Evaluating the Cardinals' long-term contracts

The Cardinals, especially in recent years, have taken a very cautious approach when it comes to long-term contracts, especially for veteran players. This strategy has worked out extremely well, as the team has been able to count on contributions from young, cost-controlled players who came through their minor league system. Having said that, the Cardinals have at times shown a willingness and ability to spend money and increase payroll, especially in efforts to retain their own star players. They have done this with players like Matt Holliday, Yadier Molina, Adam Wainwright, and Matt Carpenter, and they attempted to do so with Albert Pujols in 2011. While the team's recent success makes it is easy to say that these contracts were good moves for the team, we can see just how good these contracts have been by looking at each contract in detail and comparing the value provided by the player to the amount he is being paid.

Fangraphs has a very helpful metric for this, which converts WAR to a dollar scale based on what a player would make in free agency. We can say that this dollar figure approximates the value a player provides to his team, assuming that 1) teams value players similar to the way WAR does, and 2) the amount of money a team pays a player per win is approximately the same as the marginal revenue the team expects to earn per additional win. We can then compare the monetary value a player provides for his team to the salary paid to the player in order to determine whether the team or the player benefits more from the contract.

There certainly are some obvious flaws to this metric. For one, different teams value players in different ways, and this metric isn't able to account for these differences. Also, because of factors like market size and fan loyalty, a one win player is worth more money to the Yankees than he is to a team like the Rays, because an extra win will typically generate more money for the Yankees than for the Rays. In fact, in his essay New Approaches to Player Valuation: Analyzing How Wins Generate Revenue for Major League Baseball Teams, W. Graham Tyler writes that

"the returns to winning are determined by the unique, dynamic relationship each team has with its fans and other factors that cannot be quantified in a model that pools all teams."

While it is important to recognize the imperfections in the Fangraphs dollar-WAR metric, it is the best estimator I know of that puts a dollar figure on the value produced by a player, and it will be sufficient for the purposes of this post.

It is also important to note the importance of looking at an entire contract when evaluating how much a player has been worth to his team, relative to how much he is being paid. Typically, a player signed to a long-term contract will be more productive at the beginning of the contract since he is likely still in the prime of his career. Thus, in a typical long-term contract (assuming a relatively fixed salary year-to-year), a player will produce more value than he is being paid for at the beginning of his contract and produce less value than he is being paid for at the end of his contract. Smart teams know this, and they are usually willing to accept poor performance at the end of the contract as long as the player's performance at the beginning of the contract makes up the difference.

In an excellent piece at Fangraphs earlier this offseason, Dave Cameron discussed this very concept when he wrote:

"Players can, and often do, justify almost the entire cost of a long-term contract within the first few years of a deal, allowing the transaction to be reasonable even if it ends with the player being an albatross. The way contracts are structured in MLB, free agents agree to be underpaid at the front of a deal and overpaid at the back end, and everyone is perfectly okay with this arrangement."

Keeping this in mind, how well have the Cardinals done with their long-term contracts?

Matt Holliday

Matt Holliday's contract (7 years $120 million) is the largest in team history, and there are currently two years remaining on it, plus a $17 million club option for 2017. Holliday has been remarkably consistent during the first five years of his contract with the Cardinals, posting a wRC+ over 130 each season and fWARs of 6.2, 4.8, 4.5, 4.4, and 3.8. While Holliday has declined slightly from year-to-year, he is still an elite hitter despite turning 35 last month. Up to this point, Holliday has already produced $109.7 million in value for the Cardinals according to Fangraphs, and barring injuries or collapse in performance, he should comfortably surpass the $120 million mark in 2015. If Holliday produces close to what we would him to for the next two years (even factoring in age-based decline), his contract will end up being a relative bargain when it's all said and done.

Adam Wainwright

Adam Wainwright is currently in the middle of his second multi-year deal with the Cardinals. He signed an extension in the spring of 2008 which paid him close to the league minimum for the 2008 season, bought out his arbitration years (2009-2011), and included two options on his first two free agent years, both of which were picked up. In total, Wainwright's first extension ended up totaling 6 years and $36 million. Since Wainwright 2008 was his final year before arbitration and he was paid close to the league minimum, I am excluding this year from this analysis, since he would have been paid about the same, regardless of how much the team thought he was worth.

For Wainwright's arbitration years, I will adjust his salary up to approximately market value using the 40/60/80 model, where a player makes 40% of market value in his first arbitration year, 60% in his second, and 80% in his third. With these adjustments, Wainwright's contract for 2009-2013 would have been worth $43.4 million. In contrast, Wainwright produced a whopping $96.6 million in value, according to Fangraphs, over those five years. Even taking into account Wainwright's team-friendly arbitration year salaries and the fact that he missed all of 2011 recovering from Tommy John surgery, this contract has to be considered a massive win for the Cardinals.

Wainwright is only one year into his newest contract, which gives him $19.5 million per year for the next five years, for a total of $97.5 million. For the 2014 season, Wainwright produced $24.9 million in value for the Cardinals. While this is higher than what he was paid for 2014, this is about on par for what we would expect, assuming Wainwright overperforms the front end of the deal and underperforms the back end of the deal as he declines with age. This contract certainly won't as big of a bargain for the team as Wainwright's first contract, but it pays him for being what he is: an ace.

Yadier Molina

Molina, like Wainwright, is in the middle of his second multi-year deal with the Cardinals. His first extension, signed before his first arbitration year in 2008, gave him $15.5 million for four years, plus a club option for 2012, which was worth $7 million. Using the same process to adjust Molina's arbitration year salaries to approximately market value, his first contract, from 2008-2012, would have been worth $27.4 million. Over these five years, Molina produced $87.1 million in value for the Cardinals, making his contract even more of a team friendly deal than Wainwright's first contract.

Molina is now two years into his newest contract, which he signed in the spring of 2012. This contract, which covers 2013-2017, guarantees him $75 million over five years and includes a $15 million option for 2018. So far, Molina has had one great season (5.5 fWAR in 2013) and one merely good season (3.1 fWAR in 2014) in which he missed time due to injury. Up to this point, Molina has been paid $30 million for these two years, and he has produced $44.4 million in value for the Cardinals. This appears to be a good sign for the Cardinals, as Molina has comfortably overperformed his contract thus far, despite his injury in 2014. While there is still some risk in this contract, due to the wear and tear from the catcher position, Molina is on pace to match, if not surpass, the value of his contract.

Jaime Garcia

And now the one that didn't work out. The Cardinals gave Garcia an extension in the middle of the 2011 season, buying out his arbitration years (2012-2014) and one year of free agency for a total of $27 million. Adjusting his arbitration-year salaries brings that total up to $36.6 million, or $27.3 million without his 2015 salary included. Of course, Garcia has spent much of the last three seasons dealing with shoulder injuries, throwing 121 2/3 innings in 2012, 55 1/3 innings in 2013, and 43 2/3 inning in 2014. In total, Garcia has produced $16.7 million in value for the Cardinals over these three seasons, which isn't that bad, given the amount of time he's missed. But unless Garcia magically returns from injury to pitch a full and productive season this year, this will probably go down as one of the worst contracts for the team in recent memory, which really says something about how good the Cardinals have been at avoiding bad contracts.

Jhonny Peralta

Since a fair number of people questioned the Jhonny Peralta signing last winter, I thought I'd write a little bit about his first year with the team to show just how valuable he has been so far. The Cardinals gave Peralta a four year $53 million contract last offseason, and they made the unusual choice to frontload the contract, giving him $15.5 million in 2014, $15 million in 2015, $12.5 million in 2016, and $10 million in 2017. Peralta had a monster season in 2014, posting a 5.4 fWAR, in large part due to his outstanding defense at short. According to Fangraphs, this performance was worth an incredible $29.9 million for the Cardinals. Even with the frontloaded contract, Peralta's value was nearly double his first year salary and over half the total value of the entire contract.

All in all, the Cardinals have done a pretty good job with long-term contracts in recent years. In particular, the team has been pretty good with extending young players, as Wainwright and Molina both became star players after signing their first extension, making those deals look incredibly team-friendly in hindsight. They have also done a good job with the free agent signings of Holliday and Peralta thus far, as these players are well on their way to outperforming their contracts. Ultimately, though, the best long-term contract for the Cardinals was the one they didn't offer to Albert Pujols. Pujols' production has not matched his salary in any of his three seasons with the Angels, and his contract will only get worse for them as he ages.