 1.5 Fielding Wins Above Average (FWAA). PMR has him at 5+35 = +40 runs over the past two years, or 2.0 FWAA per season. ZR, on the other hand, has him at "just" +4 runs over the past two years, or 0.2 FWAA/season. Using my (rather arbitrary) weighting system, I'd estimate his fielding as 0.375*2 + 0.375*0.2 + 0.25*1.5 = +1.2 FWAA per season.

He gets no bonus (nor penalty) for his defensive position, and I'll assume no aging for his age-27 year. That puts his estimated value at 2.4+1.2 = ~3.5 WAR next season. This puts his value at 40% of $15.4 million = $6.2 million for next season.

Maybe I'm vastly overvaluing him somehow, but these numbers indicate that even his counter offer is well below his actual arbitration value. I'm guessing that Phillips will win his case if he has good representation.


Matt Belisle

The Reds are offering Belisle $1.0 million. That means they're valuing him as a $1 million / 40% = $2.5 million = 0.5 WAR player.

Belisle countered with $1.65 million. That would assume that he's a $1.65 million / 40% = $4.1 million = ~1.0 WAR player.

Belisle's a little hard to project--especially in terms of his IP--because he just began serving as a full-time starter in the majors this past season. Here are his recent stats:
Year Age Team IP K/9 BB/9 HR/9 %GB BABIP ERA FIP OBPa SLGa OPSa R/G RAR FIPRuns
2005 25 CIN 85.7 6.2 2.7 1.2 53.5% 0.321 4.41 4.43 0.396 0.504 0.900 5.5 -4.6 2.9
2006 26 CIN 40.0 5.9 4.3 1.1 46.7% 0.299 3.60 5.12 0.521 0.556 1.077 5.5 -1.0 -0.5
2007 27 CIN 177.7 6.3 2.2 1.3 29.4% 0.326 5.32 4.58 0.524 0.688 1.212 5.4 13.8 26.4
3years --- --- 303.4 6.2 2.6 1.2 49.1% 0.396 9.02 4.54 0.360 0.533 0.894 5.4 8.2 28.8

The thing that's really interesting about Belisle's 2007 season is that his FIP was so drastically different from his ERA. When putting together my writeup on him for the THT Preview (out in stores in February!), I noted that 6 of his 26 home runs allowed last season were for 3 or more runs (including 3 grand slams), which is unusually severe. Couple that with an 0.326 BABIP, and you've got trouble.

If we use standard RAR to estimate 2007 his value, that puts him at ~1.4 WAR. However, if we instead use FIP-Runs (described here), his value shoots up to a very respectable 2.6 WAR.

I think the safest thing would be to assume that he'll end up somewhere in between those figures next season--maybe 2.0 WAR? 2.0 WAR as a free agent is worth $8.8 million. So, $8.8 million * 40% (first year eligible for arbitration) puts him at $3.5 million in 2008.

Even if we just projected his 1.5 WAR value from last season into 2008, that puts his value at 40% of $6.6 million = $2.6 million in 2008. Again, I lean toward Belisle's argument, as even it seems to be undervaluing him.

Update: I discovered an error in my FIP-Runs calculation for Belisle, which cost him a half-win by that estimate. Sorry! :( The analysis still holds.

....

The fact that I'm estimating that both of these players will be underpaid in '08 raises some doubts about the validity of the assumption that players get 40% of their free agent value in their first year of arbitration eligibility. The only empirical work on this that I know of is this quick analysis based on Victor Wang's prospect value study, but by those data it was dead-on.

In Phillips' case, it looks like his defense is basically being ignored, and the Reds are a bit pessimistic about his offense. With Belisle, it looks like both the Reds and he are a) putting lots of weight on his scary 2007 ERA, and b) aren't fully appreciating how bad a replacement-level pitcher is when used as a starter.

17 comments:

  1. I hate arbitration time. I'm not much of a conflict guy.

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  2. I said this on RR, but if you compare Phillips to what Utley made last year, I think he has a hard time making a case for $4.2 million. Granted, Utley's deal was part of a long-term contract, but he only made $4.5 million last year after coming off of a year where he finished 7th in MVP voting.

    I think it could go either way, but I doubt it will matter as I bet they end up signing him to a multi-year deal kind of like they did with Dunn before 2006, though for less money.

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  3. if you compare Phillips to what Utley made last year, I think he has a hard time making a case for $4.2 million.

    The counter to that argument, of course, is that Utley produced far above his salary last season--even after you account for him being the equivalent of a 4th year arbitration-eligible player. Skyking had him as an 8 WAR player last season. 8 WAR! That's off of Tango's salary charts, easily $30+ million territory... Not saying he'll do that again, but his projection still has to be ridiculous. :)

    I agree that Phillips would be wise to sign a long term deal right now coming off what might have been his best season. The Reds, on the other hand, might be better served to wait 'til next offseason--after all, they still control him through 2010...
    -j

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  4. I wouldn't be surprised if I own Belisle in every fantasy league I'm in with NL players. And I might try to sneak him in my AL auction, too. He skills point to him being a very good pitcher, but people won't go past a few bucks. Easy profit.

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  5. @Justin: We can go back and forth on this all day, but the easy counter to your counter is that Utley was 8 WAR and only made $4.5 million. Phillips isn't anywhere near 8 WAR. Sure Utley is underpaid, but he's paid what he's paid, and that will affect the market since he's the top player at his position and he's just played the same year service time wise that BP is moving into.

    @sky: The one thing I'd worry about with Belisle is that he seems to have more trouble with men on base then you would expect. Sure his peripherals look great, but if he can't pitch out of the stretch, he may always struggle once he allows base runners (and in front of the Reds defense, that's more frequently than usual). I expect him to have a better year next year, but I don't think it will be as good as his peripherals would imply.

    As an aside, does anybody know of any pitch f/x studies that look at pitches when men are on base vs. not? I thought about checking that on my on DB, but the base state isn't easy to get out of the pitch fx data.

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  6. Re: Phillips - I think it's rather unreasonable only use one player as a comparable when making a salary decision. Utley's an outlier, and was probably one of the top 5 players in baseball last year. I think you should compare Phillips' production to all players' production, and then take a standard discount for being 1st-year arbitration eligible. If you only want to look at 4th-year players, fine. But I don't see how you can base your entire decision on what one superstar was underpaid...

    Like I said, it comes down to representation. If Phillips' agents do a good job, they should win.

    Re: pitchf/x. I haven't seen anyone look at that yet. I do remember that in The Book, Tango et al. found that starters perform worse in the stretch (as determined by runners on base) than in the windup. I forget by how much, but it was meaningful. -j

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  7. I guess where I'm getting hung up is that standard discount. There may be one (I trust both you and Tango to have been thorough), but I just don't see it as a given that BP should win his case. It's unfair of me to look at just one name, and really my intent wasn't to just say, "Hey, look at Utley." His was just the first name that came to mind.

    I've looked at a few more names (admittedly picking through a quick and dirty list that I pulled up from BRef) and I'm even less convinced that the going rate for Phillips would be $4.2 million. Here are some of the names (2007 salaries from BRef, 2008 salaries from MLB4U):

    Miguel Cabrera: 2007 - $7.4M
    Chase Utley: 2007 - $4.5M
    Justin Morneau: 2007 - $4.5M
    Matt Holliday: 2007 - $4.4M
    Joe Mauer: 2007 - $3.8M
    Jason Bay: 2007 - $3.5M
    Adam LaRoche: 2007 - $3.2M
    Chad Tracy: 2007 - $3.0M
    Jose Reyes: 2007 - $2.9M
    Alex Rios: 2007 - $2.5M
    Kahlil Greene: 2007 - $2.3M
    Mark Ellis: 2007 (2nd year of arb) - $3.5M
    David Wright: 2008 - $5M
    Grady Sizemore: 2008 - $3M
    Jhonny Peralta: 2008 - $2.3M

    (years listed are intended to be first year of arb eligibility, but that was based on eyeballing it and may be incorrect)

    By no means is it a complete list, nor is it definitive about what a player should be paid. Some of these guys gave discounts because their contracts were connected to long term deals. I just wanted some rough numbers to see what some recent, well above-average players made in their 1st arb year.

    The majority of these guys make below what BP is asking for. I'm pretty sure I've listed all of the 4th year players from 2007 who made more than $4.2M. Looking at that list, I can see the arbitrator saying $4.2 is too much, though $2.7M is too little. That's why I'm guessing they settle somewhere in between. And all I'm trying to say that BP's case isn't an open and shut one.

    BTW, I think it's been 3 years since the Reds have actually had a case go to arbitration.

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  8. Joel,

    The list does help. What it indicates to me is that there's a ton of variation, even within a given level of production.

    On the other hand, I'd also say, as you acknowledge, that it's a small sample coming from only one year. It also doesn't include '07 WAR projections, which is what we'd need in order to understand what they were being paid to do. In some cases, like Jason Bay, that'll most definitely help your case. In others, though, like Utley's, it may hurt a bit. He certainly was expected to be good last year, but not 8 WAR good.

    I keep going back to Victor Wang's study (linked in original post), which reported that 1st year arbitration players made (on average) ~42% of free agent value. Granted, that wasn't the focus of the article, but the data are there. 40% is also a value that Tango's been using at his place for some time, at it seems to work well for him (which is why he brought attention to it in the Wang article).

    Still, I'd be happy to see someone do a more comprehensive study on this. WARP is hardly the ideal measurement--the artificially low baseline might be throwing off the numbers in Wang's study, especially when I try to use them with my data.

    For the time being, though, I'm standing by my estimate of Phillips' value.
    -j

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  9. I mentioned this in the main post, but I discovered a (stupid) mistake in my FIP-Runs estimate for Belisle. He drops from 3.1 WAR to 2.6 WAR last year, by that estimate. Sorry--hopefully that won't mess up Sky's fantasy draft! :)

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  10. Justin, I think maybe we're just going at this from different directions. My understanding of the arb process is that they look at comparables with similar service time and use that to determine market value. You seem to be coming from the other direction, judging the value across the league and then discounting for playing time. Who's right? I have no idea. Are there any experts out there on arbitration who can give us some insight as to what is taken into consideration?

    And I'm not trying to say that BP isn't worth $4.2 million, just that his case isn't as rock solid as your estimate of $6.2 million would imply. I know my list is limited, but I didn't want to use multiple years because of salary inflation and what not (I have no idea how to adjust that stuff). All I was trying to show is that there are some very good players who would be making less than BP if he won. Again, just trying to show that his case isn't a no doubter.

    One last thing on Utley, PECOTA has his predicted WARP last year at 6.5, which I would (roughly) estimate translates to around 5 WAR. So even though he wasn't predicted at 8 WAR, he was still projecting to be better than Phillips.

    And I'm sorry for the continual badgering on this topic. I blame it on cabin fever and boredom from the lack of baseball. Spring can't get here soon enough... :)

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  11. Justin, I think maybe we're just going at this from different directions. My understanding of the arb process is that they look at comparables with similar service time and use that to determine market value. You seem to be coming from the other direction, judging the value across the league and then discounting for playing time. Who's right? I have no idea. Are there any experts out there on arbitration who can give us some insight as to what is taken into consideration?

    If the discount for being first year arbitration eligible is accurate, then I'd think that these two approaches should converge on the same value.

    In a sense, you're arguing that we just use a different salary scale for 4th year arbitration players than we use for free agents. Assuming that it is still built around value above replacement production, I'd assume that it's going to be related by some % to the free agent scale.

    Maybe the slope of the line relating production to salary is different, though--that could make a big difference in a case like this. A % adjustment assumes that the slope is similar in both free agent and arbitration players.

    As for Utley, yeah, 5-6 WAR was what I had in mind when I wrote that about his '07 projection. Phillips was a 4-4.5 WAR player last season, though I'm only projecting 3.5 WAR for '08.
    -j

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  12. I'm late to the dance here, but it occurs to me that Cano is also up for arb for the first time. I'd rather the Reds get something done with Phillips before the Yankees set the market. Cano is the better hitter, but if I was representing Phillips I'd point to the HR and SB numbers.

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  13. Actually, it looks like Cano has "only" asked for $4.55mm. Yankees have countered with 3.2. If they settle for 3.9, I can't see Phillips getting his 4.2.

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  14. I'm surprised Cano's asking for so little. I have Cano averaging 4 WAR over the past few seasons, offense+defense. I'd project he'll be a 4-4.5 WAR player next season, including aging. A 4 WAR free agent is worth $17.6 M, and 40% of that is $7 million.

    It again calls into question the validity of the 40% number. If only I had the time to do a real study on that...
    -j

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  15. ^^make that ~3.0 WAR on offense. I was probably giving him too many PA's in my projection. His 3-year average on offense is 2.9 WAR, and then he gets another ~0.6 wins or so from fielding. So he projects the same as Phillips does, by my simplemindedness at least. -j

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  16. I brought these issues up over at Tango's blog, and there's been some interesting discussion afterwards. It does look like the model needs to be adjusted. So Joel wins! :D

    BTW, Ken, I'm hearing that Cano is a super-2. Those individuals are paid less than normal 1st year arbitration players (3+ years), and Tango's using a 20% discount on them. So by that measure, the Yankees offer is pretty reasonable.
    -j

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  17. That explains it. Naturally, it was Tony Womack blocking Cano during April of '05.

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