Free Agent Contracts By EWSL

For those of you who have been wondering what I was doing instead of blogging about baseball lately – besides being swamped with work and a not-sleeping-well baby – I decided to take a systematic look at this year’s free agent signings thus far, using Established Win Shares Levels. These are all the signings through Monday, drawn from ESPN’s list. [UPDATE: Yes, I know the chart is already a bit out of date – I may re-run this later to include Drew, Lugo, and Pettitte, as well as some of the people who sign later in the offseason].
EWSL is explained here, and the age adjustments I used, developed from the 2004-05 results, are here (I have not yet had time to add the 2006 results). As you will recall, EWSL is not a predictive tool and is not individually tailored to the player; it simply looks at the established level of quality a player has produced over the last three years, applies an age adjustment derived from actual experience, and concludes that a particular level of Win Shares is a player’s current established level of production. I see it as a baseline or starting point for an analysis of this nature, rather than an endpoint – in other words, if EWSL says a player’s current established level is 6 Win Shares, you need a really good reason to explain why you are paying a guy with the expectation that he will give you 20. I don’t exclude the possibility that a closer statistical analysis or some teams’ scouting and coaching staffs may have such good reasons, but the bigger the gap is, the more skeptical we should be.
The chart below is mainly self-explanatory. The last five columns list, in order, (1) the average per-year contract value, (2) the player’s 2007 EWSL, (3) the average contract value divided by 2007 EWSL, (4) the player’s average EWSL for the life of the contract, and (5) the average contract value divided by the average EWSL for the life of the contract. The chart is ranked by the final column, with the best bargains in terms of dollars per EWSL for the life of the contract at the top, and the worst deals at the bottom. I explain below some of the biases in the study, however.
EWSL more than a year out was computed by successive application of the age adjustments (I’ll spare you the algebra). Obviously that’s a crummy way to project a player as far as 8 years into the future, but then I’m not convinced that the Cubs have a better way to project a player 8 years into the future.

As I see it, this analysis has three biases you need to take account of before using it to analyze contracts.
1. You will notice that the top of the chart is dominated by short-term deals for low-cost, low-quality players, while most of the stars are in the bottom half. There’s a rational reason for that that doesn’t depend on GM stupidity. Lots of players can give you 1 Win Share; very few can give you 30. And there are still only 25 roster spots. In a perfectly efficient free agent market, that marginal 30th Win Share should be more expensive; the stars ought to cost a premium for scraping the right end of the bell curve. That’s an argument that the best measures analyze contracts by marginal value, but I didn’t have time to run an analysis of that nature.
2. Win Shares accords a fairly large share of the value of preventing runs to fielders as opposed to pitchers. As a result, especially with declining innings totals, all but the very best starters and nearly all relievers will top out in the mid teens, comparable to a solid but not star-level regular. While you could argue that this is a reflection that real-world teams should spend less on individual pitchers, you still need pitching, and accordingly the pitchers generally come in as more expensive. Another way of viewing this is to recognize that pitching is scarce and thus more valuable.
3. Unsurprisingly, players returning from long injuries preceded by periods of injury-reduced effectiveness are rated by EWSL as not being worth much. Naturally, the teams employing Randy Wolf and Octavio Dotel know that they are taking on a risk.
That said, some thoughts:
*I see Adam Kennedy as a guy nearing the end of his effectiveness, at least as an offensive player, but EWSL sees him as a guy who has been a consistent producer and is not that old, and just signed for a lower annual salary than Jose Valentin. The Cards don’t need to get a ton of value from Kennedy for that to pay off. Credit the savvy Walt Jocketty for that one.
*Yes, I recognize the inherent skepticism that accompanies anything that rates Kaz Matsui as a good deal. Just because he appears to be a good use of money doesn’t mean he’s a good use of at bats. Although I do still think Matsui may have a revival in him in Colorado.
*No, I do not actually think Gary Matthews and Juan Pierre are better investments than Glavine. Don’t forget the value of their defense, but I do see Pierre in particular as a guy who is in rather faster than usual decline.
*Note that Aramis Ramirez is the only player on the chart who has an EWSL of 15 or higher for the duration of his contract. Obviously, he’s a steal.
*I was a little surprised to see Jason Schmidt in the rogues’ gallery with Eaton, Wells, Meche, Lilly, and Padilla, none of whom are pitchers of comparable quality.