In recent years, WAR (Wins Above Replacement, read more HERE) has become
one of the most discussed statistics in player evaluation. With the release of
Moneyball last November and another amazing success story of the Oakland A’s
(and the lowest payroll in the MLB, $49 Million) winning the AL West on the
final day of the season statistical analysis could not be more in vogue.
In order to earn a playoff berth this year, the A’s had to beat the Los
Angeles Angels of Anaheim. At the conclusion of the 2011 season, Albert Pujols
was easily a top-5 player and the main contributor to the team that just had
won the World Series. Deservedly so with this status, he signed a mega contract
that will pay him $240 Million dollars over 10 years. The Angels, as can any
team that spends a substantial amount of money on one player can argue that by
adding a star caliber talent, it will ultimately make the whole team better and
provide an opportunity to win a World Series. The question raised is how much
is that argument worth? In a time where people and professional sports teams
alike are looking for creative ways to save money, perhaps a new way to plan
for success in baseball is to answer that question better and buy free agent players
accordingly.
Taking two statistics, annual salary and WAR, we can
easily determine a value that a player earns for their team by comparing it to
the league average. In 2012, Albert Pujols earned $12 Million and his WAR was
4.6 (career low). Teammate Mike Trout, who as a rookie MVP candidate, posted a
10.7 WAR while earning the MLB minimum salary of $480,000 is on the opposite
end of the spectrum as truly being the most valuable player (not the award, but
rather the cheapest player). Under this logic, Trout 58 times more valuable to
the Angels than Pujols. Think about this with your company’s sales team. If
there are two sales people that are equally as talented and successful with
earning revenue, yet the salary for person one is 24 times higher than person
two. Whatever manager allowed for that to happen would be fired and this
happens in baseball everywhere and gets amplified by front-loaded contracts. In
2021 when Albert Pujols is 40 years old and in the final year of his contract,
he is set to earn $30 Million dollars.
Taking another player that sets precedence to Pujols is
Alex Rodriguez. Rodriguez is in the decline of what has been a remarkable
career. When he signed his contract with the New York Yankees prior to the 2003
season, General Manager's had to answer the same question that they did with
Pujols last offseason. Remarkable talent that if acquired would make the whole
team better, but probably not for the duration of the contract. Playoff
appearances have continued to mount for the Yankees since including another
World Series win in 2009. However, what the Yankees currently face is exactly
the problem for paying prime players big dollars over long term contracts. As
their decline steepens, their value to the franchise becomes negative and can
cripple a team for those years from lack of payroll flexibility. Rodriguez made
$29 Million in 2012 and had a WAR of 2.0 – this makes Trout worth 323 times
Rodriguez.
Under this theory, a team that limits the number of
players on their roster with negative contributions to payroll will experience
the greatest amount of flexibility and have the best opportunity to improve
their team in an offseason by making the right additions (again, at the right
price). If all key decision makers across the sport were to agree, it would
mean for a decided end to mega contracts. Unfortunately, in an environment
where payroll inequity exists, this explanation offers further rationalization
as to why some teams are unable to sign Albert Pujols. All teams should be
aware of the risk and reward.
The innovative way of solving this issue would be to
treat players like a sales team by incentivizing them with substantial
incentives for good play – for instance $200,000 per home run; $10,000 per hit;
$20,000 per stolen base; 20,000 per RBI. This could create a true reward system
based on performance because Mike Trout is the one that deserved $30 Million this
season, not Alex Rodriguez. Unfortunately, the MLB Players Association would
never allow because it takes away from the guaranteed high salaries to players
like Pujols and Rodriguez. What can be done is teams that are committed to payroll
efficiency should take a closer look at WAR versus salary and stay away from
albatross contracts.
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