End of an era
Over the weekend, the long saga of James Shields, Pitcher For Hire finally came to a close, with Shields accepting a four-year, $75 million contract from the San Diego Padres. Sure, $75 million is a pretty nice payday, but it's a little less than half of the $155 million that Jon Lester received from the Cubs and nearly one-third of the amount the Nationals will pay Max Scherzer over the life of his new contract. Because of how long it took Shields to sign, and the vast difference in guarantees between what he got and what the top two hurlers on the market got, Shields' agent -- Page Odle -- has come under some criticism for how he marketed his player.
Yahoo's Jeff Passan, for instance, offered up some interesting information about Shields' early offseason asking price:
Going from $125 million to $75 million is a big drop, and Passan's information adds context to the question of why Shields sat unsigned for so long. That said, I am left wondering if perhaps what we saw was not so much Shields' agent overplaying his hand, but instead, the market gently reminding us all that major-league teams aren't valuing pitchers the same way anymore.
Shields situation isn't particularly unique, in fact. In each of the prior two winters, a free-agent hurler has hit the market looking for a big contract, only to see his asking price strongly rejected, as he settles for a fraction of his initial price during spring training. Last year, Ervin Santana was the arm left out in the cold after all the money had been spent, while Kyle Lohse played the role the year before that. For a comparison, here are the walk-year numbers for each of those three pitchers.
Shields found himself mentioned with the other two big-name free agent starters, Max Scherzer and Jon Lester. Consequently, his agent, Page Odle, started asking for terms in similar neighborhoods.
As the Red Sox proffered a six-year, $120 million opening offer to Lester, Odle sought terms in that range, according to multiple clubs involved early in the negotiations. One executive said Odle started discussions with a six-year deal in mind. Another confirmed what the Kansas City Star wrote Monday: He simultaneously was shooting for a five-year, $125 million pact with others.
After Lester signed, Shields could have pounced and ramped up negotiations. GMs expected that parry. They held firm, figuring Odle would lessen his demands. That never happened. Shields ended up in San Diego of his own volition, because had he budged earlier, executives believe he would have received plenty more.
There’s a reason no pitcher had signed for more than $50 million in February: No pitcher was foolish enough to wait until February to sign. Most teams, at this juncture, have locked-in budgets that need special dispensations to move. San Diego happens to be in the midst of a complete overhaul, so general manager A.J. Preller walked into negotiations with monetary flexibility – and the knowledge that were he to whiff on Shields, he could trade for Cole Hamels.
A simple move – lowering the expectations on the deal to four years – would have sparked the market. The San Francisco Giants originally were interested at around $80 million over four years. At least a dozen teams would listen at four years, and of those, surely one would pledge $21 million a year times four to separate itself. Which would prompt a jump to $22 million a year, maybe $23 million, and when you add in a club option as a sweetener, that’s a contract that potentially jumps comfortably into the nine-figure range.
All three pitchers were durable veterans coming off an excellent season by raw run prevention. In 2012, Lohse's ERA actually ranked fifth in the National League, Santana's ERA ranked ninth in the American League in 2013, and Shields' ERA ranked 11th in the AL last year. Lohse didn't sign until right before Opening Day, eventually landing a three-year, $33 million contract from the Brewers. Santana also had to wait until spring training had begun, and he settled for a one-year, $14.1 million contract from the Braves.
So why are now on Year Three of a quality veteran starter -- each coming off a season with 200 or more innings and one of the best ERAs in his league -- sitting around unemployed for most of the winter? Because major-league teams have stopped primarily evaluating pitchers by ERA, even if players, agents and many members of the media still use it as the primary way to measure a pitcher's performance.
By ERA, it wasn't too hard to look at Scherzer, Lester and Shields and see a "big three" trio of free-agent starters this winter. Over the past three seasons, Shields' 3.29 ERA was nearly the equal of Scherzer's 3.24 mark, and quite a bit better than the 3.65 ERA that Lester put up. But in reality, MLB teams didn't see a "big three"; they saw two frontline starters and then a huge drop-off down to Shields. Because they aren't evaluating pitchers by their ERAs anymore.
If you go back and look at the table of the three rejected free-agent pitchers, notice the final column: FIP, which is Fielding Independent Pitching. This metric measures pitchers solely based on their walks, strikeouts and home runs allowed, because those events mostly do not involve the defenders behind a pitcher, and credit or blame can be more clearly ascribed directly the pitcher. FIP attempts to strip out some of the variables in run prevention that might not be the responsibility of the pitcher.
Lohse and Santana both hit the market with shiny ERAs, but in both cases, their FIPs suggested that perhaps their teammates might have played a part in keeping some of those runs off the board. Shields also had an ERA that was lower than his FIP, and as we all saw in October, no team in baseball put a better defense on the field in 2014 than the Royals. If you were signing Shields based on his ERAs in Kansas City, you better have negotiated Lorenzo Cain, Alex Gordon and Jarrod Dyson into the contract as well.
So teams didn't pay James Shields based on his ERA, even if that's what his agent might have been hoping for when the winter started. Instead, the market valued Shields as a solid above-average pitcher, which is what his so-called peripheral numbers suggest that he is likely to be going forward, and paid him accordingly.
Interestingly, this winter's market for Santana again reinforces how teams have moved away from paying for ERA. After getting shut out in his quest for a big contract last year, Santana landed a four-year, $55 million contract from the Twins this offseason despite the fact that he posted a 3.95 ERA during his one season in Atlanta. In 2013, pitching in the more offensive-friendly American League, Santana's ERA was 3.24, and he had to settle for a one-year deal. But after switching to the easier league and seeing his ERA push toward 4.00, he landed a solid four-year commitment. Worth noting: his 3.39 FIP in Atlanta suggested that the rise in ERA was probably not going to last, and the Twins overlooked those mediocre results in order to bet on Santana's underlying performance.
The market has provided plenty of other examples of teams shying away from ERA when it comes time to decide what to spend on free-agent pitchers. In the winter of Lohse's shunning, Zack Greinke landed $147 million from the Dodgers despite ERAs that were just slightly above average. The Dodgers bet on his stuff and his strikeout rate, and they've been rewarded with one of the game's best pitchers since signing the contract.
San Francisco made a similar bet against ERA last winter, re-signing Tim Lincecum to a two-year, $35 million contract despite his 4.37 ERA in 2013 (and 5.18 ERA in 2012). By runs allowed, Lincecum had spent the prior two seasons pitching like a scrub you'd call up from Triple-A, but the Giants gave him $17.5 million per year to keep him from leaving in free agency anyway, in part because his fielding independent numbers were significantly better than his results. Lincecum is perhaps a good reminder that FIP isn't a perfect predictor of future performance, and the Giants very likely regret that bet a year later, but his contract was a strong repudiation of ERA as a measure of a pitcher's future value.
Many of the pundits who were projecting Shields for a $100 million payday are also still proponents of traditional metrics like wins and ERA. Since I don't place a much lower value in either number, I saw things a little differently, writing the following in my free-agent prediction piece back in November:
Yeah, I know, they’re the new Dodgers, so they’re not just going to outspend everyone else. But they’re still the Dodgers, and Andrew Friedman does have some history with James Shields, so I wouldn’t expect them to pass if his market doesn’t evolve. It might not be their original plan, but I think they’ll scoop up Shields once his price falls to 4/$80M.
I got the NL West team wrong, but Shields ended up signing for pretty much what I expected headed into the winter. This doesn't make me any kind of wizard at predicting free-agent contracts -- you can follow that link to see how badly I missed on Hanley Ramirez, for instance -- but it does perhaps suggest that Shields' final contract might not have been the result of some kind of botched negotiating strategy.
Perhaps Passan is right, and if they had lowered their demands earlier, perhaps Shields would have ended up with $22 million or $23 million per year instead of the $19 million he accepted from San Diego. Really, though, Shields eventually signed for roughly what he's likely to be worth, for the four years that seemed reasonable at the outset of the winter, and with a team that plays in a pitcher's park in the town in which he resides. Maybe it took longer than it should have, and maybe other teams would have been interested had things not been stretched out into February.
But the idea that James Shields was a $100 million pitcher was heavily reliant on teams still paying for shiny ERAs. In reality, teams haven't been doing that for several years now.