Wednesday, June 02, 2004

Ordonez's Alleged Rejection Of A 5-year $70-million deal

It has been all over the Internet - well, since the Sox aren't all over the Internet, I should say White Sox Interactive and Soxtalk.com - that Magglio Ordonez has rejected a 5-year, $70-million dollar contract from the White Sox. The hub-bub has largely stemmed from a column by Jon Heyman in (New York) Newsday. The article reads:

Newsday has learned that Ordoñez's contract negotiations with the White Sox recently fell apart after he rejected a five-year, $70-million bid, exactly what he originally sought. Ordoñez now is all but certain to leave.

Very damning. But it's only a Newsday report for now, and we have no idea of the source or the contract that was offered. It could have had incentives, a lot of deferred money, who knows. But my instinct is that Ordonez wouldn't be wise to go into the market having rejected a Guerrero-esque deal with the Yankees largely taken out of it by contracts with Hideki Matsui and Gary Sheffield at the corners. It's likely only the Mets (who just spent a bunch on Mike Cameron) and Dodgers among major market teams might be able to pursue Maggs - and the Dodgers are hampered by Shawn Green's contract. So I think the rumors of Maggs' demise in a White Sox uniform are greatly exaggerated.

This brought me to thinking - what is the right contract for Maggs? Thinking about it analytically, one would want to know what similar right-fielders have made on the market for the value they've provided. I tried to calculated a value for Maggs in terms of $1000's of dollars per run of VORP he is likely to add from 2005-2009. I looked at all right fielders with more than 300 plate appearances from 2001-2003 and got their salaries from the
USA Today salary database.

I then segregated out the players with 7+ years of MLB experience- those who have signed free agent contracts (or at least signed contracts to cover a free agent year). I then threw out the worst contract (i.e., Bobby Higginson making $11 million for less than zero production) and the best contract (Reggie Sanders in 2002 and 2003 - cheap contract, good VORP) to arrive at an average of $302,000 per run of VORP for MLB RF'ers. I then calculated Maggs' projected VORP over the 2005-2009 period - estimating that his 2001-2003 VORP would attrit by 6% per year over the period - which is reasonable, given that Maggs would be 36 at the end of this contract, and it would still give him well above average performance.

The result is a contract of $68 M over 5 years, going from $15.4 million in 2005 to $12.0 million in 2009.

I then compared Maggs' production to Vlad Guerrero's over the same period. Vlad has produced a little bit better over the 2001-2003 period than Maggs (even with his injuries), and Guerrero's PECOTA projections show him attriting by 5% per year - arguable since Guerrero is now in his prime and 2 years younger than Ordonez.

So I took his salary over the period (splitting out his $5 million bonus in $1 million installments over the five years) and divided it by his projected VORP. I then applied that $000/VORP to Maggs' expected production over the same period...and got a 5-year, $60 million contract, an average value of $12 million per year. Anyway, here are the tables:

RF Average $000/VORP

RF Type20012002 2003 2001-2003 AVG
7+ Years 240 388 331 320
7+ Hi/Lo Deleted 219 366 322 302
All RF 165 234 221 207

Maggs' Salary Using Projected VORP (Using 7+ Hi/Lo Deleted)

2005 2006 2007 2008 2009 Total
VORP 51.04 47.98 45.10 42.39 39.85 N/A
$000/VORP 302 302 302 302 302 N/A
Salary $15,415 $14,490 $13,620 $12,803 $12,035 $68,363

(note- Maggs 2001-2003 Average VORP of 54.3)

Guerrero Salary 2004-2008

2004 2005 2006 2007 2008 Total
Projected VORP 56.02 53.22 50.56 48.03 45.63 N/A
Salary 11,000 12500 13500 14500 15500 $67,000
$000/VORP 196.36 234.89 267.03 301.90 339.71 N/A

(note- Guerrero 2001-2003 Average VORP of 59.0)

Maggs' Salary Using Guerrero Contract

2005 2006 2007 2008 2009 Total
Projected VORP 51.04 47.98 45.10 42.39 39.85 N/A
Guerrero $000/VORP $196 $235 $267 $302 $340 N/A
Salary $10,023 $11,270 $12,043 $12,799 $13,538 $59,672

Anyhoo, that's my rough analysis of the Magglio contract - he deserves less money than Vlad, and perhaps a little bit more than Garrett Anderson. The difference between the two - a 5-year, $65 million deal, would seem to be a decent deal, although Maggs making $13 million in 2009 at 35 scares me a bit. Maggs' comparables by age - Fred Lynn, Wally Berger - didn't age so well, and there are some question marks on his PECOTA comparables (Andy Pafko, Bernard Gilkey) as well.

Comments-[ comments.]
Very interesting, exhaustive analysis. So he's not way off base for asking for that much.
Well, he's not way off base, but I think that he's asking for too much by asking for 5 years $70 million based on either the Guerrero deal or the marketplace. One thing I noted about RF'ers is that there are a lot of marginal contracts out there - overpaying for very little production.

My thought is that something like $65 million over 5 years probably is a reasonable request. Remember, though, he's overpayed at $14 million per this year when Vlad is making $14 million as well (average value of deal). The best move is probably something like a 4-year $56 million deal that is 4 years with an option year at $14 million or a $4 million buyout. Pay him 13/13/13/13 and then if he stays healthy, it's a 5-year $70 million deal. Also, I think he can be insured if it's a 4-year deal. Gosh, this makes too much sense.
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