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Tuesday, December 08, 2009
Free agent tracker - implied cost per win
Rally gives us his free agent tracker. It’s a nice setup, he put the C/IF in one sort group, and the 1B/OF in another sort group, with pitchers at the end.
If we look at Polanco, he has him forecasted for 2.3 WAR in 2010, which for 3 years (2.3, 1.8, 1.3, at first guess) means 5.4 WAR, which compared to his 18MM contract means 3.3MM$ per win. (He shows 3.2, so obviously he’s using a slightly different forecast for the post-2010 years… can’t be too different anyway).
If we look at the 10 guys that signed, it was for 19 years and 114MM$. It was 16.4 WAR forecasted in the first year, and another 14.1 WAR for the future years. That’s a total of 30.5 WAR, for an average of close to 3.75MM$ per win.
If we include a 10% increase in salary every year, then having 3.5MM$ per win in 2010, and 10% higher in each year will give us a total of 114MM$ paid. In the Polanco case, that means 3.5MM for 2.3 WAR, then 3.5x1.1 for 1.8 WAR and 3.5x1.21 for 1.3 WAR for a total of 20.5 MM$. That is, within the market of these 10 players, Polanco should have been paid 20.5MM, and was only paid 18MM. (Of course, this is completely dependent on the WAR estimates to begin with.)
If Holliday is a 4 WAR player according to Rally, and if the market continues at this pace, then Holliday will come in at a 6/70 deal. As I’ve noted in the past, there’s the 1-yr market, and the 3+year market. So, in terms of using this data to evaluate the market, we should separate the two kinds of deals. (The 2-yr market would be somewhere between the two.) Basically, it might be easier to think of the first year of any of the deals for the 2010 season to be valued at say 3MM$ per win, and then the 2011 season to be worth 4.4MM$ per win, and then 2012 and beyond goes up by 10% from there. If we do that, Polanco’s deal comes in at 3/21. And a 4 WAR player (e.g. Holliday according to Rally) would come in at a 6/77 deal.
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