Have you ever wanted to predict the value of any free agent's possible contract? Well, now you can with the updated free agency contract calculator. Last year, I began with the calculator in hopes that I might be able to estimate the average annual value of the offseason's upcoming free agents. After some resounding success, I've gone back and updated the calculator to match the current inflation trends and added in the ability to toggle a qualifying offer.
The entire methodology behind the calculator can be found in last year's article. Here, I'm going to explain the results of the calculator's offseason predictions and just how it was updated to fit baseball's quickly rising inflation levels.
To my surprise, last year's version of the calculator proved to be extremely effective in predicting contracts, enough so that the prediction for the top 100 free agents' contracts correlated well with their actual contracts. Many were off by minuscule amounts including those of Pat Neshek, Nelson Cruz, Hanley Ramirez, David Robertson, and Asdrubal Cabrera. The predictions for each of those contracts and many more were off by less than 5% of their actual average annual value.
On the other hand, certain free agents were undervalued by my calculator and signed for much more than the system predicted; namely Edinson Volquez and Kendrys Morales. Both players outperformed their expected value and went on to help the Royals win the World Series. The Royals clearly took advantage of signing players with less-than-stellar track records, and it worked out for them. Other free agents signed for much less than predicted. Chase Headley and Norichika Aoki fell down the ladder far more than they should have, signing for about ten million and seven million less than expected, respectively.
In the creation of this year's version of the calculator, the first problem I encountered was the rate of inflation. Free agent contracts are increasing at an unsustainable rate. As a result, I had to use a different model than last year to extrapolate this year's inflation increase. 2014's projected inflation increase was very accurate, just 0.7% off from what the actual inflation rate was. However, from looking at preliminary data, I knew that using the same model wouldn't work again.
In 2014, I used eight years of data, going all the way back to 2006, to predict the following year. Using that rate proved increasingly massive in 2015. For example, Chris Davis would've been projected a $35,000,000 contract per season. Common sense prevails over numbers here and I went back to adjust. Instead of simply going back and applying the current year's inflation rate to previous year's data, I needed something more adaptable. That is when the inflation ceiling came into effect. If a re-inflated contract turned out to be more than the ceiling, it would be cut off at the ceiling and that value would be used in the calculator. This way, past contracts weren't enormously inflated just because they were signed a couple of years ago. The ceiling was found by increasing the largest average annual value of last season (belonging to Max Scherzer) and increasing it by this offseason's rate.
I asked the internet what else they would like to see added to the calculator back in early October and the most frequent response was to add a way to measure the effect a qualifying offer has on a player's value. After finding the players who have received QO's since 2012, I measured the percent difference between their projected contract and actual contract. That difference was then evaluated against the average percent difference between projected and actual among all other free agents since 2012. There turned out to be a discernible difference between the two.
Players who have received qualifying offers since 2012 have seen their projected/actual differential come out to be 14% lower than the average projected/actual differential. Therefore, any contract with a qualifying offer attached has been decreased by that amount.
This season's calculator, like last season's, won't be exact. It's up to you to adjust the salary based on factors such as market depth, the player's agency, injury status. Maybe in future years, I'll be able to work some of those free agent traits into the system, but for now, they serve as tuning points. To use the calculator, simply enter the free agent's age, primary position, and the last three years of fWAR data. If they have received a qualifying offer, enter that in the form of a "Yes" or "No" statement. The calculator will then take this data and output the projected average annual value for the player over the length of their contract.
The entire calculator is based around comparable players from the past, so I'd be remiss not to include a way to see player similarities. I've created a Tableau with all 935 players in the system, an easy way to spot just how similar one player is to the next. I recommend using a 1.0 fWAR buffer on both sides of the wWAR slider, as well as a 2 year buffer on the signing age slider.
Free agency is here, and that means lots of money is going to be be doled out to more-than-deserving and not-so-deserving players. Hopefully, the free agency contract calculator can help you decide which contracts are going overboard and which contracts are steals.
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