Evan Longoria’s Contract
Earlier today I met up with the black hole known to scientists as “Chatting about Evan Longoria’s contract.” To wit:
Holy Cow! That’s a lot of money and it doesn’t even include 2016! Now I’m not trying to say that one hundred million bones is chump change. Far from it, but because so much of that money is owed many years from now the actual purchasing power is substantially less. This is something we can pretty easily calculate by plugging in a few variables.
To calculate present value you need to discount future dollars. To do this we need the player’s salary, the number of years and an interest rate. After some discussion in the previously linked thread I have decided to use 5.3% for the discount rate due. Some legwork showed that his is a reasonable figure due to a Compound Annual Growth Rate of 5.3% for the fifty highest paid players between 2000 and 2015 using the USA Today Salary Database. I’m also estimating that a dollar per win on the open market right now is $7.25M, which is somewhat arbitrary. Scale up or down as you see fit. This initial peg is inflated year-over-year using that same 5.3% inflation rate. While Evan is going to receive checks totaling $118.5M over this time frame he’s really “only” going to be able to buy a little more than $93M worth of AK47s or Camaros or kind bud. That’s still a lot of money, but you’re talking around 20% in savings because you’re paying so far away.
Of course, there are two halves to value. A player could be paid a pittance, but if he has no business in the Show then there isn’t much value to be had. To gauge the other half of the equation, production, I like to use WAR and try to keep it as simple as possible. I’m leading off with what I think is a reasonable assumption that Evan Longoria will be worth something like a 4.5 WAR player next year. I also think that he’s going to shed around half a win a year due to uncertainty and potential injury in addition to natural decline. I’m pretty firm on the decline, but what if you’re a little more conservative and see him as a 4.0 WAR player next year?
In this scenario I do not see it being worth it to pick up the option so I see the Rays buying out that final year. If you’re going to discount dollars I feel you should also be discounting wins. To do this I use the formula that The Point of Pittsburgh guys shared in their phenomenal look at prospect value. Now we can start to sum stuff up. If you multiply the Lg$/WAR by the dWAR you get the dValue and when you compare that to the Present Value (PV) you get a rough idea of how much a player is outplaying (or underperforming) his contract. In the conservative scenario I see Evan worth around $30M more than he will be paid. The next three seasons should be pretty lucrative for the team, but by the end of that time frame they should be looking to flip him while he still has value and before his decline catches up to him.
The first scenario above that I think is a little more probable shows him being worth more like $54M more than he will receive in cold, hard cash and you can probably squeeze a fourth season out before getting nervous about the return. Both scenarios show him having quite a bit of value that will diminish over time, as all things must, but if he can play even a little better next year than he has this year with a pretty normal decline then he would have substantially more value. Obviously, an extra $24M means an awful lot in terms of prospects so is it reasonable to see Evan having a bit of a bounceback this late in his career?
So there’s a lot going on here and you should be able to enlarge in a new tab, which might help. Each line is a 6th order polynomial trend line. The average line is, surprisingly, an average of each player’s WAR in their Nth season with 0s counted in the average. I don’t know how much stock to put into it, especially further into a player’s career, but the shape looks like what you would expect. Ah, the players. I looked at all players that had at least one 6.5 or higher season since 1996 then focused on just those that had at least two, 7 WAR seasons and an additional season of at least 6.45 WAR. This allows Longo to barely sneak in and you can see that the rest of the players nearly universally had or are having great careers.
Longo got off to as good of a start as all, except Trout and Pujols to start their careers, and really he was playing with Pujols for the first three years. Then he started to drop off. Most guys were still ascending by their 4th season, but after his drop Evan was able to stem the tide for a bit before repeating the cyle. This may bode well for getting back to being a 4-5 WARplayer for a few years, but I don’t think his trend really tells us what to expect with how all over the place it is.
What we should be looking for here is guys that had bounce backs. Bonds is ridiculous and not a comp for anyone on the planet. A-Rod the same. Chipper had an interesting career where it looks like he was steadily into his decline phase before having a very solid resurgence over the back half of his career.
Frank Thomas had a steady decline before staving off Father Time towards the end. David Wright has had more volatile ups and downs, but let’s just move along, shall we. Utley had a nice uptick before he went over the falls. It becomes pretty evident that it’s pretty difficult for even very good players to pick their game back up and keep it there. Some of these guys put up an excellent season or two later in their careers, but none of them that weren’t obviously juicing showed an ability to push that talent curve back up and out.
Before going I wanted to point out Carlos Beltran’s curve. If I had to think of an ideal curve for a player I think that would be the exact shape. Basically adding a WAR per year to your peak in your 6th season and then a long and steady decline that allows for multiple pay days. He goes from bit player to All Star to carrying his initial team hopefully all the way to the Ship. Then hits free agency with a mighty wind pushing his sail.
Beltran is a borderline Hall of Fame guy that I don’t think got deserved attention throughout his career. Maybe it was the relatively low peak compared to his peers, but he was consistently a very good player that contributed to a lot of good teams. His career is winding down now, but I hope history remembers more than just that 2004 playoff run where he roasted all comers.
I have no idea if Longo will be a great player ever again, but I think he has a really good chance to be a pretty good one for a while, and as demonstrated that’s probably pretty good for the next few years for the money he will make. I do think that the team will trade him three to four years from now, but I don’t want to think about that. I want to enjoy the fact that the Rays best player in franchise history is here for the foreseeable future and when the time comes that some folks much smarter than I think it’s time to cash him in they get every ounce of worth for him. C’est la vie, Go Rays!