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Vincent Buono
April 12, 2016
Dr. Mehan/Mr. Babendreier
Senior Thesis H
Long-Term Contracts and the Competitive Major League Baseball Team

Upon the conclusion of the 2000 Major League Baseball (hereinafter, “MLB”)

season, Texas Rangers owner Tom Hicks was forced to examine the precarious position

of his team. After winning the American League West division in the 1998 and 1999

seasons with records of 88-74 (.543 winning percentage) and 95-67 (.586), respectively,

the Rangers had plunged to a dismal record of 71-91 (.438) and finished over 20 games

out of first place. Moreover, given that the front office for the upcoming 2001 season had

been allotted an $88 million payroll, a sum exceeded by only six other organizations,

Hicks concluded that change was wholly necessary. Accordingly, General Manager Doug

Melvin and he jointly spearheaded a vigorous pursuit of a 25-year-old shortstop named

Alex Rodriguez, who, as a player for the Seattle Mariners, had finished third in the voting

for the American League MVP (Most Valuable Player) of the 2000 season. Unbeknownst

to Hicks and Melvin, however, their spirited campaign to sign Rodriguez would have a

lasting effect on professional baseball, both contemporaneously and for the foreseeable

future.

The signing of Rodriguez became official on December 11, 2000, when he agreed

to a 10-year, $252 million contract with the Rangers. At the time, these privately

negotiated terms marked the most lucrative sports contract in history and doubled the

value of the next largest. In addition, only two subsequent contracts of greater worth have

been negotiated since. During the three seasons in which Rodriguez played in Texas,

however, his team did not finish with a record above .500 once and never made the
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playoffs. The organization and their costly investment, therefore, parted ways before the

2004 season, even though Rodriguez had seven years remaining on his contract.

Although most MLB participants initially viewed the terms of the Rodriguez

contract with an air of bewilderment and scorn, given that it trounced the previously most

lucrative baseball contract by $131 million, the league’s owners—almost

inexplicably—began to entice an increasingly greater number of players with such

lucrative contracts. Indeed, following the signing of Rodriguez in the year 2000, the MLB

has witnessed the awarding of an eye-popping 57 contracts worth $100 million or more to

53 position players and pitchers. In contrast, the only contract of the 20th century

involving similar terms had been awarded to pitcher Kevin Brown in 1999 by the Los

Angeles Dodgers, a deal totaling $105 million over seven seasons. The sudden influx of

long-term contracts during the 21st century has directly caused a rapid increase in the

average salary for a major leaguer, which in 2000 was $1.9 million, but is currently over

$4 million.

Regardless of its significant financial implications and risks, investing in a player

with such a massive contract appears attractive to teams because of the long-term

stability enjoyed between the parties and the potential to, as the industry parlance goes,

“lock down a star player” for several years. Despite this motivation, there are a myriad of

factors impacting the well-being of not only the front office and the contracting player

but also all the team’s other players, all of which could potentially go awry and

negatively affect the organization as a result. Perhaps the greatest danger is that the

owner and team executives are potentially hindered from pursuing other key players if

they devote too considerable an amount of time and money to one individual player
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alone. More specifically, even if the exorbitantly paid player’s performance accurately

reflects the terms of his contract and results in significantly increased production, it is

often the case that the only parties likely to enjoy any significant profit are the owner(s)

and the player, leaving others in the organization bereft of rightful benefits.

As to which member(s) of an organization ought to be the primary beneficiaries

of business conduct, comparison of the Shareholder vs. Stakeholder theories of corporate

governance is especially enlightening. 1 With respect to an MLB organization,

shareholders would be represented by the owners and their families, while stakeholders

would include more parties, most notably the teams’ employees, particularly the actual

players, as well as the fans. The essential promulgation of the Shareholder theory,

according to Michael Pfarrer, author of “What is the Purpose of the Firm: Shareholder

and Stakeholder Theories,” is as follows:

Shareholder theorists call for limited government and

regulatory intervention in business, believing markets are best
regulated through themechanism of the invisible hand—that
is, if all firms work in their own self-interest by attempting to
maximize profits, society at large will benefit. (87)

Furthermore, Pfarrer offers two modern-day terms used to describe the essence of the

Shareholder theory: “transaction cost economics (TCE) and agency theory” (88). He

affirms that both TCE and agency theory are grounded upon the assumption of self-

interested motivation in optimizing the value of the firm. Thus, Pfarrer observes that both

terms “have a ‘gloomy vision’ of human self-interest…both assume that human beings

are opportunistic, and, thus, will put their own interests before the firm’s” (88).

Accordingly, the chief underpinning of the Shareholder theory is the enhancement of the

corporation, a goal whose foundation is interior motivation.

1
See “Moral Obligations of the Modern Corporation” by Patrick Martin for further discussion.
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On the other hand, stakeholder theorists are defined as those who “believe that

taking all constituent groups into account is the better way to maximize overall firm

performance” (89). While the ideology of both theories is aimed at the financial success

of the corporation, the Stakeholder theory is more applicable to an MLB organization

because a fair distribution of wealth among all parties would appear to induce steady

growth and prosperity beyond the domain of the owner alone.

In promotion of the Stakeholder theory, Pfarrer introduces a philosophy

contradictory to the essential components propounded by the Shareholder theory, TCE

and agency theory. This stakeholder ideology, called “symmetric communication,” is a

goal that “emphasizes the interdependence of organizations with their customers, clients,

suppliers, competitors, the media, and even activists” (89). In encouraging transmission

of ideas throughout the hierarchy of employees in this way, the needs of all

representatives will be recognized in the constant scramble to make a profit. Pfarrer

makes another important distinction between the mindset of symmetric communication

and that of the Shareholder theory, the former of which “looks for a process in which

firms and their stakeholders both seek their own advantage while, at the same time,

respecting the needs of others” (90). In this vein, the fructification of a MLB organization

is best attained by means of the reliance of each constituent party upon the other

constituents to maximize the team’s overall capability. The most obvious example of this

mutually affirming relationship occurs between a player, who demands money from the

front office, and the owner, who expects the player to produce certain profits, such as the

increased sale of both tickets and team merchandise.

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In 2009, a study was conducted in the Chinese Professional Baseball League

assessing the application of the Stakeholder Theory.2 The analysis utilized the salary

details for 267 players over a ten-year period, from 1990 to 1999, to determine the

correlation between the discrepancy in team salaries and overall team performance. The

evaluation of each team was administered according to two chief theories, namely

Tournament Theory3 and Equity Theory.4 While the former concept advocates salary

dispersion within an organization, the latter ideology promotes a narrower range of

disparity between salaries. The study concluded that Equity Theory was more

applicable—and beneficial—to team performance (Jane 149). The chief reasoning behind

this finding is that the owners who advocated the Tournament Theory debilitated the

team roster by investing a majority of the payroll in only a few players, thus forcing the

organization to sign considerably less talented players to complete the roster. In contrast,

disciples of the Equity Theory were able to construct a stronger team on account of the

narrower range in players’ salaries.5

In addition to the significant financial detriments that a long-term contract can

trigger within the various levels of an MLB corporation, it also introduces the risk that

the player will suffer a significant injury during his long-term contract. Michael

Dinerstein, in his analysis of the change in value of a player upon experiencing free

2
See “The Causality between Salary Structures and Team Performance: A Panel Analysis in a Professional
Baseball League” by Jane, San, and Ou for a complete analysis.
3
Tournament Theory is primarily concerned with organizational performance, and thus advocates an
increase in salary disparity in order to further incentivize certain employees. It is synonymous with the
Shareholder Theory, in which only the profits of the owner and a select few constituent parties are
considered.
4
Equity Theory is primarily concerned with equal salary dispersion as the primary means to improve
organizational performance. It is synonymous with Stakeholder Theory, in which the profits of all
constituent parties are considered.
5
In fact, the Chinese Professional Baseball League currently does not employ an unrestricted free agency
market; therefore, most players sign one-year contracts rather than long-term contracts based on the needs
of the team.
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agency, asserts that “[t]he improvement in skill due to experience and becoming

accustomed to the Major Leagues may then be overrated or possibly counteracted by

other effects associated with aging, such as the accumulation of injuries” (23). Indeed, the

debilitating impact of injuries is well demonstrated by an examination of the career of

Mike Hampton, an all-star pitcher who signed an eight-year, $121 million “mega-

contract” with the Colorado Rockies before the 2001 season.6 After being traded to the

Atlanta Braves in 2003, Hampton played two full seasons and led his new team to two

consecutive division titles. After the 2005 season, however, the Atlanta pitcher had

“Tommy John surgery” and missed the 2006 and 2007 seasons. Consequently, the Braves

missed the playoffs in both of those seasons.

Other than potential injuries, though, the most apparent risk inherent in the

utilization of a long-term contract is the decreasing level of performance by the player.

More specifically, experience shows that a steady decline in accomplishment is expected

for each MLB player as his career progresses beyond a certain point of age,7 but any

organization willing to sign a player for many seasons can only hope that such recession

occurs after the player is no longer under the team’s control. As Dinerstein notes, “teams

have turned to incentive mechanisms to protect themselves from the risk associated with

signing a player whose future production is highly uncertain” (7). More specifically,

Dinerstein focuses on certain financial bonuses that are awarded to a player, for instance

should he partake in a significant team accomplishment, such as winning a World Series,

or should he attain a personal award, such as MVP or Rookie of the Year. While

6
These and all subsequent statistics cited in this paper have been acquired from fangraphs.com.
7
In a previous study, statistician Bill James concluded that the player-age of 27 produced the best average
rate of production and a player’s performance most likely will decline in the immediately following
seasons.
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Dinerstein concludes that such bonuses are indeed beneficial methods to motivate a

player’s performance, he identifies a glaring deficiency: “The size of these bonuses,

however, is quite insignificant compared to the base salaries…These incentive

mechanisms thus may not provide the team with much insurance” (ibid). In other words,

a player whose performance has decreased significantly after signing a long-term contract

might not benefit from monetary awards because he has already begun struggling despite

being given an exponentially greater amount of money each season.

Considering the financial, physical, and emotional aspects that considerably

intensify after a player signs a long-term contract, the empirical results in a majority of

cases demonstrate that it is neither prudent nor strategically sound to invest in one

franchise player (or a few), with such lavishness and trust, as a means to secure a

competitive baseball club for many seasons. Although an organization can easily be

induced to sign a player to a mega-contract based on his potential to be a team leader and

the promise of heightened on-field accomplishments, the notion that his health and

above-average performance will be maintained for the duration of such a contract is a

rather suspect proposition. Accordingly, today’s MLB teams should discontinue the

practice of committing themselves to any franchise player for so many years at such

exorbitant salaries.

In further consideration of such mega-contracts, the analysis herein will be

viewed primarily through the lens of attempting to forge a competitive team. In a study

administered in 2014 to evaluate the change in performance of professional baseball

players, Matthew Cahill found that “there are three variables that need to be taken into

account when maximizing [league-wide] competitiveness: maximizing league-wide

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profits for all teams, subsidizing on-field performance in relation to payroll tax, and

revenue sharing” (6). While Cahill refers to a competitive and financial balance between

MLB teams, this distinction can be applied further to each organization. In an ideal

scenario, each party in an organization would employ an equal amount of effort and be

rewarded financially in commensurate fashion.

The idealized concept of revenue sharing would also benefit an organization

whose motivation for increasing profits is synonymous with the aforementioned

Stakeholder theory. With respect to the modern corporation, Edward Freeman affirms

that “[s]uppliers, interpreted in a stakeholder sense, are vital to the success of the firm, for

raw materials will determine the final product’s quality and price” (43). Moreover,

Freeman explains that “[employees] often have specialized skills for which there is

usually no perfectly elastic market…In return for their loyalty, the corporation is

expected to provide for them and carry them through difficult times” (42). Accordingly,

the current analysis will attempt to prove that an MLB organization is considered to be

morally sound only if the needs of each facet are appreciated equally.

With respect to an MLB organization, the suppliers would primarily be associated

with the companies which furnish the players with bats, gloves, and other equipment

needed to play the sport. Therefore, the owner must apportion sufficient funds to this

party because the ability of the team to perform is grounded upon having the proper

equipment with which to play. In other words, a supplier could easily sever ties with an

organization if it feels that its dedication to the organization is not sufficiently

compensated financially. A rational apportionment of revenue and services engenders

positive effects according to Freeman: “When the firm treats the supplier as a valued
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member of the stakeholder network, rather than simply as a source of materials, the

supplier will respond when the firm is in need” (43).

Furthermore, while the players would understandably correlate best with

employees, as the organization is willing to pay them in exchange for beneficial

performance on and off the field, the players could also be categorized as suppliers given

their considerable influence on ticket and merchandise sales, which account for a chief

means of revenue for an organization. Should a player openly expresses displeasure with

the terms of his contract, the owner would likely assume blame from the fans and may

witness a decrease in attendance.

A primary example of the propriety of viewing an MLB player as a supplier

occurred after the 2011 season, when shortstop José Reyes agreed to a six-year, $106

million contract with the Miami Marlins. During the transaction, owner Jeffrey Loria

reportedly assured his client that the team planned to be the final destination in the young

star’s career.8 Reyes played only one season with the Marlins before being traded to the

Toronto Blue Jays, a transaction which undoubtedly irked the fan base, given the failure

of Loria’s proposition. The Reyes fiasco, paired with a dismal record of 69-93 (.358

winning percentage) in 2012, induced a marked decrease in attendance at Marlins Park.

Since the 2012 season, the Marlins have finished last in the National League in ticket

sales in three straight seasons.

The importance of suppliers and the other stakeholders in a corporation is best

displayed via Freeman’s graphic model for the Stakeholder theory.9

8
See “José Reyes Reflects on What Could Have Been” on usatoday.com for more information.
9
See “Moral Obligations of the Modern Corporation” pp. 17-19.
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Figure 1 (Freeman 42)

In accordance with this model, owners and other parties alike have equal authority in an

organization. Furthermore, there is no discrepancy between parties regarding financial

compensation. In the MLB, an organization that abides by the Stakeholder model will

provide equal benefits for all of its members, including the owner, the players themselves

as both employees and suppliers, and the fans as customers. The analysis will thus defend

this model as a more appropriate means for a team’s financial success than its

counterpart, the Shareholder theory.

MLB Contracting

Before a corporation can flourish and provide for the needs of its constituents, it

must negotiate a proper contract with each employee. A contract, according to Webster’s

Third New International Dictionary, is defined as “an agreement between two or more

persons or parties to do or not to do something; an agreement that is legally enforceable.”

The concept of a contract as a “legally enforceable” agreement is an important distinction

to identify insofar as most MLB contracts are negotiated between front office and player,

whether directly or through the player’s agent.

In contrast to every other professional sports association in the United States, the

MLB does not impose a salary cap upon its member organizations. As an attempt to
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create financial balance between teams, however, the league levies upon each

organization a luxury tax.10 In accordance with this regulation, a team whose payroll

exceeds the total sum previously agreed upon is punished with a fine, 11 the amount of

which is determined in large part by the number of times the offending organization has

committed any such offense. 12 Accordingly, while teams may repeatedly exceed their

payroll, an action which the New York Yankees franchise has willingly undertaken on a

virtually annual basis, the goal of the luxury tax is to gradually cripple an organization

that refuses to set and abide by a maximum level of player-salary expenditures for its

offseason campaigns.

In Rhetoric, Aristotle expounds upon the efficacy of a contract and the

consequences that will result should the validity of the agreement be compromised:

The law itself is a sort of contract, so that anyone who

disregards or repudiates any contract is
repudiating the law itself. Further, most business
relations—those, namely thatare voluntary—are
regulated by contracts, and if these lose their
binding force, human intercourse ceases to exist.
(1376b8-14)13

A primary case in which a breach of contract affected an MLB team’s ability to keep a

“signed” player with that team occurred in 1974. 14 Jim “Catfish” Hunter, a pitcher for the

Oakland Athletics, had signed a two-year, $50,000 contract in the offseason along with a

request to avoid tax liability for the entirety of the contract’s duration. The owner of the

10
Defined by Cambridge Online Dictionary as “a tax on expensive goods that are not necessary”
11
Each organization’s annual payroll is bargained with the MLB in the offseason.
12
The luxury tax is based on a four-year period; first-time offenders pay 17.5% of surplus to the league,
second-time offenders pay 30%, third-time offenders pay 40%, and fourth-time offenders and beyond pay
50%.
13
See The Complete Works of Aristotle, p 2192. Note that the in-text citations of Aristotle will be given in
this format in accordance with the original and separate publication of each work.
14
See Labor Relations in Professional Sports, pp. 53-54.
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Athletics, Charles Finley, however, later refused to accept that this term was his

responsibility to fulfill. As a result, Hunter accused Finley of perpetrating a breach of

their contract before the end of its first year. An arbitrator found the evidence to be in

Hunter’s favor, thus justifying his decision to sign with another team before the 1975

season. In addition, the Hunter case became the prime ammunition for the Major League

Baseball Players Association (MLBPA) in their successful plea to incorporate free

agency in December 1975.

The wrongdoing committed by Finley and the entire Athletics organization

exemplifies the point made by Aristotle concerning the validity of a contract. Although

Hunter had received his full salary from the front office, a disagreement as to the proper

interpretation of a non-payment clause in that contract prompted the nullification of the

legal agreement in its entirety. The Hunter case also induced the MLB to review and

improve the various ways in which a baseball player’s contract could be negotiated. In

1976, the owners and the players’ association agreed to implement an innovative

procedure: “final offer arbitration” (FOA), a newly developed method of negotiating

contracts. Pursuant to such, the appropriate criteria used to evaluate a player’s

marketability included “player performance during the past season, length and

consistency of the player’s career, comparative salaries, and the team’s recent

performance in the standings and at the gate” (Kahn 158). The significance of final offer

arbitration’s implementation is that the market value of a player nowadays will most

likely increase should a third party representative advertise that player’s talents to each

team potentially interested in that player. Robert Berry explains that “[t]he parties

propose salary figures that need not have been submitted during prior
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negotiations…salary arbitration has produced major gains for players” (58). Salary

arbitration in the sport today is a valuable asset by which a player will be assured that the

negotiation will be optimal for his needs, on and off the field.

Even so, the chief shortcoming of salary arbitration from the player’s perspective

is that a player is eligible for such only after having played three full seasons under the

control of his first team. Therefore, any bargaining of a contract before this three-year

period has transpired is conducted simply between the front office and the player’s

representatives or the player himself. Furthermore, if a player is not eligible for

arbitration and thus cannot become a free agent, he is subject to the “reserve clause.”

Pursuant to this clause, which was implemented in 1975, an organization owns the rights

of a player’s contract for the first three seasons. Upon the completion of this period, a

player may elect to seek arbitration.

In a previous study evaluating the economic value of professional sports teams,

Vassiliki Avgerinou offers further insight concerning the benefits of removing a player

from the reserve clause: “Economic rents previously extracted by teams are now being

allocated to players. The increased player power to bargain over their salaries and

contracts together…has led to spiraling wages of players in professional sports” (10). In

the MLB, arbitration thus induces an ever-increasing inflow of long-term contracts,

which at first glance appears to benefit both player and owner. Such a view, however, is

misguided insofar as it ignores a few glaring inconsistencies in the process of arbitration.

More particularly, with respect the process of final offer arbitration through which a third

party foists a lasting influence on all labor disputes,15 Brien Wassner identifies a

See “Major League Baseball’s Answer to Salary Disputes and the Strike: Final Offer Arbitration: A
15

Negotiation Tool Facilitating Adversary Agreement,” pp. 6-7.

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potentially negative consequence: “[FOA] has effectively led to significant increases in

players’ salaries—even for mediocre players” (11). The most obvious reason for this

occurrence is the limited ability of the owner to negotiate the contract.

In addition to the marked upsurge of salaries, Wassner notes that FOA often

induces a “narcotic effect [which] basically motivates parties who have previously relied

upon the system to use it exclusively to solve future disputes and impasses” (11). In

accordance with this perception of FOA, an owner employing a number of players who

are eligible for arbitration in one season may become accustomed to that method of

negotiation in subsequent seasons. Furthermore, an agent whose clients are constantly

becoming eligible for arbitration will most likely become more adept at attaining the

most lucrative contract possible. For constructing a competitive team, these economically

based endeavors can be particularly burdensome for the organization, given the increased

probability of a player’s securing a larger contract via arbitration than through the reserve

clause. Thus, each MLB team must meticulously evaluate the past on-field performance

of each player potentially to be signed in order to determine the most beneficial and

frugal agreement.

MLB Teams’ and Players’ Motivations in Contract Negotiations

Before attempting to negotiate a contract, each party must first examine its

respective motives for making significant financial and emotional commitments to each

other. While at first glance the potential talent of the MLB player may seem to be the

only relevant concern to a team owner and his executives, there are, nevertheless,

numerous additional factors regarding the incentives of a player in signing the contract

which need to be taken into account as well. In a previous psychological study, Richard
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Ryan partitions the ideal of motivation into two chief groups: “The most basic distinction

is between intrinsic motivation, which refers to doing something because it is inherently

interesting or enjoyable, and extrinsic motivation, which refers to doing something

because it leads to a separable outcome” (55). The discrepancy between intrinsic and

extrinsic motivation is particularly important in determining the financial soundness of a

long-term contract in baseball (or any sport) because the primary intentions of a player to

sign with a new team could considerably affect his on-field performance and the

competitiveness of the team.

In his analysis, Ryan first expounds upon the relevance of intrinsic motivation in

society: “When intrinsically motivated a person is moved to act for the fun or challenge

entailed rather than because of external prods, pressures, or rewards” (56). Such

compelling external rewards are best represented in the MLB and all professional sports

as the base salaries and financial bonuses promised to the player. Given that a player

makes a living for himself and his family by performing on the field, the notion that pure

love for the game exceeds financial implications is suspect at best.

While the proposition of financial stability is certainly a chief determining factor

of a player in signing a contract, the effect that the contract will have on the team and its

subsequent on-field performance must carry greater magnitude in the eyes of the player.

For example, a player whose sole motivation is to maximize his profits by signing a

lucrative, multi-year contract with a below-average team rather than sacrifice a portion of

his salary in order to play for a winning team on the field would not be an attractive target

to a team contending for a World Series title. With respect to long-term contracts, a team

often attracts a player based on the exorbitant financial terms of the contract. Even if the
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primary motivation of the player in agreeing to such a deal is to win as many

championships as possible, the financial imbalance in salary distribution could outweigh

the incentives of a single player. For example, the Detroit Tigers missed the playoffs in

2008, 2009, and 2010 despite three stellar seasons from Miguel Cabrera in which he

finished 13th, 4th, and 2nd in MVP voting, respectively. His contract, however, accounted

for over 12% of the entire players’ payroll during the three-year period and financially

debilitated the organization. On the other hand, if the player signs the mega-contract

simply because it was the highest offer he received, the organization has already put itself

at a disadvantage.

An incentive to perform primarily for financial gain is categorized as extrinsic

motivation, an ideal which, according to Ryan, involves numerous factors external to the

object of motivation, which in this case is the contract itself. In other words, the

impending financial worth of a player can considerably alter his mindset going into a

season, particularly if the imminent season will determine how lucrative his next contract

will be.

The relationship between intrinsic and extrinsic motivation is best represented

through Ryan’s model of human motivation:

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Figure 2 (Ryan 61)

In accordance with this model, a majority of MLB players would likely be more

extrinsically than intrinsically motivated to sign a contract. More specifically, players

whose chief purpose for performing is to satisfy an external demand, such as the

attainment of certain, aforementioned salaries and financial bonuses, would fall under the

subcategory of “external regulation.” The second group, namely “introjection,” would

include those who perform merely “to avoid guilt or anxiety or to attain ego-

enhancements of pride” (62). This distinction would certainly apply to recipients of a

long-term contract, given the substantial pressure provided by the fans upon the arrival of

the player. Third, players whose focus is to accomplish any long-term goals, such as

winning a World Series, would exemplify the subcategory of “identification.” Lastly, the

term “integration” suggests its inherent meaning, specifically that the independent goals
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of the player are matched with the values and necessities of his teammates. According to

Ryan, “Integration occurs when identified regulations have been fully assimilated to the

self” (62).

In short, an important ideal to consider in examining the on-field performance of

players, particularly those who sign long-term contracts, is the motivation for the players

before and during the season. A misguided implementation of the aforementioned

subcategories of extrinsic motivation, given the various differences between them, could

potentially induce a regression in performance by a player.

Statistics for Consideration

The present analysis has been conducted by examining actual levels of production

by a considerable number of position players and pitchers who signed long-term contracts

and whose production level appear, on average, to significantly decrease after doing so.

While taking into account both extrinsic and intrinsic motivation, the analysis of

players will be conducted using two classifications of statistics: conventional and

sabermetric. The former describes statistics that the average fan can easily locate in a

well-worn profile of a player and understand as to how each value is calculated. In

contrast, the latter produces statistics that are not readily apparent to the average baseball

fan and do not even appear in a traditional “box score.” More importantly, however,

sabermetric figures transmit a more developed perception of a player’s particular, direct,

and independent contribution to a team on the field because statistics reliant almost

entirely on the player himself are employed. With respect to the sample of position

players to be analyzed, only a select few conventional statistics will be utilized in

addition to sabermetric statistics; for pitchers, only sabermetric statistics will be used due
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to the unreliability of conventional pitching statistics, a notion to be expounded upon

shortly.

In determining the offensive performance of a player in a given season, MLB

teams, up until recently, have primarily examined three specific statistics: batting

average, runs batted in (RBI), and home runs. In the present analysis, however, these

three figures will not be used because of the respective inconsistencies of each. More

specifically batting average, which calculates the ratio of hits (H) to at-bats (AB), does

not take into account other ways by which to reach base: namely, walks (BB), hit-by-

pitches (HBP), and sacrifice flies (SF), the last of which occurs when a teammate scores a

run as a direct result of a fly-ball out by the hitter.16 RBI, a statistic that conveys how

many times a teammate and the player himself crossed home plate as a direct result of the

player’s plate appearance (PA), often does not directly correlate to the player’s individual

ability.17 While the most valuable hitters often have comparatively high RBI totals, these

players most necessarily, and heavily, depend on the ability of their teammates to reach

base in front of them. Lastly, the home run is an insufficient statistic to apply because of

its partial reliance on external factors, particularly the dimensions of various stadia.18

In the spectrum of conventional statistics, three main figures will instead be

considered to evaluate a hitter’s yearly performance: on-base percentage (OBP), slugging

percentage (SLG), and “on-base plus slugging percentage” (OPS). OBP describes the

ratio of the number of times a player reaches base to the number of plate appearances,

16
See “Stats to Avoid: Batting Average” by Neil Weinberg (Courtesy of fangraphs.com).
17
See “Stats to Avoid: Runs Batted in (“RBI”) by Neil Weinberg (Courtesy of fangraphs.com).
18
See “MLB Park Factors” (Courtesy of espn.com) to view the range of home runs hit per game in each
stadium in each season. For instance, in 2015, the range between the stadia allowing the most and least
home runs, respectively, was .8 home runs per game.
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excluding an error by the defensive player who fields the player’s struck ball. The full

economic equation for OBP is:

Figure 3 (Courtesy of Fangraphs.com)

OBP is particularly valuable because it analyzes statistics that batting average ignores

and, accordingly, implements a more refined approached to the determination of a

player’s on-field performance.

In contrast, SLG takes into account the total amount of bases crossed by the

player per each at bat. The full equation for SLG is:

Figure 4 (Courtesy of Fangraphs.com)

By assigning a numerical value to each type of hit, SLG effectively calculates the

proficiency of a player in being able to gather all types of hits. As a result, SLG is a more

telling statistic than home runs because the latter only conveys one dimension of a

player’s hitting ability, as opposed to four. Thirdly, the statistic OPS simply combines the

values OBP and SLG to provide a single numerical value of a player’s ability to reach

base while garnering extra-base hits. The importance of this figure lies in its ability to

radically distinguish different types of players. For example, a player who boasts an

above-average SLG because he is among the league leaders in home runs but is crippled

by a below-average OBP would be overmatched by a player who hits fewer home runs

but is still able to garner extra-base hits while accruing more walks and fewer strikeouts.
 Buono 21

In addition to the three conventional statistics that will be used to evaluate only

hitters, a number of sabermetric figures will be utilized for the analysis. The term

sabermetric was originally coined in 1980 by Bill James, a statistician who sought to

evaluate MLB players beyond the scale of traditional statistics. The goal of baseball

sabermetrics is to provide a clearer representation of a player’s independent contribution

to the team for owners, general managers, coaches, and fans alike. Although this unique

method of calculating the authenticity of a player’s talent is not the primary mechanism

applied in the traditional classification of MLB players, sabermetrics will be used

extensively in the present analysis to rectify any inconsistencies found in conventional

statistics.

With regard to the position players to be considered in this evaluation, three main

sabermetric statistics will be utilized:19 Batting Average on Balls in Play (BABIP),

Weighted Runs Created plus (wRC+), and Wins above Replacement (fWAR).20

The goal of BABIP is to determine the amount of success a hitter has when he

puts a ball in play. Nevertheless, this statistic does not account for home runs hit by the

player, as home runs are given up directly by the pitcher and do not take the defense into

account. The critical value of BABIP is that it not only accurately conveys the ability of a

player to put the ball in play with success, but also reduces if not eliminates any factor of

luck or poor defensive play because the statistic covers the player’s performance for an

entire season. The equation for BABIP is:

19
All explanations for sabermetrics are courtesy of fangraphs.com.
20
The “f” preceding “WAR” identifies fangraphs.com as the primary source of information.
 Buono 22

Figure 5 (Courtesy of Fangraphs.com)

The key functionality of wRC+, the second sabermetric being employed here, is

that it measures how each plate appearance of a certain hitter directly affects the outcome

of a game, while negating the potential effects of playing in various stadia, a difference

often overlooked yet necessary to examine insofar as the readily apparent, various

dissimilarities of dimensions and climate between the twenty-eight cities that contain

MLB stadia undoubtedly influence the accumulation of measurements used to assess

players’ performance. The equation for wRC+ is:

Figure 6 (Courtesy of Sportsanalytics.sa.utoronto.ca)

In this equation, the abbreviations wRAA and wRC21 represent Weighted Runs above

Average and Weighted Runs Created, respectively. Although both statistics are also

useful in determining a player’s value to the team, the information conveyed by both

wRAA and wRC are succinctly represented and adequately accounted for within the

calculation of wRC+ as a whole.

The third and final alternative statistic for consideration, fWAR, is the arguably

the essential figure for the entire realm of sabermetrics in professional baseball. It

attempts to assign a numerical value to each player in comparison to an average minor

21
The statistic wRAA calculates how many runs a player created for his team compared to the average
MLB player, while wRC takes into account every statistic highlighted by wRC+ except for the stadium
factor.
 Buono 23

league player, should this so-called replacement supplant the everyday player because of

an injury or personal issue suffered by the latter. As a result, this single statistic most

soundly estimates how instrumental the role of a player has been with respect to the

overall success or failure of a team. In short, fWAR provides a constituent benchmark to

which all sabermetric statistics refer. The equation is displayed below:

Figure 7 (Courtesy of Fangraphs.com)

Note that the calculation of a player’s fWAR includes Ultimate Zone Rating (UZR), a

sabermetric statistic that accounts for the defensive value and prowess of a player by

estimating the number of above average plays made and concomitant number of runs

saved in a given season. Although it is considered for determining fWAR, UZR will not

be examined independently in the evaluation because the present analysis is only

concerned with each player’s offensive proficiency. The database fangraphs.com cites

UZR as its primary and most reliable tool for calculating the defensive value of a player.22

Accordingly, the present analysis would be significantly narrowed should it consider

UZR as a major determination of one player’s value to the organization.

The critical reference point utilized by fWAR is the estimated wins added or

subtracted to the final record of a team based on one player’s performance. According to

fangraphs.com, this correlation is best summarized on a scale of 0 to 6. Players whose

fWAR in a given season amounts to less than or equal to 0 are equated to bench players,

while those whose fWAR equates or exceeds 6 are likened to MVP-caliber players.

22
See the article “UZR” on fangraphs.com for more information.
 Buono 24

Naturally, players whose statistics hearken to the latter echelon are more attractive

candidates to be signed by any MLB team.

The selection of the sabermetric library is based on the value transmitted by these

statistics with respect to the competitive team. More specifically, BABIP measures how

frequently a player puts a ball in play with success, a comparatively high amount of

which provides more opportunities to score runs and win games. The value of wRC+ is

particularly suitable because it calculates how much of the team’s offensive production

was credited to one player based on his ability to take advantage of run-scoring chances.

Lastly, a team can utilize the fWAR of a player in a given season to most meaningfully

determine the benefit of employing such a player and whether the terms of his contract

accurately reflect his worth to the team during the season.

While most conventional batting statistics carry a certain level of predictability

and often correlate with the performance of a hitter in baseball, the standard pitching

statistics conventionally employed for years are altogether too unreliable to be included

in the present analysis. The most commonly examined figures in the conventional

pitching arena are wins (W), earned run average (ERA), and strikeouts (K). Wins are a

particularly unreliable analytical tool because the prospect of a win to a starting pitcher

depends in too large a part on his teammates. For example, if a pitcher exits a game with

a 1-0 lead in the ninth inning but the next pitcher surrenders a run, then the starting

pitcher would not receive a decision despite the fact that, for all intents and purposes, he

deserved a win. In contrast, the same pitcher, in his next start, could allow six runs in six

innings. If the team scores seven runs to take the lead before the beginning of the seventh
 Buono 25

inning, however, the starter would be in line to receive a win despite his far less than

stellar outing.

With respect to ERA, a similar problem arises with respect to a player’s

independent performance, an issue succinctly addressed by Neil Weinberg:

[The value of ERA] is especially difficult [to reliably calculate]

because while pitchers have a huge impact on the number of runs
they allow, they don’t have complete control. You can’t just look
at the number of runs a pitcher allowed and say they were
definitely responsible for those runs and call it a day. You aren’t
isolating their performance and if you aren’t isolating individual
performance you’re looking only at outcomes, and that’s not
typically very interesting.23

The inconsistencies found in ERA can be further and perhaps even more clearly viewed

in another hypothetical situation. Suppose a starting pitcher is facing a batter with two

outs in the inning while runners occupy all three bases. The batter hits a sharp groundball

to the center fielder, allowing the runner on third base to score. The ball, however, rolls

under the fielder’s glove (without any error by the fielder) and the other three base

runners also score. In the box score, the hit is marked as a grand slam (a home run in

which four runs score) and is charged to the pitcher’s ERA, even though it could be

vehemently argued that only one or, at most, two runs should have scored on the play.

Because the spectrum of ERA does not adequately account for this type of scenario,

however, the inconsistent play of the center fielder significantly blemishes the pitcher’s

final line of performance, thereby adversely affecting the validity of the analysis of that

pitcher’s true worth.

In addition to a pitcher’s fWAR, three chief figures will be utilized: Opponent’s

BABIP, Fielder Independent Pitching (FIP), and Skill-Interactive ERA (SIERA).

23
See the article titled “How to Evaluate a Pitcher, Sabermetrically” on fangraphs.com for more details.
 Buono 26

Following a similar methodology to that of the analysis of hitters, these statistics provide

more telling estimate of the independent value of a starting pitcher to an organization.

While the success of a hitter is partially reliant on the ability of his teammates to get on

base frequently, the achievement of a starting pitcher is heavily dependent on his defense,

as made clear in some of the hypothetical scenarios considered earlier. Accordingly, these

four statistics have been chosen insofar as they best construct the most accurate

representation of a pitcher were he to perform without the aid of defensive players.

With respect to Opponent’s BABIP, the same equation utilized for hitters will be

used in determining a pitcher’s contribution to the team over the course of a season.

While BABIP is most reliant upon the defense within the spectrum of sabermetrics, it is

generally synonymous with the seasonal performance of the pitcher. In other words, a full

season will most likely mitigate if not annul both outstanding plays by the defense, which

benefit the pitcher’s performance, and errors made by the defense, which hinder the

pitcher’s outing.

In an attempt to rectify any inconsistencies of a defense with respect to the in-

game performance of a starting pitcher, fangraphs.com has developed a newer statistic,

FIP, to remove the “ups and downs” of an MLB defense. The equation for FIP is

displayed below:

Figure 8 (Courtesy of BeyondtheBoxScore.com)

In contrast with ERA, which simply accounts for the number of runs charged to the

pitcher per nine innings, FIP incorporates the realities that the surrender of home runs and
 Buono 27

walks are particularly detrimental to the value of a pitcher, while strikeouts and

significant innings pitched are significantly favorable. The coefficients 13, 3, and 2 listed

in front of HR, BB, and K, respectively, represent the proportional damage allowed or

success accomplished in a game by a pitcher. The statistics chosen in determining FIP

thus reflect home runs, walks, and strikeouts as the three key statistical outcomes almost

entirely dependent upon the pitcher. Lastly, the constant (C) that is added to this fraction

accounts for the average ERA of all pitchers, a statistic whose value typically is in close

resemblance with the average FIP. Despite this apparent congruency between the two

statistics, a pitcher’s ERA and FIP are rarely equal; therefore, the latter accounts for how

much the pitcher benefitted or suffered statistically as a result of the defense behind him.

According to fangraphs.com, “certain pitchers have shown an ability to consistently post

lower ERAs than their FIP suggests, but overall FIP captures most pitchers’ true

performance quite well.”24 In general, the purpose of employing FIP in the present

analysis is to highlight the inconsistencies within ERA and therefore represent a more

precise method of determining the valuative difference between starting pitchers in the

MLB, ranging from all-stars to pitchers promoted from the minor leagues.

The final statistic for consideration is SIERA, the newest tool created by

fangraphs.com for evaluating pitchers. While based on a scale very similar to ERA and

FIP, SIERA incorporates a more sizeable terrain for assessment in that it attempts to

accentuate the level of dominance of a pitcher in a myriad of situations. For example, one

dimension of SIERA is to calculate the number of times a pitcher induces a double play

in proportion to the number of opportunities. In addition, the expanse of SIERA extends

farther than that of FIP in that the former takes into account the stadium in which the

24
See “ERA, FIP, and Answering the Right Question” (Courtesy of fangraphs.com).
 Buono 28

game is played, thereby encompassing the variations between the dimensions of each

specific park. Because of the recent nature of its inception, however, there has not yet

been developed any consistently discernable equation for SIERA; rather, the value for

each pitcher is calculated specifically by fangraphs.com alone.

Despite the lack of an equation for SIERA, Matt Swartz vouches for the validity

of this novel statistic: “FanGraphs’ new-and-improved ERA estimation system now uses

different proprietary data [and] takes more interactions and quadratic terms into account

when reaching its conclusions.”25 A few additional, notable trends that result from the

increased depth of analysis are as follows: first, starting pitchers proficient at garnering

strikeouts tend to allow fewer home runs per each fly ball; second, pitchers accustomed

to surrendering a below-average number of walks per game are not likely affected by a

single walk; and third, pitchers with above-average strikeout totals also induce below-

average BABIPs. For instance, with respect to this second trend, Swartz provides as an

exemplary player Tom Glavine, a ten-time all-star who was inducted into the Baseball

Hall of Fame in 2014 following a largely successful career that spanned from 1987 to

2007. Specifically, “Glavine walked 15% of his opposing batter with first base

open—even after netting out intentional walks—but he only walked 6% of hitters the rest

of the time.”26 As a result of this pattern, Glavine produced an above-average FIP and

SIERA in nearly all of his twenty seasons, including a top-ten FIP ranking in four

separate seasons.

Similar calculative problems to that of SIERA exist when determining the fWAR

of starting pitchers. According to fangraphs.com, the computation of a pitcher’s fWAR is

25
See "New SIERA, Part Two (of Five): Unlocking Underrated Pitching Skills" (Courtesy of
fangraphs.com).
26
Cf. note 21, supra.
 Buono 29

based on his FIP on account of its dependence solely on the pitcher and its ability to

transmit how his performance in the past can affect his future value to an organization.

Other contributing factors that play a key role in calculating fWAR for pitchers are the

average figures of a replacement level pitcher, the conversion of FIP onto a “runs scale,”27

the necessary adjustment for the dimensions of each stadium, and the average number of

runs needed per win by a certain pitcher. Accordingly, insofar as there is no discernable

or official equation incorporating each of these distinct statistics, the fWAR of each

pitcher under consideration will be attained from the leaderboard on fangraphs.com.28

In sum, the underlying goal of the analysis undertaken for both hitters and

pitchers is to impart a precise and thorough representation of a player’s approximate

worth to and within an MLB organization. Each statistic that will be included in the

examination has been chosen because of its accuracy in both covering every major facet

of statistical value and removing the unpredictability of external factors such as defense,

baserunning, and stadia differences. While sabermetric statistics have been identified as

the primary source of relevant information for pitchers, conventional statistics such as

OBP, SLG, and OPS provide similar information as sabermetrics for each field player in

that the performance of only the player himself is considered relevant.

What field of study will the analysis not address?

The evaluation of players in this analysis is simply concerned with the players’

on-field performance and the amount of money deemed worthy of investing in said

players, specifically those who have played or are currently playing under a long-term

27
Such a “runs scale” is attained by dividing the FIP value by .92 (fangraphs.com). Also cf. note 18, supra.
28
Upon the end of each season, fangraphs.com displays a sortable table of statistics so that a certain pitcher
can be compared to every other qualifying pitcher in several different categories.
 Buono 30

contract paying $100 million or greater. In taking this approach, the experimentation will

be conducted primarily through an empirical lens.

In contrast, any potential legal infirmities concerning the motivation, negotiation,

or effects of a long-term contract will not be addressed. From a jurisprudential viewpoint,

there is no conclusive evidence condemning as illegal the negotiation of or agreement to

such contracts, especially considering the vast number of qualifying contracts that have

been agreed upon in the twenty-first century alone. Indeed, given the unparalleled zeal

and excitement often experienced by a fan base upon the arrival of a potential star player

signed to a mega-contract, the team’s office will almost certainly benefit financially from

the mere presence of that player, regardless of his eventual, in-season performance. 29 In

addition, a contract could potentially be voided on account of “want of consideration,” by

which a contract is declared unenforceable because “no inducement to a contract was

intended to pass between the parties.”30 Therefore, the notion that an owner could be

convinced that investing such a vast sum of money in one hitter or pitcher is legally

wrong has virtually no ground for argument. Accordingly, the incursion of or reliance

upon long-term contracts has not yet been vehemently opposed in any legal arena.

Potential Objections to the Cessation of Long-Term Contracts by MLB Teams

The inundation of long-term contracts in the MLB has understandably resulted

from opportune and exciting circumstances. As the 21st century has shown, a significant

majority of professional baseball owners are willing to invest rather astronomical

amounts of money in one player based on the proficiency of his on-field performance in

29
The excitement of having such a player on a team often engenders a noticeable increase in ticket and
merchandise sales. For instance, the signing of Alex Rodriguez in 2002 increased the attendance by almost
10% from the previous season.
30
See full definition and application on legal-dictionary.thefreedictionary.com.
 Buono 31

previous seasons. Given the possibility that the player will continue or even increase his

above-average play, negotiating a long-term deal is indeed a very attractive option to

consider. In addition, the increasing credibility of the term “franchise player” has initiated

in front offices the desire to outbid any other contender seeking to acquire a certain

player, no matter how exorbitant the salary may be. The resulting bidding wars have thus

proven costly for a number of organizations with respect to the overall competitive

success of the team in following years.

A prime example of the crippling financial effect of a long-term contract occurred

with the Rodriguez contract in 2001. Despite a considerable increase in performance by

Rodriguez himself, who played in three consecutive All-Star games and was crowned

league MVP in 2003, the Rangers suffered tremendously as a team on account of the

organization’s insufficiency of funds in the wake of the mega-contract. More specifically,

in the 2001 season, Rodriguez’s $22 million salary devoured over 25% of the yearly

payroll of the entire organization.31 In contrast, no other Ranger played was paid more

than $9 million. In short, the outstanding performance of a player signed to an exorbitant

contract can easily be outweighed by the financial effects that such a contract has on the

ability of an organization to invest in a sufficient number of additional talented players.

Another compelling variable sometimes resulting from the execution of a long-

term contract is the rise of the contracting player as potential leader or captain over the

course of his tenure with the organization. In most cases, a veteran player who has

succeeded in past seasons and is willing to impart his skills and knowledge of the game to

his teammates will have a positive effect both in the clubhouse and on the field. This

31
See the analysis of Team Salary Compensation conducted by baseballprospectus.com for a graphic
analysis and further explanation.
 Buono 32

component of a player, however, does not necessarily transfer to the actual on-field

performance of a so-called leader, arguably the most critical factor for consideration,

given that the main goal of any professional organization is to win a championship. In

other words, the below-average achievement of a player will outweigh any benefit of

having such a player on the roster, specifically in the locker room.

For instance, from the 2011 season to the present day, the discrepancy between a

person as a leader and as a player has considerably affected outfielder Jayson Werth and

the Washington Nationals organization. Werth, who had won a World Series with the

Philadelphia Phillies in 2008, signed a seven-year, $126 million contract and brought a

much-needed veteran presence to the young organization. In an article published by the

Washington Post before the 2013 season, the lasting effect of Werth on the morale and

swagger of the team was made known publicly: “One week away from his third opening

day in Washington, Werth’s [positive] influence has spread through every phase of the

Nationals’ operation, from the training room to the front office, from rookies in their first

spring training to ownership” (Kilgore). Indeed, the arrival of Werth had an immediate

impact on the Nationals, who made their first playoffs in 2012. This brief spurt of

jubilation, however, temporarily shrouded the detrimental play of Werth himself in the

first two years of his long-term contract. While his average fWAR nearly equaled 5 in his

two final seasons with the Phillies, it finished at only 1.50 at the end of both the 2011 and

2012 seasons. Moreover, after reaching base in 38% of his plate appearances in 2009 and

2010, Werth barely managed to reach base 30% of the time in Washington during the

2011 and 2012 seasons. While the intangible effect of Werth certainly benefitted the

organization upon his initial appearance, the cost of his contract paired with his sub-par
 Buono 33

performance ultimately had a far greater negative impact on the team’s overall

achievement.

A third arguably positive return of awarding a mega-contract is its potential

increase of both the team’s fan base and the sale of tickets and team merchandise.

Regardless of the on-field performance of a player, his reputation and past success often

induce a considerable surge in the sales of game tickets as well as team apparel—such as

jerseys, t-shirts, and jackets—and other memorabilia. As one baseball writer notes,

“Players with magnetic personalities or characteristics that inspire the community have

marketing potential that can increase team revenues…All-stars are often the most well-

known players and have the marketing potential and so will serve as a proxy for a

player’s marketability” (Dinerstein 15). For example, second baseman Dustin Pedroia

agreed to an eight-year, $110 million contract with the Boston Red Sox in the months

following the 2013 season. From January 1, 2014 to Opening Day on April 2, the

merchandise sales of the Red Sox more than doubled the team’s sales from the 2012

offseason, and the jersey of Pedroia became the fourth-most purchased of all MLB

players.32

Nevertheless, insofar as an MLB organization is not solely a business but rather a

competitor in a league,33 the claim that team revenue wholly or vastly supersedes team

success is illogical. Indeed, while an owner who pursues financial profit as the chief goal

of his organization would be sound business policy under the Shareholder theory, as the

owner is the primary beneficiary of all incoming funds, the success of corporations such

32
All information regarding team revenue and jersey sales is according to report conducted by NBC Sports,
as of Opening Day 2014.
33
The primary goal of a traditional business is to make a financial profit; meanwhile, the very nature of
professional team sports is to win a championship as a result of utilizing well the funds apportioned to an
organization.
 Buono 34

as MLB franchises is best assessed through application of the Stakeholder theory,

pursuant to which parties beyond the narrow realm of team ownership have an equal

opportunity to benefit financially. An additional objective which the Stakeholder theory

endorses is that of exciting the players who wish to form a legacy of championships and

pleasing the fans who want to witness this legacy for themselves.

A fourth and final major objection to the present thesis is the existence of

utilization by baseball teams of insurance coverage for injured players. While an injury to

a player signed to a long-term contract may negatively affect team performance, the

organization will thereby be financially compensated for the player’s absence. In

protecting its own financial stability, however, an organization with a comparatively

limited payroll becomes vulnerable to insufficient funds for other purposes, namely the

signing of other key players. In an article published by fangraphs.com, this issue is

expanded: “Baseball insurance has grown steadily more expensive. Although it is

difficult to ascertain how much a team actually spends on insurance it is clear that it can

be a burden for smaller teams.”34 As an insurance policy generally covers 80% of the

contract of a player who is under team control for an extended period of time,35 an

organization is often forced to forgo opportunities to attract other above-average players.

Another risky proposition associated with insurance coverage of players is its

potential ineffectiveness. If a player does not suffer from an injury or partake in any

action which would directly detriment the team financially, such as using steroids, the

organization is still required to pay the insurance company the full amount of the

proposed insurance on said player. Accordingly, a number of teams have refused to seek

34
See “Insurance in Baseball is Like a Black Hole,” on fangraphs.com for a full explanation of insurance
policies in the MLB.
35
See note 30.
 Buono 35

insurance payments for players, even those signed to a long-term deal. For example,

when the San Francisco Giants signed Barry Zito to a seven-year, $126 million contract

before the 2007 season, the organization refused to buy insurance while stating that the

risk associated with the potential decrease in performance by Zito was their primary

concern.36

Aside from the deleterious effect of necessary insurance coverage for mega-

contracted players on a team’s ability to pay more attractive salaries to his teammates,

such coverage could also deplete organizational funds arising from off-field actions of the

player himself. For example, outfielder Josh Hamilton suffered from drug abuse before

the 2015 season while under a lucrative long-term contract with the Los Angeles Angels

of Anaheim. If he were to miss a majority of the season, the team would receive

insurance and would not be financially responsible for covering Hamilton’s personal

issues. Through arbitration filed by the league itself, however, Hamilton was found to be

physically able to play for the entire 2015 season, in which he posted a career-low 0.2

fWAR.

Statistical Analysis of Players

The primary concern of this thesis is the correlation of the on-field performance

of a player before and after signing a long-term contract of at least $100 million in total

value,37 and the results of such performance on his team’s competitive success. The

analysis will specifically evaluate the contracts of 30 position players and 13 pitchers

statistically in all seasons played before and after signing a new long-term deal or

receiving an extension of a preexisting mega-contract. Based upon such analysis, each

36
See “Checking the Numbers: Paying the Premium” on baseballprospectus.com for more information.
37
This value was chosen both as a sound baseline of the most recently signed long-term contracts and
because only one contract exceeded $100 million in the 20th century, even while accounting for inflation.
 Buono 36

position player or pitcher will be sorted into three groups based on the player’s change in

performance: those with positive, negative, or negligible, that is, less than 5.5% change

(up or down) in their performance after agreeing to the contract. In addition, the analysis

will evaluate the performance of each team in the seasons before and after employing

such a player with respect to win percentage, playoff appearances, and playoff success.

All statistics for position players and pitchers have been retrieved from

fangraphs.com and have been formatted to fit the analysis. Each position player must

have played at least 80 games in each season or have at least 400 plate appearances in

each season. Each pitcher must have started at least 25 games or have pitched at least 150

innings. In evaluating position players, a negative change in a certain area conveys a

decreased value in that statistic. In contrast, however, the performance of a pitcher is

considered to have decreased if the value of the statistic has increased. For example, a

pitcher will have regressed if his FIP rose from 2.60 to 3.00 after signing a long-term

contract. Concerning fWAR, however, a decrease in numerical value for both position

players and pitchers will result in a negative assessment.

General Assessment of Statistical Analysis

The two essential patterns that the present analysis conveys are, first, that the on-

field performance of a player significantly declines upon signing a long-term contract;

and, second, that the overall competiveness of an individual team is noticeably hampered

upon shouldering the financial burden of such an extravagant contract.

In the analysis of position players, the first pattern is accurately represented. Of

the 224 total figures utilized to assess the value of the 32 position players, an

overwhelming 142 (63%) imparted a negative change, while only 10 (4%) conveyed a
 Buono 37

positive change. The statistic that most clearly encapsulates this drastic decrease in

performance across the board is fWAR, according to which the on-field performance of

28 of the 32 players (88%) regressed. In this vein, the nearly uniform pattern of decline

by position players carries even greater magnitude, given that fWAR is perhaps the most

revealing statistic of a player’s individual success and his contribution to his team.

In the examination of starting pitchers, the debilitating effects of a long-term

contract were more subtlety reflected. More specifically, the change in individual

performance of the pitchers was not nearly as noteworthy as that of the aforementioned

position players, as 6 of the 13 pitchers (46%) exhibited a noticeable increase in overall

performance. Nevertheless, given the subsequent general decline in competitiveness of

the teams which employed these players, the improved performance of a few pitchers

appeared to have been cast aside in light of the financial magnitude of their respective

contracts. More specifically, of the 58 teams that employed a pitcher with a long-term

contract, only 15 (26%) ever appeared in the playoffs.

Lastly, the influence of such mega-contracts on the team itself is best represented

in the significant decrease in average win percentage. Of the 27 distinct periods of time in

which a team employed at least one long-term contract, only 7 (27%) enjoyed an increase

in winning percentage and only 7 witnessed an increase in playoff appearances. While the

total number of World Series (8) won increased by 25% for teams after employing at

least one mega-contract as compared to before doing so (6), four of the eight

championships were achieved by teams that had already appeared in a World Series in

the preceding timeframe. Therefore, the experience attained by a team amidst such a
 Buono 38

tense environment could arguably have carried greater magnitude in its subsequent

appearances to the World Series than the addition of one or two “star players.”

Conclusion

The remarkable inundation of long-term contracts in Major League Baseball from

the beginning of the 21st century is an issue that has long since prevailed without sizeable

resistance from within or outside the league. While certain measures have been taken to

limit the funds of any one organization, namely via the luxury tax, the lack of a salary cap

has allowed several teams to bestow exorbitant salaries upon a player without

considerable league-imposed drawbacks. More specifically, a franchise such as the New

York Yankees has made no significant attempts to deviate from its philosophy of

extravagant spending, despite the implication that this strategy is detrimental to an

organization on a long-term basis. In contrast, this present analysis has been conducted in

order to undermine the claim that magnanimity and longevity breed prosperity. On an

economic level, the appendix tables demonstrate that, pursuant to the Stakeholder

Theory, a long-term contract on its own does not sufficiently benefit the organization,

insofar as the player under the agreement and the owner are unfairly promoted as

virtually exclusive parties of interest while other branches of the organization suffer. On a

practical level, the performance of a single player is most likely to decrease upon and

following the signing of a long-term contract, as the statistics presented above have

displayed. In fact, only nine players out of the forty-three (21%) with such contracts have

won a World Series38 since the year 2000, and three of those players did so as a part of a

single team, the 2009 Yankees.

38
These players include Matt Cain (2012, 2014), Derek Jeter (2009), Buster Posey (2014), Albert Pujols
(2006, 2011), Manny Ramirez (2004, 2007), Alex Rodriguez (2009), CC Sabathia (2009), and Barry Zito
(2010, 2012).
 Buono 39

In contrast to this highly popularized method of investment, teams who have

endorsed the Stakeholder Theory and revenue sharing while avoiding the employment of

mega-contracted players have generally had greater postseason success on account of a

smaller distinction between the highest and lowest contracts. Most recently, in 2015, on

their way to a World Series championship, the Kansas City Royals paid their most

expensive player $14 million, a value just $10 million above the average team salary. In

stark contrast, Rodriguez’s salary in 2001 exceeded the average salary in the Rangers

organization by $19 million, almost twice as much as all but one Royals’ player, and the

team finished in last place by over 40 games.39 Accordingly, in attempting to carefully

and prudently construct a competitive baseball club, team owners and executives should

be dissuaded from the proposition of building around a “franchise player” for the

conceivable, beneficial future of each MLB team.

39
Cf. note 27.
 Buono 40

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 Buono 42

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rbi/>.
Buono 43
 Appendix A: Analysis of Position Players: On-Base Percentage (OBP)

Player Season in Average Average Percent

which LTC OBP before OBP after Change (“+”
was Signing LTC Signing LTC Indicates
Negotiated (Seasons (Seasons Positive
Change, “-”
Played) Played)
Indicates
Negative
Change)
Carlos Beltrán 2005 .354 (6) .356 (10) +0.6%
Miguel Cabrera 2008 .388 (5) .406 (8) +4.6%
Robinson Canó 2014 .355 (9) .358 (2) +0.8%
Shin-Soo Choo 2014 .392 (6) .359 (2) -8.4%
Carl Crawford 2011 .340 (8) .316 (3) -7.1%
Jacoby Ellsbury 2014 .356 (4) .335 (2) -5.9%
Prince Fielder 2012 .391 (6) .384 (3) -1.8%
Freddie Freeman 2014 .361 (3) .379 (2) +5.0%
Jason Giambi 2002 .415 (6) .398 (9) -4.1%
Adrian González 2012 .380 (6) .343 (4) -9.7%
Ken Griffey, Jr. 2000 .379 (10) .357 (8) -5.8%
Josh Hamilton 2013 .364 (6) .316 (2) -13.2%
Todd Helton 2003 .421 (5) .415 (10) -1.4%
Ryan Howard 2012 .368 (7) .301 (3) -18.2%
Derek Jeter 2001 .396 (5) .371 (13) -6.3%
Matt Kemp 2012 .353 (5) .338 (3) -4.2%
Carlos Lee 2007 .340 (8) .337 (6) -0.9%
Evan Longoria 2012 .360 (4) .331 (3) -8.1%
Joe Mauer 2011 .409 (6) .377 (5) -7.8%
Dustin Pedroia 2014 .373 (6) .345 (2) -7.5%
Buster Posey 2013 .390 (2) .371 (3) -4.9%
Albert Pujols 2004 .412 (3) .424 (8) +2.9%
Albert Pujols 2012 .421 (11) .326 (4) -22.6%
Manny Ramirez 2001 .409 (7) .415 (10) +1.2%
José Reyes 2012 .345 (6) .335 (4) -2.9%
Alex Rodriguez 2001 .381 (5) .397 (7) +4.2%
Alex Rodriguez 2008 .392 (12) .362 (6) -7.7%
Alfonso Soriano 2007 .327 (6) .317 (7) -3.1%
Mark Teixeira 2009 .378 (6) .351 (6) -7.1%
Vernon Wells 2008 .331 (6) .304 (5) -8.2%
Jayson Werth 2011 .369 (6) .364 (5) -1.4%
David Wright 2013 .384 (8) .354 (2) -7.8%
Positive Change: 0 contracts
Negative Change: 15 contracts
Negligible Change (≤5.5%): 17 contracts
 Appendix B: Analysis of Position Players: Slugging Percentage (SLG)
Player Season in Average Average Percent
which LTC SLG before SLG after Change (“+”
was Signing LTC Signing LTC Indicates
Negotiated (Seasons (Seasons Positive
Change, “-”
Played) Played)
Indicates
Negative
Change)
Carlos Beltrán 2005 .491 (6) .493 (10) +0.4%
Miguel Cabrera 2008 .542 (5) .574 (8) +5.9%
Robinson Canó 2014 .504 (9) .450 (2) -10.7%
Shin-Soo Choo 2014 .469 (6) .423 (2) -9.8%
Carl Crawford 2011 .448 (8) .412 (3) -8.0%
Jacoby Ellsbury 2014 .407 (4) .387 (2) -4.9%
Prince Fielder 2012 .541 (6) .482 (3) -10.9%
Freddie Freeman 2014 .468 (3) .465 (2) -0.6%
Jason Giambi 2002 .553 (6) .503 (9) -9.0%
Adrian González 2012 .520 (6) .471 (4) -9.4%
Ken Griffey, Jr. 2000 .585 (10) .501 (8) -14.4%
Josh Hamilton 2013 .549 (6) .426 (2) -22.4%
Todd Helton 2003 .617 (5) .501 (10) -18.8%
Ryan Howard 2012 .560 (7) .421 (3) -24.8%
Derek Jeter 2001 .470 (5) .430 (13) -8.5%
Matt Kemp 2012 .472 (5) .490 (3) +3.8%
Carlos Lee 2007 .495 (8) .466 (6) -5.9%
Evan Longoria 2012 .515 (4) .446 (3) -13.4%
Joe Mauer 2011 .478 (6) .411 (5) -14.0%
Dustin Pedroia 2014 .454 (6) .402 (2) -11.5%
Buster Posey 2013 .530 (2) .470 (3) -11.3%
Albert Pujols 2004 .613 (3) .618 (8) +0.8%
Albert Pujols 2012 .617 (11) .478 (4) -22.5%
Manny Ramirez 2001 .596 (7) .583 (10) -2.2%
José Reyes 2012 .447 (6) .409 (4) -8.5%
Alex Rodriguez 2001 .575 (5) .591 (7) +2.8%
Alex Rodriguez 2008 .585 (12) .500 (6) -14.5%
Alfonso Soriano 2007 .512 (6) .497 (7) -2.9%
Mark Teixeira 2009 .541 (6) .496 (6) -8.3%
Vernon Wells 2008 .483 (6) .433 (5) -10.4%
Jayson Werth 2011 .485 (6) .441 (5) -9.1%
David Wright 2013 .505 (8) .436 (2) -13.7%
Positive Change: 1 contract
Negative Change: 23 contracts
Negligible Change: 8 contracts

Appendix C: Analysis of Position Players: On-Base plus Slugging Percentage (OPS)

 Player Season in Average Average Percent
which LTC OPS before OPS after Change (“+”
was Signing LTC Signing LTC Indicates
Negotiated (Seasons (Seasons Positive
Change, “-”
Played) Played)
Indicates
Negative
Change)
Carlos Beltrán 2005 .845 (6) .849 (10) +0.5%
Miguel Cabrera 2008 .930 (5) .980 (8) +5.4%
Robinson Canó 2014 .859 (9) .808 (2) -5.9%
Shin-Soo Choo 2014 .861 (6) .782 (2) -9.2%
Carl Crawford 2011 .788 (8) .728 (3) -7.6%
Jacoby Ellsbury 2014 .763 (4) .722 (2) -5.4%
Prince Fielder 2012 .932 (6) .866 (3) -7.1%
Freddie Freeman 2014 .829 (3) .844 (2) +1.8%
Jason Giambi 2002 .968 (6) .901 (9) -6.9%
Adrian González 2012 .900 (6) .814 (4) -9.5%
Ken Griffey, Jr. 2000 .964 (10) .858 (8) -11.0%
Josh Hamilton 2013 .913 (6) .742 (2) -18.7%
Todd Helton 2003 1.038 (5) .916 (10) -11.8%
Ryan Howard 2012 .928 (7) .722 (3) -22.2%
Derek Jeter 2001 .866 (5) .801 (13) -7.5%
Matt Kemp 2012 .825 (5) .828 (3) +0.4%
Carlos Lee 2007 .835 (8) .803 (6) -3.8%
Evan Longoria 2012 .875 (4) .777 (3) -11.2%
Joe Mauer 2011 .887 (6) .788 (5) -11.2%
Dustin Pedroia 2014 .827 (6) .747 (2) -9.7%
Buster Posey 2013 .920 (2) .841 (3) -8.6%
Albert Pujols 2004 1.025 (3) 1.042 (8) +1.7%
Albert Pujols 2012 1.038 (11) .804 (4) -22.5%
Manny Ramirez 2001 1.005 (7) .998 (10) -0.7%
José Reyes 2012 .792 (6) .744 (4) -6.1%
Alex Rodriguez 2001 .956 (5) .988 (7) +3.3%
Alex Rodriguez 2008 .977 (12) .862 (6) -11.8%
Alfonso Soriano 2007 .774 (6) .744 (7) -3.9%
Mark Teixeira 2009 .919 (6) .847 (6) -7.8%
Vernon Wells 2008 .814 (6) .737 (5) -9.5%
Jayson Werth 2011 .854 (6) .805 (5) -5.7%
David Wright 2013 .889 (8) .790 (2) -11.1%
Positive Change: 0 contracts
Negative Change: 22 contracts
Negligible Change: 10 contracts

Appendix D: Analysis of Position Players: Batting Average on Balls in Play (BABIP)

 Player Season in Average Average Percent
which LTC BABIP BABIP after Change (“+”
Player Season in Average Average Percent
Indicates
was before Signing LTC Change
which LTC wRC+ before wRC+ after
Negotiated Signing LTC (Seasons Positive(“+”
was Indicates
Signing LTC Signing LTC Change, “-”
(Seasons Played) Positive
Negotiated (Seasons (Seasons Indicates
Played) Change,
Negative “-”
Played) Played)
Indicates
Change)
Carlos Beltrán 2005 .308 (6) .320 (10) +3.9%
Miguel Cabrera 2008 .354 (5) .345 (8) -2.5%
Robinson Canó 2014 .322 (9) .326 (2) +1.2%
Shin-Soo Choo 2014 .350 (6) .323 (2) -7.7%
Carl Crawford 2011 .333 (8) .316 (3) -5.1%
Jacoby Ellsbury 2014 .330 (4) .298 (2) -9.7%
Prince Fielder 2012 .298 (6) .317 (3) +6.4%
Freddie Freeman 2014 .336 (3) .339 (2) +0.9%
Jason Giambi 2002 .327 (6) .268 (9) -18.0%
Adrian González 2012 .325 (6) .310 (4) -4.6%
Ken Griffey, Jr. 2000 .300 (10) .271 (8) -9.7%
Josh Hamilton 2013 .325 (6) .320 (2) -1.5%
Todd Helton 2003 .335 (5) .333 (10) -0.6%
Ryan Howard 2012 .324 (7) .296 (3) -8.6%
Derek Jeter 2001 .372 (5) .343 (13) -7.8%
Matt Kemp 2012 .353 (5) .334 (3) -5.4%
Carlos Lee 2007 .290 (8) .279 (6) -3.8%
Evan Longoria 2012 .301 (4) .301 (3) n/a
Joe Mauer 2011 .346 (6) .344 (5) -0.6%
Dustin Pedroia 2014 .318 (6) .308 (2) -3.1%
Buster Posey 2013 .344 (2) .317 (3) -7.8%
Albert Pujols 2004 .330 (3) .304 (8) -7.9%
Albert Pujols 2012 .311 (11) .256 (4) -17.7%
Manny Ramirez 2001 .343 (7) .338 (10) -1.5%
José Reyes 2012 .314 (6) .306 (4) -2.5%
Alex Rodriguez 2001 .332 (5) .311 (7) -6.3%
Alex Rodriguez 2008 .309 (12) .302 (6) -2.3%
Alfonso Soriano 2007 .307 (6) .297 (7) -3.3%
Mark Teixeira 2009 .310 (6) .259 (6) -16.5%
Vernon Wells 2008 .288 (6) .264 (5) -8.3%
Jayson Werth 2011 .333 (6) .321 (5) -3.6%
David Wright 2013 .343 (8) .332 (2) -3.2%
Positive Change: 1 contract
Negative Change: 13 contracts
Negligible Change: 18 contracts

Appendix E: Analysis of Position Players: Weighted Runs Created Plus (wRC+)

 Negative
Change)
Percent
Player Season in Average Average
which LTC fWAR before fWAR after Change (“+”
Carlos Beltrán 2005
was 110 (6) 126 (10)
Signing LTC Signing LTC +14.5%
Indicates
Miguel Cabrera 2008
Negotiated 135 (5)
(Seasons 162 (8)
(Seasons +20.0%
Positive
Robinson Canó 2014 126 (9)
Played) 127 (2)
Played) +0.8%“-”
Change,
Shin-Soo Choo 2014 136 (6) 114 (2) Indicates
-16.2%
Carl Crawford 2011 108 (8) 103 (3) Negative
-4.6%
Change)
Jacoby Ellsbury 2014 113 (4) 96 (2) -15.0%
Prince Fielder 2012 141 (6) 134 (3) -5.0%
Carlos Beltrán 2005 4.8 (6) 3.6 (10) -25%
Freddie Freeman 2014 128 (3) 137 (2) -7.0%
Miguel Cabrera 2008 3.9 (5) 5.4 (8) +38.5%
Jason Giambi 2002 148 (6) 130 (9) -12.2%
Robinson Canó 2014 4.0 (9) 3.7 (2) -7.5%
Adrian González 2012 139 (6) 124 (4) -10.8%
Ken Griffey, Jr. 2000 144 (10) 115 (8) -20.1%
Josh Hamilton 2013 132 (6) 109 (2) -17.4%
Todd Helton 2003 140 (5) 125 (10) -10.7%
Ryan Howard 2012 134 (7) 99 (3) -26.1%
Derek Jeter 2001 127 (5) 116 (13) -8.7%
Matt Kemp 2012 128 (5) 131 (3) +2.3%
Carlos Lee 2007 111 (8) 113 (6) +1.8%
Evan Longoria 2012 134 (4) 116 (3) -13.4%
Joe Mauer 2011 134 (6) 116 (5) -13.4%
Dustin Pedroia 2014 120 (6) 107 (2) -10.8%
Buster Posey 2013 149 (2) 139 (3) -6.7%
Albert Pujols 2004 164 (3) 168 (8) +2.4%
Albert Pujols 2012 167 (11) 121 (4) -27.5%
Manny Ramirez 2001 150 (7) 155 (10) +3.3%
José Reyes 2012 110 (6) 102 (4) -7.3%
Alex Rodriguez 2001 141 (5) 155 (7) +9.9%
Alex Rodriguez 2008 149 (12) 131 (6) -12.1%
Alfonso Soriano 2007 114 (6) 110 (7) -3.5%
Mark Teixiera 2009 133 (6) 126 (6) -5.3%
Vernon Wells 2008 108 (6) 96 (5) -11.1%
Jayson Werth 2011 122 (6) 123 (5) +0.8%
David Wright 2013 135 (8) 129 (2) -4.4%
Positive Change: 3 contracts
Negative Change: 18 contracts
Negligible Change: 11 contracts
Appendix F: Analysis of Position Players: Wins above Replacement (fWAR)
 Shin-Soo Choo 2014 3.9 (6) 1.8 (2) -53.8%
Carl Crawford 2011 4.6 (8) 1.8 (3) -60.9%
Jacoby Ellsbury 2014 5.3 (4) 2.5 (2) -52.8%
Prince Fielder 2012 3.3 (6) 2.9 (3) -12.1%
Freddie Freeman 2014 2.4 (3) 3.8 (2) +58.3%
Jason Giambi 2002 4.6 (6) 2.5 (9) -45.7%
Adrian González 2012 4.2 (6) 3.3 (4) -21.4%
Ken Griffey, Jr. 2000 6.5 (10) 1.0 (8) -84.6%
Josh Hamilton 2013 4.1 (6) 1.6 (2) -61.0%
Todd Helton 2003 5.4 (5) 2.8 (10) -48.2%
Ryan Howard 2012 3.0 (7) -0.1 (3) -103.3%
Derek Jeter 2001 4.7 (5) 3.8 (13) -19.1%
Matt Kemp 2012 3.7 (5) 1.6 (3) -56.8%
Carlos Lee 2007 2.5 (8) 1.3 (6) -48%
Evan Longoria 2012 6.6 (4) 4.7 (3) -28.8%
Joe Mauer 2011 5.1 (6) 2.6 (5) -49.0%
Dustin Pedroia 2014 5.4 (6) 3.3 (2) -38.9%
Buster Posey 2013 5.9 (2) 5.4 (3) -8.5%
Albert Pujols 2004 7.4 (3) 7.4 (8) n/a
Albert Pujols 2012 7.4 (11) 2.3 (4) -68.9%
Manny Ramirez 2001 4.5 (7) 3.6 (10) -20%
José Reyes 2012 4.6 (6) 2.6 (4) -43.5%
Alex Rodriguez 2001 7.1 (5) 8.0 (7) +12.7%
Alex Rodriguez 2008 7.6 (12) 3.8 (6) -50%
Alfonso Soriano 2007 3.5 (6) 3.0 (7) -14.3%
Mark Teixiera 2009 5.3 (6) 2.4 (6) -54.7%
Vernon Wells 2008 3.3 (6) 0.8 (5) -75.8%
Jayson Werth 2011 3.6 (6) 2.5 (5) -30.6%
David Wright 2013 5.3 (8) 4.0 (2) -24.5%
Positive Change: 3 contracts
Negative Change: 28 contracts
Negligible Change: 1 contract

Appendix G: Analysis of Position Players: Overall Change

Player Season in which LTC was Overall Change (“+”

Negotiated Indicates Positive Change,
“-” Indicates Negative
Change)
Miguel Cabrera 2008 +38.5%
Freddie Freeman 2014 +9.7%
Alex Rodriguez 2001 +4.4%
Carlos Beltran 2005 -0.9%
Albert Pujols 2004 -1.7%
Manny Ramirez 2001 -3.3%
 Robinson Canó 2014 -3.6%
Prince Fielder 2012 -5.1%
Alfonso Soriano 2007 -5.2%
Buster Posey 2013 -8.0%
Jayson Werth 2011 -8.3%
Derek Jeter 2001 -9.7%
Matt Kemp 2012 -10.0%
Carlos Lee 2007 -10.1%
David Wright 2013 -10.8%
Adrian González 2012 -10.9%
José Reyes 2012 -11.8%
Evan Longoria 2012 -12.5%
Dustin Pedroia 2014 -13.6%
Todd Helton 2003 -15.3%
Carl Crawford 2011 -15.6%
Jacoby Ellsbury 2014 -15.6%
Jason Giambi 2002 -16.0%
Joe Mauer 2011 -16.0%
Alex Rodriguez 2008 -16.4%
Mark Teixiera 2009 -16.6%
Shin-Soo Choo 2014 -17.5%
Vernon Wells 2008 -20.6%
Josh Hamilton 2013 -22.4%
Ken Griffey, Jr. 2000 -24.3%
Albert Pujols 2012 -30.3%
Ryan Howard 2012 -33.9%

Positive Change: 2 contracts

Negative Change: 23 contracts
Negligible Change: 7 contracts

Appendix H: Analysis of Pitchers: Opposing Players’ BABIP (Opp. BABIP)

Player Season in Average Opp. Average Opp. Percent
which LTC BABIP before BABIP after Change (“+”
was Signing LTC Signing LTC Indicates
Negotiated (Seasons (Seasons Positive
Change, “-”
Played) Played)
Indicates
Negative
Change)
Kevin Brown 1999 .291 (10) .271 (3) +7.4%
Matt Cain 2012 .269 (6) .260 (2) +3.5%
Zack Greinke 2013 .306 (7) .272 (3) +13.6%
Cole Hamels 2013 .282 (6) .295 (3) -4.4%
Mike Hampton 2001 .291 (6) .304 (4) -4.3%
Felix Hernández 2013 .302 (7) .286 (3) +5.6%
Clayton Kershaw 2014 .265 (5) .280 (2) -5.4%
Cliff Lee 2011 .297 (6) .296 (3) +0.3%
CC Sabathia 2009 .290 (8) .292 (3) -0.7%
CC Sabathia 2012 .291 (11) .304 (3) -4.3%
Johan Santana 2008 .264 (5) .275 (3) -4.0%
Justin Verlander 2013 .283 (7) .317 (2) -10.7%
Barry Zito 2007 .264 (6) .280 (5) -5.7%
Positive Change: 3 contracts
Negative Change: 2 contracts
Negligible Change: 8 contracts

Appendix I: Analysis of Pitchers: Fielder Independent Pitching (FIP)

Player Season in Average FIP Average FIP Percent Change
which LTC before Signing after Signing (“+” Indicates
was LTC LTC Positive
Change, “-”
Negotiated (Seasons (Seasons Indicates
Played) Played) Negative
Change)
Kevin Brown 1999 3.41 (10) 3.05 (3) +11.8%
Matt Cain 2012 3.68 (6) 3.67 (2) +0.3%
Zack Greinke 2013 3.50 (7) 3.00 (3) +16.7%
Cole Hamels 2013 3.55 (6) 3.27 (3) +8.6%
Mike Hampton 2001 3.85 (6) 4.79 (4) -19.6%
Felix Hernández 2013 3.37 (7) 2.96 (3) +13.9%
Clayton Kershaw 2014 2.79 (5) 2.09 (2) +33.5%
Cliff Lee 2011 3.67 (6) 2.91 (3) +26.1%
CC Sabathia 2009 3.66 (8) 3.27 (3) +11.9%
CC Sabathia 2012 3.55 (11) 4.04 (3) -12.1%
Johan Santana 2008 3.16 (5) 3.61 (3) -12.5%
Justin Verlander 2013 3.46 (7) 3.93 (2) -12.0%
Barry Zito 2007 4.20 (6) 4.52 (5) -7.1%
Positive Change: 7 contracts
Negative Change: 5 contracts
Negligible Change: 1 contract

Appendix J: Analysis of Pitchers: Skill-Interactive ERA (SIERA)

Player Season in which Average SIERA Average SIERA Percent Change
LTC was before Signing after Signing (“+” Indicates
Negotiated LTC LTC Positive Change,
(Seasons (Seasons “-” Indicates
Negative Change)
Played) Played)
Kevin Brown 1999 3.56 (10) 3.18 (3) +11.9%
Matt Cain 2012 4.18 (6) 3.77 (2) +10.9%
Zack Greinke 2013 3.60 (7) 3.25 (3) +10.8%
Cole Hamels 2013 3.38 (6) 3.38 (3) n/a
Mike Hampton 2001 4.38 (6) 5.23 (4) -16.3%
Felix Hernández 2013 3.41 (7) 2.89 (3) +18.0%
Clayton Kershaw 2014 3.32 (5) 2.17 (2) +53.0%
Cliff Lee 2011 4.02 (6) 2.87 (3) +40.1%
CC Sabathia 2009 4.04 (8) 3.53 (3) +14.4%
CC Sabathia 2012 3.90 (11) 3.74 (3) +4.3%
Johan Santana 2008 3.06 (5) 3.93 (3) -22.1%
Justin Verlander 2013 3.70 (7) 3.89 (2) -4.9%
Barry Zito 2007 4.46 (6) 4.85 (5) -8.0%
Positive Change: 7 contracts
Negative Change: 3 contracts
Negligible Change: 3 contracts

Appendix K: Analysis of Pitchers: Wins above Replacement (fWAR)

Player Season in which Average fWAR Average fWAR Percent Change

LTC was before Signing after Signing (“+” Indicates
Negotiated LTC LTC Positive Change,
(Seasons (Seasons “-” Indicates
Negative Change)
Played) Played)
Kevin Brown 1999 4.8 (10) 6.7 (3) +39.6%
Matt Cain 2012 4.0 (6) 2.7 (2) -32.5%
Zack Greinke 2013 4.3 (7) 4.6 (3) +7.0%
Cole Hamels 2013 4.3 (6) 4.3 (3) n/a
 Mike Hampton 2001 3.3 (6) 1.7 (4) -48.5%
Felix Hernández 2013 4.7 (7) 4.8 (3) +2.1%
Clayton Kershaw 2014 5.8 (5) 8.3 (2) +43.1%
Cliff Lee 2011 4.5 (6) 5.8 (3) +28.9%
CC Sabathia 2009 4.3 (8) 5.8 (3) +34.9%
CC Sabathia 2012 4.7 (11) 2.8 (3) -40.4%
Johan Santana 2008 5.7 (5) 4.0 (3) -29.8%
Justin Verlander 2013 5.2 (7) 3.9 (2) -25%
Barry Zito 2007 3.7 (6) 1.5 (5) -59.5%
Positive Change: 5 contracts
Negative Change: 6 contracts
Negligible Change: 2 contracts

Appendix L: Analysis of Pitchers: Overall Change

Player Season in which LTC was Overall Change (“+”

Negotiated Indicates Positive Change,
“-” Indicates Negative
Change)
Clayton Kershaw 2014 +31.1%
Cliff Lee 2011 +23.9%
Kevin Brown 1999 +17.7%
CC Sabathia 2009 +15.1%
Zack Greinke 2013 +12.0%
Felix Hernández 2013 +9.9%
Cole Hamels 2013 +1.1%
Matt Cain 2012 -4.5%
CC Sabathia 2012 -13.1%
Justin Verlander 2013 -10.7%
Johan Santana 2008 -17.1%
Barry Zito 2007 -20.1%
Mike Hampton 2001 -22.2%

Positive Change: 6 contracts

Negative Change: 5 contracts
Negligible Change: 2 contracts
Appendix M: Analysis of Teams: Change in Regular Season and Postseason Success

Team Season Average Win Pct. Total Playoff LCS40 World Series
s with Percentage Change Appearances Appearances Appearances
(+/-)
LTC (Wins)
on Befor Afte Before After Before After Before After
Payroll e41 r
Braves 2003- .584 .591 +1.2% 3 3 1 0 0 0
05
Braves 2014- .586 .441 -24.7% 2 0 0 0 0 0
15
Red Sox 2001- .528 .571 +8.1% 3 5 1 4 0 2 (2)
08
Red Sox 2011- .568 .491 -13.6% 1 0 0 0 0 0
12
Red Sox 2014- .599 .460 -23.2% 1 0 1 0 1 (1) 0
15
Cubs 2007- .478 .474 -0.8% 1 2 1 0 0 0
13
Reds 2000- .492 .462 -6.1% 1 0 1 0 0 0
08
Rockies 2001- .481 .473 -1.7% 1 2 0 1 0 1 (0)
11
Tigers 2008- .439 .525 +19.6% 1 4 1 3 1 (0) 1 (0)
15
Astros 2007- .542 .432 -20.3% 3 0 2 0 1 (0) 0
12
Angels 2011- .568 .538 -5.3% 3 1 1 0 0 0
15
Dodgers 1999- .505 .520 +3.0% 2 1 0 0 0 0
05
Dodgers 2012- .526 .562 +6.8% 2 3 2 1 0 0
15
Marlins 2012- .492 .428 -13.0% 0 0 0 0 0 0
14
Twins 2011- .548 .430 -21.5% 3 0 0 0 0 0
15
Mets 2005- .505 .514 +1.8% 2 1 2 1 1 (0) 0

40
The League Championship Series is the playoff series which takes place directly before the World Series.
41
“Before” denotes team performance in the number of seasons predating the signing of a player to a long-
term contract synonymous with the number of seasons after doing so.
 11
Mets 2013- .457 .500 +9.4% 0 1 0 1 0 1 (0)
15
Yankees 2001- .540 .585 +8.3% 6 12 4 6 4 (4) 3 (1)
15
Phillies 2011- .563 .484 -14.0% 4 1 3 0 2 (1) 0
15
Giants 2007- .548 .515 -6.0% 3 3 1 3 1 (0) 3 (3)
15
Mariners 2013- .418 .481 +15.1% 0 0 0 0 0 0
15
Cardinals 2004- .532 .555 +4.3% 4 5 3 4 0 3 (2)
11
Rays 2012- .568 .523 -7.9% 3 1 1 0 1 (0) 0
15
Rangers 2001- .523 .444 -15.1% 2 0 0 0 0 0
03
Rangers 2014- .568 .478 -15.8% 1 1 0 0 0 0
15
Blue Jays 2008- .514 .506 -1.6% 0 0 0 0 0 0
10
Nationals 2011- .409 .548 +34.0% 0 2 0 0 0 0
15
Totals 16042 .522 .501 -4.0% 52 48 25 24 12 (6) 14 (8)

42
This number denotes the number of total teams that contained a long-term contract on its payroll. For
example, the New York Yankees employed such contracts from 2001 to 2015 and would thus be counted as
16 distinct teams.