This week we will be following up on our previous piece regarding Least Valuable Players. There identified Hanley Ramirez and Pablo Sandoval as the two worst performers of the 2015 season. We are not fans of beating the proverbial dead horse, but given that this was just the first year of their respective contracts we were interested in figuring out just how bad these deals are shaping up for the Red Sox. The short answer? It is bad. Like, Lucas Duda throwing to home in high-pressure situations bad.
As you might recall, during the 2015 season Sandoval accumulated a -2 WAR whilst Hanley finished up with a -1.8 WAR. Even after that woeful start, the Red Sox are still on the hook for 5 more years and $89.4 million for Sandoval, and 4 years and a total $90.25 million for Hanley. Just let that sink in for a minute: 9 seasons of potentially below replacement level performance for $180 million. That makes the Barry Zito deal sound like a real steal.
For the sake of argument, they do not have to be that bad for the rest of the contract, do they? I mean these guys were 3-win players just two seasons ago; maybe this was just a hiccup. Well, Steamer seems to partially agree with this logic and projects them to improve substantially. More precisely, it projects Sandoval to have 1.8 WAR and Hanley 2.2 WAR during 2016. Returning to these levels of performance is something, but is it enough to salvage these deals?
We replicate the player assessment analyses we used in our piece comparing offseason splurges in pitchers, just to figure out the net value of these deals. We use Steamer's 2016 projections as a starting point for WAR and then apply a player aging curve that goes as follows: WAR increases annually by +0.25 for ages 18-27, stays flat for ages 28-30, decreases annually by -0.5 for ages 31-37 and lastly decreases annually by -0.75 for ages 38 and above. With regards to the market value of wins we start off at $8 million per win and we apply a 5% yearly inflation rate.
Even after considering the improvements suggested by Steamer, none of the 9 seasons controlled by the Red Sox would produce a net positive value, and overall the net loss of these deals comes at $79.4 million.
We ran the numbers, and in order for the Red Sox to recoup their investments, even after letting 2015 go down as a sunk cost, Sandoval would have to accrue 10.35 WAR for the rest of the contract (73% more than the projection), whilst Hanley would have to accumulate 10.56 WAR (82% more than the projection). This seems to be rather unlikely, especially when you consider that the Steamer projection already seems bullish, implying a 4 WAR improvement between seasons.
We wanted to test just how bullish this prediction is. We set out to find the past seasons most like the ones Sandoval and Hanley just endured and tried to identify how those players fared off the year after as well as for the rest of their careers. We searched the last 30 seasons for players between the ages of 28 and 32, that produced a -1.5 WAR or worse in at least 400 PA, after accumulating at least 5 WAR in the previous two seasons. Namely, we were searching for players that had been performing at a high level, still in their prime or early phases of decline, which suddenly plummeted in performance.
Lo and behold the mother of small samples. We found just 5 players that met these requirements, 4 of them are already retired and one of them, well, one of them also plays for the Red Sox. Out of these five players four of them improved after their decline season, the other one was out of the game. Out of the ones that improved, only one, Joe Carter, was able to meet the 4 WAR improvement inherent to the Steamer prediction, actually he was the only one that was better than replacement level after the decline season. So far Joe Carter has also been the only one able to play more than one season in the majors after the decline, with the jury still out on Allen Craig.
Just how good were Joe Carter's first five seasons after the decline? Well he won back-to-back World Series with the Blue Jays, starred in one of the most memorable moments of baseball history and amassed a total of 9.4 WAR; almost the same as what would be required for either Hanley or Sandoval to break even in their contracts. Just how bad is the alternative? Another season of negative WAR (-1 is the average for those not named Joe Carter) and 0 WAR from then on; a scenario like this would produce net value losses for the Red Sox close to $200 million or 150% more than what emanates from the Steamer scenario.
I know that we are dealing with extremely small sample sizes, but entertain this thought for a second. Let's imagine that the above players represent the universe of possibilities and hence Pablo and Hanley each have a 20% chance of becoming Joe Carter and returning a net value of 0, that means getting fair value for investment, and 80% of teetering off and producing a net loss of around $100 million. Under that scenario the expected value of keeping both players comes somewhere at a net loss of $160 million over the life of the contracts. That is not necessarily crippling as it translates roughly to 3-4 lost Wins per year, but these bad decisions can find a way to add up quickly.
Based on this, the Red Sox would certainly welcome another Dodger bailout, however this time around they might have to add additional value for a deal to go through. Moving forward the Red Sox might want to pursue one of three alternatives. First off, the might use that $160 million expected net loss value as an upper bound of how much they would be willing to send (in either money or player value) to another team as compensation for taking these contracts off their hands. Secondly, they could settle on the Steamer projection and set that upper bound on $80 million. Lastly, they could try to make the other team believers of the Joe Carter dream, and try to get away with not sending anything else, and even hoping to get something back in return, but this seems rather unlikely. In theory by sending something (money or players) of less value than those upper bound figures to facilitate the deals they would be effectively cutting their losses.
With regards to the debate between sending some money or a player with value to make the deal work, it should be noted that $160 million in player value is something like Xander Bogaerts and a Top 25-50 prospect. Despite all the good will that recent deals have gained Dombrowski, there is no way Red Sox Nation would look kindly into giving up that kind of talent just to undo a mistake. The Red Sox are looking to become consistently competitive for the years to come and it does not make much sense to mortgage the team's present and future by giving up so much controllable high-end talent. It may be time for the Red Sox to leverage their financial fortitude, bite the bullet, subsidize part of the contracts if need be, and move on.
By Douglas Barrios