The folly of pre-arbitration extension mania

James: Let’s try to get caught up on current events. In another great opportunity to rag on other AL Central, the rumors of the Twins nearing an extension with Brian Dozier is drawing the TCS’ staff’s ire.

Basically, the White Sox have given out two pre-arbitration extensions that we more or less feel great about (Chris Sale and Jose Quintana), and there’s a wave of pre-arb deals that get applauded by saberists for their projected surplus value, but we often criticize are premature and unnecessary. Is it just homerism talking or are there different approaches at work?

Nick: Perhaps I have been scarred from being a White Sox fan / fantasy baseball player, but my concern is more hedging against the possibility that a volatile player gets hurt or craters, as opposed to worrying, “What if he’s super good while under team control and becomes more expensive?”

I feel like that’s a good problem to have should that come to pass. Dozier is a great example of that.

James: For me, extending Dozier brings up many issues that the Twins extending Phil Hughes brought up. They have a guy who accumulated a not insignificant track record of being just ok, or even worse, had One Good Year, and now you’re negotiating the right to give a raise to a player already under contract for two more years or more, and secure some more seasons of when he’s well over 30. Unless the Twins are trying to give Costco a run for their money on the “Best Places to Work” list, I don’t see the benefit for them.

Nick: Dozier is going to be 28, he had one okay year, one plus year, and doesn’t really have much of a pedigree. He won’t be arb eligible until 2016, won’t be a free agent until 2019 - i.e. once he is 29 and 32 respectively. I don’t think his arbitration figures are going to be that expensive, and he’s the type of guy who might go right back to being terrible. As long as you’re going year-to-year in arbitration you can just cut him and it’s no problem. If you extend him with guaranteed money and he goes back to being bad, you’re screwed.

Ethan: One thing I think is problematic with a Dozier extension would be is he’s not someone you really need or a particularly rare player. Fetishizing contracts like that is how you get Jose Tabata making multimillions in AAA. Especially considering the age, it’s really a “why bother” kind of thing.

James: I think the Sale extension is too bulletproof--absolute ace-level pitcher when salaries for topline starters are exploding and you get him to accept less to protect against his arm giving out on him--to compare. But what goes into our acceptance of the Quintana deal?

Nick: Right, the Sale extension is the type of pre-arb contract that makes tons of sense for both sides. The difference between dollars 0-32 million is much bigger than the difference between 30-60 million as a human being. If Sale has a career-threatening injury, which is possibly for any pitcher at any time, he’s set for life anyway. Meanwhile, the White Sox get a free agent year or two locked in at what should be cheaper than market rate.

James: This is intense Devil’s Advocate here, but my argument is that a lot of the White Sox treatment of Quintana--making him untouchable in trades, etc.--was justified at the time by extreme organizational confidence in him. Confidence that outstripped empirical results and pedigree known around the league. Could Dozier be a similar case?

Nick: Clearly the White Sox were ahead of the curve on Quintana every step of the way. They, correctly, valued him more than anybody else did. They bought out potentially three free agency years (if you include options - which, similar to arbitration control give you the choice of jumping ship if the player turns south). I get the analogy you’re making with Dozier. I think age is a difference, as well as position / price. Quintana and Sale were both what...3-4 years younger than Dozier at the time of their deals?

If you go all the way to free agency with Dozier, or at least get closer, you’re talking about negotiating with a 2B for his age 33-35 or so seasons? That’s nowhere near the same thing as say, a #3 starter in his late 20s entering free agency.

2B often hit a wall in their early 30s anyway - Jon Bernhardt wrote about that a couple years ago -

The other thing is that the Quintana deal was just so relatively cheap that they could have been 100% wrong and it wouldn’t have been that big of a deal.

Re: Dozier and Hughes, I also agree with you James that if you have a player under team control and they have an aberrant career year, that is the absolute worst time to negotiate with them. They have nothing to lose, and the strength of their most recent year on their side.

James: So let’s get to the crux of our irritation. FanGraphs is regularly positive on pre-arbitration extensions, and FanGraphs has a pretty uniform house philosophy of approving/disapproving of moves based on projections (given what the site is, that’s to be expected), Craig Edwards recently described Dozier as an ideal extension candidate with the following justification:

Brian Dozier is an ideal candidate for an extension (they might be close). He has had two solid years in a row, including his breakout in 2014. He is set to make just around the minimum of $507,500 this season, making this spring an opportune time to work out a deal before he hits arbitration after the year. He has shown improvement every year he has been in the big leagues, increasing his walk rate from 4.7% to 8.2% to 12.6% last season. With a career .156 ISO, he provides decent power from second base in addition to his excellent speed on the basepaths (8.3 BsR in 2014).

Steady improvement, providing value in a number of ways, at the point where he’s most able to immediately benefit from a raise at the cost of some overall contract value.

Our question here is how solid is the assumption that he’s going to keep going? The huge advantage for the team is that the player has to prove himself over a six-year (or more) time period. Chucking that away should come with a lot of certainty about his consistency. I’m not sure how excited about him improving from 2012 I am, since it was his first taste of the majors and he was complete garbage and didn’t look like he was ready for the bigs (at 25!).

Nick: I know that one notion of conventional wisdom is that players’ careers will take the shape of a parabola, and that generally the players who make it to the majors earlier tend to hang around longer. Dozier is sort of the opposite of that, where he is breaking in late, which I believe is supposed to presage a mirrored rapid decline.

I don’t know whether it’s relevant to ask if you think he’s going to keep improving / repeat last year / be pretty good for a few years. You already have him under control for four seasons including this one. Even if you are optimistic on him and think he’ll be good for four more years, you don’t need to do anything about it. Are you REALLY worried some team is going to blow you away to retain the services of a 33-year old Brian Dozier?

Ethan: I think my biggest problem with any extension is there’s basically no upside in it. Players like Dozier don’t get arbiters eager to side with them for large dollar figures, and free agency is so far off. If Dozier keeps going as is, you’re set to have a significant amount of surplus value for 2015-2019 without any commitment. If he craters, you can cut ties. The same can’t be said of an extension.

It’d be one thing if he had some sort of potential for crazy upside, but I don’t see that. What tool yet untapped screams “this guy could breakout”? I think he’s already hit a way loftier upside than nearly anyone foresaw, and I highly doubt he’s going to suddenly become Ben Zobrist 2.0 or somehting.

Nick: Yeah, absolutely. This isn’t Ryan Howard / David Price / Craig Kimbrel. His arbitration hits aren’t going to make him cost more than he’s worth.

And besides, let’s say we’re wrong and we have only just begun to see the ascendancy of Brian Dozier - Superstar. Let’s say he just keeps murdering the ball and improving significantly every year. So then you pay him more in arbitration...and he’s really good for you. Like I said at the beginning, if he hits his 90th percentile, isn’t that a good problem to have? The arbitration automatically adjusts to protect the team from risk. If he sucks you can cut him, and if he gets better then the pay will scale a little bit more. If you lock in an extension you give up the ability to cut bait.

James: Perhaps this would make me the Sabes of the league, but if I was a GM, I think I would pretty slow to the draw on these extensions. I want something to repeat as a skill. Sale just murdered everyone at every opportunity, so probably after his first year as a starter, or mid-way through 2012, I’m trying to lock that down, but I probably wouldn’t have offered Quintana until mid-way through this past year, and that’s as much about watching him and how his stuff looked than results.

For Dozier, he doesn’t hit for average. He had a huge, out of left field power surge in April, then leveled off. He got on base pretty well, but even that was new this past year. I’d like more track record on him having a good approach or plus power.

Nick: Right, and even if we say he just repeats last year in 2015. How much more are you really going to have to pay him? I think it helps reassure you as the organization much more than I think it helps his argument that he deserves more money while still 3 years away from free agency.

James: I imagine it wouldn’t be hard to find an approving saberist analysis of the Jedd Gyorko extension at the time.

Nick: Buy high, right?  

James: Well, you can only plug a guy’s projections in at the time you’re operating in. Ethan’s here, and being kept from finishing his education. Is there part of the model that just doesn’t allow for proper accounting for guys who just fall out of the league and the statistical sample?

Ethan: Well, technically, yes, a model would always have that projection. Of course, when surplus value analysis is done, I think we too rarely see people analyzing more than 50th percentile outcome and upside. Players are by no means a guarantee to hit that 50th percentile; inherently, about 50% of players will fall below it.

Nick: We were all badly traumatized by 2011.

But I also think a lot of the big, early deals like this when it started becoming trendy have had an outsized impact on the perception of them. Evan Longoria’s deal is insanely team friendly, and people associate that deal with all of these other ones.

I also remember Ethan and @ihateprospects talking about this on Twitter a while ago, about how projection systems used to be more about identifying candidates for breakouts and collapses instead of just mushing everybody as close to the median as possible, which is what it seems to be now.

Ethan: A bit tangentially, this morning I was reading an old Colin Wyers BP article about SIERA, and how, if one were to reduce the variance in a model, the Root Mean Square Error (the most common measure of overall “accuracy” of a model) will inherently decrease without the model adding any compelling information. I do think this applies to an extent the problems with projection systems today- the sabermetric community is too focused on RMSE, to the point where the usefulness of models becomes small.

Of course, a model with high variability suffers from many problems itself- if a bunch of players are predicted to break out, of course you’ll get some hits but you’ll also get a projection of Matt Wieters, destroyer of worlds.

Nick: Sure, but I don’t really need a projection system to tell me what the guy’s last three years will tell us, or what we should expect given their age (is the guy 21 or 38?). Rather, I like being presented with a range of possible outcomes, and indications of, “Hey wait, Adam Dunn may collapse this year, whereas Adam Jones is relatively stable.”

Ethan: PECOTA does provide numbers in their projections like “BREAKOUT”, “COLLAPSE”, “IMPROVE”, etc. but one of my problems is that I have absolutely no idea the practicality of such a number. Furthermore, I’d personally much rather see a full distribution of potential outcomes for each player. I don’t know the feasibility of such a desire, but I think it would be fascinating to see some players, especially if there are some players whose projected distribution was particularly skewed

There certainly are players like that- Carlos Rodon, for example, may have a median outcome of a three or four starter, but 20th percentile likely wouldn’t be much worse than that, whereas 80th percentile is probably significantly better. Mau Rubio of BP’s prospect team has a really good term for this-positive elasticity- but I’ve only really heard it in a scouting sense, never really as a result of a projection system.

Nick: I always liked that idea from PECOTA, I was just dubious of their ability to execute it, especially after Nate Silver left. They launched the web based version that had the percentiles listed, and projecting years out, and it never really added anything / worked as well as you would think.

I don’t want to be too hard on people, because this stuff is really, really hard to get right, and if you could get it right you would probably get hired by a team immediately. These people have skills and experience that I just don’t have - but, I still think it’s worth checking ourselves and making sure we are being careful with how we use these various pieces of information.

I like the notion of positive elasticity and how the percentiles for each player’s skill set differs - but I think that a lot of that can be captured in the Floor / Ceiling phrasing. I also know the BA handbook has an overall grade and then a volatility grade. i.e. 45 medium, 50 high, etc.

Are there any position players on the White Sox who would merit such an extension? The only people I can think of would be Avisail or Eaton, and I’m not sure either one would make sense.

Ethan: I would worry about Avisail for the same reason I think the Jonathan Singleton extension was dumb in that there’s too much possibility for him to just not be worth any money at all. Eaton, on the other hand, seems like a guy an extension may make sense for- my worry is that he’s so far from free agency, he’s could break down, and speed doesn’t age well. A good OBP no-power guy who is relegated to the corner outfield because of lack of speed is just not a valuable player.

Nick: Eaton has a very stable and valuable skillset. He’s just brittle. And yeah, he’s extremely far from free agency. The argument for it would be his profile / age, as well as the fact that if he is concerned about his own durability you may be able to actually get some value out of it if you can convince him to take significantly less money.

And yes, that’s true, if he lost his speed he would be in trouble. I don’t know that it’s a great idea or something I would do. I think he’s the closest thing to a player it makes sense for on the roster right now.

I agree with you on Avisail.

James: If you have a guy who has had an injury history, and a history of being bad when diminished by injury, why sign up for his 30’s?

The arbitration model, is a horribly abusive, wage-suppressing system built for the owners’ advantage. I would be encouraged to work within it, if I’m representing a team. Efforts to get around it seem like they’re not using as leverage against the player enough.

Ethan: Yeah the issue of the righteousness of the arbitration system brings up a whole separate can of worms that I got deep into today on twitter (@spaldingethan yo), and the wage-suppressing nature of it all makes me uncomfortable with celebrating locking up players for cheap, but that is a topic for another time because of its complexities.

I do for the most part believe that some extensions should be done, but on players that don’t really move the needle it seems silly. It’s nice to extract menial amounts of surplus value from a guy like Dozier but what are you really gaining there?

James: The model cases for this approach feel like aberrations. Evan Longoria worked, but that was an extreme confidence bet that a stud prospect would be a stud. Matt Moore was along the same lines and showed that even that isn’t foolproof. For these useful guys like Hughes and Dozier, I think I'd do fine asking them to compile a consistent six-year track record and watching them fail. If they max out their potential, are Hughes and Dozier going to hamstring my budget?

Ethan: I think there is certainly enough upside in extending certain players that I think it’s a very legitimate plan. For example, even though Trevor Cahill and Ricky Romero cratered, I don’t think those contracts were bad decisions given what we knew at the time- I mean, if teams weren’t taking on any risk why would they sign such contracts in the first place? Guys like Sale, Lester, and Quintana signed similar extensions that turned out golden. My problem is locking up guys like Dozier, Hughes, Tabata, and Singleton, or even Miguel Cabrera and Justin Verlander- notably, all players in different stages in their careers and of different value to their respective teams- the team seems to be taking on a ton of risk without a proportional reward.

James: The last thing this conversation needs is another thread, but could there be more than a pure production element here? I joked about the Twins being Costco, but if they envision Dozier as part of their core, maybe they want to give him that validation and commitment and establish him as a fixture to everyone in the organization.

Ethan: I think this could definitely be a factor, and think that also contributed in the case of Verlander and Miggy (even if that money is still ludicrous). There probably is “surplus value” in showing loyalty to players, or maybe even beyond that, the owners just think it’s the right thing to do (lol jk no way). I have absolutely no idea how one would quantify such an effect, but certainly it could factor into the equation.

Collin: tl;dr


Follow The Catbird Seat on Twitter @TheCatbird_Seat