Baseball Strategy:Who should we sign?

Signing “Middle-Class” Free Agents Is Foolish.

Texas came under a lot of fire a few years ago for lavishing a $252 million, 10-year contract on Alex Rodriguez, and countless other stars have been heckled through the years for taking on enormous salaries, but the truth is that the real villains are the middling free agents who take in $4-9 million a year. Allow me to explain... The top free agent signings ever -- Greg Maddux and Barry Bonds in 1992 -- were largely worth every penny. Likewise, minimum-wage players at the other end of the free agent spectrum invariably produce a good return on the investment: they come at no risk, and they’re usually only one-year deals, so if they flop, there’s no long-term repercussions.

The middle class, however, is where ugly contracts are born. Not to pick on the Mets, but they’ve done a lot of this: in acquiring Cliff Floyd, Roger Cedeno, Pedro Astacio, Mo Vaughn, Kevin Appier, and Roberto Alomar in the early 2000s, they paid a pretty penny for old, injury-prone, and clearly flawed players in the irrational hope that they would somehow stay healthy, reverse the aging process, or simply not suck. Tampa’s had some doozies as well: Greg Vaughn, Jose Canseco, Fred McGriff, Vinny Castilla... Cristian Guzman and Eric Milton are other good examples of how some GM’s ignore obvious warning signs when going after middle-class, “established veterans”.

Additionally, since teams have to give away compensatory draft picks in order to sign free agents, inking deals with stiffs like Guzman create a triple-whammy effect: first, the Nats have to actually pay Guzman for multiple years; second, the Nats have to actually play Guzman -- out of pressure to justify his contract, and also out of the fact that the money they spent on him didn’t go to another SS that could replace him when they realized how awful he was; and third, the Nats relinquished a first-round pick to the Twins, a selection that could have been spent on a future SS that would likely be better than Guzman is right now.

The moral of the story is this: either go all-in, like teams did with superstars A-Rod, Bonds, Maddux, and Pujols, or stick to the low-budget model of building through the draft and signing useful minimum-wage FA’s. Also, consider this: the chance of finding a quality player in the first round of the draft is high enough that it is extremely foolhardy to surrender a pick for a mediocre free agent.

Talent In Baseball Does Not Follow The Rules Of Normal Distribution (The “Bell Curve”), But Rather Looks Like A Pyramid.

This should be obvious. For every player actually in the majors, there are hundreds of wannabes on the outside looking in, and that’s just minor-leaguers and players overseas. There were roughly 900,000 people in the population per Major Leaguer last year. Even slightly-below-average ML players are better than almost the entire professional-baseball population. So for all those fans out there that complain, ‘I could hit that!’: No, you couldn’t. Sorry.

The Replacement Level Is Real And Significant.

Instead of comparing players to the theoretical “average,” as many people do, they should be more concerned with comparisons to the replacement-level player, someone (a AAA player, for instance) who can be acquired at little or no cost. Looking back to Thing Number 7, we see that average players have definite value. Average players are playing baseball at a level that few professional players can attain. Joe Average is scarce. In fact, if a player’s production is above replacement at all he has some measure of value to the team, since his output is more than they could get from the minimum-wage player waiting in the wings.

There are degrees of this utility, though: If you pay the minimum salary to a player that puts up 10 runs above replacement, you just got those 10 runs for free; however, if you pay several million dollars for those 10 runs, you overpaid drastically. Teams that understand the economic concepts of Marginal Cost and Marginal Utility will do better in the long-term than teams that don’t, because the concept of the replacement level allows smart teams to avoid Guzman-type contracts, which can kill a team’s chances faster than you can say “Bobby Higginson”.

Beware Of The Young Player With The Dreaded “Old Player’s Skills”!

Remember Ben Grieve? He won the 1997 AL Rookie Of The Year with the Oakland A’s, posting