Following the Money on a Lazy Sunday

We’re almost there. The first spring training game is just 3 days away, so close that I can almost taste it. The golden voice of Tom Hamilton will soon be pouring over the airwaves to our waiting ears, painting a picture of real, actual baseball being played in the desert oasis of Goodyear. The games don’t count, but that doesn’t make them any less interesting after a long, cold offseason. Pennsylvania can keep their groundhog. I want Feb. 25 to be “Tom Hamilton Day” in northeast Ohio. That’s the surest sign that winter is finally drawing to a close. Just 40 days remain until the home opener, and we again have baseball at the corner of Carnegie and Ontario…

The always-entertaining Jonah Keri put out a pre-season ranking of every team in baseball this week, and he slotted the Indians directly in the middle of the pack at #15 overall. Unsurprisingly, he singled out the flame throwing Danny Salazar as a bright spot not just for the Indians, but in the American League:

It’s tough to remember another season in which so many incredibly talented pitchers will get their first crack at full big-league seasons with so much at stake. I, for one, am hopping on the bandwagon early for #TeamDannySalazar. The 24-year-old righty has three excellent pitches in his holster, with a 96 mph fastball, a nasty slider, and a backbreaking changeup that all generate lots of swings and misses. He missed more and more bats as he climbed the ladder in the minor leagues, and he dominated in his 10-start major league debut last year, fanning more than four batters for every walk…With Jimenez in Baltimore and Scott Kazmir in Oakland, the Tribe needs big results from its under-30 arms. Salazar is my pick to outshine his peers, give the Indians another shot at contending, and maybe even tiptoe into some Cy Young discussions.

I was already irrationally excited about Danny Salazar before I read Keri’s article. But seeing that piece made me positively giddy over the 24-year old Dominican’s future in the Indians rotation. I see him as the Indians #2 starter behind Justin Masterson this year, and if he can throw 180+ innings in 2014 he could easily end up as the Indians best starting pitcher. Remember, he put up a 121 ERA+ and struck out 65 in just 52 IP last season. He’s not a sure thing to replicate those numbers over a full season, but there’s also a chance that he could be even better in 2014. Throw in Salazar’s new nickname ‘Thundercat’ courtesy of Nick Swisher, and you have a fantastic talent who is on his way to becoming a fan-favorite. Salazar is an easy kid to cheer for, and it’s going to be an awful lot of fun watching him on the mound this year and beyond.

The Indians had four players who were on track for salary arbitration this offseason. The team came out victorious in hearings with pitchers Vinnie Pestano and Josh Tomlin, and reached an agreement on a long-term deal with outfielder Michael Brantley. That just left starter Justin Masterson, and he and the Indians were further apart on salary $$ than any other player who filed for arbitration in all of baseball. The Indians offered Masterson $8.05 million for 2014 while Masterson and his agent countered with $11.8 million. That sizeable gap led many to believe that an arbitration hearing was a foregone conclusion, but the two sides were able to come together on a one-year deal that will pay the Indians ace $9,762,500 next season. That figure is slightly below the midpoint between the two offers, so Masterson met the Indians more than halfway in salary negotiations. So Masterson’s contract for his final season prior to free agency is set, but it doesn’t appear that the two sides have been able to make significant headway on a long-term, multi-year deal that will keep the Indians ace from testing the free agent market come this offseason. The Indians have a self-imposed rule against negotiating contract extensions during the season, so it appears that if nothing gets done in the next month, Masterson will be a free agent following the 2014 World Series.

If Masterson does become a free agent, it’ll be a significant challenge for the Indians to bring him back into the fold. Starting pitching always comes at a significant cost, and there will be plenty of teams lining up to add a guy with Masterson’s talent to their rotation, especially if he can repeat or improve on his all-star season from 2013. To have an idea of what it will cost to lock up Masterson to a long-term deal, we can look about 250 miles southwest down I-71 to Cincinnati. The Reds signed 27-year old starter Homer Bailey to a 6-year, $105 million extension earlier this week, and Bailey is a fairly close comparable to Masterson, as you’ll see below:

	Masterson	Bailey
Age	27	26
IP	1013	853
W/L	53-63	49-45
ERA	4.03	4.25
ERA+	100	96
K	839	705

Bailey has of course done his work in the National League without having to face a DH, but he’s also pitched in the more hitter-friendly Great American Ballpark. Bailey got a long-term contract with an average annual value of $17.5 million to pitch in Ohio. Masterson, provided he pitches well in 2014, should command at least that much, especially if (when) he hits the open market. The Indians payroll will probably hover around $80 million in 2014. Paying Masterson somewhere in the $15-20 million per year range will be awfully difficult for the Indians, even with the additional national TV money that kicks in for the 2014 season. The Indians have been reluctant to commit big $$ over multiple seasons to a starting pitcher, especially since the seemingly-safe Jake Westbrook deal blew up in their faces. Between the money and the risk of a long-term deal, it’s looking less and less likely that Justin Masterson will be wearing an Indians uniform in 2015 and beyond.

In what seems like a weekly feature, we have another glowing report on Indians top prospect Francisco Lindor. Baseball Prospectus is doing their annual “Best Tools” series, and they singled out Lindor as having the best “makeup” in all of minor league baseball:

Within scouting circles, Lindor receives praise for any number of things: most notably his defensive wizardry and plus arm, but also for his plus hit tool and incredible instincts for the game. What often seems to slide under the radar is Lindor’s exceptional makeup. It can be argued that his work ethic is second to none in the minor leagues, which allows scouts to be aggressive in projecting his tool development. When combined with his on-field attitude, generally unflappable nature, and overall confidence, Lindor owns the very definition of what excellent makeup signifies in a professional baseball player.

Makeup is one of those things that cannot be quantified with any combination of stats, but at the same time is undeniable for those who have been around Lindor on the baseball field. It’s hard to put a specific value on makeup, but it has a positive effect on more than just Lindor. I go back to the discussion that I had with team president Mark Shapiro during spring training last season, when we talked about “levers” that the Indians can pull that effect more than one player at a time. Shapiro referred to a guy like Nick Swisher, whose animated enthusiasm can be infections throughout the clubhouse as a lever. There’s no doubt in my mind that Francisco Lindor will be a similar lever both on and off the field. On the field, Lindor plays outstanding defense, helping every pitcher that plays with him put up better numbers. Off the field, he’s provided leadership throughout his rise through the minor leagues, setting a positive example for other young players in the organization. Every time I think I’m as excited as I can possibly be about Francisco Lindor, something like this comes up that makes me even more eager to see him playing shortstop at the corner of Carnegie and Ontario.

The Ubaldo Jimenez domino finally fell this week when the veteran righthander signed with the Baltimore Orioles. Baltimore inked Jimenez to a 4-year, $50 million deal and will forfeit their 1^st round draft pick in the upcoming MLB Rule 4 Draft as well. Sam Miller from Baseball Prospectus took a look at the deal from the Orioles perspective, and tries to answer whether Ubaldo is worth the risk of a multi-year deal at this stage of his career. Ubaldo isn’t as consistent as a guy like fellow FA signing Matt Garza, but he offers more potential upside than Garza or Ervin Santana. Miller comes to the conclusion that while the contract is a gamble, it’s a good gamble for a team like the Orioles that needs to make something big happen to contend in the ultra-competitive AL East:

But consider the Orioles: They have about one 1 in 20 shot at making the playoffs. If they add Jimenez and he has one of his off years, well, there was already about a 95 percent chance that it wouldn’t have mattered anyway. They need a lot of things to go right, more right than we’re predicting. Adding Garza’s certain two wins doesn’t move the needle. Adding Jimenez and his possibility of six is a start.

The Orioles went into last season with a payroll of $92 million. After signing Ubaldo, they project to around $100 million this season (after other additions/subtractions). They also own the Mid-Atlantic Sports Network (MASN), which uniquely broadcasts both Orioles and Nationals games. They therefore own both the Baltimore and Washington D.C. media markets, a region stretching from south-central Pennsylvania all the way down to most of North Carolina. That broadcast area encompasses a lot of households. Even after a lot of research, it’s unclear exactly how much Baltimore makes from MASN, but my best guess is about $170 million per year. That’s based on the Nationals asking for a 50/50 stake in MASN (they have about a 30% share now) and attaching a $100-$120 million figure to that request. If you're interested in just how murky the MASN waters are and how much of a sweetheart deal Baltimore has in running their own regional sports network (RSN), I highly recommend this fantastic, in-depth piece from Grantland's Jonah Keri. That ~$170 million is of course before the $51 million that all MLB teams receive from the central pot thanks to the new national TV contract. So the Orioles make about $130 million more than the Indians from TV money alone. I’m stepping (stumbling?) through all of this financial math to show that the Orioles are in a much better position than the Indians to absorb the $13.5 million per season that they’re paying Ubaldo if he loses his mechanics and goes all 2012 on them. And when smart people are comparing your mechanics to Apollo 13 the way Ben Lindbergh did (also linked in Miller’s article), that’s a pretty dicey proposition. I’ve drawn attention to Lindberg’s piece before, but it’s such a good comparison that I feel compelled to again feature it for you in case you missed out last time around. As Lindberg put it last September, when good Ubaldo had firmly re-established himself:

This is the Apollo 13 approach to pitching mechanics. An oxygen tank blew up, and the Service Module has to be abandoned? Okay, we’ll use the Lunar Module as a lifeboat. The square Service Module carbon dioxide scrubber cartridges don’t fit the round receptacle in the Lunar Module? Fine, we’ll build a makeshift scrubber out of tape, cardboard, and a plastic bag. It will work for a while, but not forever, and there’s still a hole in the side of the Service Module. Jimenez has found a way to compensate for his suspect mechanics. But because he hasn’t addressed his delivery’s deeper flaws, this might be more of a temporary fix than a lasting solution. (text bolded by me)

I’m sad to see Ubaldo go, but I’m glad he’s someone else’s risk. There’s a possibility he’s returned to the elite form he displayed in Colorado back in 2010. There’s even a possibility that he can maintain it. But the horrors of 2011 (77 ERA+ with Cleveland) and 2012 (72 ERA+, league-leading 17 losses) are still fresh enough in my mind that I’m ok with the Big U’s departure, simply because the risk isn’t worth the investment it would’ve taken to keep him around.

In addition to avoiding the risk of a multi-year contract, the Indians come away with a compensatory draft pick after losing Ubaldo to free agency. Since they extended him the qualifying offer of a 1-year, $14 million contract, the Indians receive a pick at the end of the first round for the upcoming Rule 4 Draft. As of right now, that pick is #30 overall. In 2013, that slot was worth an additional $1,731,200. It should add at least that much to the Indians bonus pool in 2014. The Indians also have pick #37 in the draft, awarded via the “competitive balance lottery.” That gives them picks 21, 30 and 37 before the 2^nd round even starts. That should equate to just under $5.5 million in slot money for their first three picks alone (based on 2013 slot figures). Whether they choose to spread that money around to a number of picks or go high overslot for a player who drops due to signability concerns, it gives them flexibility to take who they want when they’re on the clock. After losing their competitive balance pick and their 2^nd round pick last year following the Swisher/Bourn signings, it’ll make for an interesting 1^st night of the draft despite not picking in the top 5 like in 2013. Brad Grant and his staff still have to identify and select the right players, but the slot money will be there for them to deploy how they best see fit.

Since we’ve already been looking into the financial aspects of major league baseball, I thought this would be a good time to link to this fantastic (free!) piece from Ben Lindbergh over at Baseball Prospectus. Lindbergh sat down for an interview with John Hart, the former Indians GM who was recently hired on in Atlanta as a “senior advisor.” Not long after Hart came onboard in Atlanta, the Braves started locking up their young, talented players to long-term deals. Freddie Freeman, Julio Teheran, Craig Kimbrel and Andrelton Simmons have all agreed to contracts buying out their arbitration years and at least a couple years of free agency. If that sounds familiar, it should, as it’s the same strategy Hart established when he was the GM in Cleveland during the 1990’s. It’s a fascinating interview that touches on a wide variety of topics, from extending the core of those mid-90’s Indians juggernauts, Manny Ramirez as a leader, considering the Scott Boras factor when identifying players to extend, to the role of cost certainty (there’s that term again) in allowing a club to be flexible with its assets:

BL: You once said that one of the things you had learned as a GM was that "Stability leads to flexibility." You mean that once you have your core locked up, you can count on that amount of money being assigned to that amount of production, and then you can work around that?

JH: It really does. Every organization has a different mindset. I had to be a little more nimble in Cleveland. We maybe traded a few of our guys to gather payroll flexibility in certain points, but the idea of going in is that we can manage this payroll and this roster, and that will also allow us the ability to be creative if we find a free agent that we like. They're our core players, they're our better players and we know what we're paying them. And that does lead to stability.

And I think in this case, every guy that’s been signed here, these are players that you're looking to be stable with and build around them. That gives you the ability to do it, and quite frankly, I think that was a little bit of the mindset as to why these players wanted to sign here. I think Frank did a great job. His strategy was Freeman one, along with Heyward. I think Kimbrel, you read some of his quotes, it was like, ‘This makes sense to me because I know who I'm going to be with. This is showing me, number one that the Braves believe in me, and number two we're going to have a core of good players that are going to grow together.’

Cost certainty…even if it’s not saving the club a ton of money, long-term extensions provide for a more predictable budget and insure against unexpected raises in arbitration. This was the same sort of thinking that brought about the Brantley deal, and it’s a philosophy that the Indians will continue to try and execute for years to come.

Interviewing former Indians GM’s was apparently the thing to do this week, as Jordan Bastian sat down with team president Mark Shapiro on (fittingly) President’s Day to talk with him about a wide range of topics from Tito Francona to revenue to the sustainability of the Indians success from last season. Some of the most interesting discussion revolved around player acquisition following a borderline-insane free agent spending spree around baseball this offseason (that the Indians all but completely sat out of):

MLB.com: Last week, you signed outfielder Michael Brantley to an extension, buying out his arbitration years and at least one free-agent year. You've also done similar deals in the past with guys like Asdrubal Cabrera and Carlos Santana, among others. It was also reported recently that you ranked fourth in all of baseball in international spending last year. How important is that type of spending -- on core guys, in the Draft and internationally -- to this organization?

Shapiro: It's tough to even quantify or to appropriately say how important it is. We basically have to excel at every aspect of player acquisition. And we have to continue to look for opportunities whenever they exist, because we are largely not going to be players in Major League free agency. It's going to be more of an exception than a rule. So how we draft, how we sign internationally, how we trade, how we develop and our efforts to retain our players when there's that agreeable multiyear deal are all going to be essential for us to be able to sustain a competitive team.

None of this is new or surprising. The 2013 offseason was the exception, not the rule. If the Indians are going to keep a window of contention open for more than a season or two, it’s going to be because of sustained success in the draft, the international free agent market, and by maximizing value in trades when the do eventually move their own homegrown talent. It’s why the added draft pick and bonus allotment compensation from losing Ubaldo Jimenez is such a big deal. It’s how the club will reload after losing their next big free agent, whether that be Justin Masterson, Jason Kipnis or (gulp) Francisco Lindor.

On a lighter note, manager Terry Francona penned an open letter to the city of Cleveland that was published on MLB.com on Monday. The letter isn’t very long, but it is plenty inspiring and will help get you fired up for the upcoming season (if for some reason you aren’t already). Having the reigning AL Manager of the Year back in the dugout is a nice lever for Antonetti to pull. Tito has been everything we’d hoped for and more when the Indians announced his hiring last winter, and this letter just goes to show how much he genuinely cares about this city and wants to bring a sustained winner to the fans.

Finally, in a bit of shameless self-promotion, I wanted to call your attention to a new venture that I’ve been recruited to. Jerry Mires brought me onboard as a contributor to his online radio show, The Sports Fix Cleveland. I made my first appearance this past Wednesday, and it went well enough that Jerry was nice enough to ask me to do a regular spot every Wednesday at 12:30pm. You can listen in live here, or catch a replay of the show on various outlets to include iTunes, iHeart Radio, Soundcloud and others. I’ll be talking about pretty much anything Cleveland related, but of course concentrating on the Indians and the Indians farm system in particular. So if you’ve ever wanted to hear how annoying my voice can sound over your airwaves, tune in and check it out. Just 34 days and counting until opening day…

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