The concept of surplus value took a beating this past offseason. The Ice Cold Stove forced us to reckon with the fact that some players had to sign for pennies on the dollar because baseball’s youth movement is blossoming and younger players are cheaper. Add in yet another Marlins fire sale, another service time manipulation kerfuffle, and a renewed focus on minor leaguers’ pay, and it’s no wonder labor strife increased along with calls for a change in MLBPA leadership. Some analysts even grappled with their role in the system.
But baseball is a business. No matter what changes come to the CBA or who heads the MLBPA, teams will try and find as much surplus value as they can. It’s what shrewd business owners do, not just in baseball but in all walks of life. Your boss does the same thing.
Prior to the 2017 season — as I explained over at FanGraphs — no team exemplified this search more than the Chicago Cubs. They’d built their championship team the “right” way, meaning primarily through drafting and shrewd trades instead of signing free agents. As a result, they not only controlled an exceptional amount of on-field talent, they were paying pennies on the dollar for most of it.
Before we get too deep into the 2018 season, I wanted to see how things had changed, so I updated my calculations prior to the season’s start. I used the same basic method as last season: project up to five years of WAR for team-controlled players, model assumptions about arbitration payouts, and examine only players who I feel are certain to play for their team. (See more details in last year’s post.)
I also updated the cost of a win above replacement to $9 million, accounted for 2.2 percent annual salary inflation going forward, and updated the league-minimum salary. All major signings through the Jose Altuve extension are accounted for.
The result? Let’s just say things are different. Relative to this time last year, the Cubs lost more surplus value than any other team:
That fall was due largely to two prominent Cubs players, who experienced some of the largest year-over-year drops in surplus value across MLB:
What happened? Kris Bryant got himself paid, that’s what happened. He’s still as good as ever, but his surplus value decreased because his salary went through the roof, metaphorically speaking. Addison Russell also got paid. But more importantly, Bryant’s infield partner accumulated only 1.4 fWAR in 2017. After back-to-back seasons of at least 3 WAR, this drop in performance hurt his projected WAR, diminishing his surplus value.
The rest of the Chicago drop came from guys like Jon Lester, who didn’t live up to his usual expectations; Ben Zobrist, who was barely replacement-level; and Jason Heyward, who simply refused to improve. The subpar seasons hurt the WAR projections for these players, reducing their controlled surplus value.
Other players stayed good. For example, Anthony Rizzo put together another great season in 2018. He didn’t earn more money, but the simple passage of time means the Cubs own less of his talents than they did last year. Therefore, his surplus value decreased.
Finally, the the team also dipped deeply into the free agent market. While Yu Darvish, Tyler Chatwood, and Brandon Morrow should perform well on the field, free-agent contracts rarely provide surplus value. The team also signed Steve Cishek, Drew Smyly, and Brian Duensing to free-agent deals.
It’s not all bad news for the North Side: The Cubs still control the 11th-most surplus value in the sport. And money aside, looking only at projected WAR shows they still own the NL Central for the foreseeable future:
So if the Cubbies are no longer kings of surplus value in MLB, who is? It’s almost a three-way tie, but their 2016 World Series counterparts rose to the top of the dogpile:
Cleveland now controls the most surplus value in the sport, due mainly to Francisco Lindor’s continued excellence and affordability. The 23-year-old shortstop has four more years of team control at a projected 20 WAR and $23 million in total salary. That combination works out to $173 million in surplus value, second-most in the big leagues.
Jose Ramirez closely follows his infield partner with $149 million in surplus value, sixth-most in baseball, on the strength of 18 projected WAR and a team-friendly $24 million guarantee. Rookie Bradley Zimmer is no slouch, either, accruing $46 million in surplus value after a strong debut season.
Then there’s the rotation. With 9 WAR in his future but just $24 million heading his way, Corey Kluber remains ace-like on the mound and pauper-like (relatively speaking) in the wallet. Fellow starters Carlos Carrasco, Danny Salazar, and Trevor Bauer aren’t quite as great as the Klubot, but combined, the foursome reach almost $120 million in controlled surplus value.
The list goes on: Tyler Naquin, Yandy Diaz, and Andrew Miller keep the Indians in the black. Even uber-prospect Francisco Mejia gets in on the act, registering $35 million in projected surplus value.
The Indians look so strong here because they avoid domestic free agency. This year they gave out only one guaranteed major-league contact: two years and $16 million to Yonder Alonso. The only other halfway meaningful free agent on the roster is Edwin Encarnacion.
You, dear reader, already know this, but it bears repeating: free agency is a terrible way to find surplus value. For every Justin Turner ($43 million of surplus value, most among free-agent signings) there’s an Alex Gordon (-$43 million in surplus value), Aroldis Chapman (-$45 million), or Yoenis Cespedes (-$52 million) cancelling him out. And these guys are just the tip of the iceberg. Lurking beneath are awful surprises like Chris Davis (-$123 million) and, sadly, Albert Pujols (-$220 million).
The Indians will have none of that. They can’t afford to, not with a media market that ranks 22nd in size out of the 30 MLB teams. That’s why their core consists of draftees like Lindor and Zimmer, amateur free agents like Ramirez and Salazar, and canny trade acquisitions like Kluber and Bauer. Hit on some talent, sign some to early extensions, and and you’ll end up with the most controlled surplus value in the sport.
Surplus value aside, the point of baseball is to win games. Like the Cubs, the Indians should have no problem doing this:
The division is theirs to lose.
As I did in last year’s article, I’ll remind you here: These numbers aren’t gospel. Projecting performance is still a dark art, especially for rookies and relievers. These projections make assumptions about salaries that will turn out to be incorrect. The upcoming free agent class will change teams’ outlooks dramatically.
Plus, other GMs don’t stand still. Remember that the Cubs were in this same spot last year. Look where they are now! Chris Antonetti and Mike Chernoff can’t rest for a moment.
Then there’s the labor market. These projections go through the end of the 2022 season, but the current CBA expires after 2021. Under a new agreement, will players get paid less by their service time and more by their baseball skills? Will the qualifying offer system change again? No one knows,
But get excited, Indians fans. The team’s front office has proved they can find surplus value.