In my recent post on Joey Votto’s Hall of Fame chances, there was some interesting discussion. However, much of it got bogged down in the debate over whether or not Votto’s contract is “too much” of the payroll. While I get where people are coming from with this, there’s a problem in the logic and I want to try and lay out an argument here. So stay with me.
Any good team (except possibly the Yankees and Dodgers) HAS to develop much of its own talent. This talent comes at a discount during the first six years. Where that talent plays will, naturally, shift around quite a bit. Given that, worrying about what percentage of the payroll is tied up “in the starting rotation” or “in the outfield” or wherever else is irrelevant. The purpose of free agency and extensions is to fill holes where there is no new talent or equivalent value available in the organization. Those spots will ALWAYS take up a disproportionate amount of the payroll. Even on bad teams with low payrolls. That is how free agency works.
Long contracts aren’t necessarily a bad thing. I don’t think anyone saw the Reds becoming bad this quickly. Fans would have rioted if Votto had been allowed to reach free agency. But do you think you could sign a player of Votto’s caliber for 4 years/$100 million? No way. You’d probably have to pay him between $35 and $40M a year in a contract that short. Instead, a longer deal allows the Reds to defer a huge portion of the payout to a time when salary inflation means that he will be overpaid by much less.
How real is salary inflation? Very. And it’s fairly easily to calculate using the salaries and production levels of players past their sixth year. Using Votto as an example: During his rookie year, he produced 3.6 WAR. At the time, that would have been worth $22.4M on the open market, meaning 1 WAR was worth about $6.2M. Last year, Joey Votto produced 5.0 WAR, which was valued at $39.8M on the open market. Placing the value of 1 WAR at about $8M. That’s 29% inflation in 9 years. So, no $25M in 2023 is not what it was in 2014. At all. It’s more like $17M in 2014.
In terms of yearly payroll, we shouldn’t be focused on how much payroll is tied up in one player, but rather if the money doled out in extensions and free agent contracts is, in fact, providing AT LEAST market value. This should be obvious, but year to year, about half the teams will get more value than they pay for from those contracts and about half will get less than they pay for. $8M/WAR is an average, after all. So let’s look at the players the Reds have on the books for 2017 who are past their 6th year and what can reasonably be expected of them.
2017 Salary – $22M
Worth it? Barring injury, there is no question.
2017 Salary – $19M
Worth it? If he pitches a full season, probably (this is a big “if”). That’s only about 2.5 WAR in terms of value.
2017 Salary – $14M
Worth it? Almost certainly not. Phillips provided enormous surplus value early in his contract, so it balances out — but purely in 2017 terms, this isn’t a good one.
Devin Mesoraco & Raisel Iglesias – $7.3M & $4.2M, respectively.
Worth it? Neither of these players has passed year 6 yet, but Mesoraco signed an extension and Iglesias was an international signing. In hindsight, the Mesoraco signing is bad. No way he’d make this much in arbitration. Iglesias, however, will be worth significantly more than his salary if he pitches even half a season this year.
In total, the Reds will have $66.5M invested in these players in 2017. That should purchase about 8 WAR on the open market. What value can they expect?
Best case: Votto: 7 WAR, Bailey: 4 WAR, Phillips: 2 WAR, Mesoraco: 4 WAR, Iglesias: 3 WAR (assuming he’s locked into the bullpen)
Worst case: Votto: 3 WAR, Bailey: -0.5 WAR (comes back briefly, pitches poorly), Phillips: -2.0 WAR (plays all season, badly), Mesoraco: 0 WAR (doesn’t play), Iglesias: 0 WAR (shoulder injury).
Best case? Reds get 20 WAR for the cost of 8 WAR. Worse case? They get 0.5 WAR for the cost of 8 WAR.
Most likely? I’d say something like this: Votto: 4.5 WAR, Bailey: 1.0 WAR, Phillips: 0.0 WAR, Mesorac0: 0.0 WAR, Iglesias: 1.5 WAR. That’s 6 WAR for the cost of 8. So, not a good deal.
Overall, the Reds are unlikely to get their money’s worth from their expensive players next year. But even in the worst case scenario, Votto earns his paycheck. He simply isn’t the problem. The problems are thus: Phillips is at the end of a longterm contract (everyone knew he’d be overpaid at this point). Bailey got hurt. Mes got hurt. That’s it.
Put it another way: The Reds won 68 games last year. With a never-injured Bailey and Mes, they win what? 76? If you just won 76 games and have the farm system the Reds have, you feel pretty good. That’s when you hit the free agent market to fill your holes (probably pitching and outfield). In hindsight, maybe they should have traded Bailey and Mes and spent that money on Johnny Cueto and Mike Leake (or Todd Frazier, if you haven’t let that one go yet). But that’s hindsight.
Everyone knew the Reds would eventually hit a low point as players aged and we had to wait for new guys to develop. We didn’t know it would be this low, but the depths they’ve fallen to have NOTHING to do with Votto or his contract and everything to do with the Reds, sadly, picking the wrong other guys to keep around.
Sometimes you’re the windshield and sometimes you’re the bug. Such is life.