What would it take for David Price to sign a long term deal with the Tampa Bay Rays?
Five years? Six? Seven? How much per year, $25M?
Price seems excited to remain a Ray. What would a couple more years look like?
Would a reasonable team give David Price a 7 year, $175M deal? That's the contract extension Felix Hernandez signed, or $25 million per season. Justin Verlander signed a five year deal worth $28 million per season.
And there's so many more: Matt Cain. Cole Hamels. Masahiro Tanaka. When monster deals are being handed out on a regular basis, how can we tell what's fair?
Dave Cameron is fond of a $6M-per-WAR rate with 5% inflation, which he's found to be surprisingly accurate in projecting contract extensions for Clayton Kershaw and C.C. Sabathia. We can use the same model to get a grasp of Price's market value.
In 2014, Oliver projects a 4.5 fWAR performance, and Steamer a 3.8 fWAR. While the latter is normally preferable for players coming off injury, I'm inclined to believe Oliver has the right call, given Price's strong rebound in the second half last year.
Using Oliver's WAR projections, here is the Cameron approach to David Price's next contract.
At first glance Price would be worth about $103M on the market for the 2015-2019 span, or the next five years from his $14M arbitration salary in 2014.
Six years would be $114.8M. Seven years just over $123M.
If you were to give Price a Hernandez size deal, starting in 2015, this rough sketch says you would be overpaying by nearly $52M.
But is 4.5 fWAR the right place to start? Can we expect Price to get better?
David Price gathered 4.4 fWAR in 2013, approximately half a WAR shorter than his Cy Young year. Most of this discrepancy can be isolated to a triceps injury that kept Price in the dugout for 44 games.
Price had a new approach of last year attacking the strike zone, but I never thought Price looked comfortable at the start of the season, and the injury backed that up.
If memory serves, Price had complained on the radio during Spring Training about pitching in a simulated game during a rain storm. According to reports, he had slipped during his throwing motion, straining his arm. Up until that point, Price had only positive things to say about his award winning arm, but his tune became one of concern from then on. Perhaps he injured his arm and was pitching through that injury the entire first half.
Despite his extraordinary low walk rate, Price was allowing base runners to return home like he was Jeremy Hellickson, including a .316 wOBA allowed against a 3.32 xFIP. When he returned, his good health brought a .269 wOBA allowed against a 3.22 xFIP. He was the same pitcher, but sharper, and back to his Cy Young self (with even less walks than before).
Here's the breaking point, though. Price is an ace. He is elite. He can lead a rotation. But he's not a six win pitcher. His Cy Young campaign was a mere 4.8 WAR, not the 6.5 performance of Kershaw, or 6.4 performance of Scherzer that won the award this season. That difference in wOBA's allowed is not enough for much more than a half-WAR improvement on last season.
I believe that Price can at least repeat his second half performance in 2014, but if we allow for an increase in walks from his career lows last season, we settle on 4.5 WAR all over again.
The model we've used thus far is not necessarily perfect.
If I were starting from scratch and ignoring Cameron's model, I would prefer adjustments for a more generous $7M/WAR -- on the strength of Beyond the Boxscore's research -- and a more conservative 3% rate of inflation.
If you were to map out Price's future in this way, we can first get a grip on his future market value with a more expensive lens:
Using this table and buying out Price's final year of arbitration, it would cost just shy of $135M for a seven year deal.
This year they settled with Price on a $14M contract to avoid salary arbitration, which if projections stay true, would net the Rays $17.5M of surplus value when comparing to the market.
You might also vehemently disagree with the WAR projections, and I wouldn't blame you.
I would agree with Cameron's standard aging curve of 0.5 WAR per season, it's a basic model that is consistent and simple. There are two opportunities for disagreement above, but to say that Price will only be worth 4.5 WAR in his age 28 season is no guarantee. How would it look if he surpassed that expectation by a full WAR?
Let's make that adjustment with Cameron's tried-and-true model from above:
The Rays' surplus value in 2014 jumps up to $19M, but the dollars really express themselves over the long term. To buy that talent on the market over the five year stretch from 2015-2019 a team would need to drop $137.5M.
Over six years we've risen to just under $158M, and over seven years we've finally reached that illustrious $175M.
And there's the rub.
There are reasons not to sign a long term deal that are not related to money, but the biggest source of caution may be Price's triceps injury.
Russell A. Carlton did thorough research on risk factors for future injury in pitchers. He found that pitchers who missed significant time (placed on the Disabled List) were eight times more likely to be injured in the following season, including a 73.4% chance of repeating that injury the following season, 55.6% two years later.
His research was rudimentary in terms of not knowing true medical history (not public) and not being a medically trained professional, as well as not including pitchers who had their injury outside the disabled list (like Price did).
Signing Price long term is a significant risk, which tempers the enthusiasm on $175M. Price may be more than capable of putting up 5.5 WAR next season, but there's less of a guarantee he can continue without blowing his arm out.
The triceps strain he suffered is more unique than most injuries, safer than an elbow or shoulder, but it's worth consideration and would likely impact a long term deal.
A Home Town Discount
Tampa Bay cannot expect to net that $17-19M surplus over market value in each season of a long term deal when Justin Verlander and Matt Cain and Tanaka are earning massive deals of their own, but it would not be unreasonable to ask for a bit of a home town discount.
Players take less money to stay with a contender often enough that it's a possibility. We've seen it with Evan Longoria, Dustin Pedroia, and Adam Wainwright all in the last year.
Why be a Wainwright when you can be a Kershaw?
Reactions have been strong the Clayton Kershaw's $215M, seven year contract extension. David Price called in "Monopoly money." My favorite might have been Cardinals GM John Mozeliak's. Speaking with beat writer Derrick Goold, Mozeliak had this to say in light of the Kershaw extension:
"From a St. Louis Cardinals organizational view of things, what we hope is that we offer an attractive product in a place where players are happy to play and want to be here. Adam [Wainwright] knew that if he wanted to go to market he would have done better. He knew that. And I think all of you did."
Wainwright could have demanded his own deal in the vein of Justin Verlander's five year contract, which served up $28M per season, but opted for $19.5M instead (~30% discount).
Evan Longoria opted for approximately $14M per season in his long term deal, making $15M or less in all but three seasons when his numbers would indicate at least double that amount on the market (~50% discount).
Let's split the difference and suggest the Rays would require a 40% home town discount, and project Price to 5.5 WAR in 2014:
(60% Market Value)
With this discount, a five year deal would cost the Rays $82.5M over five years, starting in 2015. Six years would cost $94.6M, and seven approximately $105M.
If you use that same 40% discount but assume Price starts at 4.5 WAR next season, the numbers are less enticing:
(60% Market Value)
Here a five year deal would give Price under $62M, with $69M the cost of six years, and $74M for seven.
We've already discussed just what how "unsustainable" the payroll is projected to be this year. On the most simplistic level, the Rays will likely look to keep salaries low in 2015-16 until the new TV deal is in place.
It Price were to agree on an extension, I would expect the first two years (buying out his final year of arbitration) to be low, and then back loaded. In terms of what years would carry how much money exactly, I have no bets. The Rays can get quite creative.
It all comes down to what WAR projection you favor. If you believe Price has peaked, will follow the projection of 4.5 WAR, and decrease from there, then you probably want nothing to do with an extension. A trade of Price would bring far more value just by flipping his final year of control for prospects.
If you believe Price will exceed the projections to a 5.5 WAR, as is the other format we used, then there's a discussion.
If the Rays could extend Price on a five year deal, starting in 2015, worth $80-85M that's backloaded to 2017 and beyond, you have to consider it; however, there's so much more money to be had on the free agent market.
Price could double his money. Who could blame him if he doesn't want to stay?