FA WAR Cost

bkeich 2019-12-05 04:31:45 UTC #1

One of the more difficult concepts to keep in mind in looking at FA signings is what is the actual cost of WAR that a team SHOULD pay to succeed. So, I tried a quick, dirty calculation with the following assumptions:

Team has a budget of $180M to make the playoffs
Team target is 95 Wins or 35 WAR
20% of your salary will be lost to injuries, failed players, etc.
Half of the team is not FA eligible yet, so 13 players are pre-FA and 13 are acquired in an open market
62% of the WAR comes from Position Players, 38% from Pitchers
25% of the Position WAR comes from the bench
70% of the Pitching WAR comes from the Starters, 30% from relievers
The overall average of a pre-FA player is 1.8M/year

From these assumptions, which are debatable, I come up with the following:
Each Starting Position Slot - 2.2 WAR
Each Bench Slot - 0.9 WAR
Each Starting Pitcher Slot - 1.9 WAR
Each Relief PItcher Slot - 0.6 WAR

Each WAR acquired in post-FA eligible Player - $6.89M / WAR

So, I did not look at players, but instead "slots". So there are 26 slots. Yes, I know this is a simplification, but the "lost" salary accounts for it. I think my balance of what each slot needs to give you is about right, but feel free to comment.

Splits I did were not extensively analyzed, but I did put some data into it, so I think it is at least close. The salaries are close, but I am not sure I have the pre-FA value correct. I also made a somewhat suspect assumption that the ration of pre-FA and post-FA players matches the ratio of WAR generated by each (so in this case, half my WAR coming from pre-FA slots since I said the ratio of the players is 50%). It could be that your post-FA players give you more total WAR, but of course this depends on whether they are starters or not.

This is a simplification in general, but I just wanted to see if the numbers of $/WAR actually made sense. I think they are reasonable, but feel free to give your thoughts.

(PS: I am working in a refinery tonight in LA and things are a little slow. If you buy some 10W40 this year and it isnt quite up to the quality you wanted, it could be that I was playing with this spreadsheet instead of watching what was happening in the plant, but I am tired and a little bored )

Austinfan 2019-12-05 05:35:32 UTC #2

It depends on how many "cheap" WAR you can garner, but most rookies are barely above 0 WAR, the majority of 2nd and 3rd year players tend to be slightly positive (since replacement level players tend to be replaced). Only a few pre-FA players will produce significant WAR on most teams.

But I've never bought the $9M per expected WAR because you can't spend $180M for 20 WAR, you may have maybe $100-120M that can go for FAs and extensions negotiated into FA years - you also have to pay arbitration salaries for a dozen or so players and close to minimum for the rest. Even if arbitration WAR only cost say $4M, 15 WAR would cost $60M. Then throw in $20M for replacement players and "dead money." So to get to 30 WAR on $180M you can't be paying more than about $6.7M per WAR ($100M/15).

If Wheeler is a 4 WAR player, he's costing $6M per WAR, 3 WAR, then $7.4M.
We got 4.6 WAR for Harper's $26M or $5.7M per WAR.
Of course, if a player falls off, the out year WAR can get awfully expensive.

andyb 2019-12-05 12:12:31 UTC #3

Nobody buys that as every team fills out at least half of their roster, if not more, from low cost players. The $9 million per WAR is for free agent salaries only. It is market-based. You then compare the salaries AND performance of lower cost players to that. Supply and demand also factors in with stars getting more and average players (like the glut of 2B) getting less.

It is just a fallacy that you start with this construction that the math is wrong. Because it isn't. Teams can get high and low cost players at the same time (the latter will cost them prospects). It is just a more complicated market than you put out.

Austinfan 2019-12-09 12:58:11 UTC #4

The math doesn't lie, you can't pay $9M per WAR for more than a small % of total WAR or you'll be mired at .500 or below.
I think it reflects the "winner's curse" more than market value.
Because you have rich owners with big egos and unbridled optimism, there's always someone who'll bid the price of top free agents well above what a well functioning market would pay.

andyb 2019-12-09 14:38:49 UTC #5

But nobody is trying to do that. And teams with a $200 million payroll have more options than a team with a $100 million payroll. The Phillies' problem is not developing enough good, young talent. Nola is really the only young player that has made a significant difference in the last decade. That is a problem one can only address by spending money (and getting better at drafting and player development).

Austinfan 2019-12-09 14:58:11 UTC #6

If you claim a WAR is worth $9M in free agency, and the Philies should spend over the cap, then that's exactly what you're advising.
If you buy WAR, you'd better be judicious, and pay more like $6-7M an expected WAR.

Harper for example, cost $6M a WAR last season, and if he sustains that for most of a decade, the three out seasons can be written off.

If Wheeler gives them an average of 4 WAR over his contract, that's acceptable ($6M a WAR), but 3 WAR becomes $8M a WAR and makes life harder. 2.5 WAR becomes almost $10M a WAR and you can't afford too many of those deals or you're permanently under .500.

Cheap young talent is limited, because few players have much value their first two years, the bargain is in years 3-4 or so, and by the end of the cost controlled phase arbitration starts raising the price of WAR. If your young players start costing $4-5M a WAR, there's limited room for overpriced free agents eating up the salary cap.