Report: Yanks eying austerity budget for 2014

The Yankees, baseball’s biggest spenders for the better part of two decades, may finally be eying something of a budget, according to a report by Joel Sherman. In a piece on Sunday, the New York Post scribe says that Major League Baseball’s Collective Bargaining Agreement and the other 29 teams’ attempts at keeping the Yanks’ spending under control may finally pay off in 2014 as the New York front office wants to bring its payroll below the luxury tax threshold. If the Yanks are truly intent on reducing costs, the club will not overpay for long-term deals in the near future and may focus on ushering in a new round of young players instead.

Sherman, who noted that this drive toward fiscal control has them lukewarm on top free agent pitchers Mark Buehrle and C.J. Wilson, explained the rational behind the Yanks’ thinking:

As an organization, they are saying they are driven to have a payroll of $189 million or less in 2014 when that becomes the luxury tax threshold. Because the incentives that come via the new CBA are just too great for them to ignore.

For if they are at $189 million or less for the three seasons from 2014-16, they not only avoid paying one cent in luxury tax, which would rise to 50 percent for them as repeat offenders, but they also would get roughly $40 million in savings via the to-be-implemented market disqualification revenue sharing program. However, only teams under the luxury-tax threshold get reimbursed in this program, which is designed to prevent big markets such as Toronto and Washington from receiving revenue sharing dollars, which in turn will lower how much teams such as the Yanks pay (as long as they are under the threshold).

And even if they just went under $189 million for 2014 before going over again in 2015, the Yankees would receive serious benefits. They would get about $10 million in the revenue sharing disqualification program. Also, by simply going under the threshold once, the Yankees would go back to having a 17.5 percent tax rather than the 50 percent that begins in 2014 for them if they never go under. Keep in mind that since the luxury tax went to 40 percent for them in 2005, the Yankees have averaged paying $25.75 million in tax annually.

So what’s going on here? How could the Yankees, who enjoy the edge of money with their new stadium, TV deal and various other revenue sources, suddenly become fiscally conservative? There are, in effect, three answers. First, the Yankee sources who are talking to Joel Sherman are being truthful. The Yankees know what they stand to gain by getting their payroll under $189 million in 2014, and they think they have the young pieces to do so. Plus, as Sherman writes, the Yankees say, “The big-name guys are a waste of time. We are not spending that kind of money.”

Next, they could be bluffing. Maybe they’re playing coy now to make a bigger move later in the year. If any free agent player wants to come to New York but the Yanks don’t want to meet that player’s asking price, it’s in the club’s best interest to put forward a plausible explanation for future that is fiscally conservative. Maybe they want to go big on Yu Darvish or Yoenis Cespedes but do not want to overplay their hand now.

Third, they’re laying the groundwork now in order to play it coy next winter. Right now, they have $72 million tied up in three players in 2014 — A-Rod, Mark Teixeira and CC Sabathia. They know that they’ll have to deal with Robinson Cano‘s, Curtis Granderson‘s and Nick Swisher‘s free agencies within the next two offseasons, and they will likely want to retain two of those three if not all three. Plus, the free agent pitchers could include Matt Cain, Cole Hamels and Anibal Sanchez while Mariano Rivera‘s current deal — and perhaps his career — is set to end after 2012 as well. That’s a whole lotta holes the Yanks are going to have to fill with an eye toward the 2014 luxury tax benefits.

Ultimately, then, baseball’s long-term effort to rein in the Yanks’ spending may be coming to a head, at least temporarily. Baseball has incentivized the Yanks to drop their payroll under the luxury threshold for at least a season. In 2007, the Yanks spent $189 million and won 94 games. They’ve spent over $200 million every year since then and will likely do so again in 2012. Change may be on the horizon though, and if it comes, it could benefit the Yanks’ bottom line tremendously as they gear up for another half decade of exorbitant spending.

Report: Reyes headed to the Marlins

Via Ken Rosenthal, the Marlins and Jose Reyes have agreed to a six-year contract worth $106MM. The deal does not include a no-trade clause, and Jon Heyman says the plan is to move Hanley Ramirez to third base. I’d like to see them try him in center field, but that’s just me. To make matters worse for the Mets, they’re only going to get Florida’s third round draft pick as compensation (in addition to the supplemental first rounder). Ouch.

The Yankees were never serious suitors for Reyes, especially not that price. The first domino of the Winter Meetings has fallen though, and the next four days are sure to be fun.

Open Thread: Hello From Dallas

Forgive the crappy cell phone camerawork, but that’s the official “Welcome to the Winter Meetings” sign in one of the lobbies here at the Hilton Anatole in rainy Dallas. That guy on his phone in the background is actually Mitch Williams, the MLB Network analyst and the pitcher that gave up Joe Carter’s World Series clinching walk-off homer in 1993. You have to figure that’s something he thinks about at least once a day, right?

Anyway, the Yankees made a handful of transactions at last year’s Winter Meetings in Orlando, most notably re-signing both Derek Jeter and Mariano Rivera. They also made a pair of Rule 5 Draft picks, but most of their time was spent wooing Cliff Lee and feigning interest in Carl Crawford. It certainly feels like we could be in for a slow week this year, but you never really know. The first official order of business comes tomorrow afternoon, when teams have to set their 40-man rosters for Thursday’s Rule 5 Draft by 5pm ET. The Yankees do have one open spot on their 40-man at the moment, so if they clear another spot(s) tomorrow, we’ll know they have their eye on a player or two come Thursday.

Pitching figures to be the popular topic for the next four days, in terms of both free agency and trades. Bench help and general depth is also on the agenda. The Yankees do appear content to wait the market out though, and in fact Brian Cashman won’t even get here until tomorrow afternoon. Unlike last year — when they had an obvious target — we’re in the dark as far as their plans go. I don’t know about you, but I think that makes things more exciting.

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Here is tonight’s open thread. The Lions and Saints are your late football game (8:20pm ET on NBC), but feel free to talk about anything you want here. It’s all fair game, have at it.

Mailbag: Joel Zumaya

(Leon Halip/Getty Images)

Jon asks: Should the Yankees have any interest in Joel Zumaya?

Oh yes, absolutely. There’s no way they could give him anything more than a minor league contract though, the guy just can not stay healthy. Zumaya hasn’t pitched in a game since suffering that scary injury against the Twins in June of 2010 (video), a fractured elbow that required two surgeries. He’s also missed time with numerous shoulder surgeries and a finger problem throughout the years. Paying the new $100k retention bonus will suck, but that’s the cost of doing business these days.

Despite all those arm problems, Zumaya was still sitting (sitting!) right around 99-101 mph with his fastball at the time of his injury last season. It’s been five years since he’s thrown more than 40 IP in a season, so we have no idea what his current performance level is like. If he gets back to what he was in 2010, we’re talking about a guy with a good (but not great) strikeout rate (7.98 K/9) and a strong walk rate (2.58 BB/9) to go along with a lot of fly balls (just 35.8% grounders in his career). Typical power pitcher kinda stuff.

It’s tough to consider Zumaya anything more than a total wildcard at this point, he’s the definition of a scrap heap pickup. One thing he has going for him is age, having just turned 27 last month (five months older than David Robertson). Zumaya is scheduled to work out for teams later this month, and about ten clubs are expected to attend the showcase. It’s unclear if the Yankees will be one of those teams, but I would guess yes. They seem to scout basically everyone. It’s just a question of Zumaya’s preference, since he figures to get a whole lot of minor league offers.

Contracts For Relievers: Paying For Consistency

Very few things in baseball receive quite as much derision as large contracts given to relievers. Relievers have come to be seen as fungible, volatile assets who are poor investments. Many view the contracts given to established closers as being entirely based on saves, a stat that is rightfully maligned and makes a poor basis for a multi-year multi-million dollar contract. However, the logic underlying these complaints has holes large enough to push Phil Hughes through, and a closer look suggests that the truly large reliever contracts may actually make a modicum of sense.

My theory is that general managers who hand relievers big money have not been looking for saves per se. Rather, they have been looking for pitchers who have provided consistent performance on a regular basis. To test this hypothesis, I decided to take a look at the largest contracts given to relievers since 2000, as well as the most consistent performers over the same time period. For the contracts, I limited my search to 3+ year contracts worth at least $7 million per season. 3+ year deals tend to reflect a level of trust by the club in the player, and $7 million struck me as a reasonable cutoff between the deals handed to top players and to those a level down on the talent chain. For measuring performance, I used a simple ERA+ and IP combination to try and isolate the most consistent performers (a search for relievers who have racked up 35+ saves on a yearly basis unearthed a similar list. Players who provide that many saves regularly tend to have strong underlying numbers, so saves can serve as a proxy for performance when addressing a multi-year sample).

Here’s the list of pitchers who had at least 3 seasons with an ERA+ of 150 or better and at least 65 innings pitched:

1 Joe Nathan
2 Billy Wagner
3 Mariano Rivera
4 Francisco Rodriguez
5 Keith Foulke
6 Mike Adams
7 Joakim Soria
8 Carlos Marmol
9 Jonathan Papelbon
10 Jonathan Broxton
11 B.J. Ryan
12 Juan Rincon
13 Brad Lidge
14 Francisco Cordero
15 LaTroy Hawkins
16 Luis Ayala
17 Eric Gagne
18 Jason Isringhausen
19 Octavio Dotel
20 Armando Benitez

It is important to note that when the search was expanded to players with at least 2 seasons of this sort of performance, an obvious drop in quality could be perceived. To my eye, 3 seasons turned out to be a very good parameter by which to evaluate consistent success. Looking at the list, Adams, Soria, and Marmol have not yet reached free agency, while Broxton, Dotel, Rincon, Gagne and Ayala all suffered injuries that hurt their performance and value before they could cash in. That leaves us with 12 pitchers relevant to our purposes.

Here is the list of relievers who have received large contracts, meaning deals for 3 or more seasons at an AAV of at least 7 million dollars (this is the list I was able to construct. It may not be complete. Please correct me if possible):

Jonathan Papelbon
Mariano Rivera
Rafael Soriano
Francisco Rodriguez
Francsico Cordero
Joe Nathan
Heath Bell
Brad Lidge
Billy Wagner
BJ Ryan
Armando Benitez
Jason Isringhausen

Soriano and Bell are the only players on the “got paid” list not on the “consistently performed” list, and Bell has two seasons of requisite performance and a third that falls just short (146 ERA+). Soriano is the only real outlier here, as he has never had a season meeting the performance criteria yet was paid like the more consistent elite performers. Conversely, Foulke and Hawkins are the only two of the 12 relevant players from the “consistently performed” list who failed to make the “got paid” list, and Foulke missed it by .25 million (3 years, 20.75 million).

Basically, when looking at the two lists, we find that the pitchers who have performed at a high level on a regular basis are the ones who are getting the big money. Now, correlation is not causation, but it does seem reasonable to say that large contracts for relievers have been largely reserved for pitchers with established levels of consistency and performance. Now, the next question to ask is whether it makes sense to be giving those pitchers large contracts. The obvious retort to this is that:

1) relievers are a volatile commodity, and
2) past performance does not guarantee future results, and
3) relievers are fungible and good relief can be acquired cheaply.

As for #1, Stephen Rhoads addressed this very issue in this space a few weeks ago:

In any walk of life, one quick way to open yourself up to embarrassment is to assume that those around you are either unable or unwilling to comprehend the complexities of your worldview, to borrow a turn of phrase from Confederacy of Dunces. I’d wager that most General Managers have a pretty good idea that relievers are volatile creatures, and that they are also aware of the failure of these relievers to live up to the contracts given to them. So, avoiding the arrogance that would suggest that they’re just irrational actors, what would drive a GM to pay a premium for a reliever? It boils down to predictability.

Paradoxically, the volatile nature of relief pitchers drives GMs to pay big money for relievers whom they don’t believe will be volatile. Thus, relievers with a long track record of health and consistently superb performance are the most likely candidates to get big money.

Essentially, reliever volatility actually makes handing big contracts to those relievers who have proven to be more of a sure thing a logical decision. As for #2 and #3, they can both be answered by the same point. While it is easy to look back at the end of a season and find relievers who provided great results for few dollars, it is much more difficult to identify those pitchers ahead of time. For every Joaquin Benoit there are 10 Buddy Carlyles and Lance Pendeltons, pitchers who are blanks in the game of reliever roulette. Additionally, while some of these large contracts have flopped, that is a risk that comes with any free agent contract. In the right context, it makes sense for clubs to take that risk rather than cross their fingers and hope to stumble upon the right reliever. Although past performance does not guarantee future results, it does make good results significantly more likely and predictable.

Relievers being fungible and volatile does not mean that their talent changes yearly. It means that in a small sample, you can often get statistical anomalies in both directions. Since relieving is by nature a small sample, there is more volatility and more risk. But if you have identified relievers who you think are more talented and more consistent, you lower that risk of volatility. There is value in that certainty, such that it makes sense to pay those relievers more than a pure talent to dollars evaluation might suggest. This added level of predictability is why general managers have been paying a premium for top relievers on the free agent market.

Open Thread: Baseball In Space

We tend to take baseball seriously around these parts, probably too seriously. That’s why I thought the video above was so great, it’s a nice little reminder that at the end of the day, baseball is just a game. I think we forget that far too often. Once you’re done watching, use this as your open thread. There’s a ton of college football on, plus all three hockey locals are in action. Talk about anything you like.

(h/t TedQuarters)