Ugly Truth: The Reality of a Felix Hernandez Extension
For many Mariners fans, signing Felix Hernandez to a contract extension is the top priority of the 2009 off-season. Hernandez figures to receive a large raise in arbitration, and he will be free to become a free agent following the 2011 off-season.
While he’s undoubtedly one of baseball’s most promising young pitchers, and a strong 2009 campaign, which has him in the hunt for the Cy Young award, has established him as a proverbial “legitimate ace,” it could ultimately be in the team’s best interest to part ways with the 23-year-old flame thrower.
While pitchers, especially power pitchers, are a volatile commodity, they are something of a necessity for success.
Especially in a post-season setting, a starting pitcher represents perhaps the greatest individual influence on a team’s victory in a single game of any position in sports.
But recent history indicates that there may be a limit to the salary that should be allocated to a player that only influences a little more than 20 percent of team games, and an even lower percentage of exclusively defensive innings.
Hernandez figures to sign an extension of unprecedented proportions. There hasn’t been a pitcher with a similar pedigree, at a similar age, with similar talent who became a free agent.
Last off-season, CC Sabathia cashed in on the largest long-term contract ever given to a pitcher. Sabathia’s contract totaled seven years and $161 million.
It paid him $14 million this year in salary, and a $9 million signing bonus, totaling $23 million and will pay him $23 million annually for the remainder of the contract.
Using that as a guide, if Hernandez reaches free agency without an extension, combined with his age, he could very conceivably be looking at a contract that pays him over $25 million per season, perhaps longer than Sabathia’s contract.
Dave Cameron of USS Mariner and Fangraphs wrote an interesting piece describing a discount the Mariners may receive in signing Hernandez this off-season, offering financial security for Hernandez by buying out his arbitration years and taking away any risk of Hernandez losing money following an injury.
While that sounds great, the operative word is injury. Pitchers get injured frequently by nature, and a long-term contract could mean that the Mariners must assume responsibility for an injured Hernandez for several seasons.
Cameron’s work, and other work at websites like Fangraphs are at the forefront of the evolution and mainstream exposure of sabermetrics and statistical analysis.
Among those is a dollar value based on a players statistics which contribute to statistics like “runs above replacement level,” and “wins above replacement level players.”
This year there are 11 pitchers who have been worth more than $25 million so far this year, there were eight last year, four in 2007, two in 2006, one in 2005, one in 2004, none in 2003, and one in 2002.
Those eight years represent a reasonable expectation for the length of a Hernandez extension, and also conveniently coincide with the first year where dollar value is available on Fangraphs.
It is worth noting that the stats are based on annual league-wide salary figures compared to wins, and as salaries increase league-wide, wins, and especially wins above replacement level, become more expensive and thus more valuable.
However, the more accurate, economically unbiased statistic would be wins above replacement level (WAR). Ubaldo Jimenez is the last of the players who are $25 million or more this season, worth exactly $25 million to this point, sporting 5.6 WAR. That divides down to about a $4.5 million value per WAR.
Setting the baseline at 5.6 WAR, there will be increased pitchers above the threshold for value, as WAR is unaffected by league wide salaries.
However, considering the frugal off-season the league experienced last off-season and the league getting closer to the end of the monster contracts that littered the late 90’s and early 2000’s, it’s actually possible that the value of a single WAR could stay pretty steady.
The objective of signing a player to a long-term deal is that he’ll ultimately produce year-to-year contributions that exceed the value of the contract paid as the value of contracts rise.
There were eight players who accrued 5.6 or more WAR last year: CC Sabathia, Roy Halladay, Tim Lincecum, Cliff Lee, Dan Haren, Brandon Webb, Ervin Santana, and A.J. Burnett.
None of those players played on a World Series team. Only Sabathia and Santana played on playoff teams, the Brewers and Angels respectively, each of whom suffered a first-round exit from the post-season.
The duo made $11 million and $420,000 respectively last season.
2007: Sabathia (2), Webb (2), Halladay (2), Josh Beckett, Jake Peavy, Joe Blanton and John Lackey.
Beckett played for the 2007 World Series Champs, the Boston Red Sox, while Webb, Sabathia and Lackey all played on postseason teams.
Beckett made $6.7 million, Webb made $4.5 million, Sabathia made $8.8 million, and Lackey made $5.8 million.
2006: Halladay (3), Webb (3), Lackey (2), Johan Santana, Jeremy Bonderman, John Smoltz, and Roy Oswalt.
Santana made $8.75 million and Bonderman made $2.3 million.
2005: Lackey (3), Santana (2), Oswalt (2), Chris Carpenter, Mark Buehrle, Dontrelle Willis, Roger Clemens, Pedro Martinez, and Andy Pettitte.
Lackey and Carpenter played for playoff teams, the Angels and Cardinals respectively. Martinez, Santana and Willis all missed the playoffs.
Buehrle made $6 million. Clemens made $18 million, Pettitte made $8.5 million, and Oswalt made $5.9 million. Lackey made league minimum, $440,000, and Carpenter made $2 million.
2004: Santana (3), Clemens (2), Martinez (2), Oswalt (2), Randy Johnson, Ben Sheets, Curt Schilling, Jason Schmidt, and Brad Radke.
Schilling and Martinez played for the World Series Champion Boston Red Sox. Clemens and Oswalt made the playoffs with the Astros. Santana and Radke played in the post-season with the Twins.
Schilling made $12 million, Martinez made $17.5 million. Clemens made $5 million, Oswalt made $3.3 million. Santana made $1.6 million, Radke made $10.8 million.
2003: Halladay (4), Martinez (3), Schilling (2), Schmidt (2), Mark Prior, Esteban Loaiza, Mike Mussina, Tim Hudson, Javier Vasquez, and Kevin Brown.
Mussina pitched for the American League Champion Yankees. Martinez became the catalyst for Grady Little’s firing in Boston that post-season.
Mussina made $12 million in 2003. Martinez made $15.5 million. Schmidt made $5.9 million. Hudson made $1.6 million. Prior made $1.5 million.
2002: Halladay (5), Oswalt (3), Schilling (3), Martinez (3), Johnson (2), and Derek Lowe.
Of this group, only Johnson and Schilling pitched in the postseason, both for the Diamondbacks, a first-round loss.
Johnson made $13.4 million and Schilling made $10 million again.
There are a variety of single appearance pitchers, and also a handful who made it multiple times.
However, among the multiple appearances there are five pitchers (Webb, Santana, Martinez, Oswalt, and Lackey) who have since suffered career-threatening or altering injuries in the middle of their prime.
That doesn’t include Mark Prior, whose shoulder has become exhibit A for scapula-loading mechanics and their perils, or Ben Sheets, who remains a free agent.
It also doesn’t include Chris Carpenter, who only appeared once, but will appear again this year, and has had his best seasons since recovering from reconstructive elbow surgery.
Three pitchers (Clemens, Pettitte, and Brown) were implicated in the Mitchell Report.
There were five teams possessing pitchers who accrued 5.6 or more WAR in a season and appeared in the World Series.
Both Boston and New York account for significantly different economic settings than the one the Mariners are in, and they can afford to overpay for WAR, and thus afford the inherent risk in large contracts given to pitchers.
The Tigers, White Sox, and Astros got to their World Series in very different ways in terms of pitcher acquisition.
The Tigers traded for Jeremy Bonderman early in his career. The White Sox drafted Mark Buehrle.
But while the Astros drafted Roy Oswalt, they bought their appearance with high-dollar signings of Clemens and Pettitte. The team has since experienced extreme financial problems.
Perhaps the best-case scenario for individual performance would be if Hernandez pitched as consistently as Roy Halladay, who is amidst his sixth season of the past eight with 5.6 WAR or greater.
However, despite a reasonable salary compared to production, Halladay’s salary represents a very large portion of the Blue Jays non-Vernon Wells and formerly non-Alex Rios salary.
Huge payrolls like those of the Yankees and Red Sox represent a disproportionate amount of the value assigned to WAR, and the teams have financial resources that aren’t available to many other teams.
Halladay’s a hell of a pitcher, no doubt, but not trading him at this year’s deadline is nothing short of disastrous. The last eight years have been a transition from a steroid-laden era to one less fraught with PEDs. The result has been that pitchers who earn high WAR have become less necessary to building a championship team.
The Blue Jays are probably the best economic parallel to the Mariners that exists. Both teams face significant challenges based on geography.
The Mariners are in the relative “middle of nowhere,” while the Blue Jays location, Canada, gives them tax hurdles when signing or re-signing free agents.
There was an offer reportedly made to the Mariners that would have sent Clay Buchholz and Adrian Gonzalez to Seattle, with the Mariners trading Hernandez to Boston and Brandon Morrow, Phillippe Aumont, and Carlos Triunfel to the Padres.
Buchholz has been a 1.7 WAR pitcher this season, Gonzalez a 6.1 WAR first baseman. Hernandez has pitched his way to 6.5 WAR this season, while Morrow has pitched to -0.1 WAR, and Aumont and Triunfel are both prospects with question marks and a less than ideal fit in the philosophy of the present regime.
Morrow is under team control until 2012, Hernandez until 2011.
Conversely, Buchholz is under team control until 2013, and figures to improve on his modest WAR, while Gonzalez is under contract until 2011 with the final year being a team option at $5.5 million, far less than Hernandez figures to receive in the final year of team control via arbitration.
Gonzalez is the ultimate fit for Safeco Field. He fields pretty well, but has a power left-handed bat, strikes out about at the league average, and walks almost two percent more often than league average.
The team would have acquired a net gain in terms of WAR, and ultimately two players whose future trade values could have a ceiling just below that of Hernandez.
That however, only deals in the literal, Major League talent realm. The Red Sox also reportedly made a list of eight of their top prospects and told the Mariners to pick any five to make a deal work.
By not trading Halladay this season, a year and a half removed from his free agency, they’ve likely cut his trade value in half.
The Mariners could do the same if they don’t move quickly on Hernandez.
If they can keep him at a reasonable price, the Mariners should absolutely extend Hernandez, but it seems more likely they’ll have to break the bank.
In today’s economic climate, “breaking the bank” has become less a proverbial figure of speech, rather a more literal prophecy complete with subprime mortgages and rehab loans.
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