How Much Should It Cost To Sign Giancarlo Stanton?

Mar 3, 2014; Jupiter, FL, USA; Miami Marlins right fielder Giancarlo Stanton (27) at bat against the Houston Astros at Roger Dean Stadium. Mandatory Credit: Steve Mitchell-USA TODAY Sports

On an almost weekly (and sometimes daily) basis lately there seems to be a new update on Giancarlo Stanton’s future with the Miami Marlins.  Speculations range from he’ll decide after this season to the Marlins are working on a trade to he’s already decided on his destination once he becomes a free agent after 2016.

Meanwhile on the field, Stanton just continues hitting prodigious bombs that keep all of the other 29 teams salivating as they dream of ways to acquire him and keeps Marlins fans longing for some way to keep him.  Well, despite all of the extraneous drama that accompanies the Marlins franchise, the root of the issue is money.  If offered a big enough contract, Stanton would re-sign with the Marlins.

The first question is how much is enough to entice the 24 year-old slugger to re-sign with the Marlins?  The next question is would it be worth it for the Marlins to offer that much?

This offseason the Atlanta Braves signed first baseman Freddie Freeman to an 8 year, $135 million contract.  Comparisons were quickly drawn between the Freeman and Stanton situations due to their nearly identical service time and importance to their current teams.  The Freeman contract has been called a starting point for a Stanton contract negotiation, but let’s assume Stanton would take it and use it to evaluate whether it would be a worthwhile investment for the Marlins.

To address the second question, this post at Beyond the Box Score discusses an interesting method for evaluating long term contracts in baseball based on the concept of the cost per each Win Above Replacement (WAR).  The assumption is that each unit of WAR on the free agent market currently costs $6 million.  However, due to the declining value of a dollar over time, salary owed in future years will be worth less than it is today so a 5% discount rate is applied to the contract to determine its present value.  On the flip side, inflation will cause an increase in the cost per WAR in future years so a similar 5% increase is applied to the $6 million per WAR figure.

Here is a table showing the amount of WAR which Stanton would need to produce to justify the $135 million contract:

[table id=16 /]

For a player with Stanton’s proven track record entering just his 24 year-old season, this looks like it would be excellent investment on the Marlins part.  Just take a look at how his 4 big league seasons have played out in terms of WAR:

[table id=17 /]

Stanton would easily blow past the WAR required in the first 3 years of the contract.  Year 4 calls for him to produce the highest WAR figure during the length of the contract at 2.5, but it also comes in his age 27 season which is generally when a player is at his prime.  Following that season the required WAR starts declining gradually as Stanton ages towards the back end of his prime years.

Two things really jump out from looking at the proposed contract in this manner.  The first being that now is the perfect time to sign Stanton to a long term deal, especially if 7 or 8 years is the required length.  By escalating the annual salary the way the Braves did, you ensure that highest salaries are being paid in the player’s prime seasons meaning age 27 to 30.  The second thing is that even at $20+ million per season, Stanton should easily out produce the contract.  Stanton has averaged 3.4 WAR per season and totaled 13.5 WAR across his 4 seasons.  His average annual WAR is about a win more than the highest annual WAR required during the length of the contract.  Even if we remove the discounting factor on the dollars, he would still average more than the highest annual WAR on the contract.

Free agent contracts will only continue to get more expensive as time passes, the Marlins need to realize they have a golden opportunity and relative bargain here in Stanton and make this extension happen now.  Do you think Stanton is worth an 8 year, $135 million contract?