Transaction Analysis: Gently Hughes’d

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Agreed to a three-year extension with RHP Phil Hughes worth $42 million. [12/22]

Here's what we know about Hughes:

• he turns 29 in June;
• he had two years, $16 million remaining on his contract;
• he owns the record for the highest strikeout-to-walk ratio since 1950 (min. 100 IP);
• he posted that mark while topping 200 innings for the first time;
• and he did so while posting a better FIP than ERA for the third time in four tries.

Add it all up and Hughes' extension is a litmus test for how you analyze pitching and risk.

If you care only about strikeout-to-walk ratio, then Hughes just pitched one of the best seasons ever. By setting the single-season record, he joined a top 10 that includes Bret Saberhagen, Ben Sheets, Cliff Lee, Curt Schilling, Pedro Martinez, and Greg Maddux—all good to great pitchers. Of course the top 10 also includes Hal Brown—who, at age 38, posted an 8.5 strikeout-to-walk rate despite fanning a batter every other inning—and used to include Carlos Silva. There's a stinker here and there, yet generally speaking, if you perform to that level, you're almost certainly a good pitcher.

But nobody cares only about strikeout-to-walk ratio*. You might weigh it as 50 percent or 75 percent (or some other round number) of pitching. You might think it's more predictive than a season's worth of ERA. You might think it's the best single pitching statistic there is. Caring only about it though? Nonsense. That's why Hughes finishing seventh in Cy Young award voting didn't incite a panic, and that's why nobody considers his 2014 one of the best single-season pitching performances of all-time.

*The Twins surely don't, and yet, despite their anti-analytical reputation, take a look at their recent big pitching investments—Hughes, Ricky Nolasco, Ervin Santana, and so on. What do they have in common? Almost all of them looked better through the lens of FIP than ERA. Maybe it's a coincidence, maybe not.

Even so, let's not trivialize Hughes' season as a whole, because he did pitch well. On a rate basis, he still allowed plenty of hits, but he more than halved his home run rate. Additionally, he cut into his walk rate by having close to 75 percent of his pitches go for strikes. The move away from Yankees Stadium (and perhaps New York) helped, as did a renewed emphasis on not overthrowing. Perhaps the degree of Hughes' success in '14 is little more than a one-year anomaly; however, you should probably expect him to be an average or better starter in the short term.

That's an acceptable outcome—maybe even a good one—given the finances in place. Still, the other point of contention here is the timing. Why lock Hughes in for an additional three years now, some two years before he could hit free agency? The only line of thinking that makes sense is the Twins must view him as more than an average pitcher. If so and they let him pitch another year without an extension, then (in their estimation) he would've raised his stock and increased his likelihood to test the free-agent market after the '16 season.

In a sense, this deal is similar to the risk-reward gambits the Rays asnd Blue Jays (among others) have used on late bloomers like Ben Zobrist and Jose Bautista. That doesn't mean it'll work out—over a long enough timeline, most pitchers suffer some kind of injury, after all—just that the upshot here is Hughes settling in as an above-average starter who rewards the Twins' faith in him. The worst-case scenario is Hughes gets hurt or has a run of 2013-like seasons. And the most likely outcome? The tacked-on years mattering little either way.