MLB Embraces Replacement Level

Dave · March 12, 2008 at 10:21 pm · Filed Under Mariners 

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.


57 Responses to “MLB Embraces Replacement Level”

  1. scraps on March 13th, 2008 4:07 pm

    Partly, yeah. ‘Sokay. Thanks.

  2. scott19 on March 13th, 2008 5:18 pm

    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.

  3. scraps on March 13th, 2008 5:27 pm

    Well, Henderson was at least an order of magnitude better than Lofton. Though I’m surprised Lofton isn’t getting offers, too.

  4. Bremerton guy on March 13th, 2008 9:33 pm

    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.

  5. zugzwang on March 14th, 2008 9:40 am

    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.

  6. BaltimoreDave on March 14th, 2008 12:42 pm

    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.

  7. bookbook on March 15th, 2008 12:18 pm

    +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.

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