Breaking down Giancarlo Stanton's reported monster deal with the Miami Marlins.
Baseball is reportedly on the verge of having its first $300 million man. CBS Sports' Jon Heyman has reported that the Marlins have an agreement in place with slugger Giancarlo Stanton for a 13-year, $325 million extension, the largest in the history of North American professional team sports. If it plays out to its conclusion, the contract would run through 2027, though an opt-out clause could open the door for Stanton to receive an even bigger payday.
That's a big if, given the history of such clauses. According to Heyman, "Stanton will be able to opt out not long after he turns 30," which given his Nov. 8 birthday would be following the 2019 season, his age-29 year. Reportedly, the deal will also include a no-trade clause, something the Marlins would not grant any of their marquee players — even potential free agent signing Albert Pujols — in recent years.
The $325 million amount is a staggering sum of money, about $15 million shy of the combined amount of the Marlins’ last six Opening Day payrolls, or more than double the team’s $155 million contribution to build Marlins Park, which opened in 2012. Still, the contract's $25 million average annual value ranks a comparatively reasonable seventh in baseball history, well behind the record $31 million per year that Tigers slugger Miguel Cabrera received for his 2016-23 extension, signed last March. In part, that's because Stanton, who just turned 25, is still two years away from free agency. He made $6.5 million this past season, and MLB Trade Rumors' arbitration salaries projection recently forecast him for a $13 million salary in 2015. Estimates of what he could make in 2016 and '17, what would have been his two years prior to free agency, run in the $30-35 million range; use either figure and the remainder of this new contract averages upwards of $26 million per year, short of the top average annual values of free agents Roger Clemens ($28.2 million for 2007) and Alex Rodriguez ($27.5 million for 2008-17), but not by much.
Stanton is coming off a banner season. He finished second in the NL MVP voting and the surprisingly-competitive Marlins went 77-85 — their best record since his rookie year of 2010 — despite losing ace Jose Fernandez to Tommy John surgery. Stanton hit .288/.395/.555 with a league-leading 37 homers, matching his career high in that category while setting new highs in OPS+ (160, second in the league) and Wins Above Replacement (6.5, third). His season ended on a frightening note, however. On Sept. 11, he was hit in the face by a pitch from the Brewers' Mike Fiers, and sustained facial lacerations, multiple fractures and dental damage. His orbital bone was fractured, but his vision wasn't affected.
While that was a freak injury, it serves as a reminder that Stanton has had trouble staying healthy during his career. The 150 games he played in 2011, his first full season, still stand as his career high. He's averaged 134 games over his four full seasons, losing a month to in-season surgery to remove bone chips from his right knee in 2012 and six weeks to a right hamstring strain in 2013.
When he's played, he's wielded a potent bat, hitting a combined .271/.364/.540 for a 144 OPS+. Among players with at least 1,500 plate appearances in the last five seasons, only six have higher slugging percentages, and two of them (Troy Tulowitzki and Carlos Gonzalez) play in Colorado. Stanton's OPS+ in that span is in a virtual tie for eighth with Buster Posey, with Cabrera (171) and Mike Trout (166) topping the field. His 154 homers over that time are tied with Pujols for third, behind only Jose Bautista (187) and Cabrera (181).
Even more surprising than the record-setting dollar figure is Stanton's commitment to a team that hasn't finished above .500 since 2009, and one whose ownership has displeased him in the past because of their fly-by-night ways. In advance of the 2012 season, Loria attempted to boost attendance for Marlins Park's inaugural year by hiring manager Ozzie Guillen and authorizing the free agent additions of Heath Bell, Mark Buehrle and Jose Reyes, pushing payroll above $100 million. Amid a sluggish showing, the team traded away Omar Infante, Hanley Ramirez and Anibal Sanchez that July, then — capitalizing on the lack of no-trade clauses in those big free-agent deals — flipped Bell in October and sent Buehrle and Reyes to Toronto as part of a 12-player blockbuster in November.
Via Twitter, Stanton's response to the latter trade was, "Alright, I'm pissed off!!! Plain & Simple." Until now, he had rebuffed any attempt by the team to sign him to a multiyear deal. His contract was unilaterally renewed by the Marlins such that he didn't make more than $537,000 until 2014; his salary jumped this past year because he was eligible for arbitration for the first time.
Will he be worth the money? That's the $325 million question, of course, and it depends on the assumptions one uses to answer it. Last winter, I built a model to address that question, one that incorporated past performance, a projection of future performance, the market cost of a marginal win, inflation and aging, building on the top research done in those areas. With that model, I looked at some of the jaw-dropping figures being discussed with regards to the contracts of Robinson Cano, Jacoby Ellsbury, Shin-Soo Choo and Trout. Rather than pin a single value to a player, my goal was to show how changes in our assumptions with regards to those parameters affect estimates of worth, but that the dollar amounts were within range of the rumors floating around.
Research by Jeff Zimmerman at FanGraphs shows that great players in their early 20s tend to improve by about five runs per year until about age 25, then maintain that level through about age 29 before beginning a gradual decline. So the first key to estimating Stanton's value is establishing his true talent level. We could slap his 6.5 WAR from 2014 in there, but that ignores his ups, downs and absences of recent years. For example, via Baseall-Reference.com's numbers, he was four runs above average in baserunning in 2014 but had been five runs below in his previous four seasons combined; he was also seven runs above average in the field according to Defensive Runs Saved, after being seven below average in 2013 (his only year in the red).
Generally for these exercises I used the past three seasons' values in a weighted average of 5/4/3 — (5 x 2014 WAR) + (4 x 2013 WAR) + (3 x 2012 WAR), all divided by 12 (5 + 4 + 3) — taken straight from Tom Tango's overly simplified Marcel projection system (so simple even a monkey could calculate it). Via that, Stanton projects to be worth 4.9 WAR for 2015, which feels a bit low but which of course is suppressed by those absences. In the mood for generosity, I bumped that to 5.3 by prorating each year as though he played as many games as he did in 2014 (145) before the weighting.
So that's our starting point. If we figure Stanton can retain that level through age 29 before beginning a decline of 0.4 WAR (four runs) per year and that based on Dave Cameron's research, a reasonable estimate of the 2014 cost of a win starts around $6 million (I used $5.45 million last year, a figure that in retrospect looks too low). Last year, average salaries grew by 5.4 percent, so we'll start with that for our inflation figure. With that in mind, here's what Stanton's 13 years could look like:
Holy Marlinator! Under those assumptions, the model suggests Stanton could produce $438.3 million in value over the life of the deal, a surplus of more than $113 million beyond what he would be paid. If I back that off and return to the original 4.9 WAR estimate while keeping the other assumptions in place, Stanton produces 48.7 WAR over the life of the deal, still worth $389.3 million. If I accelerate his decline from that lower plateau to 0.5 WAR per year, he comes in at 45.1 WAR and $352.6 million. Here's what it looks like if I steepen that to a loss of 0.6 WAR per year:
That set of assumptions, which casts Stanton as a well-below-average player by the tail end, still produces a value of $316 million, a very slight overpay but hardly an embarrassing one.
What if I've underestimated the cost of a win, as I did last winter? Bump the current cost to $6.5 million with that last set of assumptions in place, including the 0.6 WAR per year decline, and Stanton's value over the life of the pact jumps back up to $342.9 million; in other words, it means he has to produce even less to make it worth Miami's while.
Thanks to the opt-out, there's a very good chance that the Marlins won't be on the hook for those late, unproductive years. Looking back to past high-profile players with opt outs, most of them with such clauses in their contracts have exercised them, a list that includes J.D. Drew, A-Rod, A.J. Burnett, CC Sabathia, Rafael Soriano and Ubaldo Jimenez, with Vernon Wells standing as a notable exception. Clayton Kershaw, Zack Greinke and Elvis Andrus are among those with future opt-outs, so it's not like Stanton is alone in this respect going forward. The strategy isn't without risk for the team, but it would seem to be higher when dealing with a pitcher — look at the Yankees stuck with Sabathia for two more seasons after producing −0.3 WAR over the past two — than with a hitter.
Of course, there's also the chance that the Marlins won't be on the hook because Stanton wanted to get the hell out of Dodge, waiving his no-trade clause to allow himself to be dealt. Given the franchise's notorious reputation for building up and tearing down — one that dates back to their 1997 World Series win and the ensuing fire sale — it's not hard to imagine such conditions presenting themselves again. The team hasn't been above 12th in the league in attendance since 1997; after six straight seasons of ranking last in the NL, they climbed to 12th in 2012, when the new ballpark opened, but have returned to last in the NL in each of the ensuing two seasons. Their current local television deal, which pays them an estimated $16-18 million per year though 2020, is among the lowest in the game.
Not coincidentally, their Opening Day payrolls have ranked 29th and 30th in the past two years, respectively, and even at a $25 million average salary, it's difficult to envision a situation where Stanton's salary doesn't stand out like a sore thumb,. If it doesn't, the chances for success appear slim. Last month, in the context of considering whether the Pirates should stretch their budget to retain Russell Martin, the Pittsburgh Tribune-Review's Travis Sawchik published the results of a study he undertook, covering the last five seasons:
Of the past 46 major league playoff teams, only nine spent more than 17 percent of their payroll on a single player, and only one — the 2010 Texas Rangers — spent more than 20 percent of payroll on one player (Michael Young). The majority of teams studied — 72 percent — spent between 12 percent and 16 percent of payroll on their more expensive player.
For a $25 million salary to represent 20 percent of a payroll, its entirety would have to total $125 million. At 16 percent, it would have to be $156.25 million, roughly the amount of the Marlins' two highest Opening Day payrolls (2011's $57.7 million and 2012's $101.6 million) put together. Don't hold your breath, and don’t expect the Marlins to be able to keep both Stanton and Fernandez, who as a Scott Boras client is likely to test free agency at his first opportunity following the 2018 season. That said, the Marlins currently have less than $25 million in existing contract commitments, and with the maturations of outfielders Marcell Ozuna, Christian Yelich and Henderson Alvarez alongside Stanton and Fernandez, the shape of a contending team isn’t hard to see, particularly while those players are affordable and with much of the NL East competition — the Mets Phillies and Braves — in some stage of rebuilding or retrenching.
It’s worth noting that Stanton's contract is being authorized by an owner who likely won't have to deal with its ramifications down the road. Loria turns 74 on November 20, and could eye the sale of the team in the next several years for estate-planning purposes, as many aging owners have done. He bought the franchise in late 2002 via a three-team swap famously termed a "bag job" because it allowed then-Marlins owner John Henry to purchase the Red Sox despite not having the highest bid; it also allowed Loria to turn the Expos, whom he then owned, into wards of the other 29 teams while paving the way for their eventual move to Washington, DC. Because the Marlins did not get a new ballpark within five years, Loria's purchase price was reduced from $158 million to $143 million. In March, Forbes Magazine estimated the team's value at $500 million.
Given the baggage attached to Loria and the franchise, the Stanton contract is quite a coup in that even if he opts out, the team is likely to own his most productive seasons. Even so, the owner will have to show far more patience and spend more money than he’s done in the past if the team is to win during Stanton’s tenure, no matter how long that may be.