Friday, March 29, 2013

Is Verlander's Contract Worth It?

Earlier this afternoon, news broke that Tigers right-hander Justin Verlander, 30, had signed a 7-year/$180 million contract extension with a vesting 8th year option for an additional $22 million. This is easily the largest contract a pitcher has ever signed and begs the obvious question: is it worth it?

I think no, and I think, more generally, a contract like this is never worth it. The Tigers are taking a number of risks with this contract. The obvious risk is that Verlander is a starting pitcher and starting pitchers tend to break down. There's no reason to believe that he will get hurt other than the fact that he throws a baseball in an overhand motion -- but that's enough. Just ask Mets fans about Johan Santana. Seven years is a ton of time for a pitcher who is already 30 and has thrown more pitches than anyone else in recent years.

Injury issues aside, let's just look at how we construct rosters more generally and how we would even determine if a contract like this is "worth it." Justin Verlander's current contract runs out in two seasons ($20 million per year), so it is more realistic to frame this as a five-year extension worth $140 million for a 32-year-old pitcher.

Another idea to keep in mind is the going rate for WAR on the open market. Dave Cameron and Jonah Keri, two experts on this issue, have 1 WAR on the open market pegged at $5-6 million. This means that Verlander needs to amass roughly 35-40 WAR over the course of his contract for it to be worth it. Over the past six seasons, Verlander is at 38.6 FanGraphs WAR, so basically, the Tigers are hoping that Verlander will be the same pitcher at 30-36 that he was at 23-29. This seems dubious, especially considering that he has never been hurt.

However, let's just assume for the sake of argument that Verlander does amass the 35-40 WAR over the next seven years. That would put his contract in line with the value of one WAR on the open market. Even then, even if Verlander can achieve everything he did in the first half of his career in the second half, his contract will still not be worth it.

This is because the most inefficient way to build a team is through free agency, especially for players out of their prime. Locking up a young player's free agency years a la Evan Longoria? Great. Keeping a pitcher until his age 37 season when you could cut ties with him at 32? Not so much.

The obvious concern here is that there is a finite number of dollars that every owner is willing to spend. This might not be the case in Detroit, since their 84-year-old owner, Mike Ilitch, appears not to have any qualms about spending his money to give Detroit its first good thing since 8 Mile came out. However, as the Yankees have shown us, investing huge amounts of money in a few aging stars ties up your payroll, implicates the luxury tax, and means basically that you have to play these guys when they are well past their peak. The Tigers have tied roughly $90 million to Verlander, Fielder, Cabrera, and Anibal Sanchez in 2015. This creates a huge problem as younger players like Austin Jackson, Max Scherzer, and Alex Avila come in line for their own paydays.

So basically, to stop burying the lede, I'll just say that building your team around one pitcher, in his 30s, even if he is as damn good as Verlander, is not worth it. The $5-6 million per 1 WAR on the open market figure might be completely correct. It is why guys like Shane Victorino will get 3 years/$39 million and probably be close to worth it. However, this ignores the obvious fact that for the first six years of a player's career, they are cost controlled. These players are close to or in their primes and being paid nothing compared to players just a few years older than them. Justin Verlander will make $28 million as a 35-year-old pitcher and Kris Medlen is making $490,000 this season. These players will have similar WAR this season, except the Braves will have roughly $19 million more to spend on other players. The Tigers would be better off in my view spending $12 million on a guy like Kyle Lohse to get them 2-3 WAR, take the draft pick that comes from losing Verlander, and spend the remaining $16 million on young players, international signings, and up-the-middle position players.

I'm not condemning free agency completely. There are certainly bargains to be had and holes to fill with players that offer more certainty than a young player. However, paying a premium for a star player who is past his prime just has too many obstacles to overcome (health, aging, etc.) to justify spending such a large amount of money and a large portion of resources. We saw this with Pujols and the Cardinals, Hamilton with the Rangers, and even way back when, Glavine and Maddux with the Braves. As Branch Rickey said, it's better to get rid of a player a year too soon than a year too late. Roster construction means everything in the MLB, and even though the Tigers kept a great pitcher today, they've paid more than any pitcher or player at the end of his prime deserves.

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