Yesterday, I considered several reasons why Giancarlo Stanton’s new contract wasn’t folly on the part of the Marlins, but that was before the details of the mega-deal were announced. As it turns out, Stanton’s extension is heavily back loaded, making the new contract even more team friendly than first anticipated.

Annual Breakdown of Giancarlo Stanton Contract
Stanton Contract Breakdown
Note: Excludes potential for $1 million in award-based bonuses each season.
Source: Cots contracts

Stanton’s new deal was first reported as 13-years and $325 million, but that includes a $10 million buyout of a $25 million option in 2028. So, if the Marlins pick up the option, the average annual value (AAV) would end up being $24.3 million. However, that’s only a small consideration. What significantly lessens the Marlins’ financial burden is the payment structure, which concentrates payment in the second half of the contract. This is important for a few reasons, including the impact it has on Stanton’s opt out after year-six. If the right fielder decides to test free agency at that time, the Marlins would likely have enjoyed his prime years for a paltry $107 million dollars, or less than one-third of the total contract value. If this transpired, the Marlins could end up with an incredible bargain, but what if they want the slugger to stay? Because of the back-loading, the incentive for Stanton to flee would be lessened considerably. Instead of aiming to surpass an AAV of $25 million in order to breakeven, Stanton’s hypothetical foray back into free agency would need to net at least a seven-year deal worth approximately $31 million per season. Considering salary inflation in major league baseball, that’s not beyond the realm of possibility, but it certainly raises the bar.

The impact of back-loading on Stanton’s opt out is only half the story. By structuring the deal in such a manner, the Marlins will also enjoy more tangible financial benefits. Although pundits like to refer to large contract values as one lump sum payment, the transfers of cash are periodic. This is important because money has time value (i.e., a dollar is worth more today than in the future in the absence of deflation). As a result, the present value of any long-term series of payments is less than the stated amount. So, by pushing the largest payments to a later date, the Marlins have increased the level of benefit they’ll accrue (see here for a PV analysis using a straight-line approach). The chart below illustrates this savings by adjusting each year’s payments by an average CPI and MLB salary inflation rate, in each case using assumptions that are less favorable to the team to avoid overstating the impact.

Inflation Adjusted Present Value of Giancarlo Stanton Contract
Stanton Contract Breakdown Adjusted
Note: Adjustments based on average CPI rate of 2.4% from 1994 to 2013 and average player salary growth rate of 4.3% between 2003 and 2013. Assumes full payment made on January 1 of each year, with the inflation rate compounded once. Present Value is as of the January 1, 2015.
Source: timevalue.com, espn.com, Cots contracts, inflationdata.com Continue Reading »

The Miami Marlins must be crazy. That seems to be the conventional wisdom in the wake of the franchise’s decision to commit $325 million dollars over 13 years to Giancarlo Stanton. But, is this reaction to an admittedly mind-boggling contract based upon sound analysis, or simply a visceral response to the exorbitant salaries of professional athletes and an aversion to the notion they might actually be worth them?

In the rush to judge a contract that won’t expire until 2027, several exaggerated claims have been made by those who believe Stanton’s contract is destined to consign the Marlins to years of payroll inflexibility and diminishing returns. Below are several misconceptions being promulgated along with rebuttals that suggest the Marlins may not be so crazy after all

1) Almost every long-term deal has ended badly. By ignoring history, the Marlins are repeating an industry-wide mistake.

As the chart below demonstrates, long-term contracts are not inherently disastrous. Among deals of at least $90 million and seven years signed since 2001, and for which at least four years have been completed, about half have worked out for the team. Using fangraphs’ estimates of value, three of the 12 long-term contracts ended up in the black, while three others were within a reasonable range of the player’s estimated monetary contribution. A similar breakdown exists for current deals.

Lucrative, Long-Term MLB Contracts
LT Contracts

^Based on Fangraphs’ calculations of player value. *Years included are to-date 2014. #Total value excludes portion of Arod’s contract forfeited by suspension.

Note: Includes seven year deals of at least $90 million signed between 2001 and 2011. 2001 valuations are based on that year’s fWAR multiplied by 2002 dollar value of one win over replacement. Option years are not considered, nor is deferred money factored into the calculations. In some cases, such as CC Sabathia and Arod, contracts are considered independent of opt outs.

Source: Cots Contracts and fangraphs.com Continue Reading »

“You can’t sit on a lead and run a few plays into the line and just kill the clock. You’ve got to throw the ball over the goddamn plate and give the other man his chance. That’s why baseball is the greatest game of them all.” - Earl Weaver

Young prospects aren’t the only ones being put to the test in the Arizona Fall League this year. Major League Baseball is also using the league to experiment with a series of measures designed to speed up the game. MLB has used Arizona as a laboratory for innovation in the past, but this time around, the proposed changes are intended to turn the clock back to a time when the “pace of the game” was deemed more fan friendly.

Average Length of Baseball Game, 1947-2014
Length of Game
Note: Includes shortened, nine inning and extra-inning games.
Source: Baseball-reference.com

The length of the average major league baseball game has increased over the last 70 years. In 1947 (the first year for which baseball-reference.com has nearly every game time), the typical game lasted two hours and 11 minutes, a far cry from the three hours and eight minutes needed to complete a contest this season. What’s the reason for this increase, and, is baseball’s desire to reverse this trend a case of trying to fix something that isn’t broken?

What probably concerns baseball suits the most are the last three years depicted in the chart above. Since 2011, the average length of a baseball game has increased by over 10 minutes, representing the first sustained breach of the three-hour mark in the period covered. What explains this sudden spike after years of gradual increases?

Replay Review Snapshot
Replay snapshot
Note: Official replay time is from retrosheet. Actual replay time is based on the time from when a manager enters the field until the next batter steps into the batter box.
Source: retrosheet.com and MLB.com video Continue Reading »

Despite suffering another mediocre year on the field, 2014 was a rebound year for the Yankees in terms of fan engagement. TV ratings on YES were up 15%, while attendance at Yankee Stadium jumped nearly 4%. However, these increases belie a longer-term trend in the opposite direction.

Yankee Stadium Attendance, 2009-2014

Attendance since 2009

Note: Dotted line is a two-year moving average.
Source: Baseball-reference.com

Since opening the new Yankee Stadium in 2009, average attendance has declined by 8.5%, a drop off that accelerated in 2013, when the team missed the playoffs for only the second time in nearly two decades. Compared to 2012, the average crowd in the Bronx last year declined by 7.4%, or exactly double the 3.7% recovery that took place in 2014. Considering the positive impacts of Masahiro Tanaka’s debut and Derek Jeter’s farewell, this modest rebound could prove to be a brief detour from an otherwise steady descent.

Yankees Ratings on YES, 2003-2014
Yankees TV Ratings Since 2003
Note: 2013 is first year that YES was carried on the Cablevision system. Rating is based on viewing households compared to Nielsen estimates for total New York market size. 2004 Household number not available. 2008 rating is estimated based on 2009 total New York market households and may differ from the actual rating.
Source: YES Network, Nielsen, New York Times, TV By the Numbers Continue Reading »

The major league baseball postseason is often referred to as a “crapshoot”, but is there any method to the madness that ends with a World Series champion? Are teams with a better record more likely to win in October, or is run differential a better barometer of postseason success? What about teams that are hot entering the playoffs, or those who performed better against stiffer competition in the regular season? Let’s take a look.

Regular Season Record

Since 1901, there have been 281 post season series, and the team with the better record has won only 53% of them. By individual series, only the ALCS has seen the better team emerge victorious more than 60% of the time. The same pattern also holds for more recent results. Since 1995, the team with a better record has won the ALCS 63% of the time, but the overall outcomes have been a coin flip.

Postseason Series Won by Team with Better Regular Season Record, 1901-2013
Regular Season Series Postseason Records
Note: Bars represents percentage of teams with a better regular season record that won a playoff series. Number labels above aggregate categories represent total series played.
Source: baseball-reference.com and proprietary calculations

Post Season Series Won by Team with Better Regular Season Record, 1995-2013

Regular Season Series Postseason Records since 1995

Note: Bars represents percentage of teams with a better regular season record that won a playoff series. Number labels above aggregate categories represent total series played.
Source: baseball-reference.com and proprietary calculations

Better is a relative term, but a one or two game difference over 162 has little meaning. In order to avoid that conflict, series results were grouped into winning percentage ranges. Using this approach reveals that as the differential widens, the better teams tends to be more successful. In fact, at the extreme parameter (winning percentage difference greater than 0.100), the percentage is 81%, albeit in a more limited sample of 16 qualifying series. Continue Reading »

It’s official. With today’s loss, the Yankees will be heading home in October. However, 2014 hasn’t been a complete loss, at least not from a historical perspective. With one victory in the team’s final four games, the Bronx Bombers will secure a winning season for 22nd consecutive year.

Longest Consecutive Winning Season Streaks, By Franchise (1901-2014)
Consecutive winning seasons

Note: Data is as of September 24, 2014 (Brewers and Blue Jays could still have their season status change before end of the year); Blue bars represent NL; red bars represent AL.
Source: Baseball-reference.com

The Yankees’ current stretch of 22 consecutive winning seasons would be the second longest streak of its kind in baseball history. However, it would be a distant second. From 1926 to 1964, the Bronx Bombers reeled off 39 straight winning campaigns, including 18 championships, 25 pennants, and a victory in over 62% of all regular season games.

Aside from the Yankees’ two winning season streaks of 39 and 22, the Baltimore Orioles boast the next longest stretch, which lasted for 18 seasons from 1968 to 1985. The best run put forth by a National League team is shared by the Atlanta Braves and St. Louis Cardinals. The Braves enjoyed 15 straight winning seasons from 1991 to 2005, while the Cardinals run lasted from 1939 to 1953.

Franchise Winning Percentage Distribution, Since 1901
season distribution

Note: Data is as of September 24, 2014 (Brewers and Blue Jays could still have their season status change before end of the year).
Source: Baseball-reference.com Continue Reading »

In July, Nike helped the country pay “RE2PECT” to Derek Jeter. Now, Gatorade and Jeter are teaming up to return the favor.

This morning, Gatorade unveiled a new 90-second commercial in which Jeter literally and figuratively tips his cap to the fans who have honored him during his final season. Set to Frank Sinatra’s “My Way”, the ad, which will begin airing on September 20, follows the Captain on a special farewell tour through the streets of the Bronx. This journey gives Jeter the opportunity to interact with fans, allowing the Captain to say thanks with various personal touches before culminating with his signature tip of the cap to the crowd at Yankee Stadium.

2In addition to the commercial, Gatorade also announced a series of sponsorships that will adorn Yankee Stadium during the season’s final home series against the Orioles. Starting on September 22, the Yankees’ dugout will feature Gatorade equipment, including coolers, adorned with Jeter-inspired logos in place of Gatorade’s G.

Too bad Paul O’Neill didn’t have a farewell tour.


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