Examining Nine Figure Contracts
When investigating the viability of a Lindor extension the gauntlet was thrown down, and I decided to investigate how frequently large contracts fail in Major League Baseball. To limit my sample I decided to look only at contracts valued at or above $130M. Why $130M? Because I got tired of the exercise after looking at Johnny Cueto. I understand this is not a complete sample, but what I found was moderately interesting (at least to me). Full disclosure: the five next deals I would have looked at would all have been duds: Barry Zito, Vernon Wells, Jayson Werth, Ryan Howard and Josh Hamilton are effectively a 'who's who' of awful nine figure contracts. Anyway...
Here's what I did: I took a look at the contract (besides four exceptions: Stephen Strasburg, Justin Upton, and the two new ones, because they're too recent to judge). I first looked at the total amount paid out to the player. This is important because many of these contracts are not finished yet. I then took a look at the total amount owed to the player (these numbers are the same if the contract is finished). I then took a look at the total number of bWAR accumulated so far (or over the contract if the contract finished), and then divided the two previous dollar amounts by the total bWAR produced. From there I figured I could guess how reasonable the contract was for the team.
In total I examined 40 contracts, the averages were:
Average $ per bWAR produced so far: $9,373,390
Average $ per bWAR produced over the contract life: $14,598,087
In total 37 players were part of the sample. Frankly, after looking at them I find the stigma over large contracts completely incorrect, at least if you look at a simple bWAR compared to money. it is certainly true many of these contracts became an albatross as it aged, but it's also true many of the players produced enough value early on that it simply did not matter. A few notable examples:
Max Scherzer: 7 years, $210M
I bring up Scherzer because he's an example of why I think these deals can be too easily stigmatized. Scherzer's been paid $83.5M the past four seasons and produced 29.0 bWAR. Overall he's been paid an average of under $3M per bWAR. If he doesn't throw a single pitch he'd be worth under $7M per bWAR produced on this contract. Of course, Mad Max remains a constant threat to win a Cy Young and punch out 300 batters. Also in short: he's already worth the money he's owed, even if he doesn't throw another pitch.
Joey Votto: 10 years, $225M
Votto's another one who is pretty much already worth the money. Votto's been paid $93M against 24.5 bWAR. He's a perennial contender for the MVP, if the voters would pay attention to losing teams. His contract's $/bWAR so far is a paltry $9M per bWAR produced, and he has 5 more years to keep dropping that number.
Troy Tulowitzki: 10 years, 158M
This is another contract which completely bombed out for everyone involved at the end. Heck, Tulo's barely played the past few years, and missed whole seasons. But again: Tulo was so good early on in the deal, it still doesn't look awful at the end. Tulowitzki is in the 9th year of his deal, and has been paid $138M (roughly), and has been paid $5.8M per bWAR. If he doesn't play again, his total payout would be $6.7M per bWAR produced. Overall, if Tulo puts in another decent season, his deal would be pretty stout in terms of value produced.
Chris Davis, Prince Fielder, Albert Pujols
A pretty clear pattern emerges from this study: slow first baseman are generally awful bets to age well. There are, of course, exceptions like Joey Votto and Todd Helton. However, these three are arguably the three worst contracts in the study. Prince Fielder was paid over $30M per bWAR produced, and did not finish his contract. Albert Pujolis is currently at $18M per bWAR produced, and Chris Davis is being paid over $100M to effectively play as a replacement level player. In short, while there are numerous examples of excellent long term contracts, there are also plenty examples of duds.
Jason Heyward: 8 years, $184M
This may be the most shocking deal (and the one which Philadelphia must concern itself with on Bryce Harper). Heyward was a sensational player before signing his mega deal. Then he immediately fell off a cliff. The deal is already looks putrid, with the Cubs shelling out over $15M per bWAR so far, and are looking at over $30M per bWAR if he doesn't produce going forward. In short, there is still time for Heyward to rebound (although this appears less likely as time continues), but there is also reason to think this will become an awful deal going forward.
Neither of these deals are amazing, but they're around where (I think) a team can reasonably expect a deal like this to pan out. Jon Lester is not quite an ace level pitcher, but he's pretty darn good. He's also aged well; so far he's been paid $7.8M per bWAR produced, and sits at $12.5M per bWAR for his contract. Overall, he's a decent bet to pan out in the end, with two more seasons under contract. If he can replicate his 2018: he'd be worth the money, and wouldn't be an awful signing overall.
David Price is a bit more complicated. Price has not quite pitched like an ace for Boston, but rebounded reasonably last season. He's been paid $10M per bWAR, with $24M per bWAR produced on his contract. He's going to need a few more seasons at his 2016 or 2018 level to eventually make this deal worth it for Boston.
Conclusion
There was a wide range of value on the deals I found so far, some more surprising than others. Overall, I think people mischaracterize the deals as they are far more about the total dollars committed than they are about years. The length of the contract is a hedge for the team, not security for the player. If star players perform well early on, most of these deals look reasonable at the end, even if they become an albatross. This is largely because teams simply arent' prepared to pay the massive amounts of money per season to make it worth it for a player, but if a player performs early, the deal winds up being a good deal for the club in the end.