With Twins' closer Nathan ailing, Indians may be more relieved to keep Kerry Wood: Analysis | cleveland.com (Paul Hoynes, The Plain Dealer)

Closer Kerry Wood isn't going anywhere. The Indians may be more intent on keeping him today than they were when spring training opened Feb. 20.

Just because the Twins have apparently lost closer Joe Nathan for a significant part of the season with a torn ulnar collateral ligament in his right elbow, it doesn't mean the Indians are rushing to package Wood and send him to Minneapolis.

---snip---

So GM Mark Shapiro would be wise to keep Wood. Let the season's first couple of months unfold to see just what kind of team he has under manager Manny Acta. The Indians play 26 of their first 50 games against division foes. They play the White Sox eight times and the Twins and Tigers six times each. Shapiro, in his last year as general manager, should have a good idea where the Indians stand by then.

The Indians entered spring training with the idea of opening the year with Wood. They owe him $10.5 million, an obscene contract on a team cutting payroll, but the thinking was that if Wood was going to rebound from an inconsistent 2009, why shouldn't it be for the Indians?

The thing about Kerry Wood is he's Kerry Wood and he's averaged 46 innings over the past five seasons. Of course, he's been mostly pretty good over those 231 and 1/3 innings (10.2 K/9, 3.6 BB/9, 3.66 xFIP (using 3.2 as the league-specific factor)), but, regardless, even if he rebounds, there's little reason to believe he's capable of staying healthy and effective for an entire season. He hasn't done so in over half a decade.

The other thing is, he was pretty bad last year. The strikeouts were still there (10.3 per 9 innings), but he walked 28 batters in 55 innings and gave up 7 home runs. In 2009 he threw his fastball harder (95.5 MPH) on average than he'd thrown it any year since 2001, but the pitch was the least valuable (-4.0 RAA) it's ever been over that period.  His batted ball peripherals were pretty much exactly in line with his career averages. To be fair, he was hurt for much of the season, but now we're just back to square one.

Considering other factors, like aging and otherwise normal regression, I think there's a really good chance what we saw from Kerry Wood in 2009 is about what we're going to get from him in 2010.

But let's put all that aside for a second and, in the spirit of letting Spring Training be Spring Training, assume he does manage to stay healthy and effective for an entire season. Let's say he pitches 75 innings and he's just as good as as his career averages. Neither of these scenarios are particularly likely for a thirty three year old power reliever with an extensive injury history coming off one of the worst seasons of his career in terms of performance, but, like I said, it's Spring Training.

According to Rally, Kerry Wood has been worth 236 runs versus replacement over 1274 and 1/3 career innings. He's been worth 0.1852 runs per inning, or, 1.852 wins per 100 innings. So, 1.852 wins per 100 innings. Times 75 innings, divided by 100, equals 1.390 wins per 75 innings. Times 1.4 to account for closer's leverage (the average leverage index for a closer is about 1.8, exactly Wood's 2009 average leverage index, whose chained value (LI + 1)/2 is 1.4), and we get 1.945 wins. Call it two wins (his beard is probably worth at least .055 wins when it's in mid-season form, anyway).

So what is a two win reliever worth to a team? The answer is not too much if he's owed $10.5 million. CHONE projects the Indians to finish 81-81 with Wood, so we'll be generous and call that their position on the win curve. In that case, a 2-win reliever owed $10.5 million is worth approximately -$3 million. Quite simply, best case scenario, the contract is a $3 million liability. Observe:

I didn't include any potential draft pick compensation because even if he is a type A at the end of the season, it's unlikely his team will offer him arbitration and risk being saddled with another year of an inefficient contract for an injury prone reliever. Plus, if he qualifies for type A status, there's a decent chance he will have finished 55 games, thus triggering his $11 million 2010 vesting option.

Now, there is a scenario in which he's worth disproportionately more than the two or so wins above replacement he provides if all goes well. That scenario is him being the difference in the Indians making the post season and not making the post season. In that case, his contract is worth something like $34 million, seeing as making the post season tournament is worth, on average, $40 million to a team. What are the chances the Indians finish a game or two ahead of the 2nd place AL Central team with a fully healthy and productive Wood?

I'm not good enough at math to give you a good answer, but if we approach this from a graphical standpoint, we can determine how good their chances would have to be in order for Kerry Wood's contract to be club favorable on average. So, the options are a) the Indians have a fully healthy and productive Kerry Wood and they don't finish a game or two ahead of the 2nd place AL Central team and b) the Indians have a fully healthy and productive Kerry Wood and they finish a game or two ahead of the 2nd place AL Central team.

Say the Indians have a 50% chance of either one happening. In that case, we take the product of .5 and the value of the contract under scenario a) ($-3.1 million) and add it to the product of .5 and the value of the contract under scenario b) ($34 million), and come up with $15.5 million.

I've represented the model with the following visualization:

Our break even point is 8.36 per cent. If the Indians have an 8.36 per cent chance of making the post season by a game or two, having a 2 win reliever at $10.5 million is a break even proposition--one in which his contract is expected to generate exactly zero surplus value on average.  Like I said, I don't have a very good idea of what the Indians' chances of narrowly making the playoffs with a fully healthy and productive Kerry Wood are, but I'd probably wager they're not quite as rosy as the 8.36 per cent break even point. Regardless, we're talking about Kerry Wood, and all things considered, he's probably not going to be a 2-win pitcher anyway.

Quite simply, right now, Kerry Wood's contract is very unfavorable, and Mark Shapiro would be doing a world of good just by getting it off the books for nothing. I can almost guarantee Shapiro hasn't done so not by choice, but because he hasn't had the opportunity.

Aside from most teams' unwillingness to assume Wood's entire salary or give up anything of meaningful value in return, there are other advantages to keeping Wood around a bit. If Kerry Wood does rebound and by June seems to be on pace to put together that 2-win, 75 inning season he'd like to, perhaps teams will look at him and say, "I'm willing to give up something of value in exchange for Kerry Wood's services at $5 million for half a season."

The other reason is that ugly vesting option and the thing that causes it to vest--games finished. If Kerry Wood finishes 55 or more games in 2010, he's automatically owed $11 million in 2011. If he finishes 54 or fewer, the club decides whether or not to retain him in 2011 for $11 million. Regardless of what team Kerry Wood finishes the 2010 season with, they'll prefer for the option not to vest. The option vesting is never a better scenario for the club but very often a worse scenario for the club. It's common sense, the club will always prefer to decide rather than let the option vest. So, if Cleveland keeps him around for a few months and limits his games finished, such that a contender could pick him up mid season and use him however they see fit without having to worry whether or not the option will vest, his contract will be a good bit more valuable and it will make a whole lot more sense. Knowing you won't be obligated to pay Wood $11 million in 2011 unless you want to is a far better situation for a contender than trying to leverage the economic impact of the option vesting against using Kerry Wood in the 9th inning late in a pennant race.

But when we depart from Spring Training and return to reality, we're left with a 33 year old over paid injury prone power reliever coming off a fairly disappointing season. And that's why we'll see Kerry Wood break camp with the Indians in 2010. Not because the Twins just lost their closer and the Indians season outlook just got a slight bit rosier. But because in today's economy, Kerry Wood's contract is immovable.  Advice to Mark Shapiro et. co., hope Kerry Wood rebounds and keep his games finished down, regardless.  I think we can tell a lot about the way an organization does business by their handling of situations like these.