Grand Cards: Stop Comparing the Werth Deal to Pudge and Maggs

Monday, December 6, 2010

Stop Comparing the Werth Deal to Pudge and Maggs

So Jayson Werth and his superfluous "y" just signed a 7-year $126 Million contract with the Washington Nationals. When I found out about it yesterday I was floored. Apparently, some GM's were floored too:
The Werth contract is stunningly huge. An American League general manager nearly fell over when I told him the terms.
So...yeah. My first reaction was "oh thank God the Tigers didn't offer 7 years." Because when you think about it, that's the crazy part. 7 years at $18M per year, for a 31-year old late-bloomer who has had four very good seasons in a hitter's ballpark in a lineup surrounded by Ryan Howard and Chase Utley (in addition to Jim Thome, Raul Ibanez and Jimmy Rollins, at times).

According to MLB Trade Rumors, Keith Law takes on the "Losing Teams Need to Overpay" argument (ESPN Insider), a sentiment that has been reflected far and wide, from half the people in my office to Scott Boras himself:
Agent Scott Boras says this is like the Tigers signing Pudge Rodriguez seven years ago -- when they were coming off 119 losses, and he was coming off a World Series win -- or Magglio Ordonez six years ago. Nice comparison, especially since the Tigers ended up in the 2006 World Series in large part because of those two deals.

You see? This is a franchise saver! Just like the Tigers did before they went to the World Series! Spend money to make money!

Except that they're not the same. Not at all.

Exhibit A: A perennial All-Star at a premium position fresh off a World Series championship is a free agent. He's already a lock for the Hall of Fame. However, he is also coming off of a back injury that has scared off every team under the sun. This is Pudge Rodriguez. Teams were scared about his longevity and durability and were offering 1 and 2 year deals, just like the Marlins had the year before.

The Tigers stepped in an offered a 4-year/$40M contract--or at least twice as much as anyone else was willing to pay in either dollars, years or both.

Except it wasn't so cut and dried. Pudge's contract has a series of elaborate back-out clauses and buy-out provisions that protected the Tigers in case of recurring injury--the very reason that teams were afraid to go after Pudge. In the end, only $20M was guaranteed, with all the downside protection in the world.

So yeah, the Tigers overpaid, but this was hardly a blank check and had the ability to right a franchise without having the possibility of crippling it. Also, this was a Tigers team with far less talent coming off a far worse season (119 losses) with far less hope than the Nationals in 2010.

Exhibit B: Perhaps the more apt comparison, Magglio Ordonez signed a deal worth as much as 7-years and $105 Million in 2005. Again, this was a case of the Tigers paying far above market price for Maggs, something that they had to do to get talent to come to Detroit to play for a floundering franchise.

But again, things aren't all that they seem. Ordonez, like Pudge, was coming off of an injury that scared other teams away from offering any long-term contracts. Like Pudge, Magglio's contract had protections--the contract could be voided--if his knee injury came back and put him on the disabled list.

Sorry Maggs, such is the price of experimental European treatment.

If you boil it down, the Tigers had a $12M exposure to Magglio's knee injury, which, if it was healed, would lead to a 5-year, $70M contract with two vesting option years.

This was an overpayment--Maggs was not worth $18M last year, and won't be worth $15M next year, just as he wasn't in 2009--but the options protected the Tigers from having to issue the 2011 contract at $15M and by and large he has been worth the value of the contract.

The common thread between the two contracts is the same: in both cases premier players were coming of major injuries that added significant uncertainty to whether they would be able to return to form. Overpayment amounted to offering what Pudge and Maggs would have commanded on the open market, if their injuries were not an issue. Maybe and extra year here or an extra million there, but the Tigers were willing to take the risk (while creating contracts that mitigated risk) that no other teams were willing to take.

Such is not the case with Jayson Werth. He's coming off three full, healthy seasons, in which he has been tremendously productive. He was one of the premier free agents on the market, and was expected to land a big, multi-year contract. In other words, there was no uncertainty about Jayson Werth.

And that is why this comparison needs to die. The Nationals massively overpaid the rest of the market with 7 guaranteed years. No options, no back-out clauses no little things that could prevent this deal from being a Vernon Wells/Barry Zito style albatross. And that's fine--the Nationals can overpay for whoever they want and I won't really care. But to say that this is what the Tigers did with Pudge Rodriguez and Magglio Ordonez is a fallacy. The Tigers took a chance when nobody else was willing to. The Nationals decided to just open up the bank and look the other way.

1 comment:

  1. That deal doesn't make any sense to me. I understand he's had a few good seasons but wow.