MLB Embraces Replacement Level
Over the last decade, there has been a significant shift within baseball front offices to evaluate players differently. While OPS was making its way into the general lexicon, teams have been accepting more analytical approaches to things and taking consultation from the statistical community. The concept of probability has become more well received, and major league teams have adjusted accordingly.
However, one of the main beliefs of the sabermetric crowd had simply not been adopted, and that was the concept of replacement level. Along with many others (notably among them Keith Woolner, one of the founders of the replacement level theory, now working for the Cleveland Indians), we’ve talked quite a bit about the idea that there is a vast talent pool of players who are capable of giving you performances that are only about two wins per season worse than a league average player, and can be acquired at essentially no cost.
These guys are just hanging around, signing minor league deals every winter and waiting for their chance. Guys like Jamie Burke and Cha Seung Baek epitomize replacement level – every organization has guys just like them, and if given the chance, they can play pretty well at times, though you’re obviously not going to win anything if you depend on them as the core of your club. But as end of roster role players who don’t cost anything and allow you to allocate all of your resources to the top spots on your roster, they have some value.
Major League teams have generally ignored this principle, however. There are some exceptions, but even most of those embrace replacement level players out of need more than out of belief that it’s the best way to build a roster. The A’s obviously make good use out of replacement level players, but an argument could be made that they’ve had to, thanks to their payroll and injury situations. When other organizations had the choice between ponying up a few million for a proven veteran or going with the low cost Triple-A guy, they’ve always given the money to the veteran.
Until this winter. For whatever reason (I subscribe to the “teams getting smarter” theory myself), major league baseball as a whole has finally embraced the concept of replacement level in deciding who gets money and for how long. Seriously.
Kyle Lohse, who made about $4 million in each of the last two years and has thrown 1,100 not horrible innings since 2001, went into the winter thinking he’d get something like a 4 year, $40 million contract. He’s not that different from Jeff Suppan, and that’s what Suppan got from the Brewers last winter. Jarrod Washburn got $37.5 million for being that same type of pitcher the year before. The market for healthy, back-end starters with some recent success but little upside was pretty clearly established.
On March 13th, a few weeks from opening day, Kyle Lohse still has no job. When he signs, it will be for one year and probably half of the annual salary he was expecting.
It’s not just Lohse, though. Corey Patterson, at 27 years old, hit free agency coming off a disappointing season, but still had some value as a premium defensive player with some left-handed power. He made just over $4 million last year, and he’d been an above average player in three of the last five years. Patterson, heading into his physical prime, signed a non-guaranteed minor league contract with the Cincinnati Reds.
Patterson wasn’t alone in having to play his way into a major league contract. He joined Bartolo Colon, Shannon Stewart, Mike Sweeney, Odalis Perez, Trot Nixon, Kevin Mench, Jorge Julio, Marcus Giles, Morgan Ensberg, Kris Benson, and Bobby Kielty in taking contracts that offered them nothing more than a chance to fight for a job. But at least those guys are getting that chance – Kenny Lofton, Mike Piazza, Reggie Sanders, David Wells, and Jeff Weaver are sitting at home wondering if they’ll play in 2008.
These aren’t career minor leaguers with spotty track records. These guys have all been productive major league players in the very recent past, and the lucky ones are in spring training trying to convince their organization that they’re worth a spot on the 40 man roster.
In 2006, every player ranked by Keith Law in his Top 40 free agent rankings signed a major league contract, with the average of those 40 players receiving a 3 year, $31.3 million dollar deal. 12 of the 40 had to settle for one year contracts, but the lowest paid of that group was Joe Borowski at $4.25 million. Shea Hillenbrand got $6.5 million for having some name value. Jeff Weaver got $8 million to try to revive his career. Kenny Lofton got $6 million to continue to defy aging.
In 2007, five of Keith Law’s top 40 players have yet to sign. Six others signed minor league contracts. 20 of the 40 signed one year deals. Only eight of the 40 signed contracts for two or three years, compared to 13 from a year earlier. In all, only 17 of Keith Law’s top 40 free agents received multi-year contracts, compared to 28 from a year earlier.
If you want, you can argue that this was a bad year for free agents, or that Keith Law didn’t know what he was doing when he put together his list, or that those crazy statheads with their make believe replacement level just don’t understand the value of experience and leadership. But, the thing is, major league baseball is coming around. Not every team, but enough. There are less and less jobs that are being handed to players for what they used to be, as teams are now showing more willingness to go with the more talented, less proven guy for a fraction of the price.
It’s the right move, and as MLB makes this adjustment, everyone’s going to have to adjust. Kyle Lohse has to realize that he’s not getting a four year deal. Kenny Lofton has to realize that he’s not getting a starting job and millions of dollars. And the organizations that don’t accept the concept of replacement level – there’s one that we write about occasionally, for instance – are going to have to realize that they’re literally throwing money away until they adjust their pattern of thought.
Even if you love Carlos Silva, would anyone on earth really prefer to have him locked up for $48 million over four years than to take a one year flyer on Kyle Lohse for $6 million? Or would you want to have Jose Vidro making $6 million when Shannon Stewart, his offensive twin, is taking a minor league deal?
The days of saying that replacement level is some vague, undefined theory that is only for poor teams is over. Major League Baseball has defined replacement level this winter, and the game is better for it. Hooray for finally having to earn your way on the roster by having enough talent to help your team win, and not through some arbitrary right of experience and name value.
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It’s really weird to me that nobody’s given Lofton a contract yet. He’s practically the Avatar of Useful One-Year Outfield Stopgaps.
I think I’ll stay on the pessimistic side of things until a few more years of this go on.
I would be interested to see a post that explores the strange economy of major league baseball which allows individual teams to ignore best practice trends to their detriment. Dave or some economist?
In my MLB 2k8 game I just bought, I started a franchise as the Mariners, and I turned on GM goals. One of the first goals was “Carlos Silva is overpaid and Its about time we got rid of him. Find some way to get him off our team.” Man, even a game which rates Sexson’s overall value higher than Beltre’s knows that the Carlos Silva signing was bad.
My take on the signing is that it was an impulse signing by Bavasi after losing out on Kuroda, trying to save his job, and most likely didn’t know Kyle Lohse would be unemployed mid-way through spring training.
One year does not a trend make. If this continues for four or five more years, with more and more teams, then I’ll believe it. That’s about the point Bavasi will notice the trend as well. He seems to get surprised by “the market” consistently, year after year.
So, just so I have this straight. Corey Patterson signed a minor league deal, but we signed Brad Wilkerson AND Miguel Cairo to major league contracts?
Okay, just checking.
Another brilliant move by the boys in the F.O.
While I agree with the replacement level idea when evaluating free agents, I would, given the money the M’s have, use a slightly different metric for long-time employees. While I don’t think that players should be kept in their positions past the point where they are productive, as long as they were productive I would be willing to pay the market/arbitration rate for them.
Just like I hope my boss doesn’t decide he’d be better off with replacement level talent in my spot…
What’s amazing about this is, as far as we know, it doesn’t involve any collusion. But I guess if enough front offices get smart, collusion wont be necessary.
I’m not sure if the correlation is direct, but many teams seem to be much more willing to hand jobs and roster spots previously given to low- and mid-level FAs to prospects. And it isn’t the usual suspects: last-place teams bereft of talent or small-market teams unwilling or unable to devote the payroll.
Perhaps teams feel their prospects are more polished or simply more talented at a young age than in years past, and are more willing to not only carry them on the major league roster, but start them in the rotation or the lineup. The Reds could easily bring back Lohse at a price in line with his value, but they’re likely to have Bailey and Cueto in the rotation instead (not sure if that’s a good idea on a team managed by Dusty Baker…)
I think that the new regime in Pittsburgh account for 99% of this.
It was a weird year. Seems that most team in contention made their move early and didn’t try to dip into the free agent pool to make their splash. More trades than general seemed to go down. A lot of these guys aren’t playing because good teams had younger guys available to play for pennies on the dollar.
I still would have liked to have seen Corey Patterson be the M’s 4th outfielder. Not that Jeremy Reed can’t do a similar job, but I love Corey’s defense and SB ability.
Beautiful post, though I think you forgot another team that this year is pushing for better evaluation of replacement level players.
The Minnesota Twins lost their two best pitchers last year (J. Santana and Silva) and are replacing them with Kevin Slowey and Scott Baker, two guys who up to this point are AAAA players. However, the signing of Big Heavy, (L. Hernandez, the man [whose] career was built off of a blind Kevin Gregg) was absolutely a kick in the balls for replacement level cost evaluation-Big Heavy will be worse than the next AAA prospect. Letting Denard Span or Carlos Gomez fight it out for CF is another example of letting a young guy prove he can play at replacement level, or even better in Gomez’s case.
The signing of Mike Lamb and [Adam] Everett for the left side of the infield are interesting, because Everett came pretty cheap, is worse than a replacement level player offensively, but godlike defensively, and Lamb is a player who’s been in search of playing time, and might become a decent defender on the turf.
At second base, the Twins have epitomized replacement level player, with Brendan Harris, Alex Casilla and Nick-I lost my bat-Punto fighting it out.
So, while the A’s have been leading this front, and the lesser moneyed teams have been following their lead (Royals, Rays) I would say the Twins are doing a good job themselves.
What’s funny is that from the player’s perspective they are all rumbling about collusion. They think the reason that all these players are out there is because in some dark room the F.O. of all the teams are secretly deciding market value. Apparently the type of collusion they are seeing is collusion in thought that is going to drive a more realistic wedge between great players and replacement level.
#7 – Just like I hope my boss doesn’t decide he’d be better off with replacement level talent in my spot…
It should be up to you to make sure your performance doesn’t sink to a place where your boss would be better off with replacement level talent. If it does, maybe you should explore another line of work.
I hear there is a baseball team in the northwest corner of the country that will pay big bucks for ~league-worst DH performance- maybe you can catch on there as your new line of work.
Tim Keown has a short, fluffy article over on espn.com talking about cultural wars between new baseball evaluative techniques and traditionalists, and I liked this gem:
“We’re a society that continues to increase its fondness for ignorance, so why should baseball be any different?”
Replacement level? All we need is eye black and ERA!
The replacement level concept makes perfect sense to me. If I were a GM I would embrace it.
As a fan, however, I only care about one metric: wins. I want my team to win, this year and every year. I really don’t care if they overpay as long as they win.
The Yankess and Red Sox overpay all the time, seems to work for them, and the Ms are just below that top level in terms of resources. Bavasi doesn’t have to manage his operation within the same limits as Billy Beane, he can afford to overpay for a guy like Silva.
Overpaying for a guy who helps you win is fine with me. Overpaying for a dud like HoRam is something else. The key is talent evaluation. That’s where the Ms fail about half the time.
AuburnM Says:
As a fan, however, I only care about one metric: wins. I want my team to win, this year and every year. I really don’t care if they overpay as long as they win
Using Replacement Level player data better allows a team to win. For example, if the M’s had signed someone at replacement level salary to fill Vidro’s shoes, then they have that money freed up, and they can afford to almost double Silva’s salary to get a better pitcher. Hypothetically, if they had used replacement level evaluation on Vidro, Wilkerson, and one of the other starters, they could have afforded Santana (yes, I acknowledge Santana would have refused to come to Seattle because he wanted Spring Training in FL).
Comments 16 and 17 could not be any better juxtaposed.
#18
I get it. If I were a GM I would think that way.
But I am a fan. All I care about is wins. I don’t care how the Ms win, I just want wins.
If we win, Bavasi is a genius. If we lose he is an idiot. Its a simple game.
#12 I don’t know…I’m OK with the signing of Hernandez by the Twins. They have several question marks in the rotation, so I think it’s worth it to pay Hernandez for some slightly-below average innings. He is probably going to take the ball every fifth day, and that does have some value.
What I don’t like is that they insisted on getting pitching prospects back for Santana. They have plenty of arms in their organization; they needed to focus on adding bats.
Actually, recently, overpaying hasn’t worked well for the Yankees at all, and they’re showing signs of moving away from it.
The Red Sox, by and large, don’t overpay; they have a high payroll, yes, but they use it well and mostly get players that justify their salaries.
The league as a whole is getting smarter, and teams are going to have to use their payrolls efficiently to stay competitive. Simply throwing money at problems on your roster is going to get less and less effective, and as a fan, you SHOULD care about whether the Mariners use their resources effectively, because if they don’t, you won’t be seeing much winning for quite a while.
I think that the new regime in Pittsburgh account for 99% of this.
So true, JI, so true.
A thought: Are we sure that the burden of the large salaries of better-paid incumbent players has no role in MLb team’s decisions not to hand out expensive contracts to these players, rather than a conscious embracement by GM’s of replacement level?
21) Maybe their thinking is they can always trade the pitching for bats. Seems to me that is always a shortage of pitchers, due to injury ect…
I think that baseball has been slow to recognize and correct market inefficiencies such as this one because some teams have been able to compete successfully simply by throwing money around. In the salary-cap world of the NFL the “what have you done for me lately?” attitude is king.
The USS Mariner has been so far ahead of the M’s Front Office it is not even funny. You have written about replacement level players for several years. You were correct from day one that trading Soriano for Horacio was a bad deal.
Your analysis about virtually every move made by the M’s has been right on. Given the track record for this blog it is a wonder that so many people gave you a hard time about the Bedard trade.
All this praise may be tiresome, but the “right on” analysis has given the USS Mariner an enviable track record….I just wish I could say the same about the lame ass Mariner front office.
Plus, we have ponies, which so far the Mariners have been reluctant to embrace.
In all seriousness, MLB as a whole is getting smarter about these things, so the Mariners need to start paying more attention, or they’re going to fall further and further behind smarter teams.
Personally, I’m terrified of what will happen when Billy Beane has actual revenue to work with.
I hope I did that right. Anyhow, I disagree with this sentiment. A few assumptions. First, free agents are more talented then replacement players. (Closer to average). Second, MLB contracts operate under normal market conditions (not perfectly competitive but second best). Third assumption is that the large majority of teams employ the stars and scrubs/replacement level philosophy. Fourthly, teams act like consumers (behavior requires time to change)
If these assumptions are correct we would expect free agent supply to increase while their demand decreases. These market forces will drop prices of better (simply over priced) players. “dumb” teams should luck into free agent talent at a cheaper rate. Therefore in he future the M’s stupid ways will actually benefit them, ceteris paribus.
[fixed it for you]
As a fan, all I care about is wins. I don’t care if Bavasi hires a rain dancer, turns left and spits before he makes a deal, or believes in signing the fattest player available. I don’t care if he thinks walks are girly, spikes are a newfangled abomination, and has the pitcher hit because he hates the DH rule. I don’t care if he smokes pine tar. I don’t care if he thinks the Japanese teams are too soft about discipline and insists his players run ten miles before breakfast which they are required to hunt, kill and cook themselves. I don’t care if Bavasi thinks all signals should be conveyed in a special whistling moon language he picked up from his time riding the rails with hobos. I don’t care if he plays with eight men on the field or ten. I don’t care if he shaves his players personally, bribes umpires with ice cream, and teaches baserunners to slide on their back and calls it a Fosbury Slide. I don’t care if he can count, wiggle his ears, or tie his shoes. I don’t care if he doesn’t care, and is only a general manager because of a rare neurological compulsion. If he wins, he’s a genius, and that’s all that matters to me.
Results based analysis is just laziness wrapped in a different package.
zeke5123 –
Not sure if I’m following your “assumptions” point properly, but… I’m pretty sure all of those assumptions are incorrect, making your second point irrelevant.
And folks, please stop this “all I care about is wins” mantra… that the front office misassigns value to certain players doesn’t mean they care less about winning than you do.
Looks like the Cards are picking up Lohse. Somebody had to.
33# Im curious which assumptions you disagree with.
FA player v. Replacement Level I think if you look at what classifies a replacement level player ( two wins below average) and the type of free agents we are talking about a talent level above that.
Market assumption; If you believe that MLB doesn’t operate under market forces I would like to see why.
Increase in replacement level philosophy; that is the point of Dave’s post. More teams are using the slightly inferior yet freely available players.
Teams use consumer behavior; this is to say that consumers do not change their actions rapidly. Teams that look to use replacement level players will continue to use RLP. Teams that use free agents will continue to use FAs. In the short run this is a valid assumption.
Dave,
Please explain “results based anyalysis” as applied to a team’s win/loss total.
Since the only thing that matters is winning and losing, what analysis is necessary to determine whether a team has been successful?
If teams are getting better at assessing free agent value, then the teams behind the curve won’t “luck into” anything (at least on average); they’ll just pay more for similar production.
The fallacy of your argument is the belief that the MLB market will, at some point, undervalue free agents in the same way that replacement players are currently. I can’t see that happening, at least not for a long, long time.
(Previous post directed at #29/35)
37# The question becomes one of magnitude. How much the market adjusts. Regardless how much the market adjusts, it will become cheaper to use free agent talent then now. So the M’s wont be as screwed as they are now. However, the same problems would exist; they cannot evaluate talent.
AuburnM,
I’ll use a poker analogy because results based analysis is a horrible habit to pick up in poker.
You are playing Texas Hold’em and are in the big blind of $5. You have a $500 stack, and everyone folds to the small blind. He raises to $500. You have the 7 of clubs and the 2 of diamonds. You call anyway. The flop comes with three 7′s and your four of a kind beats your opponent who had pocket kings. If you analyzed this hand based on the results, you might come to the conclusion that calling was good here. It did win you $500 after all. But that ignores that fact that in the log run it was a negative move, and that you just got lucky.
To bring this back to baseball. Lets say the Rangers and A’s are bad this year. And the Angels are somehow ravaged by injuries. The M’s win the division, with 84 wins. Does this mean that Bavasi’s moves were good? No! Once again it means that we got lucky.
Looking at won-loss record, without any attempt to analyze how a team got to that won-loss record and if it is repeatable, IS lazy.
“Results-based analysis” isn’t actually any analysis at all, and is frankly 99% of the time the refuge of those who don’t WANT to look any deeper, for whatever reason.
Zeke:
– I think you’re conflating quality of player with contract status. There are plenty of free agents who are “replacement level” players, and plenty of freely-available players who are better than “free agents”.
– The MLB labor market is in no way a normal market; many of the most valuable assets are not freely available, inflating the value of those assets that are.
– I don’t believe most teams employ the “stars and scrubs” method of roster building; in fact, the gross overvaluing of the middle class of players refutes that
– Few teams have an organizational philosophy that carries over from one regime to another. The behavior of any one team is dependent on the skills/philosophy of its front office, its ability to develop players in-house and its salary budget relative to other teams. I don’t think any team that “uses free agents” will continue to do so… just because that’s what they do.
zeke5123,
And that’s how it should be. Guys who are 1-2 wins over a replacement player should not be payed very much more than a replacement player. What we are seeing is that teams are realizing this. The are figuring out how much to value each marginal win. They are also beginning to understand that squeezing three wins out of one player is worth more than getting one win from three. So the market for free agents is going to stabilize at some level.
However, baseball is not and will probably never be a free market where market forces control everything. The main reason is that some players are under team control and are paid way below market rates. This completely changes the dynamics of player compensation and keeps baseball from ever really being a free market.
Jeebus, was it not clear that I was making fun of the “all I care about is wins” argument?
It was to me! I particularly liked the part about the “Fosbury Slide”.
If you’re referring to my post, it was mostly directed towards AuburnM, not you.
I was just disconcerted to see Dave’s comment about the laziness of results-based analysis directly after my comment, followed by a flurry of agreement from all comers. Thanks for the reassurance.
Actually, recently, overpaying hasn’t worked well for the Yankees at all, and they’re showing signs of moving away from it.
The Yankees most recent “dynasty” wasn’t built on Free Agents, it was built on a core group of players (Jeter, Williams, Posada, Rivera, Pettitte, O’Neil) who either came up through the Yankee farm system, or were acquired via trade for prospects, augmented by a group of generally well-picked FAs.
The real difference the Yankee payroll made for those years was that as their young guys graduated to FA status, they were able to retain them, unlike the A’s who constantly had to either trade or let walk their graduating classes.
But, regardless, there are three factors in the equation – wins, talent, and payroll. Payroll buys talent which produces wins. For a given team, payroll is pretty much fixed (e.g. Lincoln gives Bavasi a dollar figure. He probably doesn’t say he can spend 58.9% of whatever Cashman spent last year). So, with a given budget, the more effecient a team can be at buying talent, the more wins it will get. Wasting money is still wasting money, and still costs wins.
BTW, when I saw the post title, I was half expecting to see a picture of Bud Selig giving Carlos Silva a hug. What I got was much better…
well, loshe signs with the cards, 1 yr 4.25m. good call.
The Giants look like they have built an entire team of replacement players, except for their 3 young pitchers. That might be enough to contend in the NL.
Scraps –
I think you may be referring to my post (#33). Sorry ’bout that; my sarcasm meter went on the fritz getting through some of the first 30 posts.
Partly, yeah. ‘Sokay. Thanks.
1: I find that intersting, too, that nobody’s signed Lofton yet — considering that Rickey Henderson was still getting contract offers at the same age about 8-9 years ago.
Well, Henderson was at least an order of magnitude better than Lofton. Though I’m surprised Lofton isn’t getting offers, too.
The Transaction Guy reports today,
Looking to bolster a leaky rotation, the St. Louis Cardinals have come to terms with free agent righthander Kyle Lohse. Loshe, 29, split the 2007 season between the Cincinnati Reds and the Philadelphia Phillies, posting a 4.62 ERA and a 122/57 K/BB in 192.2 innings pitched. According to the AP, Lohse’s agreement with the Cards is a one-year, $4.25M deal with an additional $500K available through performance incentives based on innings pitched.
42 and 43 –
Sorry, but I think your missing Zeke’s point, which in shorter form is this: there is a pool of free agents out there. Historically, that pool has been overvalued, with the M’s bidding gamely for overpriced midlevel talent. Now, if Dave is right, fewer teams are buyers in that market. The remaining buyers may still drive prices too high relative to replacement level, but the drop in demand should lead to some reduction in over-spending. Buyers in that market are still likely stupid, but their stupidity will be a bit cheaper.
I don’t think I’m missing Zeke’s point, I just don’t agree with it. To me, it’s built on two assumptions I don’t believe are true: 1) That fewer teams will be in the market for free agents, which will drive down their cost, and 2) That the makeup of the free agent market will remain the same.
+I would be interested to see a post that explores the strange economy of major league baseball which allows individual teams to ignore best practice trends to their detriment. Dave or some economist?+
There is a popular misconception that businesses are all well-run, and need to be to survive.
There’s a popular misunderstanding that “survival of the fittest” in the Darwinian sense means that every individual that survives and reproduces is therefore more “fit” than every individual who does not.
Every competitive system is far more dynamic – and far more random – than that.
Survival of the fittest probably means that a “fit” gene lends a 5% survival advantage or even less to an organism. Given enough generations, the more fit gene wins out.
Anyone who has worked for any business knows they all do a ton of stupid things.
The White Sox can ignore the rules of putting together a great baseball team and still create the best team in the league every so often.
No biggie.