Effectively Wild: A FanGraphs Baseball Podcast - Effectively Wild Episode 80: Could Josh Hamilton Be a Bargain?/Are the Financially Responsible Yankees for Real?

Episode Date: November 9, 2012

Ben and Sam discuss whether Josh Hamilton could end up signing a reasonable contract after all and talk about whether the Yankees can commit to and compete despite their goal to get under the luxury tax threshold by 2014.

Good morning and welcome to episode 80 of Effectively Wild, the Baseball Prospectus daily podcast in New York. I am Ben Lindberg and in Long Beach, California, in the Honda Fit in the garage where the crickets are quiet because he has killed them all. It is Sam Miller. How are you, Sam? Good, Ben. How are you doing? I'm okay. And we have come to our final show of the week, which means that we're going back to

two topics. Each of us has brought one, theoretically at least. Have you brought one? I have. And what is it? Josh Hamilton. Okay. And mine is the Yankees and their spending or lack thereof. Oh, good. That's actually probably one that I'm interested in hearing you talk about. So I'm glad that you picked it. And if I listened to this podcast, I would be excited right now.

Okay. So which of us should go first? Why don't I go first? Okay. So Josh Hamilton is a free agent. He's looking to get paid a lot of money. He is presenting himself as one of the best players in baseball. And he maybe is. I mean, I guess everybody is one of the best players in baseball. If you, for instance, say one of the 5,000 best, then many people are. If you say one of the three best, then only three are. And Josh Hamilton is probably not that.

But he is one of the best if you have a nice sort of small number. is one of the best if you have a nice sort of small number and um yet there i think is a well i don't quite know how to frame this um there's a sort of uh i don't know probably a sense among almost everybody who i follow that josh hamilton is going to make somebody really unhappy in time nobody seems to be that excited about their team getting him. And sort of more notably, really none of the big sort of smart, big money teams that can kind of choose who they want to sign seems to be interested in him. And so instead, we heard today that the, or this week, we heard that the Orioles are interested in him. There is talk that the Mariners are interested in him.

The consensus seems to be that the Brewers are perhaps the front runner to get him. These are all teams that you don't normally think of as the teams that would be getting a player like Josh Hamilton. And so I guess my question is sort of along the lines of the idea that teams that aren't – sort of the old moneyball idea that a team that doesn't have a ton of money has to look for players with flaws. And they sort of sign players whose flaws will suppress their value. And instead of sort of focusing on the flaws, they just kind of overlook the flaws or hope that the flaws don't show up and they sign the players that they think will produce. And in a way, I wonder whether Josh Hamilton is going to end up being a bargain. Like I said, nobody seems to think that he's going to be a good deal, but I wonder whether it could be the case that he ends up getting paid so little that some of these teams

see this as their one shot of landing a premium free agent. The alternative idea is that there are always one or two of these types of teams rumored to be in on any big free agent, and maybe that's just agents working the phone lines to try to sort of drum up a good five or six team competition for their players. So maybe this is all nothing and maybe he'll end up signing with a big market team. But yeah, I guess I have sort of more, I don't know, I didn't frame that that well. Well, it's hard to remember a free agent who really has just been widely acknowledged as the best or the second best or the third best or very close to the best player available by everyone who made a free agent list or

wrote anything about who's available this offseason. And yet there is so little enthusiasm for what he's worth. I mean, it seems like everyone acknowledges that he's one of the few best players available and yet thinks that no one should sign him, essentially. And it almost feels like if some team signs him for like two years, 16 million, people will be like, God, I don't know, with his with his past right and he's at three yeah he can't see during the daytime he's he's he literally is a blind mole and today mike adams basically went on a radio show and said he's a weirdo i mean he was he sort

of phrased it in kind of nice terms but he was like yeah he's weird you know so uh and yeah there's i mean there's and and not only that but even his play is kind of like it's really good in a sort of ugly way like it's it's not good in the way that we fetishize it's good in kind of a a way that is not really in vogue you know he swings at everything he's he's um you. He's incredibly streaky. Even I think if he didn't have some of these kind of backstory issues, there still might not be all that much excitement. I sort of think of him a little bit like C.J. Wilson last offseason where I kind of was surprised at how little enthusiasm there was for C.J. Wilson

considering just really how good his previous two seasons had been. And we went into the offseason kind of mocking the idea that his offseason starts were going to determine how much he got paid. But then I think at the end of it, after he had that bad postseason, it really did feel like everybody, the stat heads and the sort of it after he had that bad postseason it really did feel like everybody um the you know the the stat heads and the sort of mainstream guys all were kind of like yeah he's not really all that and um so that sort of surprised me and so i don't know hamilton kind of i don't know it it it's almost um it almost seems like there are so many red flags that no reasonable deal is going to look good.

But I mean, I don't know. Eventually, it gets low enough that it is. Is it possible he's going to get that low? I guess the question is how low is that low? It almost feels like he's a guy who needs to take a huge one-year deal and reestablish his value. But what even? He's going to finish fourth in MVP voting this year. Right, and he's just going to be one year older next year,

and there aren't going to be any fewer concerns about any of the other stuff that comes with him um so i don't know i i guess i mean if he really is looking for seven years and and 175 i mean it seems like there's no way he could get that unless unless there's an appeal to ownership and and some sort of prince fielielder sort of scenario happens where an owner just kind of steps in and pays possibly more than he has to or more than his baseball people would have recommended to sign him. Well, would five and 85, would you be happy if your team signed him for five years and $85 million? In the abstract, that sounds reasonable, but I almost can't tell whether it's because I'm conditioned by the concept of anchoring. Exactly, yeah. The concept of anchoring.

Exactly, yeah. So if he just says seven years, 175, well, suddenly 585 sounds extremely reasonable, where maybe if he hadn't thrown at that huge number, it wouldn't have. Sounds not so bad for a best player available type. Probably the best player available has signed for more than that in most of the recent off-seasons. Yeah, I think maybe 2008 off-season there wasn't... Oh, no, that was the Teixeira year. Never mind, yeah. So, yeah, everybody... Right, you're right. I think you 2008 offseason there wasn't – oh, no, that was – yeah, that was the Teixeira year. Never mind. Yeah. So, yeah, everybody – right.

You're right. I think you're absolutely right. It would be a very low highest salary. Oh, maybe it was 2005 I'm thinking of. The year that Paul Canerco re-signed with the White Sox, I think he was like the biggest and he got like $44 million or something like that. That's a long time ago and money was worth more then. I think that $5.85 is, I would still be a little nervous about it,

which puts $7.75 in perspective. He's really had one year where he's been worth that much in his career. And Pocota's 10-year forecast for him before 2012 was sort of extremely depressing. Like, he essentially lived up to his Pocota forecast almost on the dot this year. And Pocota has him at, like, 3.4 wins next year, 3.2, 2.9, 2.3, 1.7. In a five-year deal, you're talking about 15 wins, 14 wins. Maybe 15 million for this year, but then you add inflation as you go.

Five years in 85 seems to be about right. If you go beyond that, he's replacement level by the seventh year and out of the league by the eighth. But I don't know, has there ever been a free agent who had this many obvious red flags? I don't know that there's ever been a free agent, maybe not counting every pitcher who's ever been a free agent, who has had any risk factor as prominent as Hamilton's substance abuse, right? I mean, is there – can you think of any free agent who has ever had a known risk factor that was that big? I mean, it would be like – well, I don't know. I don't even i mean it would be like well i don't know i don't even know what it would be like like it would be like if it maybe if like shinsu chu's uh military deferral deferment was was not likely and so you like you knew that he was gonna have to just leave together like it's

almost like that it almost seems uh impossible that you make it through five years without it coming up at some point do you think that is most teams primary concern with him or is it the fact that he is already 31 older than 31 and kind of has that style of play that causes him to get hurt at some point every year? I think it's more the latter but I don don't know though. If I were a responsible adult, it would be more the former and probably the guys in the front offices are responsible adults. So yeah, they're probably looking at it a little bit more from a risk assessment kind of insurance salesman's sort of eye. sort of eye well it will be interesting to see and uh yeah i wonder if the i saw that rumor too where hamilton was just linked to teams that aren't huge payroll teams or don't typically end up with with the big prize um and yeah i wonder whether whether it is the case that one of them will end up with him just because no one else wants him and they think it would be fun to end up with a big free agent.

Shall we pick a final number for him? I guess that would make the people happy. I guess I'll say five years. Man, I'll say $90 million. Oh, well, I'll say five and a hundred. Yeah, that's probably smarter. Followed by general freakout on Twitter. It is interesting to think about where that line is that the freakout wouldn't happen.

Yeah, well, maybe 5 and 85. 5 and 85 seems right about the point that I get nervous and yet in my gut it seems like a bargain. nervous and yet in my gut it seems like a bargain yeah yeah i probably should have said more money because someone usually does overpay or at least what we think is overpaying there's always one team um so i like your estimate better than mine but we'll see uh so anyway we are talking about spending on the show. I'm going to continue talking about spending. The Yankees really for a while now have been beating the drum of fiscal responsibility, at least by Yankee standards. They have been talking at least since the new CBA was signed about getting under the luxury tax threshold for 2014. So their goal, they've stated and restated many times, is to get under $189 million, which according to Katz, they have not been under since 2004. And even then, only just barely. And they've

been over 200 most years, including this past year. And typically, there is inflation and teams spend more and more as time goes on. Instead, they're talking very seriously about reversing that trend. In March of 2012, Hal Steinbrenner said, I'm a finance geek. That's my background. Budgets matter and balance sheets matter. If you do well on the player development side and you have a good farm system, you don't need a $220 million payroll. You can field every bit as good a team with young talent. I'm just not convinced we need to be as high as we've been in the past to field a championship caliber team, which is hard to argue with. Obviously, every other team that has fielded a championship caliber team has done so for

less than that amount, I guess. Caliber team has done so for less than that amount, I guess. And there is significant incentive for them to do this. I was just reading Vince Gennaro's blog, Diamond Dollars, and he said, doing so, getting under the luxury tax threshold would put significant dollars in their pockets. Not only would they save money by not paying the maximum luxury tax rate, they would also reset their future tax rate to a modest 17.5% should they exceed the luxury tax threshold in a subsequent year. In addition, if a team is below the luxury tax threshold, they are entitled to additional shared revenue from MLB. So this would mean many millions of dollars for them if they're able to do it. And kind of the popular perception is that millions of dollars don't matter to the Yankees,

or at least they can do without them because they're generating so much profit that it's just a drop in the bucket and that all that matters to them is winning. And yet we saw yesterday or two days ago there was an article in the Post by Joel Sherman where he was talking about how the luxury tax concerns were basically keeping the Yankees out of the hunt and out of the bidding for a bunch of players this year. They reportedly would not even do a two-year contract in the $20 million range with Torrey Hunter, which I think based on our recent discussions about Torrey Hunter, you would consider a pretty good deal for him or a reasonable deal for him.

they apparently are not even in on justin upton uh who has 38 million 38 and a half million over three years left on his contract uh which really is just eight and a half or something on the uh the average annual value that would count towards the luxury tax payroll on him. And so there's the sense that they're not going to be in on any big free agents. Brian Cashman in July said, we don't have big money. If there's a hypothetical mythical beast that makes 25 million a year for the next X amount of years that was hitting the market, we certainly could not participate in that level of financial talent. So I don't know what to make of this because for one thing, the Yankees seem to be in kind of a tough position if they want to keep competing every year, as of course they do. And they have a lot of incentive to compete every year. And it seems as if their financial model is almost built

on making the playoffs every year. And yet they are in this situation where they have 76 million committed to basically three players for 2014, Alex Rodriguez, Mark Teixeira, and CeCe Sabathia, Rodriguez, Mark Teixeira, and CeCe Sabathia, plus at least a buyout for Derek Jeter. And they have an old team and not a ton of help on the way at the farm system, at least at the upper levels. Most of their talent seems to be at the lower levels. So it would really have to be quite a change for them to go from this extremely old team would really have to be quite a change for them to go from this extremely old team that they've just kind of papered over any weaknesses with more and more money to a team that competes with a significantly lower payroll by 2014. And I'm not sure whether to buy it or not. They've repeated

it so many times that it seems as if they're quite serious. And yet I can think of times in the last several years where they've sounded probably just as serious about other things and not actually followed through on that. They pretty much swore that if A-Rod opted out after his last contract, they would not negotiate with him. They would not bring him back. They did. I think Brian Cashman often kind of poo-pooed the idea

that they could afford CeCe Sabathia and Mark Teixeira in one offseason. He kind of said that was ridiculous. Of course, they ended up with both of them. I remember him. And Burnett. Yes, right. I remember him saying how Bubba Crosby was going to be his center fielder. You bring that up a lot. I do. I love that. Before they

ended up signing Johnny Damon. So pretty much every time in recent years that the Yankees have said, well, we can't afford something, they have been able to afford it ultimately. So it's kind of the team that cried wolf in a way with the payroll. So I guess I wonder whether you buy it, and if you do, do you think that they can sustain their success without spending over $200 million? Wow. Without a gap year or some sort of rebuilding of some sort where they would miss the playoffs. Well, wow.

It's interesting because there's such an odd double standard here where most teams, if they don't spend the money that they have, they get criticized. The Twins owner gets criticized for basically acting poorer than he is based on his personal fortune and his market size. The Marlins and the Pirates have been criticized for not spending enough. And the Marlins and the Pirates have been criticized for not spending enough. And here the Yankees sort of always are on the defensive about spending too much. And you do wonder how much profit are they making.

We don't know how much profit they're making. But if – I mean, I'm just going to totally throw out a hypothetical, unrealistic amount. But let's say they were making $400 million in profit next year. It would be sort of tacky if that came out and they finished in third place this year because they wouldn't re-sign Raphael Soriano while they're cashing in $400 million. So it's kind of hard to judge the ethics of the situation without knowing what exactly their profit is. It's also kind of interesting because every, I mean, there's sort of a, in a way, it's a little bit distasteful to see how explicitly they're talking about their budget. It almost feels like bringing up finances at a dinner party or talking about your salary at a dinner party. It just feels kind of tacky. Of course, budgets and money are part of every conversation that we ever have about

any baseball team signing any player. But the difference is that most teams have a budget and it's about making the team work within the budget. Whereas the Yankees have a team and it's about making the budget work within the team. It's like getting the budget. I mean the budget is the artificial here. Like they don't need that budget. It's an artificial budget. need that budget it's it's an artificial budget um seems to be because i mean they've been over this level for so long now that if they couldn't afford it they would have had to cut back before

you'd think yeah well and steinbrenner's what i mean what steinbrenner said is wait was it steinbrenner yes yeah okay uh what he said was that you shouldn't need to spend all that to win, but he doesn't say that he can't spend all that much to win. I mean that's really the underlying question is what exactly is the goal here? Is the Yankees' goal here to win and is this part of what they need to do to win. If they actually are constrained by money here and they need to get their house in order because it's really limiting their ability to be competitive year in, year out, then that's a legitimate thing to do. If the goal here is to make 32% profit instead of 30%, I think there's an unwritten rule against that in baseball. You don't make more profit than you need. Baseball, when you own a team, obviously it's

a business and I'm not actually judging them, but as far as how it plays in the public, your job as a baseball team is to compete to the best of your ability within the financial restrictions you have. So, I don't know. I mean, I could see it as far as what incentive they would have to lie. I mean, I could certainly see the Yankees, A, being sick of being every agent's leverage. You know, it's probably pretty annoying for them to read rumors about how they're into every free agent simply because that's how you get the Red Sox, Dodgers, Angels, Rangers,

and Tigers to pay more. And so, you know, acting weak is, you know, it's in a way, I think that a lot of owners like sort of like to act weak because they can't collude, but they have more sympathy for each other than they do for the agents. And so it's a way of kind of taking the feet out of some of these rumors. trying to promote the perception that they can't afford people so that they're not used it they can only continue to maintain that uh that fiction as as long as they don't sign any big free agent the second that they do sign someone to a multi-year deal they basically can't use this anymore and they kind of look silly for not sticking to it. Not that that would necessarily bother them if it saves them some money, but it seems like you can kind of only use this once.

Well, yeah, maybe you can. But maybe you can only use this specific thing once, but like you were sort of noting, maybe you find a different way of selling the same idea every offseason. Well, I mean, the perception, as long as the team has been owned by someone named Steinbrenner, is that the Yankees, and I don't know whether it's a fair perception, but the perception certainly with George Steinbrenner was that he cared more about winning than he did making a profit. Not that he was

necessarily losing money on the team, but that if it came down to making a bigger profit or investing in the team to win, he would usually go with the latter. So I don't think this sits well with Yankees fans, whom, as you said, they don't particularly care whether Hal Steinbrenner is making more money. They care about whether the team is winning. And so, yes, I would think that stating this so explicitly would not win over the fans who have been used to a completely different way of business for the last decade at least and more, really.

Yeah, it's delicate for sure. From a practical standpoint, do you think it could work? I mean, obviously you can compete. He is right. You can win a World Series and spend a lot less than that, and the Yankees presumably could too. But can they do it by 2014 with that much money committed to three players,

at least one of whom you can almost not expect to contribute very much, and really two of whom have almost no chance of being worth what they'll be paid, it seems. And not a ton of replacements on the way by that time, probably. And just kind of a history of continuing to spend on free agents. Can they, continuing to spend on free agents can they uh i guess what would it take to for them to stay under this under this projected payroll and not interrupt this run of success that they've been on for so long come on we're not going to answer that tonight okay all right well, maybe we'll come back to that at some point when we're feeling it. Yeah, that seems fair.

Okay. Are we done then? I'm done. Okay. Well, thanks for sticking with us for another week. We will be back next week with – Wait, quick question. Veterans Day, are we going to do one? Oh, hmm. I hadn't thought of that at all. I don't know. I don't even know whether we're publishing things.

Well, okay. So maybe we will. I think probably we won't. Okay. I think the only reason that you will want to is so that we stay on this. Oh, no. Ending each week on an even number. Isn't it nice that we're ending the week on episode 80?

It's so satisfying. That's upsetting because if we're one day off, then we'll never get back. Well, no, we're going to lose two. We'll lose two at Thanksgiving. Okay. And we'll... You've thought about this. We'll lose two at Thanksgiving.

The tricky thing is that we'll lose two at Christmas and probably two at New Year's. And so no matter what happens, it's going to be a terrible footing. Yeah, the holidays are going to mess it up regardless of what we do. Yet again, we have neglected to mention how you can email us. As I was saying to Sam, we never tell you how to contact us. Send us emails at podcast at baseballperspectives.com. And many of you have been, and we've gotten some excellent emails,

and we will address some of them next week. So have a nice weekend, and we'll be back on Monday.