Howard Gets Extension Through 2016

EDIT: Check out what Matt Swartz has to say about the extension at Baseball Prospectus. He makes a lot of good points. Swartz specifically adjusts for inflation, something I was too lazy to do in the analysis below.

Jim Salisbury of CSN Philly has the scoop. Five years, $125 million extension for Ryan Howard and it kicks in after the 2011 season.

From 2005-09,  Howard has contributed 21.6 WAR, an average of 4.3 per season. In that span of time, he has been paid $26.6 million and provided an overall value (production minus salary) of $66.6 million. Seems like a great deal, right?

The going rate for a win in 2010 is about $5 million, which means that — assuming that figure stays static — in 2011 and ’12, Howard will be paid as a 4-win player. From 2013-16, he will be paid as a 5-win player. Using the ten-year forecast from Baseball Prospectus, Howard will be worth 3.3 wins (WARP3) in 2011 and decline gradually.

Over the length of the extension, Howard is projected to accrue 11.7 WARP3, an average of under 2 per season. Even if we make the extremely generous and unrealistic assumption that the value of a win is $5 million not just in 2010, but throughout the length of the contract (it won’t — it will rise most likely), Howard still provides an increasingly negative value to the Phillies. $84.5 million specifically from 2012-17. In chart form:

*Note: 2010-17 numbers are projected and assume a static $/win of $5 million (because it is impossible to know exactly what the going rate will be). Howard’s value is likely to be much worse than indicated above. Additionally, the 2017 season is a club option with a $10 million buy-out.

This extension pushes the Phillies’ guaranteed payroll in 2012 to about $87 million, tied up to just eight players including Howard: Roy Halladay ($20 million), Chase Utley ($15.3M), Joe Blanton ($10.5M), Shane Victorino ($9.4M), Placido Polanco ($6.4M), Carlos Ruiz ($3.7M), and Brad Lidge ($1.5M). There may be six arbitration-eligible players as well in Cole Hamels (fourth year), Kyle Kendrick (second), Ben Francisco (second), Scott Mathieson (second), J.A. Happ (first), and Mike Zagurski (first). In short, the Phillies will be paying a lot of money to just a few players, almost all of them past their prime. Furthermore, the team will have very little flexibility as few teams will want to take on such expensive contracts.

Thinking more short-term, Howard’s $20 million salary from 2011-13 may prevent the Phillies from having the financial flexibility to sign right fielder Jayson Werth to an extension, which means that he will most likely become a free agent after this season. You may recall that two months ago, I suggested the Phillies should think about trading Howard to give themselves the ability to extend Werth. Obviously, GM Ruben Amaro disagreed and apparently has tremendous faith in Domonic Brown to transition seamlessly to the Majors. The 2011 team will look a lot like this year’s team, only with Dom in right instead of Werth.

There are a couple positives with the deal. The first, obviously, is that the Phillies will not have to look for a first baseman for a long, long time — barring injury. It is unfortunate, though, that the Phillies have locked up such security at the least important position on the baseball diamond in the National League. Additionally, the Phillies may end up saving themselves several  million dollars every year theoretically as the post-2011 free agent market may include Albert Pujols and Prince Fielder and both may exceed Howard’s average annual value of $25 million per season. Both players are likely to be signed to extensions (in Fielder’s case, perhaps with a new team) beforehand.

Most Phillies fans will love the extension, as it keeps a fan favorite in town for a long time. Stat-savvy fans immediately dislike the deal. Most Phillies fans will come to loathe the deal in several years when the Phillies are hamstrung by Howard’s relatively large salary and declining production.

Already, Howard has shown signs of decline as his walk rate has declined every year since 2007 and sits at a paltry 3.6% thus far in 2010. His BABIP has been lower as more and more teams have employed an infield shift against him. Opposing teams have also been bringing in more left-handed relievers to face Howard and his production against them has swiftly dropped. His strikeout rate has declined gradually but so has his isolated power. Using FanGraphs’ pitch type linear weights, Howard’s production against the fastball has dropped every year since 2006. He has swung at more and more pitches outside of the strike zone every year since he came into the Majors. Finally, his whiff rate (swinging strike percentage) has increased every year since 2006.

This will be a fun ride for two, maybe even three more years, but it will quickly become tumultuous.

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30 comments

  1. Steve

    April 26, 2010 02:25 PM

    Couldn’t agree more with this analysis. I also don’t understand why the Phillies felt the need to do this deal now. Why not let him play out his deal? Would another team have paid him more money than what we just agreed to pay out? This is a ton of money, and even worse, a long long deal.

  2. MplsPhilliesFan

    April 26, 2010 02:44 PM

    While I do not disagree with any of Bill’s assertions, I think this was more of a PR move than anything else. The Phillies are still fighting against an (improper) perception that they are cheap, which was only reinforced in the mind of Joe Q. Public when they would not resign Cliff Lee.

    Making sure that Howard remains a Phillie is a sign to the general fan that management is serious about winning. Even though he is a more versatile player and a better bet to retain his skills long term, Jayson Werth does not have the high level profile that Howard does. This was a short term business decision, not a baseball one, and gives management a possible excuse for why Werth will not be resigned (although I realize that the extension will not kick in until 2012, and should not be sued to deflect blame, the cynical part of me thinks it will)

    Here is a question I have though: How much will it take to resign Chase Utley when his cotnract is up in 2012?

  3. Phillies Red

    April 26, 2010 03:05 PM

    I’m fully on board with this analysis, and totally share Steve’s question: why now? The Phils don’t always pull off the best contracts, but it seems odd that they would just go ahead and commit $125 million over the next 6 years without very good reason. They must think that Howard is going to age well, or that the market for HR-hitting 1st baseman is going to take off again. Or perhaps this is about budget certainty, and they now have the flexibility to plan and execute some nice moves over the next two or three offseasons (Werth, or perhaps more SP?). Again, this team isn’t always the sharpest when it comes to contracts, but there’s got to be something compelling them to do this now.

  4. Danny

    April 26, 2010 03:10 PM

    Agree.

    The opportunity cost of this deal could take them out of World Series contention for a few years in the middle of this decade as every other team in the division improves.

  5. Shooter-B

    April 26, 2010 03:24 PM

    Now maybe he can quit his 2nd job selling sub sandwiches.

  6. Sophist

    April 26, 2010 03:35 PM

    How good are these 10-year forecasts, esp. for a guys like Howard?

    If Domonic Brown were a 1B prospect of Brown’s promise in OF, does this deal get done?

    How much does 2015 matter if Howard helps keep this team at current levels from 2010 until 2014 (assuming this deal doesn’t happen without extra years)?

    Bill, would be interested in an analysis at some future date in Howard’s approach so far this year. I believe only once prior has he had fewer than 20 SO in a month (his K% is 17.5% so far this season) but, as you note, he’s walked I think just 3 times. His P/PA is way down.

  7. e

    April 26, 2010 03:44 PM

    Amaro jumps the market again.

    Is it a stretch to say Werth will outperform howard over the next few years?

    Howard already is not an elite 1b.

  8. Bill

    April 26, 2010 04:43 PM

    Sigh, awful contract. Hopefully doesn’t this screw up the Phillies recent great run, but it certainly makes me question Amaro as a GM.

  9. Chareth

    April 26, 2010 04:45 PM

    Maybe I’m missing something incredibly obvious, but it seems to be that if the value per win goes up over time, Howard’s contract value becomes less negative, not more negative, as his win value offsets more of his fixed yearly salary.

    Either way, still not a fan of this contract.

  10. Brandon

    April 26, 2010 06:35 PM

    Chareth, you’re reading my mail – and I see where Bill went wrong, I have to believe he was thinking that he would be paying for, say, five wins and getting, say three, for a deficit of $10 million; then if the price of a win goes to $6 million, that two win deficit is $12 million, without adjusting the number of wins paid for (in this case now 4.17, and a true deficit of $7 million).

    That being said, I agree with the basic premise of the article – although I feel like Howard will be worth more than 2 wins a year (what do I know), it is still too risky.

  11. doc

    April 26, 2010 06:41 PM

    They are going to pay him more than the Yankees are going to pay Teixeira. On top of that, he was given a much longer deal than Chase Utley. It’s a real headscratcher.

  12. E

    April 26, 2010 08:20 PM

    125 million for a non top 7 first baseman? Geez.

  13. Kyle A.

    April 26, 2010 08:31 PM

    Bill, I usually accept your craft of sabermetrics as a growing part of baseball, but I also think you rely much to heavily on the use of WAR. I personally do not think WAR is a stat that has standing in the idea that a team is trying to win a championship. In baseball, intangibles are almost as important as stats and I often think sabermetrics is over reaching and does not see the big picture. The Phillies are not just paying for his 49 hr 135 rbi averages, they are paying for his ability to carry a team, change a short series and turn it up in the later months. see september/october. Will Howard’s production drop? probably. but they got him locked up for what will turn out 2 be a steal for a 1st basebman with similar or even lesser power totals. Remember, he has out homered everyone in the MLB since he got there, including Albert Pujols, Prince Fielder and even Alex Rodriguez. 125 million for the best hr hitter in the game, I say good job RAJ.

  14. Mike

    April 26, 2010 09:44 PM

    i think this deal helps them re-sign Werth b/c it gives them cost certainty regarding a big part of the lineup RAJ certainly has a better idea than us of the team’s revenue projections and budget for the next few years. i wouldn’t be surprised to see an Utley extension at some point this season.

  15. Greg

    April 27, 2010 05:34 AM

    Historically stupid contract. Given the context of the current baseball market, the availability of advanced stats, the success of teams that are using modern valuation there isn’t any way to justify this contract. It’s terribly stupid. The Phils might survive this, but their margin for error in the next four years just went down considerably. I have a terrible feeling that come 2015 we will be paying Ryan a bunch of money to DH for an AL team.

  16. Phan Stuck in nyc

    April 27, 2010 10:22 AM

    I’m down w/re-signing Howard. I like him. But I can’t help feeling this will stunt the ability to re-sign other needed players. Contrary to popular belief Ryan Howard is not the whole team. But I’m no GM. I just don’t understand the timing. Couldn’t they have signed closer to the end of the season and still gotten him at less than Fielder and Pujols if that was the issue? As far as this “making it easier to sign Werth” – Wow. I just can’t see that. But I’ll say this: when they don’t re-sign him RAJ better not say, “We can’t field a whole team of $15 mil players.” I’m also not one of those who thinks Werth can so easily be replaced by a very young, untried, lefty. Aside from that: Ok, it’s only April but we’ve lost 3 of the last 4 games and the one we won was because of Werth. Let’s just hope if they plan on extending Utley this season that they will wait until AFTER they’ve RE-SIGNED WERTH.

  17. DC Phils Fan

    April 27, 2010 01:20 PM

    I think that it’s easy to forget that $25M for a first baseman in 2015 may be more ‘middle of the road’ than highest paid player in the league. In addition, keepin Mr Five Dollar Footlong on this team is important to the phans and the community. Sometimes you cant put a dollar value on the intangibles.

  18. Bob Steinhagen

    April 27, 2010 01:26 PM

    On the surface it appears to be a bad deal, but some things that Ryan Howard have shown over the last couple of years suggest that he may not follow the exact same pattern of other big bodied players entering their 30s. Consider:

    1. He has lost 30 lbs.
    2. He has significantly improved his defense the last two years.
    3. He appears to be cutting down on his strikeouts dramatically. If that trend continues, it will substantially increase his OBP and OPS.
    4. His late ascention to the majors due to Jim Thome may mean that he would be slower to the peak. Players peak in their 27 to 30 age years, not because they are more physically gifted than they were at 22, but because they have accumulated the experience. Howard may (may) be behind the experience curve.

    And…It’s still probably a bad deal. Just may not be as bad as some think because of those reasons. I’d also like to understand the impact of deferred money, and where the team payroll will be in 2015. $25M may be more in line with $20M by then.

  19. LH

    April 27, 2010 01:55 PM

    Howard has had four consecutive seasons with at least 45 home runs and 130 RBIs. Only two other players in baseball history have reached that plateau, Ken Griffey Jr. and Babe Ruth. The Babe did it six consecutive seasons.

  20. schmenkman

    April 27, 2010 03:09 PM

    1) “…his walk rate has declined every year since 2007 and sits at a paltry 3.6% thus far in 2010.”

    His Unintentional walk rate has been fairly constant since 2006: 10.1%, 11.1%, 9.1%, 9.5%
    If you’re going to count 2010 you’ll need to count his much lower K-rate as well.

    2) “…His BABIP has been lower as more and more teams have employed an infield shift against him.”

    BABIP was ~.355 in both 2005 and his first full year in 2006. Since then, it’s been .328, .285, and .325. You’re seeing something I’m not.

    3) “…Opposing teams have also been bringing in more left-handed relievers to face Howard and his production against them has swiftly dropped. ”

    Agreed

    4) “Using FanGraphs’ pitch type linear weights, Howard’s production against the fastball has dropped every year since 2006. ”

    Not sure why you’re singling out the FB. You didn’t mention that he seemed to solve the slider last year.

    5) “He has swung at more and more pitches outside of the strike zone every year since he came into the Majors. Finally, his whiff rate (swinging strike percentage) has increased every year since 2006.”

    He also increased his contact rate each of the past two years.

    He’s made an adjustment at the plate this year — it will be interesting to see what impact it has.

  21. Phillies Red

    April 27, 2010 04:37 PM

    Matt Swartz’s article at baseball prospectus really put this contract in perspective. Bill, can you give us your take on his analysis? The primary take away, for me, was that it seems like the phils are betting on two things: Howard to remain a 4 win player for the next 5 years or so, and salary inflation to take off again, to the tune of 5% or more per MORP.

    Bill, one more question: have you seen any reactions from the fangraphs or WAR folks to Matt’s MORP?

  22. Bill Baer

    April 27, 2010 07:02 PM

    Bob,

    2) I wouldn’t use the word “significant”. His UZR/150 has gone from -1.0 and -1.3 to 1.8 and 2.0. In other words, for every 150 defensive games, Howard will make about three extra plays. That’s great, don’t get me wrong, but he is nothing more than an average defender.

    3) Cutting down strikeouts and improving his contact rate may improve his batting average but it will sap his power. If you don’t believe me, make a line graph with his ISO and Contact%.

    ___

    Schmenkman, I think you’re clutching at straws.

    1) A decent portion of Ryan Howard’s value in 2006-07 came from intentional walks. It’s why his OBP hasn’t even sniffed that same level since. Opposing teams found weaknesses and have since exploited them.

    2) I’m not sure exactly what you’re not seeing. Teams started employing the shift almost universally in 2007. His highest BABIP over the last three years is still nearly thirty points lower than his lowest BABIP from 2004-06.

    4) He faced the slider nearly half as often as the fastball and it only occurred in one year, meaning that it could very well be a fluke. Meanwhile, there is a solid four-year trend of his continued struggles against the fastball.

    5) As his contact rate has gone up, his ISO has gone down. Given his role on the team, I’d rather Howard make contact less and hit for power more.

    ___

    Phillies Red

    I think Swartz raises a lot of good points and I agree with your interpretation. While I think he does have a point about teams re-signing their own players, I also think it is unrealistic to expect him to even be a 3 WAR player during the latter half of the contract.

    If he was a second baseman or a shortstop or a catcher, I could understand the risk but first base is A) the least important position on the baseball field in the NL and B) easy to replenish.

  23. Ryan

    April 28, 2010 07:37 AM

    I’ve heard this brought up other places, and I have no way to put a quantitative value to this, but some have speculated that one reason why the front office wasn’t afraid to make this move was value. Not in terms of wins, not in terms of on the field production, but in what Ryan brings in term of revenue from the fans.

    He is, by all accounts, a legitimate face of a franchise. His HR’s sell jerseys, they get fans talking about the team, they draw fans to the park, they cause people to tune in to watch him. I have no way to calculate what a player of that magnitude is worth in terms of dollars and cents, but we never discuss this when we talk about player contracts.

    You may be able to replace 70% or 80% of Howard’s offensive production for 1/5 of the price, which is kind of silly to speculate at now, because we’ve all seen drastic changes to the economy of baseball throughout the last 10 years, but, while bringing in Russell Branyon to replace 75% of Howard’s offense may result in better on field value, no one is going to be coming to the yard buying Branyon jersey T’s and Branyon posters.

    That is a missing piece to this puzzle when evaluating the contract. If Howard generates 5 million dollars in merchandise/tv/etc… revenue, that’s 5 million more in operating income that can be spent elsewhere. That is part of the attraction to keeping home grown, center piece players for the duration of their contract.

  24. Bill Baer

    April 28, 2010 07:47 AM

    Excellent point, Ryan. I do wish fans had easy access to that kind of information as well, given the wealth of all the other data.

  25. Phan Stuck in nyc

    April 28, 2010 04:56 PM

    I’m not sure it’s as Hollywood as all that, or at least not flat out. Maybe like a music contract where future bonuses or advances are based on hitting a certain # on the chart, or merch sales. Bottomline, a winning team sells tv time, ad revenue, rental space in the stadium, t-shirts & hats around the globe, etc. A great stud player who obviously helps that team gets the bucks. If after all of that the guy is also home grown, good looking, seen out w/hot babes (or is a “good family guy”), wears great clothes, happily speaks to the media, etc. then I’m sure the marketing revenue is factored in to negotiations. Kind of profit sharing,lol.

  26. Ryan

    April 29, 2010 08:09 AM

    Phan,

    You are exactly right, that is EXACTLY what it is.

    I guarantee you, his agents are armed with the merchandise numbers – how many jersey’s did he sell, how many tshirts, etc… and they know that’s all money coming in, and I’m sure they make the case that Ryan deserves a slice of that.

  27. Phan Stuck in nyc

    April 29, 2010 11:47 AM

    But profit sharing only for the players they feel like sharing with apparently (after reading what the front office is lamely spouting about Werth yesterday). So then the FANS control so much more than they think they do, don’t they? I guess the MEMO IS: Start applying pressure now about the players you want to see them re-sign then.

  28. David

    May 06, 2010 01:15 AM

    “1) A decent portion of Ryan Howard’s value in 2006-07 came from intentional walks. It’s why his OBP hasn’t even sniffed that same level since. Opposing teams found weaknesses and have since exploited them.”

    How does one take this into account properly? It suggests that rather than Howard’s skill set deteriorating, other teams have adjusted to it.

  29. Mandy

    October 12, 2011 11:18 AM

    Bill, “Excellent point, Ryan. I do wish fans had easy access to that kind of information as well, given the wealth of all the other data.”

    Exactly.

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