Sunday, February 24, 2008

Shopping At A Different Market

The story of the day is Bowden's comments about the Zimmerman extension "negotiations."
"We've made it clear to [Zimmerman and Van Wagenen] that if Ryan is willing to sign a contract that is similar to what all the other good young players are signing for -- if he's willing to do a market signing -- we are prepared to do that with him," Bowden said. "We're not to going set all new markets with him. We're not going to change the pay scale of Major League Baseball for one player."

Fair enough. You don't want to double what the market would pay just for the hell of it.

Here's Zimmerman's agent's take:
"At this time, it's not in [Zimmerman's] best interests to consider a contract in the range that they're talking about. I'm not calling either side right or wrong. There are just a different viewpoints."

Fair enough. We can't expect the guy to take an unfair offer.

So what WOULD be a fair offer?

Bowden offers some clues:
For comparable players, Bowden cited Cleveland's Grady Sizemore (who signed a six-year $23.45 million contract in 2006), Colorado's Troy Tulowitzki (six years, $31 million, signed in January), Atlanta's Brian McCann (six years, $26.8 million, signed in 2007) and the New York Yankees' Robinson Cano (four years, $30 million, signed earlier this month).

So something like 6/$30 million would be a fair offer, something in the range of the market?

Well, that's what Bowden would have you believe. But he's being (warning: shocker alert) disingenuous with that argument. You can't just compare one young player with another young player as if the circumstances were the same. I'm sure that Bowden would LOVE to point to the Tulo deal as the model. One catch... Tulo has a year less of service time than Zimmerman does. In fact, the average salary of those contracts he uses as comparison is over $1 million a year for the equivalent service year that Zimmerman's about to enter -- a service year in which the Nats will likely pay Zimmerman less than half that amount.

You need to compare service year to service year. And when you do that, 6/$30 is a laughable offer.

I took the yearly breakdown of those contracts, plus another big deal -- David Wright's extension (which was signed at a similar service time point as Zimmerman is at now) -- and lined them up service year by service year to get an idea of what the market rate for a young star is. I figured out the average for each year, then used a 10% fudge factor to account for the continued rising salaries since most of these contracts were signed. I totaled up year by year and came up with a rough estimate of what the 'kids' are being paid to come up with a rough market estimate.

Zimmerman has 4 seasons left 'til free agency (and keep in mind, this isn't a quantitative evaluation of the players; we're saying, essentially, that all of these players are of similar run/win value).

4 years: $22 million
5 years: $35 million
6 years: $49 million
7 years: $67 million

You can see that the salaries really start escalating once he hits free agency. $17+ million might seem like a lot to pay for him, but that's a long way in the future and with continued salary inflation, $17 million won't be quite what it seems today. (To Teddy's chagrin.)

At the same time, if Zimmerman plays it year to year, he'll be a 27-year old free agent, a premium YOUNG player on the free agent market -- the kind of player other teams would surely break the bank for. $17 million will likely seem a bargain! If he were a free agent today, you can see him getting that much per year. Imagine what he'd get in 4 years as salaries keep going up! (Another reason why a long-term deal is of increasing importance; even Uncle Teddy's biggest defenders likely have a hard time seeing him handing out a 7/$130 million contract.)

So, no, there's no need for them to lock him up. No urgency. He's theirs for a few years anyway. But they need to find a middle ground there. Bowden citing somewhat misleading numbers for contract comparables isn't the greatest place to start... publicly, at least. 6/$30 isn't the market offer. It's 6/$49 or 5/$35.

And that's probably the floor. Nice work if you can get it...

  • The full salary numbers are here. Contract years are in yellow. The rest should be pretty self explanatory.

  • 21 Comments:

    • Comparing these contract numbers for different players is like trying to establish the price of a house when all you have are comparables from houses that are either very different or that are a couple of years old. In other words, meaningless. So to waste any time assembling stats to vilify Bowden for being cheap in this case is, well, a waste of time. Zimmerman obviously has a higher opinion of his value in the market than the Nationals do. Zimmerman is basing his assessment on how he plans to perform in the future, and he doesn't want to sell that performance now for less than what he will get in the future if he performs as he plans to. Bowden, OTOH, is basing his valuation of Zimmerman on what Zimmerman has shown on the field so far, which has been good but not market-bustingly good. Far from it actually. Both sides are being smart now, Bowden in trying to buy Zimm at a fair but low price now, and Zimm for holding out in the hope that he won't get hurt and will produce as he thinks he can, so he can sign at a fair but higher price later. If he turns into a market-buster in performance over the next few years, he'll get his market buster contract then. Really, this is a win-win situation now, since neither side has to accept a deal for several more years. The only way anyone will lose is if Zimmerman has a career-ending or career-maiming injury. He's gambling right now that that won't happen.

      By Blogger An Briosca Mor, at 2/24/2008 12:14 PM  

    • Of course us numbers of comparable players. You haven’t been paying attention to the last 20 years of player contract negotiations or arbitration.

      Start off by saying that we don’t have the numbers that Zman’s agent is talking about. But he did say that the numbers were out there for all to see which is true. If the agent is trying to use Howard’s arb number than we may be dealing with an idiot agent but I think that may be a line that Sheinen threw in there. I would love to see what the numbers the agent is throwing around.

      While Bowden’s lips may be moving we all know that it’s Kasten speaking for the FO. Is there anything that Kasten talking faster than having an agent talk to the press? I think not. The FO is complaining about not setting the market but the market is pretty much set. Look no further than Cabrera and Wright as the market leaders.They will be the pegs an agent will use for Zman hearings. This is inescapable for the FO. Cabrera will make over 18 mil in years 4-5 and Wright will make 12.5 for the same years. For comparison, buying out years 4-8, arb years plus the first 2 years of free agency will be for Cano 42 mil, Tulo 42 mil (assumes options picked up in year 8), and for Wright 51 mil, Cabrera will be through the roof.

      There is no advantage for a team to play financial hardball with a great position player and I would classify Zman as such. All the options are with the player. Even if a young player is hurt there is still usually a market for him as an FA and Zman will be a very young FA for year 7. There isn’t a huge amount of risk on the players side. There isn’t a whole lot of risk on a team’s side either unless you have a guy who is going to quit after he gets the big contract and Zman doesn’t have that kind of character. He is going to get his money through arbitration so a team doesn’t save any money. For the team, it’s more about securing a great players 1-3 free agent years rather than saving some money, but certainly a team hopes to save some money. As he approaches free agency there is less incentive to sign with his team and to test the market instead. There is a very good chance that Zman who will be playing in a much more hitter friendly environment and surrounded by a better cast of offensive players will be able to put up much better numbers which will further weaken the FO’s arguments in an arb hearing.

      Also take into consideration that the Nationals have now opened into the new stadium with those cash inflows so they can’t cry poor. On top of it they will probably be dumping their highest paid players in NJ, Young, Lopez, LoDuca, and perhaps Cordero and they will be replaced in all likelihood with younger players from the system making minimums. Kasten has for years now been squawking about building from within and then signing their own players which many fans have accepted (we’ll see if its been blindly). So there is simply zero excuse for the FO to not sign Zman to a fair market contract as defined by the market rather than Kasten. The market for buying out years 4-8 is somewhere between 42 and 51 mil. Tack on another 14 or 15 to buy out year 9. Zman is the first test as to whether or not the FO will be true to its word or simply be the Expos South raking in more cash with a cash cow stadium..

      By Anonymous Tulsa Fan, at 2/24/2008 12:38 PM  

    • "Also take into consideration that the Nationals have now opened into the new stadium with those cash inflows so they can’t cry poor."

      Refusing to bust the market on a player who is not putting up market-busting numbers on the field yet is a long way from "crying poor". I have yet to see one statement from the Lerner/Kasten ownership where they "cry poor". I see a lot of cases though where they say they're not going to spend money just for the sake of spending money. That's not "crying poor", that's being smart.

      By Blogger An Briosca Mor, at 2/24/2008 12:55 PM  

    • I have to agree with An Briosca Mor here. This is a negotiation, and it is very early in the process, with each side making their case.

      This situation will play itself out. And I would almost bet my house that if Zim has a very solid year then the Lerner's will pay up. They have been putting this guy out there as the "face of the franchise" I don't think they will be "cheap", when the time comes.

      By Blogger Chuck B., at 2/24/2008 12:55 PM  

    • "Refusing to bust the market on a player who is not putting up market-busting numbers on the field yet is a long way from "crying poor". I have yet to see one statement from the Lerner/Kasten ownership where they "cry poor". I see a lot of cases though where they say they're not going to spend money just for the sake of spending money. That's not "crying poor", that's being smart."

      A player asking to be paid market rates from a team in a top ten market with all the payroll flexibility in the world is not in any way, shape, or form busting the market. If that team uses these kinds of excuses to not pay that player than they are crying poor. Further they are not spending money just to spend money but signing a player like Zman is exactly what the FO said it would do and developing and signing players like Zman was Kasten's justification for low payrolls.

      By Anonymous Tulsa Fan, at 2/24/2008 2:28 PM  

    • This debate, I think, is one of those where we fans are far more revved up about it than either side. Seems to me that if I were Zim, I'd absolutely refuse to sign Tulo's deal for two reasons - one, my numbers are likely to get a LOT better in the new park this year, and two, salaries are going to get higher every year. Similarly, if I'm the Nats, I'm not offering anything more than Tulo's deal, because I don't really know exactly yet what the revenue stream out of the new barn is going to look like. I think this probably gets resolved next year. Chris is right that they're going to have to reach a number, but why would the Nats be willing to pony up 7/$75 until they know that they're going to have the stream to support it. The quotes from both sides are obviously trying to sway public opinion, which we're all now debating - seems to me a lot of heat, very little illimunation. They're not going to let Zim walk as a 27-y.o. FA, and they're not going to let him take them to the cleaners in arbitration. There's a reason that they sign most of their arb-eligible guys and that Bowden's done pretty well in arbitration.

      By Anonymous Anonymous, at 2/24/2008 3:14 PM  

    • "A player asking to be paid market rates from a team in a top ten market with all the payroll flexibility in the world is not in any way, shape, or form busting the market. If that team uses these kinds of excuses to not pay that player than they are crying poor."

      Perhaps you need to go back and re-read all the stories on this topic. The team has made market-rate offers to Zimmerman, and he (or more precisely, his agent) has turned the offers down. Zimmerman wants an above-market contract, and the Nationals are not being cheap by not offering him one when he clearly hasn't earned it yet.

      By Blogger An Briosca Mor, at 2/24/2008 4:00 PM  

    • ABM -- The problem is that we don't know that.

      The only contracts that Bowden is citing aren't really Zimmerman's 'market rate', if we're to interpret them as something on the order or 6/30 for Zimmerman. If that's what they have in mind (and we don't know, other than the allusion to the Tulo contract), then Kasten et al are the ones far from the market.

      By Blogger Chris Needham, at 2/24/2008 4:46 PM  

    • "Well, that's what Bowden would have you believe. But he's being (warning: shocker alert) disingenuous with that argument. You can't just compare one young player with another young player as if the circumstances were the same. I'm sure that Bowden would LOVE to point to the Tulo deal as the model. One catch... Tulo has a year less of service time than Zimmerman does. In fact, the average salary of those contracts he uses as comparison is over $1 million a year for the equivalent service year that Zimmerman's about to enter -- a service year in which the Nats will likely pay Zimmerman less than half that amount.

      You need to compare service year to service year. And when you do that, 6/$30 is a laughable offer."

      This goes back to my original point. There is no other contract out there that matches the situation Zimmerman is in now beyond some basic level of superficiality. Either the service year is different, the performance is different, or whatever. As I said, it's like trying to place a price on a house for sale when there really aren't any good comps in the current market. Thus you can spin the data on the so-called comparative market-level contracts one way to make the case that the team is offering too little, or you can spin the same data another way to make the case that Zimmerman is asking for too much. So, as I said earlier, your data is basically meaningless. You might as well make the case that Kasten/Bowden are cheap because they obviously can't even do a decent job of tricking out a Segway.

      And who has ever said that the team's offer was 6/$30 anyway? That's just your presumption, right? And how do you know that what Zimmerman is asking for isn't some equally ridiculous number on the high end? Seems to me you're stretching to make the case that the team is cheap because you're predisposed already to thinking that they're cheap.

      By Blogger An Briosca Mor, at 2/24/2008 6:35 PM  

    • Where did I say they were cheap?

      There ARE contracts that match Zimmerman's. Bowden HIMSELF is using them. That's what this entire argument is about. The team is comparing him to one set of youngsters and saying he's not worth more than that. I was simply trying to figure out what the contract value of those youngsters is.

      By Blogger Chris Needham, at 2/24/2008 6:38 PM  

    • "Where did I say they were cheap?"

      I dunno. I guess I started getting that impression around the time you used the phrase "laughable offer" right after implying that this was the offer Bowden made. Somehow I didn't get the feeling you thought it was laughable because it was too high.

      "I was simply trying to figure out what the contract value of those youngsters is."

      And not trying to simultaneously imply that they should be offering more than that to Zimmerman, if for no other reason than to avoid being laughed at? Okay, if you say so....

      By Blogger An Briosca Mor, at 2/24/2008 7:50 PM  

    • If the offer is 6/$30, and he's citing those contracts as proof, it IS a laughable offer if you look closely at the very contracts he's using to compare.

      Truly comparable offers would be 5/35 or 6/49.

      Maybe that IS what they're offering. I don't know... but that's not the implication behind the contract numbers he's throwing out there.

      I don't know why I'm arguing with you either.

      By Blogger Chris Needham, at 2/24/2008 7:54 PM  

    • David Wright put up much better numbers than Zimmerman did during his first two full seasons. He hit more homers, had more RBI's and a much higher batting average.

      By Anonymous Anonymous, at 2/24/2008 7:54 PM  

    • The Nats decided to make Zimmerman the centerpiece of their future at the time he was drafted out of UVA. They can only blame themselves for his inflated opinion of his future value. This is just another example of the greed that now dominates the sport.

      By Anonymous Anonymous, at 2/24/2008 7:59 PM  

    • "Maybe that IS what they're offering. I don't know... but that's not the implication behind the contract numbers he's throwing out there."

      But he didn't throw out any numbers. He just mentioned other recent contracts for young players around Zimmerman's age/experience, which are the only comparables anyone has, really. And you and I seem to agree that those comparables don't really mean much. Thus I would assume that in attempting to extrapolate from those inadequate comparables and come up with his offer, Bowden adjusted up - just as you and I would do if we were trying to set the price on a house without any good recent comparable sales. The question is, how far up did Bowden go before he reached what he thought was a current "market" price? We don't know. All we know is that it wasn't high enough for Zimm and his agent.

      "I don't know why I'm arguing with you either."

      Maybe because you're trying too hard to make a point that you've either forgotten or that was too weak in the first place?

      By Blogger An Briosca Mor, at 2/24/2008 8:32 PM  

    • The nerve of Zimmerman and his agent. He had a crappy season, batting just .260 or so, striking out a whole bunch of times, especially in the clutch, and doubling his error total from the previous season.

      By Anonymous Anonymous, at 2/24/2008 9:18 PM  

    • He hasn't earned it yet, and we still don't know how his wrist is!

      In other news, ESPN reports on Rickie Weeks ...
      Weeks will never be a defensive dynamo at second base. But he still has that Baby Sheff waggle and enough natural ability to make an All-Star team with his offense. That's why Melvin turned down a Weeks-for-Chad Cordero trade offer from Washington while the Brewers were still looking for a closer.

      Oh, if only we could have pulled that one off!!!!!

      By Blogger sid bluntley, at 2/24/2008 9:48 PM  

    • Chris,

      As per usual, great post. Plus bonus content of rehashing your article for someone blindly loyal to Bowden!

      Huzzah!

      By Blogger OleShu, at 2/24/2008 10:41 PM  

    • sheinin seems to agree with chris, almost eeriely so!

      http://blog.washingtonpost.com/nationalsjournal/2008/02/a_few_more_zimmerman_thoughts.html

      By Blogger Bill, at 2/25/2008 8:41 AM  

    • I think your analysis is in the ballpark, so to speak. I had market at 6 years, $42 million in December, but that was before Ryan Howard became a $10 million man.

      By Anonymous Bob L. Head, at 2/25/2008 4:32 PM  

    • By Blogger Sneakers hobbies, at 10/29/2009 9:24 PM  

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