Was Homer Bailey's Contract An Overpay?

The Reds locked up Homer Bailey this offseason,
but was the cost too great?
Photo credit: David Slaughter

The Reds' biggest offseason player move was unquestionably handing Homer Bailey a $105 million/6 year contract extension this offseason.  While this was exciting for most fans (myself included), reaction around the internets tended to lean toward this being a pretty substantial overpay.

I'm sure that people have done nice analyses of Homer's contract.  I didn't really look around at the time, though.  So, I decided to finally take a look myself.  Well, a few looks.  

Approach #1

The first approach I used is close to what I've been doing for years to understand contracts, and is inspired by people like tangotiger.  It works as follows.

1. Make a projection for a player during the contract.  I used 2014 Steamer and ZIPS projections for that (courtesy of FanGraphs), and then did a "standard" 0.5 WAR/year decline.  That might be generous aging for a pitcher given pitchers' inherent tendencies to break, but we'll run with it.
2. Come up with a cost per win translator for each year of the contract.  This is trickier than it used to be, because some of Dave Cameron's recent work has made it clear that the cost per win is not constant anymore; above-average players are getting more dollars per win than below-average players.  Fortunately, in that article he presented a regression line for this relationship, and it showed a really simple relationship: 2 WAR players (i.e. league-average) are getting $6M/win, 3 WAR players are getting $7M/win, 4 WAR players get $8M/win, etc.  I'm assuming that this "bonus" is set in the first year, such that players do not see their $/win decline as their performance declines.
3. Estimate salary inflation.  I'm guessing wildly here, but based on past increases, as well as the amazing amount of money coming into the game right now with all of the TV contracts, I'm estimating a fairly aggressive 10% inflation on the $/win of an average player.  I'm just going to assume that the extra million bonus a 3-WAR player gets per WAR is fixed and not subject to inflation.
4. Multiply the estimated WAR each year by the player-specific $/win numbers.  This gives salary value each year.  Then, you just sum up all of the years to get total contract value.

Here's what I got when I did this for Homer:

On the far left are years, my estimated average $/win with inflation, and Homer's actual salary.  I'm assuming the Reds will not exercise their part of his mutual 2020 option, so they pay the $5 million buyout.  Then you have the Steamer projected WAR, his $/win, and estimated salary.  Similarly, I report ZIPS estimated salaries.  Finally, on the right, I'm presenting a projection that would be required for the contract to make sense using my salary model.  In other words, this is apparently how the Reds are valuing Bailey.  Also, please note that I'm ignoring the fact that 2014 is Bailey's last arbitration year; we should really subtract $3 million from his total 2014 salary in each case to account for the fact that players make about 80% of their free agent value in their 3rd arbitration year.

It doesn't look like a particularly good contract, does it?  Steamer and ZIPS have his contract valued at between $50 and $67 million over six years.  Furthermore, Steamer's projection for 2014 is low enough that it doesn't even make sense to give him a 6th year.  The difference between the Steamer and ZIPS projections is entirely playing time: Steamer projects a 3.62 FIP in 173 innings, while ZIPS projects at 3.62 FIP in 192 innings.  Homer has thrown 200+ innings for two consecutive years, and has been very healthy in those seasons.  But just one trip to the DL would drop him into the 170-territory, and the floor in any given season is 0 innings.

To get the contract to make sense, you have to set his 2014 projection to 3.3 WAR.  That's not outrageous; Bailey was worth 3.7 fWAR last season (and 3.2 bWAR), after all.  But that was easily his best season thus far.  It's pretty hard to project that he'll do that again this season, at least based on standard player behavior.

On the other hand, what we're really dealing with here is a projected difference of 0.6 to 0.9 wins.  Given how large the error bars are on projections, this really isn't that bad.  If the Reds have special scouting information that indicates that Bailey really did take a significant step forward last year, and one that he's very likely to continue in future seasons, you could at least make an argument that this is a reasonable projection...

Approach #2

Dave Cameron recently posted a pair of new models that look at free agent salaries.

The first is a model that just takes total projected WAR in a contract and uses that to estimate a player's salary.  It's a simple regression equation, but it explains 95% of the variation in free agent salaries from the offseason.  Not too shabby!  Let's run it for Homer and our various projections:

This is a bit more encouraging.  Based on the regression equation, and our projection systems, Homer Bailey's contract estimate comes in at between $70 million and $85 million over 5 years (or six years, for that matter; he's projected to be replacement level in 2019).

I adjusted the Apparent Reds projection a bit here, because this regression model tends to result in higher estimated salaries than my first approach. Here, a projection of 3.1 WAR gets him where he should be for the contract to be an even value.  That's an 0.4 to 0.7 WAR difference from projections.

Approach #3

In that same article, Cameron also put together a salary estimation "toy."  It's very simple, not horrifically rigorous, but it works pretty well.  You can go to the article to read about it.  I applied it to Homer:

Cameron's toy suggests that, based on the Steamer and Zips projections, the market length of a salary like Homer's would be about 4 years.  But if we extend it to 6 total years, we get total estimates between $72 million and $81 million.  That's pretty close to the regression equation above.

The closest I could get his contract to the actual value was 3.2 WAR.  Push it to 3.3 WAR, and Cameron's toy extends him another year to 7 WAR, and the total contract value shoots to $115 WAR.  But again, the estimates are indicating that the +Cincinnati Reds are valuing Homer by about a half-win higher than the projection systems.

Conclusions

By the numbers, I think it's pretty easy to see why so many see this as an overpay.  Steamer, which has been the champion of pitcher projections the last few years, estimates his monetary value between 50% and 70% of the actual contract value, depending on which approach one takes.  That's a tough pill to swallow, especially when you consider that the salary models I'm using aren't making any allowances for the fact that pitchers are inherently more risky than hitters, aside from the projections.

That said, the other thing that this exercise impressed upon me was that the systems that I, at least, am using are highly volatile when examining long-term salaries.  For the most part, we're dealing with differences of just a half a win.  That's easily within our margin of error.  Any small difference in projection gets compounded with each year of an extension.  This is further enhanced by the fact that the cost per win changes with player quality.  As a result, a difference of less than a win in a projection can result in a $50 million difference in a contract valuation.  In Homer's case, that's half of his salary!

What do you think?  Is it reasonable to project Homer to have a 3+ WAR season in 2014?  Are these salary approaches so sensitive to small changes in player projection that they are almost useless?  Or was this a big overpay by the Reds?

Price on bullpen use

Sean Marshall has historically had good success against
both righties and lefties.  Photo Credit: spablab

I thought this was an interesting comment from Bryan Price on bullpen usage:

"I've said to myself I don't know what it's like to be an everyday player professionally," he said. "But I do understand what it's like to be a pitcher and what these guys go through on days they don't pitch. 'Is so-in-so available?' Well, we got him hot three times yesterday and he pitched the two games before.

"It wasn't really a day off. Sometimes, as a manager (who was a position player), you may see that the guy got loose. But they see it as a day off. It's not. It's completely different. If you don't respect that, you end up over-utilizing your guys – even if they pitch in 65 games.
...
"There are going to be times when you bring in a right-hander to get that right-hander out based on the history of the pitcher that's in there at the time. But, to me, it just doesn't bode well when you match up. I don't like situational match-up pitchers because they beat up you bullpen. I've never liked it. I'd much prefer to have guys who get lefties and righties out.

"You never want to lose a game because you feel like you have the wrong matchup in," he said. "But if you want the right matchup every single game, you're going to blow out your bullpen."

It's going to be interesting to see whether his stance evolves over the season.

I think he makes a lot of good points, and important ones.  There's no question that platoon splits are real, and you absolutely do gain when you use righty-on-righty and lefty-on-lefty matchups.  I imagine that there are other kinds of match-ups that are worth exploiting, like using sinkerballers, breaking-ball specialists, or power arms against hitters that are particularly vulnerable to those pitcher types.  But I also think he's right about the importance of considering how often a guy is asked to get up and get warm as part of a reliever's usage load.

This is going to sound ridiculous (it's akin to pontificating about how to fly an airplane based on experience playing a flight simulator video game).  But my favorite baseball "video game" is Out of the Park baseball, where you play the role of the general manager and manager.  In terms of reliever usage, what I've taken to doing when deciding what reliever to bring in is to consider at least the next three batters that they will face.  Mostly, I consider handedness, but there's always some weighting for quality as well.  Ideally, there will be a rhythm to the opposing lineup, such that there is an optimal time to switch between a lefty and righty reliever that is spaced by at least three hitters.  Best case scenario, I can plan several innings in advance.  This lets me play matchups, at least in a coarse sense, but also avoid overtaxing my bullpen by using relievers for only a batter or two at a time...except in emergencies, of course!

I think (hope?) that's what Price is talking about here.  Yes, Sean Marshall will get to throw against righties.  But one should still try, at least generally, to use your top lefty reliever against the opposing team's top lefty hitters.  It's much better than blindly following a "Broxton in the 7th, Marshall in the 8th, Chapman in the 9th" plan.

The Free Agent Compensation Mess

The Reds' Todd Frazier was acquired via compensation
pick in the 2007 draft.  Photo courtesy of David Slaughter.

One of the biggest features of the latest CBA is a revised free agent compensation system.  The short version, as I understand it, is that if a team makes a "qualifying offer" to a player, which is defined as at least a one-year offer at a certain rate based on current player salaries (last year, it was ~$14 million), his team can receive compensation in the form of a draft pick if he turns it down and signs with another team.  The draft pick usually will come from the team that signs the free agent.

This offseason we've seen a group of free agents really struggle to find employment.  It's a big list: Nelson Cruz, Stephen Drew, Ervin Santana, Ubaldo Jimenez, Kendrys Morales...  All of these players are mid-tier free agents, and all are players who turned down qualifying offers from their teams in order to pursue larger contracts on the open market.  Like we saw in past years, these players all appear to be encountering a significant challenge: these are not top-tier talents, so teams don't want to give up their first round pick to sign them on top of paying their salaries.

The Nelson Cruz example is particularly interesting because he ended up having to settle for a one-year, $8 million contract after turning down a $14 million contract earlier in the offseason.  And ultimately, the main reason he actually got a deal seems to be that the Orioles had already given up their first-round pick to sign Ubaldo Jimenez, which made signing Cruz far less of a consequence for them.  Now, granted, his agents probably misread the market for him; apparently, teams are realizing that low OBP, poor fielding sluggers aren't worth as much as teams used to pay for them.  But this was a pretty big mistake.

Earlier this week, Tangotiger noted that MLBPA has decided not to challenge the compensation system until the next CBA.  I can understand that on some level--trying to renegotiate in the middle of the agreement might make negotiations of the next CBA a challenge.  But the system really seems very unfair to these few players who have to deal with the compensation pick.  It's not just this offseason, either.   I remember Orlando Hudson having similar issues some years ago.

I've always liked the principle of compensation.  It's best merit, in my view, is that it's a small token of recognition that small market teams, in particular, can't always keep their players.  Therefore, when a team loses an important free agent, they get slightly better draft position to help them begin to recover.  A 30-something pick isn't great shakes, but teams have scored some nice players with compensation picks.  Todd Frazier, for example, was the product of a compensation pick under the old system when the Reds lost Rich Aurilia to free agency.  I also like the idea of a qualifying offer: rather than trying to rank players by the TERRIBLE free agent system, the qualifying offer lets the market determine a player's value.  Teams (presumably) won't give a qualifying offer if the player isn't worth it, and so you're effectively letting the market determine if a player is good enough that the team deserves compensation.  To me, that's pretty elegant.

So how do we fix it?  To me, the problem is that the team has to surrender their own pick in order to sign a free agent.  I'm sure there's some important reason for this, but it seems to me that if we just got rid of that component--there would be no cost to the team that signs the player beyond the player's salary, just a bonus mid-30's pick to the team who lost the player--the system would serve its purpose and work quite well.  

As it is, the penalty of the pick means that some players get a raw deal, and teams are less likely to sign mid-tier free agents to improve their teams.  Seems like a lose-lose to me.

Why Joey Votto Should Probably Hit Second

Joey Votto takes YET ANOTHER pitch.
Image Courtesy of David Slaughter

Somehow, despite posting yet another truly magnificent season that saw him rank second in the league in wRC+, and topping 6 WAR for the third time in the last four years, Joey Votto became a lightning rod for controvery last season.  One of the things that has emerged from all of this is that many of his critics are arguing that he should hit second in 2014, rather than third.  Their reasoning, I think, is that since he "doesn't drive in runs," and insists on getting on base at a league-leading pace, he should hit higher in the lineup and let others drive him in.

While I hate the sentiment that's driving it (Votto is a brilliant player that we should be very thankful to have right now), I think it's actually a good idea to bat him second.  The thing is, even during his MVP season with those magical 111 RBI's, I think Joey Votto should probably have hit 2nd.  The reason?  From a lineup optimality standpoint, the #3 hole usually NOT a very good place to put your best hitter.  One of the biggest reasons is that, typically, the #3 slot in the lineup comes up with the bases empty and two outs more than any other slot.  That's because they bat two spots after the leadoff guy, who (true to their name) will lead off innings an average of two times per game.  That's the highest of any other slot, and thus, by definition, the #3 hitter will have more chances to bat with none on, two outs, than anyone else.  This limits #3 hitter's ability to positively impact the game.

Most of that comes from The Book, which I have a tendency to parrot back as Truth.  Guilty.  But how should we make lineups?  At the risk of misrepresenting their arguments, here are the takeaways that I got from The Book's lineup chapter:

• Your best three hitters should hit 1st, 2nd, and 4th.  Of those, the #2 hitter should be the best combination of on-base and power skills.  The #1 hitter should have the best OBP.  The #4 hitter should have the best power.
• Your next two best hitters should hit 3rd and 5th.  Power is desirable from the #3 hitter, because he often will come up with two outs.  All things being equal, the #5 hitter should be a bit better than the #3 hitter.
• Your remaining hitters should hit in decreasing order of quality.
• If you have a pitcher, it is often desirable to hit him 8th so that a quality hitter who can get on base hits in front of the top of your order.  Similarly, with a DH, try to get a high OBP, low power hitter in the 9th slot.

Let's run through the Reds 2014 lineup and do some lineup optimization with those principles in mind.  I'll going to use my favorite Markov chain lineup tool that John Beamer released in the 2008 THT annual  (hopefully used properly, unlike that other time) to calculate lineup effectiveness.  And we'll use ZIPS projections, in part because they're pretty bullish on Billy Hamilton (comparatively...).  And we'll do all of this with the caveat that it's pretty unlikely that the Reds will do any of these things this year.

The "Default" Lineup

This is the lineup that is reported on MLBDepthcharts, and it seems like a reasonable take on an opening day lineup based on what we've seen from Bryan Price in spring training.  Let's plug it into our model and see what happens:

Now, let's start optimizing, based on those rules of thumb above.  The Reds' three best hitters are clearly Votto, Bruce, and then one of Phillips, Ludwick, or Frazier, depending on your biases and preferred projection system (and hey, Mesoraco might also be in that group).  Bruce is clearly the guy with the most pure power, so he fits as the cleanup guy.  

That leaves Votto in either the #1 or #2 slot.  He could work very well in leadoff, but then you have a huge gap between he and Bruce.  I like to cluster good hitters together so one is on base for the other to drive in.  Furthermore, Votto's power is such that I'd prefer to hit him lower than leadoff.  That pegs him into the #2 hole.

So...without worrying about leadoff for now, let's try him in the #2 slot:

Joey Votto Hitting 2nd

According to the Markov, we gain 7 runs on the season by shifting him up a slot.  Note that the Markov has no idea about his RBI totals; it's based on average production, period.  

This also has the side effect of splitting up the two lefthanders, Votto and Bruce, in the batting order.  While I wouldn't chain myself to that, I think that's often a good idea to reduce the effectiveness of lefty bullpen specialists.  This also pushes Phillips to #3, which is not a bad spot for him.  He (historically) has had better power than on base skills (despite the projection), so I like him as a #3...

But more on that later.  For now, let's do the other obvious thing from The Book and bat our pitcher 8th.  This gets Zack Cozart in front of the top of our order, rather than our 0.139 wOBAing pitcher (the NL pitcher average last season):

Pitcher Batting 8th

Ok, so not much of an increase, but it's a slight improvement.  

Let's keep playing.  Hamilton, while OBP-heavy, has the 2nd-worst projected wOBA among the Reds' starting eight, so he is not among our top-3 hitters.  Let's move him down to 9th (his projected OBP 3rd-best, so he fits beautifully down there as a secondary leadoff guy) and get our best OBP guy among the Phillips-Ludwick-Frazier-Mesoraco group at the top of the lineup.  While it's very close between them, but Phillips gets the call.  It's a pretty defensible choice, really, and one that could work well given the hopeful return of his baserunning skills.

Phillips to leadoff, Hamilton to 9th

And we picked up 4 more runs.  Nice.  Interestingly, Hamilton's projected OBP is better than Phillips'.  Brandon's advantage is his power.  Leadoff guys can hit homers too, sometimes even with men on base.  And they get more at bats to do so than guys hitting lower in the lineup.

Above, I promoted Ludwick to the 3-hole given that he was batting 5th before.  I'm actually a little optimistic that Ludwick might have a nice little season for the Reds this year.  That said, his projection is below Frazier's and Mesoraco's.  Let's promote Frazier to 3rd with a nod to his power projection, and I'll bump Mesoraco up too:

A final rearrangement

Very incremental.  If you make even the slightest change to the projections of Frazier, Mesoraco, and Ludwick, a different lineup suddenly becomes more optimal than this one.  ::shrug::

Each step above was incremental.  But overall, based on the Markov and these projections, we've improved the offense by ~13 runs (~1.4 wins, using 9.264 runs/win) on the season by simply rearranging the batting order.  The biggest improvements came from getting our best hitter out of the #3 slot (7 runs) and then replacing a below-average hitter in the leadoff slot with an average hitter, albeit one who has a slightly worse OBP (4 runs).  Teams paid ~$6 million per win this offseason, so overall, we're talking about an adjustment worth ~$8.4 million in free agent dollars.

A 1-2 win improvement isn't a lot.  That's why folks say that lineups don't matter much.  But when you're a marginal team like the Reds, a 1-win improvement can be the difference between a playoff berth and going home at the end of September.

The New Manny Parra

Back in December, Redleg Nation released a fantastic interview with Mack Jenkins, the Reds' Bullpen Coach last season.  It's a great listen--Jenkins really impressed me, and provided a great, practical insight into what it is to be a pitching coach.  I listened to it at the time, but never had a chance to follow up on it.

One of the things I found most interesting was the discussion of what happened with Manny Parra last season.  He described Bryan Price giving him a project to look into Manny Parra's pitches and mechanics, and try to find a way to help him improve.  One of the things he reported back was that Parra's curveball was really inconsistent, and that really hurt his performance.  So, they encouraged him to drop it in favor of a slider.

Not that I doubted it, but I wanted to look at his pitchf/x profiles.  Here are Parra's 2009-2012 pitches:

You can see him grade out as having a fastball, a split finger, and that curveball.  Note that each dot above is an individual month during that time period, not an individual pitch.

Here are his 2013 pitches:

And there's the slider!  Note that the y-axis changed here.  The curveball came in around 77mph and had a spin axis over 300 degrees, whereas the new slider comes in at 83 or so with a sub-300 degree spin, so it's clearly a new pitch.  Just to show this more clearly, here are his 2012-2013 pitches:

All of the sliders were thrown in 2013, and all of the curveballs were thrown in 2012.

Another interesting thing: it wasn't an occasional-use pitch for him.  In 2013, he threw his slider 41% of the time, compared to just 18% for his curve in 2012.  

Looking at his stats:

The biggest change of substance in his record looks to be a dramatic improvement in his walk rate.  He also posted a career-best BABIP, though it was still above league-average (last year that was 0.297).  I think that both of those things could potentially be attributed to swapping his curve for a controllable, effective slider.  Now he has a pitch that he can throw for strikes, and can induce strikes (45% of swings at the slider were whiffs last year).  And if hitters are whiffing at the pitch, they're going to be making weaker contact with it when they do strike true.  Finally, if they have to beware of his breaking ball, they can't sit on his fastball and sinker.  

Kudos to Parra, Mark Jenkins, and Bryan Price for figuring this out!  I love seeing pitchers making real, measurable changes in their approach that result in such dramatic performance improvements.  Here's hoping he can do it again this year!

Trying Google Plus comments

In an effort to reduce the random spam here, and perhaps facilitate conversation(?), I've enabled Google Plus comments on the blog (and thus disabled the more open version).  Please let me know if this causes any problems for you.

My major concern is that folks won't have google accounts, and will just decide not to comment.  But I'm hoping it actually makes it easier for folks to join in on any conversations that might take place...not that I'm exactly driving a lot of traffic right now. :)  Thanks! -j

Edit: looks like the one annoying thing is that, since I have it set to automatically share, every post will automatically get one comment (from me!).  Oh well, we'll see how it goes.

Something Dusty Did Right

Saw this bit this morning buried at the bottom of a daily news brief by John Fay.  I thought it was a good example of the kinds of things that Dusty Baker did really well...like handle a clubhouse full of twenty- and thirty-something athletes through the ups and downs of a major league season:

ALMOST GOT AWAY: The Reds blew an 8-0 lead in the split-squad game with Seattle that Price managed but came away with a 10-9 win. 

“It doesn’t matter what it is,” Price said. “Spring training or not, you know these games happen. You hate to lose them when you have that type of a lead. Those happen. It stinks. You can’t let it stay with you." 

The game reminded Price of a walk-off loss in Atlanta in 2010. The game ended with Brooks Conrad’s grand slam off Francisco Cordero that Laynce Nix nearly caught. The Reds lost 10-9 after blowing a 9-3 lead in the ninth. 

When the club arrived in Cleveland later that night, manager Dusty Baker had a mandatory meeting in the hotel bar. 

“Everyone had to get a drink,” Price said. “We had to say: ‘OK, that one’s over with, we go back to work.’ We beat Cleveland the next day. That kind of got the bad taste out of our mouth. ... It was a really good idea by Dusty.”

I remember that game, as I'm sure many Reds fans do.  Just brutal.
Source: FanGraphs