Apparently the recent eight-year, $184M extension handed to Joe Mauer by the Minnesota Twins caught the eye of people around the Marlins’ camp. Here’s JCR on the issue:
"[Hanley Ramirez] can qualify for free agency going into his age 31 season. Assuming he remains one of the game’s top offensive players and can remain at shortstop over the next five years, that’s plenty young to cash in on another huge contract. A starting point might be five years at $20 million a season, and that’s a conservative estimate. Even if the Marlins go the Twins route and have a $100 million payroll at some point — can you imagine? — Samson cautioned against investing such a high percentage of the total outlay on one player."
Jim Duquette talked to David Samson and reported on his brief discussion about Hanley Ramirez here (it’s near the end of the interview). JCR has something of a transcript:
"Here is his exchange with Duquette:Duquette: “When I saw the Joe Mauer signing the other day one of the places my mind went was right here because of your shortstop. At some point you’re going to be faced with that difficult decision. Were you surprised at Minnesota’s ability to go that far?”David Samson: “It’s funny. When I saw the signing the first thing I did was call [Marlins president of baseball operations] Larry [Beinfest] and started doing the math and talking about Hanley because Hanley’s the type of guy we’d like to have retire as a Marlin and be the first Hall of Famer who spends his entire career with the Marlins. He’s obviously got a long way to go but that’s where I think he’s headed. Having said that, when you’re paying one player that much money it’s tough. That’s such a high percentage. Even if at a $100 million payroll, you’re paying one guy 23 percent, that’s not always a great formula for success. But, of course, the Twins have been so good they know what they’re doing. It’s something, obviously, we’re going to have to worry about but thank god not until 2015.”"
I know it’s a long time from now, but since Duquette and Samson brought it up and the beat writers covered it, I might as well throw my hat in the ring. What would be a sensible extension for Ramirez, and what concerns should the Marlins have?
What’s a fair value?
Mauer and Ramirez entered the league one year and a half apart, but Mauer is only about eight months older than Ramirez. Mauer signed his first deal, a four-year, $33M extension, heading into his third year of rookie salary. Right there, we see an immediate difference: while Mauer signed his first extension for his ages 24-27 season, Ramirez committed his first long-term deal heading into his first arbitration season in 2009 and covering his age 25-30 seasons. Ramirez forfeited years of prime pay for more years with the Marlins at a reduced rate; the Marlins are set to pay him $15.5M average annually in the three free agent years that were bought out.
Mauer’s deal is for eight years and $184M, giving him an annual value of of $23M / year. Conveniently, Mauer’s contract will pay that value annually for all of those eight years heading into his age 35 season, though as former BtB colleague and boss Tommy Bennett noted in this excellent article, the club will be paying less than that in the future due to the time value of money.
To make it easier, let’s structure a deal that would take Ramirez through his age 35 season as well, meaning that it would be a five-year extension past his current contract that ends after age 35. What would he be projected to do in those years? It’s kind of hard to tell obviously, but I’d like to think that he would still be close to a six-win player in those seasons. To help me guess at this, I’m going to use PECOTA’s 10-year forecasts (using WARP, which I’ll use as an acceptable stand-in for WAR) and my own simple guess at his value from 2015 to 2019. Essentially, I’ll start him off at 5.5 WAR in 2015 and drop him 0.5 WAR each season until age 35; this I think is the approach most similar to the average player, though clearly Ramirez is not an average player. For a comparison point, I also looked at three of PECOTA’s more appropriate comps and charted their five-year WAR totals starting from five seasons after PECOTA’s chosen comp year. Rally’s WAR database was used for all data that has already occurred, while PECOTA’s projected WARP from 10-year forecasts was used to fill in the blanks when necessary.
Here’s the chart:
Outside of the Garciaparra comp, the two guesses of Ramirez’ value seem fairly close. I don’t like that PECOTA keeps him stable from 2015 to 2019, but based on just looking at Alex Rodriguez and Derek Jeter, two excellent players, it seems fair enough. If I take the average between the linear value of 22.5 WAR over five seasons and the PECOTA-projected forecast of 24.7, I get a value of 23.6 WAR for five seasons, or an average of 4.7 WAR/year. For comparison, the three comps that were given averaged 18.7 WAR for five seasons, or a 3.7 WAR/year rate. Of course, that includes the fallout of Nomar Garciaparra’s career, but that is still a possibility I suppose.
What would that be worth in the free agent market of the future? It’s hard to tell right now, since we’re still in 2010, but we can guess I suppose. In 2010, the market was paying around $3.5M per win, a crazy low amount. Let’s say that in 2011, that bumps back up to $4.0M per win and gorws at 8% per year in the dollar/WAR rate. That means in 2015, the value of a win in the free agent market would be $5.4M. By the end of the 2019 season, however, we would be looking at the average market rate being worth $6.4M. Using the 2015 rate, our average 4.7 WAR per year would yield Ramirez an expected annual salary of $25.4M, while using the five-year average dollars/WAR would give Ramirez a salary of $30.1M. Those both seem like reasonable totals, but let’s go with the low one, accounting for a “long-term deal” discount.
If we pay $25.4M per season for five years, that would make Hanley’s deal a five-year, $127M extension, lasting from 2015 to 2019.
A noose around our (payroll) necks?
David Samson mentions in the brief interview with Duquette that one major concern about signing Ramirez to a deal like this is the potential of not having enough money with which to build around Ramirez. As Samson puts it, even at a $100M payroll, the Marlins would have difficulty building a franchise around a $23M/year Ramirez contract.
While I agree with the premise at lower payrolls, I call bullshit on Samson’s claim. The Marlins have been doing a halfway decent job building .500 teams using the strictest payroll restrictions. Sure, you probably could not build a competitive team effectively if you have a $25M Ramirez and a $45M payroll, but at $100M? Ramirez would provide close to five wins a season on average in those five extension years. To get into contention (labeled at 90 wins total), the Marlins would need to come up with 37 more WAR. With $75M remaining, that means the team is paying about $2M per WAR to get there. Teams pay about $2.5M per WAR as a whole (including rookie and arbitration deals), but the Marlins have been paying less than that for many a season. For Samson to say that suddenly, the team can’t eke out the same production they’ve been pumping out the last few seasons because they have a larger payroll and a big contract sounds very sketchy to me.
Ramirez has long been rumored to move off of the shortstop position in the past. In 2007, when he was the worst shortstop in baseball (and looked the part), the cries to move him to center field began. There is still a decent chance that, by 2015, Ramirez won’t be considered a shortstop and would have to move either to third or center. There are some guys in the way of those moves; presumably Cameron Maybin and Matt Dominguez are the team’s futures at center and third respectively. However, if one doesn’t pan out, we might see Ramirez move, and that could affect his value.
However, I’m not concerned about this either. Right now, Ramirez has shown that he is at worst a -5 run shortstop during a season. With his athletic skillset, I don’t see how a transition to either position would really hurt his status too much. Any loss in positional adjustment (around five runs a season to either position) would likely be offset by his improved defense at the position. In that regard, this is not the same as the concern fans have with Mauer moving off of catcher. Catcher has a bigger toll on a player’s health and requires skillsets that are unique on the diamond. Transitioning him from catcher to third base or first base would not result in an equal increase in performance at that position because the skillsets aren’t the same. With Ramirez, moving to third or center field involves skills he already has, primarily speed, decent range, and a strong throwing arm.
I think the deal I proposed is an appropriate one given the talent that we’re dealing with and the years that we’ll be getting him in. If Ramirez is to stick around another ten years with the Marlins, I suspect $25-26M a year for those last five years would be a fair price and a beneficial one for both parties. I for one would love to see Ramirez retire as a Marlin and one day enter the Hall of Fame wearing a Marlins cap, so it would be great to see something like this happen.