Did The Dodgers Sign Bauer For A Bargain?

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WE’RE BACK!!!!

Trevor Bauer, arguably the top free agent this offseason, is officially coming home to LA for a record setting contract. At surface level, Bauer signed with the Dodgers for a maximum of 3 years and $102MM. More specifically, he and his highly talked about agent got $40MM in a year no other free agent has been able to get more than $25MM.

We’ll be the first to admit, we weren’t excited initially about Bauer coming to LA, but looking closer at his contract shows why Friedman may have pulled off yet another fantastic move in the game of chess he’s playing against every other club. *Cough* San Diego *Cough*!

Highlights

  • Bauer 2018-2020
  • MLB Market Analysis
  • Bauer Bargain?
  • Bauer Contract Breakdown
  • Conclusion

Bauer’s Recent Past

Question 1 for every signing. What have you done for your teams lately? So here’s a quick look at some of Bauer’s stats for the last 3 seasons.

  • Stats
    • 2018: Cleveland, AL
      • 12-6, 2.21 ERA, 1.09 WHIP, 175.1 IP, 221 SO, 5.8 WAR
    • 2019: Cleveland/Reds (AL/NL)
      • 11-13, 4.48 ERA, 1.25 WHIP, 213 IP, 253 SO, 1.1 WAR
    • 2020: Reds, NL
      • 5-4, 1.73 ERA, 0.79 WHIP, 73 IP, 100 SO, 2.7 WAR
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2018 was Bauer’s first year finishing with an ERA under 4, and by a lot. He lead the AL in FIP and HR per 9 inning. He also had a whopping 11.3 K’s per 9IP as well. His ERA+ of 197 says he was 97% better than average. He even worked in a save that season. He finished 6th in the Cy Young voting that year, got his first and only all star nod, and even finished 22nd in MVP voting.

2019 saw regression after Bauer changed leagues. He pitched more than half the season for the Indians to the tune of a 3.79 ERA. Cinci traded for the ace but his ERA ballooned to 6.39 for his final 10 starts of the year. The NL hit him more frequently and harder. He went from 26% above average for Cleveland, to 27% below average for Cincinnati.

But then came his Cy Young 2020 campaign that made the trade 100% worth it. His ERA lead the league as well as his 2 shutouts, 276 ERA+, 0.795 WHIP, and 5.1 H/9. He had a career high 12.3 strikeouts per 9IP to top it off and set the league high in fastball spin rate. Even though he pitched against mostly below average teams and his FIP said he should’ve been worse, statcast still says there is an ELITE pitcher here.

Personally, Bauer is a bit polarizing. Some people love him, some people hate him. But we’re not here to critique Bauer as a person (as long as he doesn’t harm anyone obviously). We’re here to critique Bauer as a ball player who is getting paid $40MM by thee Dodgers for next season.

And as a ballplayer, Bauer has been great, to good, to elite these past 3 years. If you take out the growing pains of adjusting to a new league, there would be almost no question about if Bauer has taken the leap to his original #3rd overall draft value since his age 27 season. The only real question remaining, how long does that elite window stay open now that Bauer begins the slow decline of his 30s?

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MLB Free Agent Market Comparison

Going into the 2020 season, the original price per WAR was sitting around $8MM on the market. What do we mean by this? We mean that each free agent was receiving (on average) around $8MM for each projected WAR for the next season.

For example, Bauer signed for $40MM after producing 2.7 WAR in 11 starts, or roughly a third of a normal season. With the old number of $8MM per WAR, Bauer would need to produce less than 2 times the value he produced in only 11 starts in 2020. (5.0 WAR= $40MM)

Bauer’s value over a full 162 game season (at the same pace of 2.7 WAR/ 11GS) would have been 8.1 WAR or about $64MM of free agent market value. But after a year of covid and another year beginning, it seems that the free agent market has taken a hit.

So let’s take a look at all of the other top signing of the year and see what the new market value per WAR is.

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  • Other Top FA Signings

Batters

  • Arenado: (for the Cardinals) 7 yrs / $164MM
    • ($23.4MM AAV)
    • 2020 WAR: 1.4 (5.2)
    • 1 WAR Price: $4.5MM
  • Springer: 6 yrs / $150MM
    • ($25MM AAV)
    • 2.2 WAR (6.6)
    • 1 WAR $: $3.79MM
  • Realmuto: 5 yrs / $115.5MM
    • ($23.1MM AAV)
    • 1.4 WAR (4.2)
    • 1 WAR $: $5.5MM
  • Lemahieu: 6 yrs / $90MM
    • ($15MM AAV but it’s really for the next 4 years so we call it $22.5MM AAV)
    • 2.9 WAR (8.7)
    • 1 WAR $: $2.6MM
  • Gregorius: 2 yrs / $28MM
    • ($14MM AAV)
    • 1.2 WAR (3.6)
    • 1 WAR $: $3.89MM
  • Semien: 1 yr / $18MM
    • $18MM AAV
    • 0.5 WAR (1.5)
    • 1 WAR $: $12MM
  • Simmons: 1 yr / $10.5MM
    • $10.5MM AAV
    • 0.5 WAR (1.5)
    • 1 WAR $: $7MM
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Pitchers

  • Hendricks: 4 yrs / $54MM
    • $13.5MM AAV
    • 1.4 WAR (4.2)
    • (technically could be 3 yrs / $54MM paid out slowly)
    • 1 WAR $: $3.21MM
  • Stroman: 1 yr / $18.9MM (Didn’t pitch in 2020)
    • $18.9MM AAV
    • 2019 WAR: 4.6
    • 1 WAR: $4.11MM
  • Gausman: 1 yr / $18.9MM
    • $18.9MM AAV
    • 1.3 WAR (3.9)
    • 1 WAR: $4.85MM
  • Minor: 2 yrs / $18 MM (club option for 3 yrs / $30MM)
    • $9MM AAV (or $10MM)
    • 0.0 WAR (7.8 WAR in 2019)
    • Predicted 2021: 2.4 WAR
    • 1 WAR: $3.75MM
  • Morton: 1 yr / $15MM
    • $15MM AAV
    • 0.2 WAR (4.9 in 2019)
    • Projected 2021: 3.0 WAR
    • 1 WAR: $5MM
  • Hand: 1 yr / $10.5MM
    • $10.5MM AAV
    • 0.7 WAR (2.1)
    • 1 WAR: $5MM
  • Richards: 1 yr / $10MM
    • $10MM AAV
    • 1.0 WAR (3.0)
    • 1 WAR: $3.3MM
  • Quintana: 1 yr / $8MM
    • $8MM AAV
    • 0.0 WAR (1.4-2.5 WAR per season from 2017 to 2019)
    • Projected 2021: 1.7 WAR
    • 1 WAR: $4.71MM
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Very Rough Estimate for Total Average Cost For 1 War

$4.88MM per WAR is what all of these free agents average out to. Considering we will never know how much each team actually projects their signees, we just have to trust our very rough estimates. So rounding up to make this easier, we’re saying that the average cost of WAR for a free agent is $5MM

This is a drastic drop from the $8MM premium of just a couple offseason ago when Gerrit Cole, Bryce Harper, and Manny Machado all walked away with bags a lot of players won’t see for a while now.

And again this is very rough because as odd as it seems, each WAR typically loses it’s value as a player becomes more and more valuable. What do we mean? Well look at Brad Hand versus Liam Hendricks. Even though Hendricks is projected to be twice as valuable as Hand, the lefty is the one making more money per projected 1 WAR.

  • Hendrick: $3.21MM / 1 WAR
  • Hand: $5MM / 1 WAR

This is most likely because as expectations go up, the risk a team faces of that player injuring himself become greater. It’s no different than when you hear you need to “diversify” when investing.

In the example of Bauer, yes he can produce more value per game than most pitchers, but if he gets paid the same rate for his value, losing him for a single game becomes even more costly. Losing him for a season would cost the Dodgers more money than the entire Cleveland roster.

So when you think of the elite players and why they don’t make as much by value metrics, realize that it’s because a team needs to balance it’s total WAR across the diamond.

If you need an example, imagine the Angels if they lose Rengifo and Pujols to injuries. No biggie. Now imagine that the two injured players are Rendon and Trout. As much fun as stars are, if they were paid the same multiples, they wouldn’t have any talent around them.

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What Will It Take For Bauer To Be Worth It?… A Bargain?

So going back to Bauer and his $40MM salary for next year. Now we can roughly estimate what it takes for Bauer to live up to his hefty price tag for the Dodgers, if the Dodgers overpaid or underpaid compared to the market, and why Friedman structured the deal.

So in order to see what Bauer needs to do to perform at our “market average cost”, we divide 40 by 5 cleanly to get 8.0 WAR. Right on par with extrapolating his shortened 2020 total of 2.7 by 3. (8.1) So in our opinion Friedman made Bauer an offer that was right on the button. He is paying Bauer exactly the market value of what he produced last year.

If Bauer produces 8.0 WAR next year, he would have made his contract exactly worth it by the market standards set before the season. (Of course we technically don’t know what teams actually paid per WAR until after the season)

And again, that’s not counting the discount that upper WAR producers have to deal with. If anything Bauer got the AAV that we would predict if the market was still at an $8MM/WAR cost.

So if Bauer really does produce 8 WAR next year, we would bet that it will look like bargain by the end of next season. If he produces 9+ WAR (Cy Young, possibly MVP worthy), you can consider Bauer UNDERPAID believe it or not.

Bauer is being projected between 3.5 to 4.4 WAR for 2021 currently. That would mean the Dodgers would roughly pay $10MM per WAR from Bauer (not counting postseason). Or roughly double projected market value this offseason. But that’s projecting him at 13-9, less than 200 IP, and huge ERA regression to 3.60-4.01. We would call of those projections the aggressively conservative case.

We would predict an ERA between 2-3 and most likely closer to 3. His stuff his still league setting great and the MLB is rumored to be deadening the ball. We think this will be a rebound year for pitchers and Bauer will finish around his 2018 marks in Cleveland where he produced his career high 5.8 WAR. But we’ll round him up to an even 6.0 WAR projection.

At that level we think that Friedman roughly paid $6.7MM per WAR for Bauer in a year where the market is averaging $5MM. However we don’t think he overpaid. And that’s due to how he built the contract as the MLB is bound to strongly rebound this year. A likely reason to believe the market will go up again next year. Maybe even back to $8MM/WAR values.

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Bauer’s One Of A Kind Contract

Bauer signed perhaps the most interesting, and definitively record setting, contract. Bauer has an opt-out after every year of his contract. He’ll also make vastly different AAV’s if the Cy Young Winner does exercise all 3 years.

  • Contract By Year
    1. $40MM (Age 30)
    2. $45MM (31)
    3. $17MM (32)

Before we explain our reasoning, we think that Friedman made a bet that Bauer will be worth the money for the next 2 years, but peak this year. Bauer is actually betting against him.

Paying him more in year 2 shows that Friedman also believes that Bauer’s value will increase comparatively per year after his first year as a Dodger. But the price tag to drag him away will be north of $31MM a year at a minimum now.

Even though he’ll be $45MM on the books for 2022, his average over the two years decreases down to that $31MM mark as far as other teams offers are concerned. A level most teams won’t want to meet unless he somehow shows he’s still improving (or at least not declining from this elite level) as a 31 going on 32 year old.

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Hence the beauty of the Dodgers offer. This year he makes $40MM as a Reigning Cy Young Free Agent should regardless of how he performs the next year. Bauer earns his salaries, with the performance from the year before.

So the $45MM of year 2 is more a bet on how Bauer performs this year in 2021. Which also means that the $17MM for year 3 means that Friedman thinks Bauer will actually DISAPPOINT when the Dodgers are paying him the most money in year 2. At least by the numbers, Friedman sees Bauer being about a third as valuable of the player he is now by year 3 of the contract.

Conclusion

Bauer was by no means a cheap add, especially if the Dodgers can’t get back down towards the luxury tax in salary cap. It’s also impossible to say right now whether Bauer will actually be a Dodger for more than a year. Still, it’s hard not to feel excited about a 3 headed monster named Buehler-Kershaw-Bauer. It appears that Friedman is planning for a possible future without Kershaw.

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