Contract Comparisons: Zack Greinke Update | Disciples of Uecker

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Major League Baseball fans were abuzz with excitement all day yesterday, as the news cycle churned out report after report about extremely large contract extensions. San Francisco Giants ace Matt Cain signed on for at least five more years in the Bay Area, landing more money than any right-hander in the history of the game. Cincinnati Reds first baseman Joey Votto made that number look tiny, doubling Cain’s $112+ million deal, as he signed on to the Reds for another decade. Dave Cameron of FanGraphs noted the extreme shift in pre-free agency buyouts that occurred with the Votto buyout; with two years remaining until free agency, Votto topped Miguel Cabrera‘s deal by $70 million and two years.

Suddenly, the landscape for contract extensions shifted. Even a week ago, I might concede that teams need to theoretically receive some break in price from free market contract levels when extending a player on their team. Whatever shred of service level discounts that existed in exchange for early-career security is gone. With slightly more than four years of service time, Votto and the Reds soundly flew beyond any previous measure for first base talent (or four+ years of service, in general). (If one considers the deal from the perspective of MLB teams, the Reds’ offer was wildly irresponsible, and I would suspect that a sizeable portion of baseball executives are angry about just how far the Reds topped Cabrera’s standard for top service class money for players with four-plus years).

ZACK GREINKE AND THE MILWAUKEE BREWERS
There are a lot of questions about how Matt Cain’s contract extension affects Zack Greinke‘s chance at re-signing with the Milwaukee Brewers. Depending on how you look at it, Greinke is only a step or two behind Cain as a pitcher. While Greinke doesn’t have Cain’s consistency, Cain doesn’t have Greinke’s 2009 ceiling. (I am now convinced that Greinke will receive a very large deal because of his 2009 campaign).

Beyond Cain, Greinke has a few advantages. First and foremost, he knows about the Votto deal, which in some way should send a message that one need not take anything less than the free market price while negotiating a contract. This is especially significant in a case such as Greinke’s; the Brewers’ righty is already beyond seven years of service time (Cain is at six), and he’s already working beyond one of the top service-class extensions from 2009 (back when, oh, $38 million could be a top service class deal for a pitcher).

I wrote about this at Bernie’s Crew back in November, before C.J. Wilson and before Matt Cain. Back then, I still thought Greinke was in for a raise, simply based on his service time and the diminishing performances of previous pitchers signed to extensions. The good news about the Cain deal is also the bad news — even though Matt Cain is arguably the more consistent pitcher than Greinke, and therefore more valuable, Cain’s deal also lowers the overall threshold for elite money:

Sabathia (2007-2009): 686.7 IP / 146 ERA+ (7 years / $161M)
Santana (2005-2008): 912.3 IP / 155 ERA+ (6 years / $137.5M)
Zito (2003-2007): 1123.3 IP / 122 ERA+ (7 years / $126M)
Sabathia (2009-2011): 705 IP / 140 ERA+ (5 years / $122M)
Hampton (1994-2001): 1260.7 IP / 121 ERA+ (8 years / $121M)
Lee (2008-2010): 667.3 IP / 142 ERA+ (5 years / $120M)
Cain (2007-2011): 1080.3 IP / 127 ERA+ (5 years / $112.5M (2013))
(Cain (2009-2011): 662.7 IP / 132 ERA+)
Brown (1993-1999): 1568.3 IP / 135 ERA+ (7 years / $105M)

You’re certainly not going to hear me argue that Matt Cain is not a top pitcher in baseball. He’s one of two National League pitchers to sit in the Top 20 in preventing runs against average for four consecutive seasons (Tim Lincecum is the other one; Roy Halladay and jumps between the American League and National League, of course). However, in the grand scheme of things, Cain is closer to Barry Zito and Mike Hampton than he is to C.C. Sabathia and Johan Santana.

What difference does this make?

Think about Zack Greinke’s position. He has an elite season under his belt from 2009 — really, one of the very best seasons in the last five decades, and he’s near average or better in each of his other seasons (from 2007 to present). The point, it seems, really isn’t whether Greinke is better than Cain; it’s whether he can sneak into the bottom of the threshold set by Cain.

Matt Cain is now the highest paid right-hander in MLB history; Greinke only needs to reasonably prove that he deserves to be the second (or third)-highest paid right-hander in MLB history. This is more likely to happen today than it was a couple of days ago, because from the perspective of the Brewers, they cannot reasonably hope that Greinke would provide even the slightest discount for the early security provided by a long-term deal. Greinke can turn to Cain as a low-end threshold to try and hit the big money, but if he can’t reach that level on merit, he can turn to Votto to squeeze as much money out of his seven years of service as possible.

BEST COMPARISONS FOR GREINKE
1. Barry Zito (7 years / $126M): This probably isn’t fair to Zito, but if anyone has prepared MLB clubs for the reality of paying extremely high amounts of money for below average performances, it’s Zito (and I even like the guy personally and everything, he’s smart and a great music fan). Target number one for Greinke is the Giants’ left-hander, if only to prove that Greinke’s average performance from 2010-2011 was extremely valuable to his clubs. Over the long haul? Greinke’s near-950 IP and 126 ERA+ performance doesn’t quite reach Zito’s level of innings-eaten, but Greinke’s ERA was arguably more valuable..

2. A.J. Burnett (5 years / $82.5M): You know that old saying: shoot for Barry Zito’s money, because if you miss, you’ll probably land next to A.J. Burnett. This one is simply a low-threshold test for Greinke. If Burnett’s three-year performance of 552.7 IP / 112 ERA+ was worth more than $80 million, certainly Greinke’s three-year note of 621 IP / 126 ERA+ is worth that much. This one is a gut check, in a way: how valuable is that 2009 campaign to establishing Greinke’s ceiling? Certainly, that season is driving his overall value from 2009-present, but that provides Greinke an argument about his potential, too; even if you have to run through Between the Buttons and Their Satanic Majesties Request, you still end up at Beggar’s Banquet and Let It Bleed, right?

3. Justin Verlander (5 years / $79.5M after 4+ service time): Sure, Justin Verlander clearly looks worth his deal now, after turning in two seasons at 145 ERA+ while working more than 475 innings. But, when he signed his extension, he was not far removed from a notably below average season. In 2008, Verlander worked just over 200 innings, but he allowed 119 runs, which was approximately 10 runs worse than his league and park. Of course, his fielding independent ratios were much stronger than that performance, and one might have expected Verlander to allow approximately 20 fewer runs given his K, BB, and HR, and average defensive efficiency. Greinke has not ever had a season as bad as Verlander’s 2008, and on top of that, Verlander had not had a season as strong as Greinke’s 2009 (prior to signing his contract). Given the service time differences with this deal, Verlander’s signing provides what might be the absolute floor to a Greinke extension.

CONCLUSION:
If you already suspected that Greinke was worth more than $80 million, (1) the Cain deal should solidify the chance that he’s worth well over that, given the lower ceiling for lucrative money, and (2) the Votto deal should solidify his opportunity to demand free market value from the Brewers. While I can’t personally see the Brewers handing Greinke 5 years and, say, $110 million, the shifting service expectations and contracts signed in the last day should change Greinke’s expectations.

If you’re wondering whether Greinke’s personality makes him more prone to ask for a discount, or rather, less likely to ask for elite money, I think it’s clear that his contract history negates that possibility. Greinke is already working from a position of service class strength, and there’s no true reason to expect him to suddenly relinquish his strong position in extensions signed by baseball pitchers.

Furthermore, those fielding independent peripherals, snazzy stuff, and 2009 campaign will be hanging over negotiations. The Brewers would be foolish to actually hand out a contract based on future potential, when they can push to offer a contract based on Greinke’s last two years. The trouble with that is, if they push to far, they get to 2009, open the door for questions about Greinke’s defensive support, and they could end up working terms back into Greinke’s best favor.

“What if Greinke has that exceptional 2012 campaign?” Well, what if this is it? How much would you pay for a pitcher that could consistently fail to put it all together? Given those two questions, Greinke’s stuff and peripherals push Brewers fans’ desire to believe in the potential of greatness toward the former position, rather than the latter. The truth is, no one will believe that this is it for Greinke — average pitcher that could be so much more — because people like to have faith in the idea that people with great potential will achieve greatness (that’s also why I feel bad for youngsters like Stephen Strasburg — a long-time, moderately above average career will seem disappointing against ridiculous expectations). I gather that if the Brewers err, they will err on the side of Greinke breaking out, rather than not.

So, the real question is: if it takes 5 years and more than $100 million to lock-up Greinke, do you offer that contract?

RESOURCES:
Baseball-Reference. Sports-Reference, LLC., 2000-2012.
Cameron, Dave. “Joey Votto’s Massive Extension Changes the Game.” FanGraphs, 2 April 2012.
Cot’s Baseball Contracts. BaseballProspectus. Prospectus Entertainment Ventures, 1996-2012.

IMAGES:

http://www.sfgiantsbaseball.net/player-profiles/matt-cain-profile

http://creamcitycables.com/tag/joey-votto/

http://www.ongo.com/v/494012/-1/B680D0C1E26EAB94/brewers-new-ace-zack-greinke-i-had-to-play-the-bad-guy

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Comments

Tell us what do you think.

  1. wscaddie56 says: April 3, 2012

    In a word maybe. If you take Wolf’s contract off the books then you could theoretically afford $20M for Grienke but that would mean you have to have a youngster take Wolf’s spot and all of a sudden Narveson becomes pretty average as a #4 starter.
    If you’re talking $20M+ per season I don’t see that going way up if Grienke has a great year so I don’t see the advantage to signing him early. Plus, if Wolf pitches well again wouldn’t we be better off keeping him, finding another starter for $10-15M to replace Grienke and let the youngsters develop at their natural pace?
    I vote to wait until after the season unless he’ll take $15-18M per year.

    • Nicholas Zettel says: April 3, 2012

      Great point! If there’s not going to be any sort of security-buyout-”discount” against the free market in an extension, might as well wait to actually see if Greinke has a great season.

  2. Chris says: April 3, 2012

    Tremendous article, Nick. Nicely dissected and thought through from numerous angles.

    There is little doubt that Cain’s deal makes Greinke worth 5/$100MM. I expect he will get that deal (and perhaps a bit more) when he hits the open market after the season. And I think he will hit the market because I don’t these are numbers the Brewers can afford invest, particularly in a commodity as fickle and finicky as a pitcher. Offering this sort of deal to Prince was a stretch, but the expectations of getting return on the investment were higher (given his age and likelihood of health over that period). But the same set of circumstances seem less certain when it comes to ZG.

    Of course, the Brewers have been preparing for this, drafting and developing young arms for a few years now. To me that suggests they are ready to get what they can out of Greinke this year and turn the page in 2013. A rotation of Gallardo, Wolf, Narveson, Peralta and Estrada doesn’t inspire, but it will likely have to do given the constraints of the Brewers payroll.

    • Nicholas Zettel says: April 3, 2012

      Part of me wonders why the Brewers would spend $100M (if it takes that much) when they spent all this time developing youngsters. What’s the point of cost-controlled pitchers if you go out and spend nine figures on an arm anyway? Why not just do that in the first place?

  3. Paul says: April 3, 2012

    If the Greinke deal is no longer viable does that change the Brewers’ thoughts about a Marcum extension?

    • Nicholas Zettel says: April 4, 2012

      I’m not sure of that — I think they’re smart to let Marcum play it out, given the publicized shoulder issue and mechanics switch.

  4. Woodman says: April 3, 2012

    am I the only one who thinks that Cain is getting confusingly overpaid by a decent margin?

    • Nicholas Zettel says: April 4, 2012

      I’d be interested to know the argument for that — he’s 95 runs better than his park and league over the last four years.

      Really, he’s in that class with Roy Halladay, Tim Lincecum, Cole Hamels, etc. He is not the best of that bunch, but he’s a true ace.

      I will agree that he does lower the threshold for elite contracts to an extent.

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