Matt Cain and Joey Votto just got rich, very rich. This week, Matt Cain signed a 5-year/$112.5 million contract extension today to stay with the San Francisco Giants. Cain is making the most money on one multi-year contract than any other right-handed pitcher in Major League history, and when his current one-year/$15 million deal is included his contract totals to 6-years and $127.5 million. Joey Votto also agreed to a massive 10-year/$225 million extension with the Cincinnati Reds. When his current 2 year/$26.5 million deal is included into this contract, it works out to the longest contract in baseball history, 12 years for $251.5 million. It’s crazy that both of these extensions went down one the same day and only a few days before Opening Day of the 2012 seasons. I’ll do my best to analyze whether or not these contracts make any sense.
The fact that Cain is being paid more than any right-hander ever does not mean, that he is the greatest right-handed pitcher of all-time. The reason Cain made so much is the current free agent environment. The market that is out there in the baseball world currently for starting pitching is lucrative. After the 2012 seaons, Cain was set to join a talented free agent pitching crop of Brandon McCarthy, Zack Grienke, and Cole Hamels. Brian Sabean, the Giants’ GM, understood that if he let Cain out on the open market his price would’ve sky rocketed as teams competed over his arm and the others on the market.
Cain is a strangely consistent pitcher. Cain has thrown 200+ innings over the last five seasons, his fWAR has been 3.3 or above in each of the last six seasons, and his ERA has ranged from 2.88-3.14 over the last three seasons. Thus, Cain is not only consistent but also very good. Cain’s consistencies become almost eerie, when one delves farther into his statistics. His K-rate always sits in the low-7’s, his walk rate has been in the high-2’s/low-3’s range, while he gives so few home runs. His career HR/9 rate is 0.74, he has never given up more than 1 HR/9 in his career, and last season he only gave up a home run once every 26.5 innings (or one every four or five starts). Cain has also been an anomaly on the blogosphere because his ERA is about 1 run below his xFIP, every year. This was a concern with the San Francisco righty for a good deal of time, but I don’t think it is anymore. Cain has shown the ability to keep not only the ball in the park but also getting soft contact (his BABIP has ranged from .252-.297 during his career with an average of .265).
So we’ve established that Cain has been consistent and very good, which is what Sabean is paying him to continue to be, but over the next six seasons will Cain be successful enough to be worth $127.5 million over the next six seasons. My weighted fWAR projection for Cain is 4.2. I’ll assume he won’t decline from that 4.2 WAR value until 2015, thus using $/WAR analysis I project Cain to be worth a total of $124.3 million over the course of the contract. Thus, under my projection the Giants will lose around $3 million on this contract, which isn’t too bad, and most likely the premium they were willing to pay to keep Cain in town. So in terms of dollars, this deal isn’t horrible, but does it make sense when the Giants’ organization is taken into consideration?
The Giants have zero offense. Sabean has failed miserably with the veteran free agent bat contracts he has dolled out… does Aaron Rowand, Miguel Tejada, or Edgar Renteria ring any bells? The smarter decision may have been to let Cain go, and sign a less expensive free agent arm, like McCarthy and in turn gone after a bat to help their dreadful lineup. Also, the Giants’ other ace, Tim Lincecum will be a free agent after the 2013 season, and will be expecting a contract similar if not more than the one Cain just inked. If Sabean wants to keep both aces around he’ll have to use around a third of payroll on the two starters, which is not the best allocation of resources. San Francisco has a major decision coming up now because they’re set with Cain. Either they roll the dice and sign Lincecum, trade the freak for some bats, or let him walk and use the money elsewhere.
This off-season, Votto’s former NL Central competitors, Prince Fielder and Albert Pujols, signed free agent contracts of similar length and value to that of the one Votto just received. Thus, when those contracts are taken into consideration this deal isn’t surprising. However, it is surprising that Cincinnati a team that many thought wouldn’t be able to retain Votto, and also that Fielder and Pujols were free agents when they signed their deals, while Votto had two seasons left with the Reds. Votto has been incredible over the last three years, winning the MVP in 2010. His fWAR has ranged between 4.7 and 6.9 over the last three years, and his wOBA has been over .400 in each season. Votto has the perfect combination of power and average, and he has the ability to sustain a very high BABIP. Votto plays solid defense, winning a Gold Glove last season. Votto may not have the track record of a Pujols, but he has been very, very good and the Reds must think he’s going to continue to be that good for the next twelve seasons. But is Votto worth $251.5 million?
Like the Cain analysis above I took a weighted average of Votto’s last three season’s fWAR to get a projected fWAR of 6.42, as well as assuming an after-30 decline of .5 WAR per season and then did a $/WAR analysis. Based on this projection model, Votto is going to be a very special player for a long time (he still projects to be worth 2 wins above replacement as a 39 year-old). I also project that the Reds won’t start losing money on this contract until the last two seasons of the contract and he’ll be worth a total of $341 million over the 12 years, bringing back almost $90 million in surplus value.
So the Votto contract looks like a great decision by the Reds, even though the 12-year contract is the longest in baseball history and has a lot of risk going a long with it, but Votto seems like a pretty safe bet. The only question remaining with this deal is whether or not Cincinnati is a big enough market to afford not only this contract but also to pay for the pieces that they need to surround a talent like Votto with. I’m not going to get into TV revenue streams, or attendance figures, because quite frankly I don’t know what the future holds for the Reds, but they seem to think if they continue their winning ways they’ll receive the TV revenue and ticket sales to sustain this massive contract.
These two contracts are great for baseball because not only will two stars be staying with the teams that drafted them for a long time, but also the fact that these moves are a great way to kick off what is sure to be a memorable Opening Week in baseball. Happy Opening Day to All!