The Curse of Jerry Hairston, Jr./Eric Hinske:
 

Monday, February 4, 2013

WSJ: The Yankees’ Coming Conundrum

At a time when the Yankees are seeing, more than ever, the perils of a long-term megadeal with a 30-something player, they are likely just months away from pursuing a long-term megadeal with a 30-year-old player. Cano, who is making $15 million this season, might not get 10 years or $275 million from any team. But it shouldn’t shock anyone if he ends up getting an offer of $200 million or more, especially if the Los Angeles Dodgers get involved.

Two years ago, Cano ditched his former agent, Bobby Barad, and hired Scott Boras. You don’t hire Boras to settle for a modest deal from your current employer. You hire Boras to give yourself the means to purchase a small country. That’s what Rodriguez did, and the result was two record-breaking contracts.

What the Yankees must ask themselves is this: Is there anything to be learned from the A-Rod mess that applies to Cano? Or are the two of them so different—and the need to keep Cano so great—that the Yankees should pay whatever it takes?

The first and most obvious difference is that Cano is not as good now as A-Rod was at the same age.  Rodriguez hit .321/.421/.610 in his age 29 season and was the AL MVP, with a bWAR of 9.1.  Cano hit .313/.379/.550, good for a WAR of 8.2.  Rodriguez projected to hit somewhere between .296/.386/.543 (Marcel) and .301/.400/.559 (ZiPS) in his age 30 season and projected to be worth around 6 WAR.  Cano projects to hit somewhere in the area of .287/.333/.505 (Davenport) to .305/.363/.530 (Marcel) which would make him worth in the area of 5.0 WAR.  Both of these tell us that Cano right now is probably around a win worse than Rodriguez was at the same age.

Now maybe PEDs factor into this and we can expect Cano to hold more of his value going forward.  Even in that case, you can probably expect Cano to begin declining.  Maybe it won’t happen this year, but it will happen soon. 

Let’s run two sets of WAR.  One assuming he’s a 5.0 WAR player in 2013 and one assuming he’s a 7.0 WAR player.  We’ll also assume he’ll decline by 0.5 wins per season through age 34 (which is pretty conservative) and then 0.7 wins per season afterwards.

Year Age WAR1 WAR2 tWAR1 tWAR2 Years $WAR1 $WAR2
2013 30 5.0 7.0
2014 31 4.5 6.5 4.5 6.5 1 27 39
2015 32 4.0 6.0 13.5 19.5 2 81 117
2016 33 3.5 5.5 17.0 25.0 3 102 150
2017 34 3.0 5.0 20.0 30.0 4 120 180
2018 35 2.3 4.3 22.3 34.3 5 133.8 205.8
2019 36 1.6 3.6 23.9 37.9 6 143.4 227.4
2020 37 0.9 2.9 24.8 40.8 7 148.8 244.8
2021 38 0.2 2.2 25.0 43.0 8 150 258
2022 39 -0.5 1.5 24.5 44.5 9 147 267
2023 40 -1.2 0.8 23.3 45.3 10 139.8 271.8
2024 41 -1.9 0.1 21.4 45.4 11 128.4 272.4
2025 42 -2.6 -0.6 18.8 44.8 12 112.8 268.8
2026 43 -3.3 -1.3 15.5 43.5 13 93 261

WAR1: WAR if he’s a 5.0 WAR player in 2013
WAR2: WAR if he’s a 7.0 WAR player in 2013
tWAR1: total WAR1 through this season
tWAR2: total WAR2 through this season
$WAR1: Total value of tWAR1 if a win is worth $6M
$WAR2: Total value of tWAR2 if a win is worth $6M

It seems to me that anything over six years is a bad idea but I also think $200M is the magic number Cano will be asking Boras to get.  So would the Yankees do 8 years and $200M?  It would sign Cano through age 38 and very likely into replacement level, but if you think he’s a 6.0 WAR player now and will decline as this assumes it’s about fair market value.  In theory by the time Cano is replacement level the other bad contracts should be off the books and if the Yankees have been smarter about building the rest of the team it shouldn’t cripple them.

My guess is the Yankees will hold the line at six years, which is prudent, but which also probably means Cano’s gone at the end of this year.

 

--Posted at 8:57 am by SG / 54 Comments | - (0)

Comments

Page 1 of 1 pages:

Six is the new Ten.

You would think that teams would stop signing FAs to 10 year deals. Not to say that 10 year deals are all bad, but generally by the time a player makes it to FA you are getting a good amount of their decline years in that contract.

I would totally dole out 10 year deals as part of a plan to buy out arbitration years though.

“Now maybe PEDs factor into this and we can expect Cano to hold more of his value going forward.”

I would guess the opposite - that our current expectations about player decline are optimistic because a lot of players in the era used drugs not to restructure their bodies like Bonds but to stay fit through the long season.

I was thinking about the whole PEDs breaking down players’ bodies sooner than expected, but yeah, the converse is probably true.

yeah, my guess is the idea that PEDs break down bodies (in ways that matter to baseball) got started because some people were thinking of them as miracle drugs, so normal problems were seen as the fault of the drugs.

Let him go.

The team’s likely in for a rebuild after this year anyway.  No need to have another albatross looming when they get good again.

Man…it was some crazy luck to get Jeter/Bernie/Mo/Andy/Jorge from the minors all at about the same time, wasn’t it?

[3] - Agree.  I’m not sure if the PED ruined A-Rod’s hip but I’m sure they helped him up until that point.

However, I’m also not comfortable assuming Cano isn’t on them too.

[8] I agree. And it’s not just Cano. Pujols, Braun, Cabrera, Tulo, CarGo, Votto, Beltre, Hamilton, Fielder, Encarnacion, Bautista, et al. are on my suspect list.

It’s obviously possible to take PEDs and #1 get away with it or #2 not get caught so what’s stopping players from continuing to use?

I love Cano. I don’t even know how I’ll watch this team without him on it, but if he is demanding 8+ years @ $27 million per year, he’s just not worth it. Of course, if he goes on to have a Bonds like 30s then it will be all Cashman’s fault. If he does get signed, and turns into a pumpkin at 33, it’s still Cashman’s fault.

So at least we have that.

[6] Not sure what “rebuild” means as a practical matter.  I can’t see the Yankees getting so disasterously bad that they’d be getting a ton of high draft picks over a period of several years, like the Rays did.  I don’t think it fits into their business model and I don’t think very many fans actually would have the patience for that kind of project.  A more realistic approach is to take the $189mm you are allowed to spend and make the best of it.  That means you won’t have nearly as much money to load up on All-Star-caliber players, but I don’t think it means NEVER spending on blue chip FAs like Cano.

[0] We’re talking about signing him after this coming season?  Good news is, we get a better idea then for which branch of the tree to go down, since he’ll have completed his age 30 season.

I think a logical deal is 6/23 with a 7th option year for $23MM or a $5MM buyout.  So you’re guaranteeing him $143MM over 6 years and that happens to be what the lower (rough) projection says he’s worth.  Of course then if he ages a little better - not tWAR2 better but maybe 3 WAR in season 6 - he’s worth picking up the option for.  You then get an excellent player through his useful years - still helping you win - w/o breaking the bank and the chances of having another HOF.

Of course too, the Yankees quite probably have a better idea of how Cano will do going forward.  So if they sign him to an 8/200, there’s an excellent chance that he’ll be closer to tWAR2.  I think this has been fairly well studied that teams players that sign long-term (3+ year) contracts with their current team as a whole outperform players who sign with other teams.  That is, teams have a better understanding of their own players than other teams do, so make better decisions about which to keep.

My bet is there’s probably a deal that could be had to protect the Yankees but still get Cano is $200MM.  Something like 6/$150MM, with two vestable option years for $25MM each and $10MM in buyouts.  So he’d be guaranteed something like $160MM but could make the $200MM.  That would probably be non-horrible, as scenario 1 it’s only an overpay of about $3MM per year, and scenario 2 it’s a bargain (and they have a certain HOF’er for almost his entire productive career.

[8] I think it’s fairly safe to assume that, behind the scenes, every good MLB player is being investigated by a journalist. The stories are instant fame for the writers.

With the way the market is, I think $200 million for 10 years would actually be a fair deal.

My personal pick would be roughly what Mike suggested, although I think you would need to guarantee at least seven years to get him at $23 million per.

[0] We’re talking about signing him after this coming season?

Yeah.  I don’t see why he’d agree to sign an extension at this point so close to free agency.  Not with his agent.

I’m sure Boras has a number he would take right now. It might be $300 million, but still.

Forgot to mention earlier, ZIPS projections out for Yankees.  At a macro level anyway, seem to basically align with CAIRO.

[14] I imagine he’ll play out the season as well.  However, I think we assume too much as certainties with Boras as an agent.  Around this time last year it was a CERTAINTITY that Yankees would get a crack at Weaver - who has Boras as an agent - but he resigned with Angels.  There are other examples. 

Also, people always want to point out, “He signed Boras as an agent because he wants the most money!”  Also not true.  He may want the most money he can get from the Yankees.  Just by signing Boras as his agent, the Yankees probably upped their opening offer to him (either for an extension or new contract) by several million $$‘s.  Obviously, I know none of this for a fact, but I don’t think the assumptions are necessarily warrented.

[12] - This latest A-Rod story didn’t come out because someone was looking to dig up dirt on him.  The way I heard is is the guy behind it stiffed an employee some money so the dude broke into the abandoned offices and sold off what he could find. 

Balco, was it a pissed off former coach that turned in a sample?

I’m assuming there are a ton of these smaller one off shops that are never going to piss someone off and whose secrets will never be told.

If he never gets caught again and has a Hall of Fame career, do you think Braun will get dinged for his alleged PED use?

[19] Interesting question, the players who are getting hurt for it now used PEDs before they were expressly against MLB rules. Braun was “caught” after PEDs were forbidden. However the popular and press-driven backlash against him was minimal/non-existant compared to that of the current and incoming HoF classes.

My guess is he will be dinged a little, but it won’t be anything compared to what is happening right now.

Yeah, I think he is a perfect example of how the media just haphazardly gives a shit about certain issues. Big Papi is likely another good example. Bagwell is missing the Hall of Fame without ANY sort of proof that he did PEDs, while Big Papi actually has a failed test. And yet I could easily see the same writers believe Papi’s excuse while condemning Bagwell (and clearly, as we saw this past election, Piazza).

It’s hard to disbelieve Ortiz when reps from the players’ union were standing behind him, though, isn’t it?

But the truth is I could see writers thinking: Braun screwed up once as a kid, was caught and punished, and my best guess is that he was clean thereafter.  There was a punishment established by the rules - if they had had testing and punishment earlier, perhaps some of these guys I can’t vote for wouldn’t have used throughout their careers - that is, maybe they wouldn’t have screwed up their career numbers so that I’d know what to vote for or against.

I don’t think that’s an indefensible position.

Ortiz would never, ever under any/all circumstances do a thing like that.  Oh buddy(s) how can you possible doubt the man’s word.

[14]

The ‘not with his agent’ is an important caviat. I can’t believe that it’s not well worth Cano’s while to sign an extension right now, even at a somewhat reduced rate. If he isn’t thinking long and hard about how a slightly down year or a freak pitch on his wrist could cause his value to plummet, he’s making a big mistake.

This is a classic case where the interests of the player and the agent clash. Boras has definitely done the math for himself and has figured out that on average, he’s better off having his guys wait until free agency. But players should not be taking that risk, when they can get insanely rich deals right now. Why risk $200,000,000 just so you might get an extra $60,000,000?

[22] But what the “tainted” players allegedly did was not against the rules when they did it. What Braun did was. There are plenty of pitchers in the HoF who altered baseballs - they were not punished for doing so before the practice was made illegal. Altering baseballs is as clearly against the rules “in spirit” as PEDs are.

Also, the whole character clause of the HoF is bullshit. There are plenty of baseball players who are great guys and suck and just as many who are objectively terrible people but are really good. If you are superior at baseball and prove so for a significant period of time at the MLB level you belong in the HoF.

Ortiz is a super nice guy, that took steroids. Neither of those should really impact his HoF chances. The fact that he’s been a pretty dominant hitter at the DH position for a decade should be the determing fact of his HoF candidacy.

[22] I don’t know, that’s putting a lot of faith in the testing system. If, for example, someone in the current mess ends up coming clean because of it, the testing program will have pretty clearly failed to catch them, so why wouldn’t you wonder about others?

Also, considering someone who failed one test because most of his career was under the testing regime, while throwing out/under valuing the so-called clean players of the steroid era seems indefensible, even if you had a perfect testing system.

edit: okay, I’m thinking of things that make it defensible, but you have to make the assumption that steroids are okay as long as you don’t do too much, and then also assume that the average/typical usage pre-testing was above that amount. I don’t think any sports writer will take that position publicly.

Gaylord Frigging Perry is in the Hall of Fame DESPITE EVERY VOTER KNOWING HE’D CHEATED HIS WAY THERE.  Do not look for consistency, logic, or intelligence from HOF voters.

ETA:  Also, Whitey Ford.  Elston Howard would cut the baseball with the buckles on his shinguards to give the ball more movement.  But what writer believes Jim Bouton?

Clay, the “not against the rules when they did it” argument has never made any sense.
We discussed this recently: if we play poker and don’t stipulate that you can’t use your new quantum device to predict my moves, it’s still obvious to both of us that it’s cheating.  Outside of these arguments, no one thinks that you need to have a written rule to make something “cheating.”  Because you don’t.
And those who took steroids hid it because, of course, they knew it was cheating.  The absence of a stipulated punishment doesn’t change that.

Yes, UJD(C) the Perry thing is crazy.  It’s an argument for reconsidering that decision, I guess.

Tree, I agree - I wouldn’t put THAT much faith in the testing system IN PRINCIPLE… but they’re put in a position where they have to make a call and their information is inherently limited.  It seems clear enough that a blanket assumption of guilt or innocence, as a mindless and inflexible rule, is unlikely to be a more reasonable position than using one’s with limited information.  What else can they do?

And let me add that the problem shouldn’t be viewed as an application of the “character” clause.
It should be simply that they don’t believe they have enough untainted performance to know whether this guy would have passed muster.
And that it’s this guy’s fault that they don’t have enough untainted performance.

I’m imagining a case where an insane manager releases nerve gas into the visiting dugout. It’s up to the authorities to bring him up on charges, but baseball should give that manager’s team the win, since the other team would have to default.  Nothing against nerve gas, or even against murder, in the baseball rule book, after all.
Really?

[28] Knowing someone elses cards (outside of intuition/odds) is clearly illegal in poker be it via cameras, stacking the deck or hypothetical quantum machines. Altering the baseball is expressly against the rules of the game of baseball, as is batting out of order, etc. PEDs are not (or rather were not against the rules) against the rules of baseball, especially when PEDs are so nebulous - Creatine is OK, so are a number of “Performance Enhancing Substances.” They may have violated the spirit of fair-play but I have a hard time admitting that they were against the rules until, well, they were actaully against the rules.

[30] Attempts to intentionally harm the opposing team are against the rules of baseball. People get tossed to sliding cleats up fighting, and intentionally throwing at people.

WP, I think the annoyance some of us—well, me at least—feel with the feigned moral repugnance on the part of writers and MLB is that they all knew or should have known it was happening.  There were contemporary articles about the fact that steroids were becoming widespread.  The other day I linked to a discussion of Tom Boswell’s admission that he saw a future HOFer juice, presumably in the late 80s or early 90s.  Who was that former Red Sock who said the club had someone on payroll who instructed the players how to juice?

And now the bluenoses are shocked, shocked that there was gambling at the Casbah.  No writer or baseball official would wink at nerve gas in the dugout, and if they were so concerned about PEDs they shouldn’t have done the same with steroids.

[33] That is a lot of it.

Honestly the worst of the bunch is Selig, who willfully ignored steroids to rebuild baseball’s brand in the late 90s/ealry 2000s. Then acted all outraged when it became widely known that steroid use was ubiquitous. And now he has the nerve to watch one of the best HoF classes in the history of the game have no one elected and he responds that there is no issue with the HoF voting and that the events are “normal.”

[33, 34]
I get that, of course.  But if St(F)UP and I are playing poker, I’m presuming it’s not professional poker, we’re PRESUMING standard rules, or stipulating basic rules, and the rest is: obviously, nothing ridiculous out of the spirit of competition.
Or let’s say it’s stickball, where the rules could different every time.  No one said that using a mirror to blind the batter is cheating.
You know what?  It’s cheating.
Or - how about this: Lance Armstrong eats an extremely iron-rich diet and special emitters are placed so as to create magnetic fields that pull him through the course of the Tour d France.
There is no specific rule against this (I’m stipulating that).  Do you have a hard time considering that cheating?

[24] I agree with your analysis, based on Utility Theory, or just common sense.  So, the Yanks should be offering Cano an extension right now, unless they’ve already decided that they won’t try to re-sign him. That would require advance thought and planning with unified decision-making by Cashman and Steinbrenner.  Somehow I fear that the Yankee top brass aren’t up to this sort of advance planning.

[24, 36] That’s the idea behind offering long term contracts to people early in arbitration or before, but in Cano’s case, where he has already had a $50 million contract and where even the worst case scenario of suddenly becoming replacement level includes several chances to make a comeback (with several million dollars minimum), I’m not sure it makes sense. More realistically, I could see him easily getting another $50 million over his career even if he is injured for most of this year.

If Gardner hadn’t been injured, I would have liked to see him get an extension, but with the injury he likely knows that his value is at a low point, so waiting at least a year makes sense for him.

[37] There’s no question that Cano’s situation is not the same as a player who has yet to start earning big money and yes, Cano would probably be able to patch together several 8-figure contracts even with an injury or declining performance. I just think that the difference between a big contract and a really big one isn’t big enough to justify risking the big one and I wonder whether Boras is capable of making Cano aware of this (although Cano’s a pretty sharp guy).

I would put my top bid for Cano at $160m, probably over 8 years (the more years, the lower the AAV for tax purposes).

It’s also worth mentioning that Cano isn’t a pitcher; the worst case scenario is a lot more likely for them.

I see FanGraphs is about to start charging.  When will SG finally cash in?  And what value do we put on him?

Not to mention the other lightning bolts.  Will they seek greater remuneration at, maybe, The Blog That Must Not Be Named?

I would put my top bid for Cano at $160m, probably over 8 years (the more years, the lower the AAV for tax purposes).

As we’ve discussed in the past, I think the absolute rock bottom that the Yankees can expect on a 6-year deal is a little over what they’re paying Teix AAV-wise (Teix is getting $22.5). If that is too rich for their blood, then they’ll just have to let him go because they’re not getting him any cheaper than that.

Is FanGraphs going fully pay? I thought they were just having “Premium” content as well as their free stuff.

[41/44] Looks like it’s the same thing they had last year. Which is as Brian says: “Premium” (mostly fantasy related) stuff and ESPN Insider.

Whatever his contract ends up being I hope they give him an opt out after a few years. Worked beautifully with Soriano, should have worked with A-Rod but… sigh.

Anybody know what happens to the luxury tax in the case of a front-loaded or back-loaded contract with an opt-out?  If exercised, the opt-out would change the contract’s AAV - retroactively, for years in which it’s already been paid, wouldn’t it?  Has this been covered?

The way I would do it is to have opt-outs and player options treated as separate contracts. I have no clue what actually happens.

[47] The front loading or back loading doesn’t matter (AAV = sum / years), but the option years are subject to debate.  There are rules about whether or not that year counts as a year in the AAV calculation - there’s some threshold for the option value.

If the Yankees are not willing to resign Cano at market price, shouldn’t they try to trade him now that they are not even a 90 win team?

If exercised, the opt-out would change the contract’s AAV - retroactively, for years in which it’s already been paid, wouldn’t it?  Has this been covered?

This is my understanding.  So if you had a player who had a 2 year deal with an opt-out after one year and his salary was say $10M in year 1 and $20M in year 2, he’d be taxed at $15M in year one.  The assumption is that money is guaranteed since the only way it won’t get paid is if the player opts out.

If he does opt out before year 2, the tax hit gets re-calculated to $10M.  Whether that means the team gets a check back or credit towards future payments, I don’t know.

It’s not exactly the same thing, but take Derek Jeter’s player option for 2014.  I believe the difference between his buyout and the total value should it be exercised is not part of Jeter’s AAV/luxury tax calculation right now.  Should he exercise the option next year, his AAV for the entire length of the contract gets recalculated and the team gets retroactively taxed.

I’m not 100% positive on all that, but it is what I think based on what I read.  If anyone thinks that’s wrong feel free to correct me.

[50] What is market price? Cano is an elite hitter for sure, but he is also a middle infielder, they tend to age badly. SG compared him to ARod, which is a solid comparison and ARod’s contract hasn’t been the greatest contract in the history of baseball.

[48, 49 & esp. 51]
Thanks, that makes sense.

[50] Additionally, why do they need to be a 90-win team NOW (and, they’re already close)?  I mean, even if CAIRO (and ZIPS) has perfectly nailed the talent level - AND expected playing time - of every team in the AL, the standard deviation I think is something like 8 wins.  So just by some lucky sequencing - normal luck, not 2012 Oriole’s luck - they could win between 81-97 games (assuming 89 wins is their current talent level).  Are you willing to reduce that range to 77-93 (figure Joseph or Adams worth 1 win, Cano worth 5)?  I mean, sure there are trades I would do it for.  Profar+Olt for example.  Taveras and maybe Cards’ #2 prospect.  But we aren’t getting those players back.

Keeping Cano 1) gives the Yankees the best chance to win this year 2) gives the Yankees the best chance to resign Cano next year 3) if you think Yankees are having PR problems now, imagine if they traded Cano and DIDN’T get a top-10 prospect back.

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