The Cost of a Win

Morning Dose: Wednesday, January 22

☀️ Good Morning:

Billy Wagner is a Hall of Famer. Carlos Beltrán is not.

I grew up in an era when debating Hall-of-Fame candidates was the topic du jour of sports talk radio. I have spent countless hours comparing statistics, awards and Top-5 finishes to justify one player over another.

But I have to admit I just don’t care anymore.

Perhaps it’s because I’m older — the reverence I had as a kid for players from prior generations is not quite the same for the players I witnessed up close and personal. Maybe I’m jaded by the process, and how arbitrary it seems to be, justifying one case over another.

Whatever it is, I spent last night diving into free-agent spending instead of worrying about the Hall of Fame. I know there was some similar sentiment in the chat last night. I’m interested in how the rest of you feel.

Do people care that Wagner made it, or that Beltrán remains on track? Or that David Wright earned enough votes to remain on the ballot another year? Offer your thoughts in the comments.

In the meantime, we have a mailbag question to discuss.

☕️ Grab your coffee for your morning dose of Mets Fix!

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From M. Heideman: Can you speak on the differences between $ per win as calculated by arbitration boards, free market contracts, and WAR estimates (like your $11M figure the other day)? It seems these three should be more in line than they are, especially the arb and free agency payouts.

I love this question because it forced me to do some math.

A few people have asked me for the latest cost of adding a win in free agency, and I have been citing $11 million per win based on a number I had heard earlier in the offseason.

The market has evolved since then, with most top free agents coming off the board, save a select few. That makes for a good opportunity to dive into the data to see what teams are paying to add a win this offseason.

Before I get into that, I want to address the other parts of Mr. Heideman’s question.

Both arbitration and free-agent contracts are mostly negotiated using comparables. You have seen me use them in this newsletter. When Pete Alonso asks for $30 million per season, the Mets compare that number to Freddie Freeman and Matt Olson, countering with a lower number between those two. A similar process is used in arbitration, but without the market dynamics of free agency. Teams most definitely consider WAR in projecting and valuing performance, but that is just one of a multitude of metrics used for setting a salary.

• Arbitration: The CBA defines the statistics that can be used in arbitration. While WAR is one of the metrics that is allowed in presentations, there are several other factors, including “the recent performance record of the Club including but not limited to its League standing and attendance as an indication of public acceptance.” Most public statistics are allowed for consideration, with the exception of “data generated through the use of performance technology, wearable technology, or ‘STATCAST.’”

Ok, back to the main question.

🧮 To calculate the cost of a win in free agency, I will borrow from a methodology put forward at FanGraphs that takes the approach of dividing the total value of each player’s contract by their projected WAR over the life of the contract.

• Following a simplified aging curve assumption, for each free agent signing, I used the most recent FanGraphs WAR projection for next season and added 0.25 WAR for each season up to Age 30 (0.2 for starting pitchers and 0.05 for relievers), subtracting 0.5 WAR (0.4 for starting pitchers and 0.1 for relievers) for each season beyond that.

• For total salary, I used the net present value of each contract (taking into account deferrals). For purposes of this analysis, I assumed each option year is exercised.

• Rather than accounting for inflation on both player salaries and the relative cost to acquire a win in the future, we will assume they cancel out and work in nominal terms.

Some people like to focus on players who project to be worth at least two wins for this analysis; I prefer to take a comprehensive view and answer the simple question: given the amount of money spent this offseason, how many projected wins have been acquired?

🥁 Drumroll please…