MLB Insights

February 23, 2010 11:13 PM

Despite the high price tags, young players still provide great value

I have heard complaints about the amount of money being awarded to first round picks as well as arbitration eligible players.  They argue that it is impossible for small market teams to compete when a draftee like Stephen Strasburg receives a $7.5 million signing bonus, or Ryan Howard is awarded $10 million in his first year of arbitration eligibility.  Players with less than six years of service time are supposed to be cheap, and even I will admit that is not the case.  However, these players are still being paid well below market value, and are still the best way to build a competitive team for the lowest price.  Allow me to demonstrate (all salary information courtesy of Cot's Baseball Contracts). 

Howard Ryan.jpgLet's take a pair of Phillies to start.  Over the first six years of his career (2006-2011), Ryan Howard will be paid approximately $58 million dollars through salary, bonuses and incentives, thanks largely in part to his super-two status.  That is essentially $10 million for each year of service, which seems like an awful lot of money for a player who has not even reached free agency.  However, according to WAR, he will be worth $122.5 million worth of wins over this period, assuming he is worth $21 million in each of 2010 and 2011, which is not a stretch of the imagination by any means.  As you can see, even a player who reached super-two status was worth $56 million more than he was paid.

The knock against Howard is that he was drafted in the 5th round and received a paltry signing bonus, so let's take a look at Chase Utley, who was drafted 15th overall in 2000 and received a $1.78 million bonus.  Utley just finished up his 6th year of service time, and over this period has accumulated $28.225 million in paycheques.  His dollar value to the Phillies over this time span: $159.1 million.  Pretty good deal for the Phillies I would say.  The counter-argument is of course that very few players are Chase Utley, and many high-priced first round picks never even play a game in the Major Leagues.  To that I say Chase Utley is worth $131 million more than he was paid.  The Phillies could fail to develop a single player over their next ten drafts and still be in the positives.  With Howard, they could blow off five consecutive drafts while still breaking even.

To further hammer home the point, here are a few more examples:

Mark Teixeira: +$56 million

Grady Sizemore: +$117 million

David Wright: +$120 million

I know this isn't rocket science, and there are a lot of things wrong with baseball, but the pay structure for players with less than six years of service time is not one of them.        

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