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Tuesday, April 12, 2011

Buchholz-Cahill Extensions

It has become the MO of front offices in recent years to try and lock up good young starting pitchers to multi-year deals. Jon Lester, Ricky Romero, and Yovani Gallardo, for example, have signed, in the past three off-seasons, contract extensions eating up arbitration and free agent years worth about $30 million guaranteed. This past week saw similar contracts doled out by the Red Sox and Athletics to Clay Buchholz and Trevor Cahill, respectively. What I will try to do here is compare the two (strikingly similar) contracts, as well as the two pitchers, and find which pitcher is giving his team the better deal -- assuming both deals make sense right now.

The Buchholz Extension

2011 Salary - $550 K
2012 - $3.5 MM
2013 - $5.5 MM
2014 - $7.7 MM
2015 - $12 MM
2016 - $13 MM (Team option with $245 K buyout)
2017 - $13.5 MM (Team option, $500 K buyout, increases to $14 MM if Buchholz places in top-two in Cy Young voting in any season prior to 2017)

So we know what type of deal Buchholz is getting - but what kind of pitcher is Buchholz?

The story is well-known at this point. A phenom in 2007, Buchholz looked like a bust in 2008, but he found his form in 2009 and had a dominant 2010, posting a 2.33 ERA in 173.2 IP. He posted less impressive peripherals, namely a 1.79 K/BB, but his 0.5 HR/9 kept his ERA at ground-level. In order to find the saving of the contract, however, we need to find his value, and to do that we must know what kind of pitcher he is.

I have always maintained that 2009 was probably what we can expect from Buchholz - an ERA around 4.00 with healthy, if unspectacular peripherals. If we extrapolate his 1.7 WAR in 2009 over a full season -- 32 starts, he is a 3.4 WAR pitcher. However, 2009 was hurt by an outlandish 10.5% HR/FB rate, about 3 points higher than both his career and league averages. If we account for the difference in HR rate you get an expected WAR for Buchholz around 3.6.

Fangraphs has the value of a win at $5 MM in 2011, then increasing gradually. Assuming Buchholz maintains a steady 3.6 WAR for the duration of the contract (It's almost certain that he won't, but at age 26 a decline isn't terribly likely), the savings for the Red Sox are detailed below.

Year - WAR(win value) = Player value - salary = team savings
2011 - 3.6(5.00) = $18 MM - $500 k = $17.5 MM
2012 - 3.6(5.25) = $18.9 MM - $3.5 MM = $15.4 MM
2013 - 3.6(5.51) = $19.8 MM - $5.5 MM = $14.3 MM
2014 - 3.6(5.69) = $20.5 MM - $7.7 MM = $12.8 MM
2015 - 3.6(6.08) = $21.9 MM - $12 MM = $9.9 MM
2016 - 3.6(6.30) = $22.7 MM - $13 MM = $9.7 MM
2017 - 3.6(6.60) = $23.8 MM - $13.5 MM = $10.3 MM

Now, it is foolish to assume he will maintain a steady 3.6 WAR for the duration of this deal - he could get hurt (he almost certainly won't make 32 starts for each of the next 7 seasons), lose effectiveness, or improve. For now, it is most prudent to go with this estimate going forward, and it gives the Red Sox the potential for an incredible $93 MM in savings -- possibly even more when one considers that the '16 and '17 seasons would be free agent seasons, and if he were putting up a 3.6 WAR he would be sure to be getting paid more than $13.5 million

The Cahill Extension

Almost literally the same extension that Buchholz got, the difference being $50k in salary for this season and $50k in the 2016 option year buyout:

2011 salary - $500k
2012 - $3.5 MM
2013 - $5.5 MM
2014 - $7.7 MM
2015 - $12 MM
2016 - $13 MM (Team option with $300 K buyout)
2017 - $13.5 MM (Team option, $500 K buyout, increases to $14 MM if Cahill places in top-two in Cy Young voting in any season prior to 2017)

Cahill is a much more normal story than that of Buchholz - a former 2nd-round draft pick, he broke in in 2009, throwing a solid season as a 21-year-old, then posted a very impressive 2010 in which his ERA was below 3 and his WAR was 4.0. Cahill's season was similar to Buchholz', though, in that he did not pitch as well as his numbers indicate, as a 3.99 xFIP will attest. So, was he a 4.0 WAR pitcher in 2010? Probably not. However, he has shown signs of improvement thus far in 2010 (unlike Buchholz), and he is still just 23 -- much more likely to improve than Buchholz.

One thing about Cahill that also separates him from Buchholz - he has had much more trouble with the longball. Cahill has a career 1.1 HR/9 which, while not awful, is not as good as Buchholz' 0.9, and with the strikeout and walk ratios what they are (similar), that 0.2 point difference is noticeable.

ZIPS is predicting Cahill to post a 4.05 ERA, which would be good for a WAR in the low-two's, but based on his performance so far in the season, his minor league track record, and his age, I think it is entirely fair to assume an average WAR in those mid-3's, as with Buchholz (see the above year-by-year, since it will be the same for both men). For this reason, I am calling the contracts a draw, with one aside:

Cahill is younger, by three years. He is entering third-year starter status, when many pitchers break out. While, if Cahill pitches very well over the remainder of his contract, he could save the A's as much as Buchholz is (potentially) fetching the Red Sox, Cahill has more upside. We could start to see it now, but if we don't - we might have 6 more seasons to see him emerge as the better starter.

Also, keep in mind that the odds of these projections coming anywhere near true are incredibly small. Either pitcher could fall apart or turn completely dominant at the drop of a hat, as young pitchers, and pitchers in general, are wont to do.

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