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Financial MVPs, part 1

Or, why have the Rays won?

Desmond Jennings has been an incredible value to the Rays.
Desmond Jennings has been an incredible value to the Rays.
Kim Klement-USA TODAY Sports

When signing a player, almost all teams want to maximize value. They want to pay less for more production. The importance of this varies based on the team's payroll. The Yankees don't have to worry about this too much when they are able to support a $212 million payroll but for other teams, like the Marlins, whose total 2015 payroll is currently at $60 million, financial efficiency is essential.

The Rays have one of the smallest markets in baseball, and that fact isn't likely to change anytime soon. Because of this, maximizing the value of contracts is critical for the Rays to compete.

While the Rays have been generally successful in this endeavor, there are certainly times when they've missed on contracts. Let's look at scatterplots of Rays' hitter's contracts, comparing salary to WAR for 2012-2014. I've chosen to include only players with at least 100 PAs to make the graph easier to read.

An orange dot indicates it is from the 2014 season, blue from 2013, and red from 2012.

Ok, quick quiz. Look at the points at the extremes - all the way on the left, at the very top, and all way on the right. See if you can guess which player this is.

Here are the answers, with some other notable points:

Things to notice:

  • The line of dots at the bottom of the graph, as you may have guessed, is made up of players on rookie contracts. These players are all making close to $500,000 a year.
  • To follow up on that, Kevin Kiermaier had the most productive year by a hitter on a Rays rookie contract in the last three seasons. Both dots for second and third place belong to Desmond Jennings.
  • As if he was making up for the surplus value he provided in 2013, Longoria moved to the top of the graph in 2014. As I wrote last month, I don't expect him to regain the value he had in past seasons.
  • While Jose Molina's 2014 wasn't good, it wasn't as terrible as his point on the far left may suggest. Fangraphs doesn't include catcher framing in their WAR calculation, and Molina has consistently been among the top framers in the league. According to Statcorner, Molina gave his pitchers an extra 1.81 called strikes per game which was second most in the league.
  • Carlos Pena's 2012 season was during the end of his career, and was a forgettable one-year contract. But, as we will soon see, it wasn't the worst value in this time frame.
Let's now look at, by dollars per WAR, the most and least efficient contracts. This isn't a perfect measure, because a $1 million contract that flops hurts a lot less than Carlos Pena's $7 million dud, but, I think it is a valuable exercise nonetheless. It is also important to remember that a win is valued at around $7 million in free agency.

Most efficient:

Player Year Dollars per WAR
Kevin Kiermaier 2014 $131,578
Desmond Jennings 2012 $147,545
Desmond Jennings 2014 $156,666
Desmond Jennings 2013 $156,812
Wil Myers 2013 $208,333
Matt Joyce 2012 $293,823
Brandon Guyer 2014 $313,250
Jose Lobaton 2013 $354,642

As you can see, Desmond Jennings has been incredibly valuable over the past three years. While his batting average and on-base percentage haven't been great, he provides above average defense, and rare combination of power and speed. He isn't a free agent until 2018, so he will continue to provide the team with value.

All of these players were on their rookie contracts, which explains why the figures are so low. But, if we look at non-rookie contracts, the names on the list get a little more surprising.

Player Year Dollars per WAR
Evan Longoria 2013 $367,649
Jeff Keppinger 2012 $544,642
James Loney 2013 $740,740
Ben Zobrist 2012 $794,457
Sean Rodriguez 2013 $909,090
Ben Zobrist 2013 $1,053,203
James Loney 2014 $1,111,111
Ben Zobrist 2014 $1,228,070

Most of this list is made up of Evan Longoria, James Loney, and Ben Zobrist, who were all on very-team friendly contracts. Zobrist and Longoria signed long-term deals early in their career that ensured them financial stability but capped their earning potential. It worked out for the Rays, as both Longoria and Zobrist ended up performing like All-Stars.

Jeff Keppinger also makes an appearance on the list - his 2.8 WAR in 2012 made up more than half his career total. That season was fueled by a .332 BABIP, which showed how much luck was involved. It was enough to help the Rays win 90 games, although they narrowly missed the playoffs.

Now, let's look at the least efficient hitter contracts.

Player Year Dollars per WAR
Luke Scott 2012 $50,000,000
Yunel Escobar 2014 $25,000,000
David DeJesus 2013 $21,250,000
Ryan Roberts 2013 $14,750,000
David DeJesus 2014 $14,166,666
Carlos Pena 2012 $10,357,142
Luke Scott 2013 $9,166,666
Jose Molina 2013 $7,500,000

There are clearly some bad contracts on this list, but the mistakes aren't as huge as they seem to be. Luke Scott shows up on this list twice suggesting that the contract was bad, but he wasn't getting paid an inordinate amount of money. In 2012, he made $5 million. That's a lot of money for a team like the Rays, whose total payroll in 2012 was around $64 million. However, the team isn't hamstrung with contracts like the Phillies are with Ryan Howard, who is projected to be worth -0.6 WAR and make $25 million this year.

Additionally, it is important to remember the context of these numbers. If in free agency one win costs $7 million then Jose Molina's 2013 season is close to league average. The eighth worst contract in three years for the Rays was almost the average rate on the free market. This speaks volumes about the Rays' financial acumen in free agency and signing players.

Avoiding Inefficient Contracts

Some of the credit for the Rays' avoidance of terrible long term contracts like Howard's goes to the nature of their market in general. With a small payroll the Rays can't afford to give players enormous contracts in the first place, let alone be stuck with a bad one.

But, a large portion of the credit goes to the front office. By signing young players to long contracts, like they did with Longoria and Zobrist and more recently Chris Archer, they take on risk, but they also gain tremendous amounts of value. If these players reach their potential they will be making a pittance compared to what they could command in free agency.

If these players get injured or their performance collapses the Rays will be stuck with a long contract. However, it isn't as bad as it seems—even with backloaded contracts, the salary in the final year of the bigger Rays contracts is very manageable.

Let's say, hypothetically, that in the year after Longoria signed his first contract with the Rays (covering the 2008-2013 seasons), his performance collapsed and he become a utility player. In the last year of his contract, he would have made $6 million dollars. Paying that much money to a utility infielder is far from ideal, but it wouldn't have crippled the team. Additionally, it would have looked better than many of the contracts listed in the table above. Even the risk and the worst-case scenario associated with these contracts isn't devastating, and the rewards often outweigh the risks.

Overall, these types of contracts have been essential to the success of the Rays organization. They can ensure that young talent will be with the team for a considerable amount of time while leaving them the financial flexibility to acquire other players. Using a financial strategy like this seems to be mutually beneficial, and is one way the Rays can sign young players within the confines of their market.

All statistics used are courtesy of Fangraphs, and contract information from the Lahman Database.