Pedro and Sexson

DMZ · December 14, 2004 at 8:50 pm · Filed Under Mariners 

Since we’re sort of commenting on the FA season as it develops… Pedro’s 4y-$48m is crazy. The Red Sox had sentimental reasons to pay him more and for longer than anyone else, and if press reports are to be believed, even those in the front office that argued in favor of making their last rich offer to him were reluctant and admitted they might be better off in the long term if he turned them down.

Here’s the thing, as I see it (and how it applies to Sexson).

A team will make a guess at a player’s value — Pedro is worth four wins a season over our other options. Then, based on the team’s individual situation (see “Knapsack Problem“) and whether that player will push them into the playoffs (where the team makes a lot more money), they’ll make some other decisions about how much those four wins are worth.

Now, in the valuation process (he’s worth four wins a season) and during the other discussions (how much would a replacement cost?) the issue of injury risk has to come out.

So let’s say you look at Beltre. You figure he’s worth four wins a year, and you really need a star there for a number of reasons (no 3B talent in the system, crowded OF/1B/DH situation, fans massing outside offices with torches and pitchforks), and your alternative is Spiezio, who’s already under contract… you come up with a figure of $10m/year. If he performs like you think he will, he’ll be worth it.

What if Beltre, instead of having some random injuries and a brush with death unrelated to his on-the-field health, had bum knees? Like Mo Vaughn bad. 25% chance his career ends in two years, 25% chance he’s a DH in three. You chop the offer, because his expected contribution’s much lower.

Or, better yet — how much is a lottery ticket worth? If you’re a strict odds person, it’s payoff/chances of winning. There are circumstances that might make that value higher (I have $5 I don’t need, but a relative needs an experimental kidney transplant that I could only afford if I won the lottery), but in general, the more you pay for the same ticket, the more money you’re losing needlessly.

So it is with baseball players. The chances Pedro’s going to contribute $12m a year worth of pitching to the Mets over the next four years are slim. The Mets bought every ticket for the cakewalk at $50/piece. They paid $4 for a $1 lottery ticket with an expected return of 50c.

This is why the Sexson deal makes me blanch. Like Raul’s deal, like Spiezio’s deal, it’s paying a player handsomely to play at a level they’re unlikely to play at, with the added problem that with Sexson we get the added uncertainty of a nasty shoulder injury. Sure, he’ll have passed the medical exam, but we’re not going to know if he re-injures that labrum until it happens or he finishes out the contract. And no matter what chance you put on it (10%, as the Diamondbacks are rumored to have guessed?), it looks like the team didn’t factor that into his offer.

Beltre or bust. Beltre or bust.


62 Responses to “Pedro and Sexson”

  1. e.vole on December 15th, 2004 10:08 am

    So Derek’s bit finally prompted me enough to write something here. Essentially, a mathematical solution to the lottery problem exits, but it depends on the utility function (to use economics terms) of the person making the decision. A “risk loving” person will be willing to spend more on a lottery than a risk averter, who will require a premium for every unit of risk they take on.
    Two problems with this: 1) we have multiple decision makers, and presumably none of the real decision makers are participating in this conversation. Having to tolerate decisions based on someone else’s utility function can be painful and frustrating.
    The second problem is more significant. If there exists a basket of other lotteries that provides the same payoff with lower risk, anyone (regardless of their utility function) should be willing to pay more for it. This, I think, is the crux of the arguement for Drew/Clement, Beltre, Beltran, or (even better) some basket of players acquired through trade. If utility comes from winning rather than having a superstar, then Sexson isn’t a rational choice given the alternatives.
    On the other hand, it would be really cool to see a guy hit it out of the park at Safeco.

  2. Evan on December 15th, 2004 11:04 am

    Just because a deal worked out well doesn’t mean it was a good deal. It might have been an insanely risky deal that just happened to go well.

    I don’t pay for luck.

  3. mfan on December 15th, 2004 11:05 am

    What about risk-lovers? Wouldn’t they be willing to pay to incur extra risk? Not that I think they exist or anything, but…

  4. Slooz on December 15th, 2004 11:05 am

    #48 The Mets do suck – sometimes. But they were also in a WS in 2000, and are competitive more often than not. What is the downside of them signing players to bad contracts, really? They have a strong fan base, good attendance, and people continue to want to play there. They just sign other different players, knowing it will eventually work out. My point is, that as a fan I would rather have the random misguided activity of the Mets than no activity at all.

  5. giuseppe on December 15th, 2004 11:09 am

    ESPN has a barely updated version of the Sexson story up saying that according to a Baltimore paper he passed his physical for the Mariners:

  6. jack howland on December 15th, 2004 11:24 am

    #54. The Mets attendance is MLB average at best despite playing in an insanely big market. People are using them as an example of what not to do, because they have one of the highest payrolls in baseball, yet have lost a least 86 games per year over the past three seasons. Mo Vaughn is just a single example of the ineptitude that this front office has displayed over the last few years.

  7. giuseppe on December 15th, 2004 11:33 am

    55 – nevermind, sorry. This is all too confusing. I want it to end.

  8. Deanna on December 15th, 2004 2:21 pm

    #47 – Millwood is TOTALLY in our price range. Last news report I saw said he was entertaining a $3-4m one-year contract from the Braves.

    We can totally beat that, if our front office stops trying to fill the field with five first basemen.

  9. NBarnes on December 15th, 2004 3:45 pm

    #50: We’re stat-geeks here, we don’t believe in clutch. We didn’t believe in it when Derek Jeter was the immaculately concepted Son of Clutch come to lead the Yankees, and we still don’t believe in it the last ALCS when he hit, what, 252 or something like that?

    #54: What #56 said. Yes, the Mets have good seasons from time to time, in ways that the Brewers, for example, are unlikely to have. And the reason for that is that even a stopped clock is right twice a day. But I would much, much, much rather have Oakland and Beane running our team, for the pleasure of watching a smartly run team overachieve than turn into the Mets and suffer through watching a large payroll be pissed away by, and let’s not pull punches here, incompetance and languish in underachievement.

  10. G-Man on December 15th, 2004 5:50 pm
  11. Bernard Aboba on December 15th, 2004 6:44 pm

    The way I look at it, the price of incremental wins in the free agent market is now well above the level in the trade market. Since the 2001 season, Carlos Lee has underperformed Richie Sexson by an average of less than 0.10 incremental wins per season (according to PECOTA). Yet Lee is a year younger (and healthier) than Sexson, which means that he is lower risk. My bet is that Lee will provide equal or better value over the life of Sexson’s 4 year contract.

    Now consider that the price for Carlos Lee: Scott Podsednik (3.9 incremental wins in 2003, negative in 2004) and Luis Vizcaino (-0.7 wins in 2003, roughly 1-2 wins in 2004). Would the White Sox have preferred this package to $50 million over 4 years? I think not. So it looks to me like Sexson is overvalued by a very large amount — perhaps 20-30 million.

    On the good side, with this move, Bavasi has probably sealed his fate. Unfortunately we will have to live with the mess he has made (and is likely to make) for years to come.

  12. bilbo on December 15th, 2004 7:42 pm

    Finnigan quote of the year:
    “The physical seemed to focus on the condition of the left shoulder that was surgically repaired last July. ”

    The shoulder, really? HAHAHAHAHAHAHA!!!!