Wednesday, April 4, 2018

$400 Million, My Foot

G'day.  This one is not about Congress again -- they tip $400 million in the Capitol bathroom without thinking, and budget items that small don't even rise to their level of interest.  And it's certainly not about feet, of the anatomical or the 12-inch variety.  After all, I'm behind the metric system, every inch of the way.

Nope, this one's about baseball.

The $400 million I'm speaking of is the number being bandied about as the multi-year contract value of the agreement that will be made between some unlucky major league team and Bryce Harper, currently an outfielder with the Washington Nationals, the team which drafted him and then brought him to the majors in 2012 at age 19.

You can obviously count, so you will have figured out that this year, (during the playoff season this October), Harper will turn 26.  You may also know that a few weeks thereafter, he will become a free agent and available to sign a contract with whomever he chooses.  And the value and length of that contract is entirely negotiable.

Harper is represented by the Scott Boras organization, meaning that we will not expect that contract to be signed or even agreed to until after the first of the year, by which time lots of press releases will have come out and lots of less-than-factual statements made.  Boras has a tendency to have his clients wait until late in the offseason to sign, waiting for a few more dollars to be offered.

And we can imagine that a Boras team member is the one who first poofed the mythical $400 million figure out into the open air to be kicked around as if it were ever going to happen.  The obliging media have, of course, written scads of words about it, as if it were actually what Harper is going to get paid in his next contract, as opposed to a first volley from his agency.

But it's not, at least not as likely, as we think.

Let's take a look at what that means -- and it means a lot.  First, the total is actually important, because unlike football, baseball contracts are guaranteed.  Harper could strike out in 99% of his at-bats under the new deal, and he will still be paid.  The once-great Albert Pujols is clogging up the Angels roster, and still will be for a few more years, even though he was 19% worse than a league-average hitter last year and got $26 million for doing so.  And he'll get the remaining $114 million on his contract even if the Angels released him tomorrow and put even a nearly league-average player in his place.

Harper could see a deal that lasts ten years, given that he is going to be 26 in its first year and would be a still-not-too-old 35 in its last.  But would a team give him $40 million per year, not knowing that he wouldn't go all "old Pujols" on them after a few years?

Well, in a sane world, of course not.  Harper has six years of track record in the majors to look at, and that's a pretty fair sample size.

The good -- Bryce Harper is an outstanding player.  For his career, he has been an amazing 41% better than a league-average hitter, including 57% better in 2017, and a slightly above-average fielder, mostly out in right.  He was the 2015 MVP, and an All-Star five times.  At 26 this fall, he is only now entering the prime of his career.

The not-as-good -- Bryce Harper has averaged fewer than 130 games per season, three times playing in under 120 games (out of 162).  He has logged a lot of disabled-list time, and players who get hurt tend to get hurt more.

But let's us get serious here.  There is yet another figure, one that I have not mentioned as yet ... and that is $197 million.  That figure is the luxury tax threshold, meaning the amount of allowable payroll (average annual balance of the major-league roster) a team can have before salary dollars beyond it are "taxed", meaning that teams paying over that amount fork over an additional percentage of the excess to MLB headquarters to be redistributed to other teams and players' pension costs.

In 2019 that tax threshold will be $206 million.  There are 25 players on a major-league team, and 40 on the overall roster (including minor leaguers with options, players on the 10-day disabled list), and possibly a few on the 60-day disabled list.  To have one member of the 25-man roster carry a $40 million price tag means that even if the team is a bit over the luxury tax threshold, some 20% of the entire 40-man roster payroll is taken up with the salary of just one player, and thus unavailable to spend for others.

If that player is a bit brittle -- and missing 50 games or so in half your seasons qualifies -- that can be a huge issue.  When that player is not on the field, you don't play a team of eight players, you have to put someone else in there, and that "someone" would not otherwise even be playing, else he would not be on the bench in the first place (but would be starting).

If a brittle player is out for a while, the team has to replace him more permanently (i.e., with a starter-quality player) and that player will come at a cost if he is going to provide decent production, let alone Harper-level.  Since he would not have been on the roster, he'd have to be acquired, which means his salary is added to the team payroll, and if they're already in tax-land, it means that salary is even costlier.

Finally, let's get to supply and demand, particularly demand.  In order to add an outfielder asking for $400 million, there has to be a team which (A) has $40 million each year to commit to one player, (B) has a really high risk tolerance, and most importantly (C) has a vacancy in one outfield position to where upgrading to a Harper is actually worth $40 million.

Why do I note that (C) thing?  Because every team has a full outfield, as evidenced by the fact that they actually go out and play every night with three outfielders.  Duh.  If you have three guys as good as Harper, you simply don't need him at any price.

Of course, no team actually has three outfielders that good, but some of them have three pretty good ones -- the 2017 champion Astros, for example, used George Springer, Marwin Gonzalez and Josh Reddick in the World Series.  They're already on the team, with no additional cost beyond their current salaries.

If the Astros were to want Harper, injury history notwithstanding, they would have to decide -- read carefully -- not that that Harper himself were worth $40 million a year, but that they were willing to pay $40 million for the difference between Harper and the outfielder he replaced.  Make sense?  To the Astros, they may think that Harper may be better than one of their guys, but that paying $40 million a year just for a few more homers and 50 points of OPS is senseless -- and that would take them out of the competition.  Down to 29 teams.

So take out the teams with decent outfields already -- and there are quite a few.  Forget those in small markets who don't approach the luxury tax limit already, and couldn't dream of tying up that much payroll in one guy.  Before long, you're down to a very small number of teams, including the Nationals, for whom his salary would not be an upgrade cost since he's already there.  And then let out those with more common sense than to pay anyone that much, and those who have been burned one too many times (I'm looking at you, Angels) to want to go down that route again.

Before long, the demand side of the curve, the number of teams still "in the hunt",  gets so small that either Harper and Boras go back to the Nats and ask for their best offer (Washington certainly wants him back), or decide to wait out the market.  Boras tried the "waiting" tack with J.D. Martinez, floating that "$200 million" figure all the while, only to find that for pretty much the same reasoning, the demand side ended up being only the Red Sox.  The Sox agreed to the $110 million, five-year deal they had originally offered months before, when they decided on their terms what he was worth.

So unless even one team is ready to do a $400 million version of the massive contracts that crippled the Angels (Pujols), the Red Sox (Carl Crawford and Pablo Sandoval), the Yankees (Alex Rodriguez, Jacoby Ellsbury, Mark Teixeira, et al.), I would take the "under" on Harper's new deal's average annual value.

And I'm actually hoping I win that bet, for the good of Baseball.

Copyright 2018 by Robert Sutton
Like what you read here?  There's a new post from Bob at www.uberthoughtsUSA.com at 10am Eastern time, every weekday, giving new meaning to "prolific essayist."  Appearance, advertising, sponsorship and interview inquiries cheerfully welcomed at bsutton@alum.mit.edu or on Twitter at @rmosutton

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