December 2012

Justin Upton or Jason Kubel?

The Arizona Diamondbacks are reportedly interested in dealing an outfielder to overcome a logjam. They’ve signed Cody Ross who will be added to a stacked outfield of Gerardo Parra, Justin Upton and Jason Kubel. They also have a couple of young, talented outfield prospects in the high minors. By shipping out an outfielder, they may be able to land a shortstop, or at least acquire a player that could be of greater value to them in the near term. For potential buyers, one question to be addressed is which is the preferred outfielder—Upton or Kubel? There are many considerations, including whether the team has a bias or need for a left-handed hitter versus a right-handed bat, based on their current lineup and ballpark. Let’s hold that issue off to the side and assume that the club considering a trade for an outfielder is neutral on that righty—lefty issue.

Another important consideration is the market value of the player relative to his salary obligation. Upton is due $38.5 million over the next three seasons, for an average annual value (AAV) of $12.8 million. Kubel is signed for $7.5 million in 2013, along with a team option for the same amount for 2014, with a buyout price of $1 million, should his team decline the option. Pricing in the free agent market is baseball’s version of the stock exchange—perhaps akin to a lightly traded NASDAQ stock. The lack of transactions, at least when compared to the stock market, make the market tougher to read, but the lack of liquidity is an important dynamic that needs to be factored into an assessment of the market for players.

To assess the market value of players, I’ve statistically modeled free agent market transactions—about 1,100 of them over the last decade. I analyze position players separately from pitchers, since the market values different attributes in each. For position players, the most important valuation criteria is the player’s historical win contribution—I use wins above replacement (WAR) from Fangraphs.com. My analysis suggests that players are paid based on a combination of their most recent WAR (in their “walk” year, immediately preceding their free agency) and their best WAR over the last four years. In case you’re asking why does their “best recent WAR” make sense as a driver of a player’s financial value? I didn’t say it “makes sense”, just that it does the best job of explaining historical salaries that players receive in the free agent market. Other factors include the player’s position, as each position on the diamond has a different “value”, with designated hitter being at the low end of the spectrum and shortstop at the high-value end. The player’s reliability, as measured by the variation in his games played over the last several years is another factor that figures into what teams pay. Age also impacts the player’s value, both in terms of his AAV and the length of his contract. Older players tend to get shorter deals, even if their recent performance is the same as a younger player. One additional factor to consider is a player’s defensive ability, as measured by his defensive runs saved.

My assessment of the market value of Justin Upton is approximately $15 million per year for 5 years. Coincidentally, this valuation is similar to the actual contract that brother, BJ Upton was given by the Atlanta Braves in late November. Justin is a better hitter with more consistent power and is three years younger than his brother. However, BJ has greater positional value as a capable (although by no means a standout) center fielder, while Justin is a corner outfielder. On the other hand, as Jason Kubel enters his age-32 season, he prices out at approximately $9 million per year for 3 years.

It’s interesting to see that by my estimates, Justin Upton has a slightly greater differential than Kubel between his salary and his market value, when you look at it on an annual basis. Justin’s annual value of $15 million and relative to his $12.8 million in salary, leaves a $2.2. million spread, while Kubel’s value of $9 million compared to his salary of $7.5 million has a $1.5 million spread. The differences in their performance starts with their defensive abilities, as Upton is clearly the better defender. Offensively, one of the biggest differences between the two players is their strikeout rate. Kubel went down on strikes over 26% of his at bats in 2012, while Upton’s rate was 19%. This 7% differential means that over 600 at-bats, Upton will put the ball in play about 40 additional times, while Kubel goes down on strikes. Upton may also have greater upside due to his age, as he is just entering his prime.

In the end, the player demanded by a Diamondbacks’ trade partner may be determined by the amount of salary space the team has remaining in their budget. Kubel becomes the “value play”, while Upton is the higher risk (based on higher salary and longer term commitment) with a potentially higher reward. If often makes sense to look at the obligated costs of any signing. A team that acquires Kubel could spend as little as $8.5 million for a one-year commitment (which includes a 2013 salary of $7.5 million and a $1 million buyout for 2014), while Upton will cost a full $38.5 million over the next three years. If managing risk is the acquiring team’s goal, then Kubel may be their preferred choice.

Can Josh Hamilton hit the Best Pitchers?

Josh Hamilton is headed to Anaheim with his power left-handed bat. Let’s take a look at the motivation behind the Angels move and assess how he might fare in Orange County—or LA, as the Angels prefer to call it. On the positive side, the Angels get a double-hit by not only signing a top player, but stealing one from a division rival. It’s reminiscent of when the Yankees signed Johnny Damon away from the Red Sox and the Mets signed Billy Wagner, the former Phillie, both after the 2005 seasons. The Hamilton signing is a bigger, higher impact version of this effect. In terms of star power, this signing also helps the Angels battle the Dodgers for baseball supremacy in Southern California. Putting a contending team on the field and winning championships will likely ultimately determine which team is embraced by the most fans, but the star talent on each roster will also matter. The Angels add Hamilton  to Trout, Pujols, Jered Weaver and company, enabling them to go toe-to-toe with the Dodgers’ marquee talent—Kemp, Kershaw, Greinke and Adrian Gonzalez.

A couple of things to recognize about Hamilton. First, he played in one of the most hitter-friendly ballparks for lefty hitters. The Ballpark at Arlington ranked 3rd in terms of the park factor for left-handed hitter home runs, while Angels Stadium in Anaheim ranks 23rd. Considering the 2013 schedules for both the Rangers and the Angels and the parks in which they play, Hamilton will play to a park factor that suggests about 20% less homeruns, than if he remained a Ranger. Another issue, which is perhaps more concerning, is Josh Hamilton’s track record against top-flight pitching. In a recent study, I segmented all starting pitchers into different levels of “quality”, based on the OPS they yielded over a season. I defined “top” pitching as the top 1/3 and “bottom” pitching as the bottom 1/3 of starting pitchers. (I controlled for the lefty-righty factor and I rated pitchers for each season in the study—2009, 2010, and 2011.) The average left-handed hitter has a spread of 182 OPS points in his stats against “top” vs. “bottom” pitching. In other words, a .732 OPS guy (MLB-wide average against starting pitchers) is expected to hit .641 against top pitching and .823 against the bottom third of starters. Josh Hamilton’s spread is far more dramatic. Instead of a spread of 182 points, his is 433 points (see chart below, from MLB Network’s Clubhouse Confidential).

1128_CC_HAMILTON_OPS_GRAPH

Hamilton hit .721 against top pitchers, while banging out an OPS of 1.154 against the weakest pitchers. He performed only 12% above the MLB average against top pitchers, but a bone-crushing 40% above league average against the weakest third of the rotation. This suggests that Hamilton, who was a .909 OPS guy over these three seasons, feasts on weak pitching, but is neutralized by top pitching. Incidentally, this is a consistent pattern over the three years in our sample. Even in Hamilton’s MVP season of 2010, when he batted .359 with a 1.014 OPS, he exhibited the same pattern of hitting. In his MVP year he hit under .800 vs. top pitchers and over 1.200 against weak pitchers for another 400+ point spread. This has serious implications for the postseason, since the mix of pitching in the postseason closely resembles what we call the “top” pitchers. These pitchers represent one-third of regular season innings, but over 60% of postseason innings. Hitters who do not fare well against top pitchers are not as likely to get it done in October. Given the quality of the Angels’ roster, we may have a chance to see how this movie ends over the next several Octobers.

The Houston Astros Will Change Everything in the AL

In April, the Astros make their big move from the NL Central to the AL West. Except for Astros fans, most view the change as a footnote to the 2013 MLB schedule. I see this as a change that can have a profound effect on the competitive landscape in the AL. Houston is not just a “typical” team. In 2012 they were baseball’s worst team at 55 wins. Given the mindset of their general manager, Jeff Luhnow, entering his second year in the job, I would expect the Astros to get worse before they get better. Jeff has been keenly aware of need to deal his bonafide major league contributors to acquire young talent. The goal is not to always have the best players you can assemble, but rather to have enough good players in a window of time to contend for the postseason or a championship. When a 55-win team has a player (or two) that has value to another team, the only sensible move is to deal the player for future prospects—like the Wandy Rodriguez trade in the middle of last season. This translates into a weaker major league roster and less wins today, in exchange for the promise of more wins tomorrow. The talent gap between the Astros and the rest of baseball is already huge and expected to grow in the short term. For perspective on Houston’s deficiencies last season, they logged a .654 OPS against left-handed pitching, while the Cardinals and the Yankees pounded an .835 OPS and an .802 OPS, respectively. This season their offense should be buoyed somewhat by the addition of a designated hitter, but they will also play more of their games in pitcher friendly parks in the AL West.

The net result—the 2013 Astros will be playing against tougher competition in the AL West (and against the AL in general), and they should be a somewhat inferior team to the one that won 55 games in 2012. Combine that likelihood with the unbalanced schedule against two playoff teams—Texas and Oakland—and a playoff contender, the Angels, and the prospects for the 2013 Astros is bearish. If they 110 to 115 games, they will sprinkle their losses around the AL Central and AL East, but they will deliver them in bulk to the AL West. They will play 72 games against the A’s, Rangers, Angels and Mariners—18 against each. The net result could be 4 or 6 additional wins each for the four AL West teams, based on the difference between playing the Astros versus a broad mix of AL teams. These additional wins could deliver three teams from the AL West into the playoffs.

Houston’s transition to the AL has serious implications for the AL East. With the win totals for the top three AL West teams likely to rise, the AL East may be sending only the division winner to the postseason. Historically, two AL East teams would be among the four AL clubs in the playoffs. With last year’s expanded wild card, AL East teams had visions of three clubs making the postseason. That seems far less likely today because Houston will give more gifts to the AL West. The offseason has a long way to go, but by April, we may be picking the A’s, Angels and Rangers as playoff favorites, while cautioning the AL East that winning the division may be the only path to October.

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