Tuesday, February 26, 2019

Estimating the Value of Contract Extensions: Dellin Betances and Didi Gregorius

In this investigation, we will attempt to approximate the salary (dependent on the length of the deal) teams will offer their impending free agents (in their efforts to extend them) through encompassing age decline and the average cost / 1 WAR on the FA market.
In Neil Weinberg’s Beginner’s Guide To Aging Curves, he explains that…
“a basic rule of thumb is that once a player gets to 30, you sort of expect them to lose about 0.5 WAR per year of value due to aging. Some players will age better or worse, but that’s an average estimate”.
It is important to note that we will use a decline of 0.3 WAR for relief pitchers because they age differently than SPs and position player.
Another one of his articles analyzed the price teams pay per 1 WAR on the FA market. Neil Weinberg asserts that…
$/WAR is basically a measurement of how much teams are paying for players on the free agent market according to how many wins they will add over replacement level players. Right now, we think teams are paying about $8 million per every WAR they add to their roster. For example, a 2 WAR player signed for three years would theoretically provide his team with 6 WAR, so a team might want to pay him anything up to $48 million. If the team pays less than $8 million for each expected WAR, we call this a “good deal” and if they pay more, we say they “overpaid.”
Although the players we will be looking at — Dellin Betances and Didi Gregorius — are not yet FAs, they will presumably insist on pay comparable (relatively speaking) to what they could have gotten on the FA market (if they had opted to go that route). 

Dellin Betances

Photo: Bill Kostroun
30-year-old flame-throwing relief pitcher Dellin Betances is due to hit free agency after this season. He has been stellar for the Yanks, putting up excellent numbers from 2014 – 18…
  1. His worst ERA during that time was 3.08 (2016) and his best was 1.40 (2014)
  2. His worst K/9 during that time was 13.50 (2014) and his best was 15.53 (2016 and 2018)
  3. His worst BB/9 during that time was 6.64 (2017) and his best was 2.40 (2014)
  4. His worst WHIP during that time was 1.22 (2017) and his best was 0.78 (2014)
  5. His worst WAR during that time was 1.3 (2017) and is best was 3.2 (2014)
Weighted average of his WAR: (0.3 * 2018 WAR) + (0.25 * 2017 WAR) + (0.2 * 2016 WAR) + (0.15 * 2015 WAR) + (0.1 * 2014 WAR) = 0.54 + 0.325 + 0.58 + 0.36 + 0.32 = 2.1
For the purpose of this investigation, let’s assume Betances loses 0.3 WAR annually starting in the 2020 season and that the cost per 1 WAR is $8 million…
2020: 1.8 WAR [Weighted average of his WAR in last 5 years – 0.3]; $14.4 million
2021 (age 33 season): 1.5 WAR; $12 million
2022: 1.2 WAR; $9.6 million
2023 (age 35 season): 0.9 WAR; $7.2 million
2024: 0.6 WAR; $4.8 million
Betances contract possibilities:
  • 1 yr, $14.4 million
  • 2 yr, $26.4 million
  • 3 yr, $36 million
  • 4 yr, $43.2 million
  • 5 yr, $48 million
Prediction: 5 yr, $48 million

Didi Gregorius

Photo: Getty Images
SS Didi Gregorius is scheduled to become a FA after the 2019 season. Due to TJ surgery, he will be sidelined for the first few months of the season. Here is FanGraphs’ 2019 Depth Charts projection for Gregorius…
  • PA: 294
  • HR: 11
  • AVG: .265
  • WAR: 1.6
If he had accumulated 575 PAs [(0.45 * 2018 PA ) + (0.35 * 2017 PA) + (0.2 * 2016 PA)], then he would have been on pace for 3.1 WAR (575 PAs / 294 PAs = 1.96; 1.96 * 1.6 WAR = 3.1 WAR).
For the purpose of this investigation, let’s assume Didi loses 0.5 WAR annually starting in 2020 and that the cost per 1 WAR is $8 million…
2020: 2.6 WAR [3.1 – 0.5]; $20.8 million
2021 (age 31 season): 2.1 WAR; $16.8 million
2022: 1.6 WAR; $12.8 million
2023 (age 33 season): 1.1 WAR; $8.8 million
2024: 0.6 WAR; $4.8 million
Gregorius contract possibilities:
  • 1 yr, $20.8 million
  • 2 yr, $37.6 million
  • 3 yr, $50.4 million
  • 4 yr, $59.2 million
  • 5 yr, $64 million
Prediction: 4 yr, $59.2 million
Thanks for reading and feel free to follow me @MaxGold81356590

2 comments:

  1. I love the analysis of this piece but I dont think they would go more than 3 years on Dellin. The team is stacked with right handed relievers (Adams, Cessa, Holder, Kahnle, German, etc) who would be a cheaper alternative soon.

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    1. I tend to agree with you, to be honest. There's no reason to go more than three years with Dellin, given his age. To compare him to that list above though... well that's just unfair. There's one thing to plug him into a depth chart and replace him with another RHP, but it's another to replace his production on the field.. and none of them can do that.

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