With Zack Greinke, David Price and Johnny Cueto off the free agent list, there is a serious drop-off in quality in the starters' pool. San Francisco bid heavily for Greinke but got outbidden by Arizona, because they refused to give Grienke a 6-year contract. Instead, they got Cueto for $130 m / 6 years, after he had rejected a $120m / 6-year offer from Arizona. Boston went for Price and signed him quickly. The Giants probably felt left out (or panicked) and went after Jeff Samardzija and, with Cueto, rounded out a good starting rotation behind Mad-Bum. Funny things happen during winter. We will talk about these deals for a few years (just like we did with Zito's) but let's start by understanding which deals project to have the best return on investment and laying out a few assumptions teams (probably) made to sign these pitchers. After all, San Francisco, Arizona and Boston each spent ~$220m on improving their starting rotations. Let's see who did a better job.
I will not reinvent the wheel. Fangraphs and others have developed a player assessment framework that focuses on open market WAR value per year ($8m as of 2015 and growing at a 5% rate) and player aging curve i.e. WAR increases by +0.25 WAR/year (Age 18-27), stays flat 0 WAR/year (Age 28-30), decreases by -0.5 WAR/year (Age 31-37), decreases by -0.75 WAR/year (38 and older). WAR decreases by 0.5 per year as a player gets older (31-37 years old). The results using both Steamer projections for 2016 and past performance (2015) as starting points are the following:
Price's deal looks like the best one. Boston will pay the 30 year-old hurler $217m to get a return of ~$280m with no negative value years. That in itself is an anomaly the way this contracts are usually structured. It certainly appears to be a great deal for Boston, especially if David Price opts out in the middle of the contract. If we think from now onward he will perform like a 5-win pitcher the contract is even, which is possibly what the Red Sox thought they were getting. The worst case scenario is a still financially sound one, while the best - though not unlikely-scenario is a $100m extra value for Boston. Price can opt-out after the 2018 season, which would only be logical after a very good 3-year stint with Boston, maximizing his value during those years for $90m.
Greinke's deal is also positive but just slightly, if we think he will perform like a 6-win pitcher down the road. The next two seasons are key as he needs to have back-to-back 4.9+ WAR seasons. He has never done that. Dave Cameron rightfully argues here that his bat and defense are very valuable and therefore 5-win seasons are achievable. Steamer projects a less optimistic future for Greinke with a total loss of $52m over 5 years. While it is not a big loss, mid-size markets teams such as Arizona need to efficiently deploy resources to be competitive. Greinke, now 32, just had one of the best walk-off contract-year ever in 2015. As it happens with almost every single big contract, it will get messy for Arizona in a couple of years - especially when Pollock and Goldsmith demand bigger checks. Arizona's front-office is mortgaging their future for a win-now strategy. It will be interesting to see how Arizona manages that but that's another post.
Then we have Johnny Cueto (30 next year) and Jeff Samardzija (31) in San Francisco. Let's start by saying that predicting is difficult but in their particular cases is impossible as they have been very much inconsistent. Per 2015 WAR, Cueto is estimated to be $21m above market level while Samardzija is expected to drive a -$39m loss. San Francisco invested $220m to get a return of $202m. Steamer's numbers are even worse. That does not seem smart. Either A) San Francisco overpaid for those players or B) thought their performance could be improved. For the sake of this post's brevity let's not pursue option A. San Francisco might or might not have willingly overpaid. They bid for Price and Greinke and did not get them. The market changed and they might have gotten stuck in deals with lower returns. Had they not taken Cueto and Samardzija, they might have gone after another pitcher through a trade e.g. Ian Kennedy (that's rather an extreme, I guess).
Option B, though, is more interesting and reasonable. It looks as if the Giants are certain they can get both Samardzija and Cueto back to their previous/better forms. Both pitchers struggled mightily in 2015, especially Samardzija who led the American League in earned runs and hits. Cueto had a good first half but then collapsed in the second one, when homers and walks were frequent, strikeouts decreased by 30%, line drive increased by 10%, swinging and miss rate went down, etc. San Francisco requires Samardzija to follow a ~3.1 WAR pitcher pattern from 2016 to break even. He has only done that once in his career: he posted a 4.1 WAR in 2014 with CHC and OAK. Samardzija has been pretty much a 2.7 WAR pitcher, which is what he accounted for in 2012, 2013 and 2015. Steamer projects him to be a 2.8 WAR pitcher in 2016. Samardzija showed, indeed, great stuff at the beginning of his career and his arm is not as taxed as others but seems like the Giants are taking quite a big risk trusting him and coach Dave Righetti. Samardzija moved from great-talent-about-to-exploit to one-year-wonder. Samardzija needs to figure himself out but he is 31 years old and has $90m in his pockets. I would have passed on Samardzija at this price.
Johnny Cueto's contract is completely different. First of all, Cueto's contract is more aligned with his historical performance. Cueto needs to follow a ~3.7 WAR pitcher pattern from 2016 to break even. Last year he posted 4.1 WAR, even with his late meltdown. He was 4.7 and 4.6 WAR pitcher in 2012 and 2014, respectively. I know ERA does not mean much but since 2011 he has compiled a 2.71 ERA, second in the major to Clayton Kershaw, mostly in Cincinnati and now moves to the spacious AT&T Park. He has thrown 210+ innings in 3 of his last 4 seasons. His velocity seems fine. His cumulative 17 WAR since 2011 sits tightly along with Jon Lester and James Shields' numbers with fewer innings thrown. You can think of many metrics to say how good Johnny Cueto has been but his future is at least worrisome. I have doubts on is elbow, on his weird-but-entertaining mechanics and on his non-arm injuries. I am worried about his FIP-ERA gap, which is the highest since 2011. You may think the new Cueto is the one the Royals leased for two months - who was consistently hammered, while playing in another pitcher friendly park and in front of a great defense. Then again, it all comes down to the fact that Cueto only needs to be as good as he (frequently) has been and San Francisco has deep pockets. Just a few months ago they made a playoff run with a pitching staff that highlighted Volgelson, Hudson, Lincecum and Cain against a stronger Dodgers team, who had Greinke pitching every 5 days.
All taken into account, it looks Boston got a $220m bargain. They struck their deal first, shrunk the market and raised the prices. Steamer projects Price to be around 5 WAR in 2016, which is a whopping 22% year-to-year drop. Even in that low-risk case, the deal passes the eye test. Greinke's deal is difficult to explain for Arizona but it makes some sense, from a financial point of view. Greinke was destined to be paid massively after his 2015 performance. We all knew that. On the other hand, you can argue that San Francisco is spreading risk by signing two pitchers instead of one. Or that they can right the (many) wrongs. Or that Cueto's opt out option will drive up his performance in the short term. Those are to be seen but for now it looks they did not spend their $220m as wisely as Arizona and Boston did.
By Oswaldo Gonzalez