Economics of Baseball: The Orioles' shopping spree revisited

The Orioles spent a lot of money this offseason, nearly $36 million between trades and free agent signings. Their prolific spending netted them nine players, including their every-day designated hitter, every-day third baseman, every-day shortstop, every-day first baseman, closer, and top set-up man. Strategically, it seems like they tried to stick to 1-year commitments and acquire players that had fallen out of favor with their previous teams via trade. Their only multi-year acquisitions were the two years they gave Kevin Gregg as a free agent and the two years Mark Reynolds had left on his contract when he was acquired from the Diamondbacks. A fairly reasonable strategy for a rebuilding team with several holes and money to spend.

So far the Orioles have been a better team than they were last year, with a 23-24 record and -32 run differential (.429 PythagenPat W% in 2011, .338 PythagenPat W% in 2010), but was that $36 million money well spent? Let's take a look at the individual moves.

Vladimir Guerrero -- 1 year, $7.1 million

Guerrero's deal was for $8 million, total, but $3 million of it is deferred until 2016-2017 without interest, bringing the present value of the contract down to around $7.1 million. Guerrero has been used exclusively as a DH and hit .308/.332/.440, good for 0.5 rWAR, which gives him a $4 million dollars-to-win ratio. That's a bit better than the average free agent deal.

Derrek Lee -- 1 year, $7.25 million

Lee simply hasn't hit, with a .231/.311/.346 triple-slash and a 41-to-18 K/BB ratio. He's only accumulated 0.1 rWAR and the $7.25 million he signed for is beginning to look like a waste of cash.

Kevin Gregg -- 2 years, $10 million

With a 3.93 ERA in 18 and 1/3 innings the Gregg deal doesn't look terrible on the surface, but his 15-to-13 strikeout-to-walk ratio suggests the results aren't sustainable. Still, he's been worth 0.4 rWAR thus far (~$3.5 million $/W), so even if he's likely to regress and lose his job as the team's closer, the deal hasn't been a failure yet.

Cesar Izturis -- 1 year, $1.5 million

Izturis has not hit at all--.192/.250/.192 in 29 PA's--but Buck Showalter has been able to leverage him effectively as a defensive replacement. As a result he's netted the Orioles 0.3 rWAR. At ~$1.5 million $/W Izturis has been an efficient allocation of resources so far. If he starts hitting and manages to keep playing spectacular defense the Orioles could end up getting a huge bang for their buck with Izturis.

Jeremy Accardo -- 1 year, $1.08 million

Accardo hasn't been particularly good in the 21 and 2/3 innings he's pitched out of Baltimore's bullpen: 99 ERA+, 14-to-10 K/UIBB ratio, 2 HR allowed, but has managed to appear with an average leverage index of 1.4. While he'll need to be a fundamentally better pitcher to even sustain his mediocre results, 0.2 rWAR isn't bad at all for just a hair over $1 million (~$1.5 $/W ratio). The Orioles can retain Accardo as an arbitration-eligible player in 2012 if they choose.

Justin Duchscherer -- 1 year, $700,000

Duchscherer is yet to appear in a game and the latest from extended spring training is that he was scratched from his most recently scheduled rehab start. It seems unlikely that he'll pitch for the Orioles in 2011. It's hard to get upset about committing $700,000 to a guy who was a 4-win pitcher a few years ago, no matter how long his medical records are.

Koji Uehara -- 1 year, $3 million

Uehara has pitched extremely well for Orioles for his entire career and the same is true this year. As a high-leverage reliever he's pitched 20 innings with a 148 ERA+ and a 4.6 K/BB ratio, accumulating 0.6 rWAR. His $/W comes in right at $1.4 million, which is usually something you'll see from a very small commitment rather than a $3 million one. If Uehara stays healthy he could end up being a pretty good trade chip for the Orioles, should they decide to sell.

J.J. Hardy -- 1-year, $5.35 million (trade)

The Orioles sent a pair of fringy relievers to Minnesota in exchange for Hardy, Brendan Harris, and $500,000. Hardy has appeared in only 19 games, but they've been pretty good: .239/.316/.403 with above-average defense at SS according to TotalZone, good for 0.6 rWAR. If he keeps playing this well he'll end up making the Twins look foolish for giving him away so easily.

Mark Reynolds -- 2-years, $13 million (trade)

Reynolds is guaranteed $5 million in 2011, $7.5 million in 2012, and a $0.5 million buyout for his $11 million club option for 2013. Right now that option looks like it will be declined, because Reynolds has hit only .191/.298/.362 in 178 plate appearances for the Orioles. He has cut down on his strikeouts, which has unfortunately been coupled with a new-found inability to drive the ball (.171 ISO and only 5 homers). His 0.4 rWAR is entirely a product of playing 3rd base, and though TotalZone rates him as average at the hot corner thus far he isn't regarded as a good defensive player.

Summary

Some of the moves have worked out perfectly, some not so much, but overall the Orioles have paid ~$10.2 million to these 9 players and they have collectively provided 3.1 rWAR. At $3.3 million/win, the Orioles have done better than teams generally do on the open market (ignoring the value of the players traded away for Reynolds/Hardy). However, even though they have improved, their run differential suggests they're not going to be playing around .500 much longer and have little chance of contending in the AL East. Unless they start playing fundamentally better baseball pretty soon, we'll have to judge how well the $36 million was spent by what kind of prospects these players can bring back in deadline deals. Though probably not wasted, the $36 million will not buy the Orioles a meaningful baseball game this fall.
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