How Much is Too Much To Sign Stephen Strasburg?

Assuming the Washington Nationals don't pull a trick from the Houston Texans and pass on Stephen Strasburg in the next few hours, the next big question will be how much the Nats will fork over to sign the college phenomenon. The hot number was 50 million, although that seems more like a Scott Boras-orchestrated pipe dream than anything else, but let's assume the Nationals were to do some forecasting based on past college pitchers, what price ranges would they find?

Using Erik's prior research from Rally's WAR numbers, I divvied up the top three college hitters and pitchers from each of the drafts ranging from 1990-1999. From there I averaged their WAR during the team controlled period and found that the hitters averaged 1.2 WAR yearly and the pitchers averaged 0.9 WAR yearly. If I were to post analysis with Strasburg being an average top-three college pitcher, I'm pretty sure I would be greeted with a dozen comments and emails about how Strasburg is so much more than the average college arm. That may be true, but I think the same could've been said for Kris Benson or Mark Mulder.

Using the "free/free/free/40/60/80" cost-controlled and arbitration years method developed by Tom Tango, my goal was to find out what the appropriate signing bonus for Strasburg would be, given various career arcs. Of the 30 college pitchers chosen, only one topped 25 WAR, two 20, five 15, and only six over 10; that's not too encouraging for people expecting Strasburg to be better than A.J. Burnett from start one.

Let's run Strasburg through three different career paths. One being Mike Mussina, one being the moderately successful (at least by compared to his peers) Dustin Hermanson, and then the disappointing Paul Wilson.  

The Mussina Path (25.3 WAR)

Year one: 2.1 WAR
Year two: 7.4 WAR
Year three: 1.3 WAR
Year four: 5.1 WAR
Year five: 5.1 WAR
Year six: 5.5 WAR

Free agent worth: 119 million

Cost-controlled worth: 45 million

Signing bonus break-even point: 74.6 million

The Hermanson Path (8.2 WAR)

Year one: 1.1 WAR
Year two: 2.8 WAR
Year three: 3.5 WAR
Year four: 1.2 WAR
Year five: 0.1 WAR
Year six: -0.5 WAR

Free agent worth: 37 million

Cost-controlled worth: 2.6 million

Signing bonus break-even point: 34.3 million

The Wilson Path (0.5 WAR)

Year one: -2.8 WAR
Year two: 0 WAR
Year three: 0 WAR
Year four: 1.6 WAR
Year five: 0.5 WAR
Year six: 1.2 WAR

Free agent worth: 2.3 million

Cost-controlled worth: 10.5 million

Signing bonus break-even point: Strasburg pays them 8.2 million.

If the Nationals can guarantee that Strasburg is the next Mike Mussina (which would be quite the win), they can pay him that 50 million signing bonus without blinking an eye and still get a nice profit. Otherwise, the signing bonus should be somewhere below 30 million. The thing is, the odds are against Strasburg reaching the 8 wins needed. Only 27% of the pitchers in the sample reached the plateau. Meanwhile, 9 of the 28 hitters sampled reached, or 32%. We know Dustin Ackley will sign for less, meaning the amount of WAR needed for a huge profit is actually lower than eight. Keep in mind, Strasburg pitching like Mussina with a reasonable signing bonus makes this a great deal when compared to the expected free agent costs. Which is to say, those cost controlled years make all the difference in the world.

There are some unaccountable variables. Merchandise and ticket sales topping the list, along with potentially added endorsements and attendance that would come only from a Strasburg selection. It's hard to quantify those, so for the most part I've ignored them. Plus, it doesn't seem like a sustainable boost to revenue.

You can make the case from a baseball and business perspective that the Nationals should make Dustin Ackley the first overall pick.

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