Finally, Clayton Kershaw signed an extension to stay with the Dodgers. I was sincerely getting worried he simply did not want to be on the team. He had reportedly turned down a $300 million deal, and this has been dragging on for quite some time. His comments on the situation have been lukewarm, and "omigosh is he just not that into us?"
Well, that’s over with. He does want to be here, at least for another five years. He signed a 7-year, $215M contract with an opt out clause after the fifth year. He’ll be just 30 years old when he can opt out, but with maybe ~2,300 major league innings on his arm. For comparison, active players with 2,300 IP are A.J. Burnett, Roy Oswalt and Barry Zito. Chris Carpenter and Roy Halladay just retired. In other words a lot of people that are about to retire.
Pitcher aging curves have a pretty short ramp while they’re learning how to pitch effectively. Physically, they are getting worse from the minute they make their debut. Everyone just gets slower and more injury prone (recent performance-enhancing drug era notwithstanding). So, for a pitcher who has been in the league a few years, you can pretty much expect he’s just going to keep getting worse. Especially if they are already pitching well. If someone is talented but hasn’t put it all together yet, then you could still hold out hope for upside. With Kershaw, you don’t want to bet against the man, but there’s not a lot of room for improvement.
Evaluating his career as a full-time starter, we see an almost unrivaled stretch, one history will remember:
I include all the win above replacement metrics because they diverge quite a bit in his case. FanGraphs WAR is predicated on the idea that pitchers cannot control their batting average on balls in play, nor do they have the ability to dial it up and down depending on the situation. Every at-bat is treated in isolation, and only strikeouts, walks and home runs end up counting toward fWAR. Kershaw though, does induce poor contact. Every single year, and not by a little bit, his BABIP is lower than the league’s.
Typically it is .265 vs. the league’s .300. In a later post, I’ll try to understand why that is. You could say fWAR underrates him. RA9-WAR counts all the runs on his watch against him, and doesn’t try to remove luck or the effect of how much better or worse his fielders are than average. Dodger stadium suppresses runs and the Dodgers defense is actually pretty good lately, so RA9-WAR might overrate him. Baseball-Reference WAR is pretty intricate, and tries to take everything it can into account. It starts from the runs allowed and then tries to sort of normalize it for his park, his defense, etc.
Anyway, let’s take a look at what we might expect going forward:
$ / WAR
What goes into this? While he will probably get a little worse year by year, he will still probably be really good. I tried to ding the innings pitched a little here and there for minor injuries too. The WAR figured here is a simple one, just how many earned runs did he save compared to a replacement pitcher, translated to wins. If you take the ERA estimate as an estimate of his skill, rather than his actual ERA once his skill gets mixed with luck and defense, then this is fair to do. Meanwhile, the price for a win (as measured by each year’s free agent contracts vs. the projections of those free agents) is increasing and possibly even accelerating. Conservatively, let’s just say it continues to go up by 5 percent per year.
The contract ends up being extremely fair by this analysis. The Expected Net Value to the Dodgers is about $10M over the first five years. Kershaw may not choose to opt out if everything unfolds as above, since the above projects the contract to be a slight negative asset to the Dodgers in the final two years, and the total contract would come in at $218M of value. However, all businesses care more about results this year than next year, and in baseball, that seems even more true -- certainly for teams that are aiming to compete now (a few teams are explicitly making the choice to rebuild and compete later). If we put any kind of discount rate on the yearly net asset values, then the huge expected 2014 benefit clearly makes this contract a big financial win for the Dodgers.
The reason teams are willing to pay for wins is mostly because revenue also goes up with wins. Dodger fans are probably going to show up in the same numbers if the team looks like it will win 94 games or 97 games the next few years. The marginal value of an extra win depends how many wins you expect to have, and is probably lower than league-average for the Dodgers right now.
But the whole business model of the ownership group is to prove to the fanbase beyond a shadow of a doubt that the Dodgers will compete for a championship every year. That, in and of itself, wouldn’t bring in fans. People don’t want to root for laundry. The depth of connection that comes from having continuity with their most valuable player is worth something. And the value to this particular franchise that has relied on historically great pitchers since arriving in this city of this particular historic player -- a fastball-curveball lefty with unimpeachable character -- that makes the deal a huge win for the Dodgers' bottom line.
On the field, the value of having literally the best pitcher in baseball is not what’s going to push the Dodgers into the playoffs. They’re probably there without him the next few years. But it very well could be what pushes them through the playoffs -- that makes the deal a huge win for the fans that have been waiting through a couple of decades of mediocrity, ridiculousness and disappointment.
Photo credit: kla4067, Flickr