Jan
19

Santana not worth the money?

By

This one comes from Vincent Gennaro, consultant to Major League Baseball and baseball economics expert. His headline says it all: Santana not worth the tariff.

Santana is only one season from free agency, so much of his value is shifting from the team to the player, yet the Twins seem to be pricing Santana as if he has two or three years remaining until free agency. This trade is basically free-agent signing with a tariff tacked on – a payment to the Twins in the form of promising low-salaried prospects in exchange for the right to sign Santana to a long-term contract without a bidding war.

This is the same thing we’ve been saying here all winter, preferring “bribe” to “tariff.”

Gennaro then goes on to analyze the financial implications of signing Santana, both what he’ll cost and what the potential return on investment will be (i.e., playoff appearances and playoff wins). And then we have my favorite paragraph in the entire piece:

The net impact for the Yankees is a contract extension for Santana that gets the Yankees about $25 million in value, but is more than offset by trading Hughes, Cabrera and one or two other minor league prospects, giving up about $60 to $70 million in value. What would need to happen to make this a good trade for the Yankees? If Santana signs with the Yankees at $5 million to $7 million per year below the price he would have gotten in an open bidding war as a free agent next winter, or if Hughes becomes only a fifth starter or bullpen reliever, the deal could make sense for the Yankees.

I like that rationale. He also discusses the Mets and the Red Sox, saying that the deal makes even less sense for the Red Sox, but wouldn’t be a bad move for the Mets.

He sums up the piece perfectly:

Any team who makes this trade will likely set its farm system back while placing a tremendous investment – and therefore risk – in one player. But if Santana ends up taking the hill in Game 1 of the World Series, the deal will considered a good one.

A very sober analysis indeed. I know some people are going to scoff, saying that the Yankees shouldn’t be worried about money, that they’re a billion-dollar enterprise that won’t see a shortage of cashflow. Yet every single person that says that has never seen the Yankees books. This is Gennaro’s realm, and I tend to defer expertise to him.

Categories : Analysis
  • Adrian-Retire21

    WEll giving Roger Clmens $28 million might seem the Yankees haven’t seen the books either.Maybe there being wiser but no Yankee has officially said he’s not worth the money or thats he is too expensive.Maybe the years but Santana is the only pitcher thats worth $25 million in this market.And he’s only getting paid $13 million which is a steal.Also even though he might get $25 million but we lose Giambi’s $22 and Pettittes $16 million.Worth it.

    • B

      Hank has openly talked about Hal and Cashman not wanting to pay him and the money issues.

      Many, many times at this point.

      • steve (different one)

        holy shit, how hard is this to understand?

        it’s the money AND the prospects.

        • steve (different one)

          that was in response to the original post, not to B’s post.

  • Realist

    Wait until he either becomes a FA , the trade deadline , or the Twins drop Hughes as a piece in the trade. I wish the season would start already before Hank has another change of heart ;-)

    Please don’t remind me of what the Yank’s paid Clemens last year ;-)
    He should give most of that back….highway robbery!

  • Manimal

    You have no idea how badly I want Hughes and Melky to do unbelievable this season just to smack the twins and Santana right across the face because they missed out on a great deal.

    How ironic would it be if every big 3 had better stats that Santana this season.

    • NYFan50

      That would be nearly impossible without a major injury to Santana.

      • Manny

        I wasn’t saying it is going to happen I meant that it would be awesome if it did.

  • YankCrank20

    i hate people who look at just the money (adrien-retire21), how hard is it to understand when it is spelled out in plain english for you? you are giving up cheap, talented, young prospects who are under your control for years…for 1 year of santana, plus a mega contract and on top of that, extra money from the luxury tax that will make santana a $35 million a year guy instead of $25, and on top of that santana has averaged 220+ ip the last 4 years.

    if you want a team and a general manager who will throw away the future and lots of money for a quick fix, than its time to leave as a yankee fan. cash and company would rather deal with a non playoff transition year than go down that road again

  • Rich

    This note was in a recent article in Newsday:

    [...]

    The Twins continue to hold discussions with the Yankees, Red Sox and Mets about Santana, but the Yankees appear set to move forward without the two-time Cy Young Award winner. Hank Steinbrenner has been convinced by his brother Hal and general manager Brian Cashman to not give up a package headed by Phil Hughes and Melky Cabrera.

    • http://yankeesetc.blogspot.com/ Travis G.

      this doesn’t mean the deal is dead, just that Hughes might (hopefully) be off the table. i’d then like to see the Yanks offer a trade centered around Kennedy and Horne.

    • dan

      How do you get the word “Newsday” to turn blue to show it’s a link to something? I always try and can’t get it right so I just post the link under it.

  • JD

    i agree, i’m getting tired of all the ppl who keep sayin money shouldn’t be a factor for the yankees, just because it hasn’t really been a factor. But the truth is, according to Forbes magazine’s annual reports on baseball teams, the yankees have netted a loss in the past 3 years, something along the lines of losing 20+ million a year. I presume this includes revenue attained from the YES Network. Even though YES is worth alot of money, you gotta sell it before u get the couple of billion it’s supposed to be worth. You may hope the yankees spend every dollar it makes on the team, but it’s not really reasonable to ask them to lose millions a year, it is a business.

  • Ivan

    Hey I understand the yankees are the richest team in baseball and has an abundance of money, but the yankees are not Microsoft folks and even the yankees, yes the yankees have a budget too.

  • dan

    People see Santana as a “sure thing,” despite the fact that he really isn’t. We all thought that Javy Vazquez was a sure thing before he came to NY. So let’s look at ERA+ for both, which is league- and park-adjusted.

    Johan(age 26-28): 155, 161, 130– average: 149
    Vazquez (age 24-26): 130, 108, 139– average: 135

    The 14 percentage points in ERA+ is equal to about .6 runs in of ERA and only 14 runs on the entire season. Considering the age difference, at the time of the Vazquez trade and now, the two sides are pretty close (Santana’s edge is somewhat offset by the age difference).

    We all thought Vazquez was a sure thing, and he was rewarded with a big contract because of that belief. He then became an average innings eater. I’d rather have my chips spread out over various assets than invested all in one player.

    • zack

      There is a big big big big difference between Vasquez, coming from the NL in a pitchers park and as of yet unproven, vs Santana, coming from a hitter’s park in the AL with two Cy Youngs on his back. Huge difference and really incomparable…

      • steve (different one)

        i don’t think montreal was a pitcher’s park. and the stadium in peurto rico where they played the year before he was traded definitely wasn’t a pitcher’s park.

      • dan

        ERA+, as I said, is normalized for park and league, so the two ERA+ figures are most certainly comparable. I agree that Vazquez and Santana are NOT the same pitcher. However, we thought we knew what we were getting in Vazquez as he was young with a good track record of success. He turned out to be not as good as we expected. We think we know what we’ll get from Santana, but how can we be sure? I used Vazquez as an example of this “sure thing” idea, not as a comp to Santana.

  • Realist

    Good point dan! I also believe there may be an injury issue with Johan? He has spent time on the DL the past two seasons and we all know how last season ended.

    I have heard that he was upset about his friend(I forget the players name as of now?) being traded and that had something to do with the swale…which actually worries me more than an injury.

    If that is going to affect your pitching performance , how is the NY press and the NY fans gonna affect you when you have a slump? Just some food for thought but if you quit on your team because of a trade in Minny , how will you handle the heat of NY? Food for thought…..

    • Sciorsci

      That DL that Santana has spent time on… is that the one that causes him to miss zero starts? He started 34 games in 2006 and 33 in 2007 – that’s pretty much a full season of starts both years.

      • Realist

        He missed time each of the last two years due to arm trouble, look it up ;-)

        • dan

          I looked it up. He’s made at least 5 starts in every single month of every season since he became a full time starter in 2004 (and the last 2 months of ’03). I’ve never heard anything about missing any time with injuries. Provide a link if you’ve seen otherwise.

          • Realist

            Well I have egg on my face! I must have read it from one of those reporters that said Roger and Andy were BFFs????????????? I’ll try and find where I saw that.

            Anyhow , my point about doing poorly after his buddy was traded shouldn’t be ignored and I noticed no one picked up on that ;-)

  • Manny

    Lets say santana goes 15-7 this year(wild guess), and Hughes goes 10-8, is 5 wins and 1 less loss really worth $20 million more than Hughes current salary?

    • dan

      Well wins aren’t completely on the pitcher (the offense has a small say as well), but lets’ say hughes is average and johan is 3 wins above average (last season he was about 2, but it depends on the metric– I’m speaking in terms of WPA). If you haven’t figured it out already, the answer is no, he’s not worth $20million more than Hughes.

  • Lanny

    It never made any fiscal or baseball sense to trade grade A level prospects for a guy you will have to pay 100% his value for.

    Just doesnt make sense especially if you believe Hughes is a legit top of rotation starter.

    If they didnt think much of him this deal would be done.

  • http://sverlyn@gmail.com ieddyi

    JD, the Forbes analysis didn’t incluse any YES revenue

    No way are the Yanks losing money. The new stadium will be a cash cow as well

  • CB

    Gennaro’s analysis was very interesting and very strong. That type of straight forward cost benefit analysis, rational way to look at this situation (the way large businesses tend to make good decisions) and I’d guess this is the way Cash and Hal have approached it.

    That said Gennaro made a very important assumption that would likely not hold.

    He assumes in his analysis that if Hughes and Melky were to be traded they would be replaced through free agent acquisition. Based on that assumption he estimates that replacing hughes would cost $84 million (over the next 6 years) and replacing Melky an additional $10 million.

    In his analysis its this combined replacement by free agents that makes Santana’s acquisition not financially rational. While free agent replacement is one possible scenario, its much more likely that the yankees would not replace Hughes through free agency. In fact, they would most likely replace him with another young, cost controlled arm from the system given their depth (Kennedy, Horne, Sanchez, etc.) Same thing for melky – the next two years Damon and Damon/ Gardner would play center and afterwards possibly Jackson. They may not replace him through free agency.

    Gennaro’s analysis wasn’t “wrong” for making these assumptions. He probably left these factors out to not complicate his analysis. A more complete picture of Santana’s value proposition to the yankees would have been given by doing a sensitivity analysis that accounted for multiple possible situations how the players are replaced..

    What his analysis also strongly implies is that the deal really makes absolutely no sense if Hughes and Kennedy were included – the hit on losing both those players as the twins have demanded would be enormous.

  • Manimal

    I also heard something like a team with a new stadium has 2 years without luxury tax. In those 2 years the yankees would’ve dropped millions in salary(most notably Giambi) and only picked up Santana.

    Am I the only one who wants Hughes in the Bullpen? After his playoff appearance he looked so sharp in those innings than he did in any start.

    • http://www.riveraveblues.com Joseph P.

      Yes. You are the only one.

    • steve (different one)

      his appearance in the playoffs was basically a start. i am SURE the Yankees told him to prepare for that game as if he were starting, since Clemens had had injury problems.

      he came in the 3rd inning and pitched 3 2/3 innings.

      it wasn’t anything like pitching 1 inning 3 days in a row.

  • Currambayankees

    I hope the Yankees keep the kids and tell the Twinkies to go find another sucker. The Yankees are better off letting these 3-4 prospects they would need to trade to get Santana. Time to go back to the blueprint of the 90′s keep your best prospects while complementing it with smart trades and signings.

    • steve (different one)

      while i agree with your conclusions, and i would prefer the Yankees to keep Hughes, i don’t think this situation is really analogous to past “bad” trades.

      trading for Johan Santana COULD be that “smart” trade you are talking about.

      if they could do it without Hughes, which i don’t think they could, i think it WOULD be a smart trade.

      it would be more analogous to trading for David Cone than for Kevin Brown.

  • Bart

    He sums up the piece perfectly:

    But if Santana ends up taking the hill in Game 1 of the World Series, the deal will considered a good one

    The minor league roster is not going to feel the hurt

    - the basis for the deal is taking the hill for game one of the 2008 WS, & – 2009, & 2010, before the offense implodes (the defense is already marginal)

    - Santana is more likley to take the hill Game 1 than is Phil-

    – the we love Phil (and I am one) commentary asks HIM to be #1 strater by the close of this year

    – that is grossly unfair, and if we need a #1 to compete with Tigers, Indians, Red Sox then Santana is critical – even to shielding IPK and Joba as they grow (if Phil has to be the price)

    – Phil will be ready – if he is ready – in 2011 and will have Cano and Arod as offense – and we will be talking about trading him or IPK or someone from that impoverished minor league roster of fabulous arms for offense —

    In the best of all words — Santana plays for the Twins and goes free agent – the Yankees sign him for 2009 – and all we do as Yankee fans is watch Jeter age at SS while the Yankees miss the playoffs and Girardi is fired.

    Does not stop me from being a crazy, outrageous, died in the wool Yankees Fan – but the idea is to put the best nine aon the field and make a run for the WS.

    Huges and IPK can’t get us there this year or next – if ever (they wil need an offense to compete with the same Sox, Tigers, and Indians). Santana, a dominating lefty is less risk

    MONEY — the Yankees afforded Pavano, Wright, Johnson, Mussina a bunch of useless 1B, 2B, and LF contracts and Giambi – grant the good Giambi years and impact, good Moose, good Johnson — the economics are simply not an issue – except for posturing in the press to get the best deal

    No less a baseball authority than Posada, who was one of the earliest to comment on Hughes as special – said Get Santana

    I love Jeter – I love Huges – I’d tade them both to beat the Red Sox and go on a successive year WS tear. Trouble is most of the time – it is not a Santana equivalent we trade for. This CORE team we so love failed against D’Backs – Angels, Marlins, Red Sox, Tigers, Indians MOSTLY due to unreliable pitching —

    String it out as long as possibel but in the end get Santana – even if it takes Hughes, Melky, and a few minor leaguers

  • steve (different one)

    Huges and IPK can’t get us there this year or next – if ever (they wil need an offense to compete with the same Sox, Tigers, and Indians).

    says who?

  • dan

    Bart, where’s this idea coming from that the Yankee offense will implode?

  • http://porschevespa@aol.com Fernando Sanchez

    People…just without Mr..Torres …it all Yankees need to win the WS…Manager was the difference again California,,Boston,,Tampa and you see the serie with Indians..Mr. Torres just don’t know how to make a run..without a homer…leave the team the way it was..and let play ball..with a new manager who know how to run..change pitchers and play baseball.

  • Adrian-Retire21

    Guys here’s why Santana is worth $25 million. Brett Tomko with a 5.55 Era as a reliever in the N.L is getting $3 million dollars for the Royals after not having a good year in the last ten years.

  • Chris A

    testing