Transaction Analysis: Josh Hamilton and the End of Analysis

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Reportedly agree to a contract with OF-L Josh Hamilton for five years and $125 million, pending a physical. [12/13]

The first time I saw Mike Trout was in Rancho Cucamonga, when he was playing his first few games in High-A. His reactions on fly balls seemed a touch slow, maybe because it was a new park for him or maybe because he was 18. A scout I talked to brushed it aside: “He has the speed to outrun his mistakes.”

That’s what money buys a team: the ability to outrun mistakes. Gary Matthews, Jr.? Junk him, get Torii Hunter. Scott Kazmir tanks? Pfft, Matthews’ contract will be up soon, they can spend that money on Dan Haren. Spent all that money on Vernon Wells? Kazmir’s deal is over, and Torii Hunter’s contract will expire soon, so they can just use that money to get Albert Pujols and C.J. Wilson. Those moves are both back-loaded and will restrict the Angels going forward, except that Wells’ deal expires before you know it. There’s always a bad contract or two on the books, but they’re always just a few years away from expiring. There’s always room to risk another mistake. 

Wow

— Mike Trout (@Trouty20) December 13, 2012

Is it still okay to talk about cost when evaluating a Los Angeles baseball club’s moves? Have the Angels and Dodgers so disrupted the analysis industry that there's nothing to say but "wow," "you can't predict baseball," and "it's not my money"? A few years ago, this Transaction Analysis would be a simple discussion of marginal value and the like, but danged if I can tell you the value of a nickel anymore. I don’t know whether the $5-million-per-win paradigm still means anything, considering some teams with huge TV contracts seem to have unlimited money and others have extremely, extremely limited money. I don’t know whether scarcity of resources matters when there are just so few players available on the free agent market, so few places to spend $200 million. I don’t know whether the burden of a bad contract matters when big contracts seem so moveable—indeed, they’re now assets, capable of getting big returns. More than anything, I don’t know how much money the Angels have. What I do know is this: when news like this breaks, it’s easy to get swept up in it, think about how exciting that hour was when “talks” turned to “serious talks” turned to “confirmed serious talks” turned to “confirmed serious talks” turned to “confirmed serious talks” turned to “confirmed serious talks” turned to “confirmed what the others confirmed” turned to “close to a deal.” It’s easy to think about how great this makes the Angels’ lineup and to think about the best year of Hamilton’s career. I mean, look at this lineup!

• Trout: .326/.399/.564
• Kendrick: .285/.338/.464
• Hamilton: .359/.411/.633
• Pujols: .357/.462/.653
• Morales: .306/.355/.569
• Trumbo: .268/.317/.491
• Callaspo: .300/.356/.457
• Iannetta: .264/.390/.505
• Aybar: .312/.353/.423

Yeah, that’s every player and what they did exactly once, but screw it, this moment is exciting! But this moment is always exciting, and it often turns out to be the moment things go wrong. It seems petty to say a move is bad because a team paid, say, $7 million to add a win; but if they spent $70 million to add a win, that would be bad, right? Improving at any cost can’t be a certain moral good. There has to come a point where it’s okay to say that a contract looks like a mistake. Signing Hamilton for five years and $125 million is probably a mistake.

The Angels aren’t paying Hamilton to match his career-best season, but at these rates they are paying him to match his second-best season, repeatedly, throughout his mid-30s. Over the past two seasons, he’s been a little worse than a four-win player or a little better than a four-win player, depending on the URL you type in. He’s in the stage of his life that carries the biggest risk of collapse with just a slim chance of improvement. As Ben wrote last week, he’s not the type of hitter who ages well:

Because Hamilton doesn't add any value via the walk, most of his offensive performance hinges on what happens when he makes contact. The outcome of a batted ball is dependent on two things: speed and quality of contact. The early 30s are when bat speed starts to slip and reaction time suffers. If Hamilton had better command of the strike zone, his ability to take walks could compensate for his inevitable declines in other areas. As it is, his offensive value is closely tied to skills that soon start to fade in free agents of a certain age.

He’s not moving in the right direction either. In 2011, he swung at 38 percent of the pitches out of the zone; in 2012, 44 percent, the second-highest rate in the game (between Miguel Olivo and Delmon Young). In 2011, he made contact on 83 percent of swings inside the strike zone; in 2012, it was 76 percent, the sixth-worst rate in the majors. (Both of the preceding based on 1,000-pitches-seen minimums.) He has averaged just 123 games per season in his career, during a six-year stretch that represented his physical peak. And he’s got the reddest flag in the sport. There are so many ways for this to go wrong.  “/whew,” I bet at least one Rangers executive is saying right now.

Had the Mariners or the Orioles pulled it off, this move might have crippled the franchise for a half-decade. For the Angels, it’s probably just a contract that’ll expire before you know it.

That takes a bit of the punch out of any review of the move, so let’s move on to the effects this will have on the Angels on the field in 2013. To recap: the Angels had the best offense in the American League in 2012 and probably the best defense. They also had famous pitchers who, unexpectedly, pitched poorly. The answer, it seemed, was to get better pitchers, but Zack Greinke spurned them and the other pitchers on the market—Anibal Sanchez, Edwin Jackson, and Kyle Lohse—are uninspiring. The good news for the Angels is that they don’t have to replace Dan Haren, three-time All-Star, or Ervin Santana, sixth-place finisher for the 2008 Cy Young award. They just have to replace two pitchers who allowed 5.2 runs per game while pitching in a pitcher-friendly park in front of the American League’s best defense. It is virtually impossible not to do that on any major-league budget.

Besides, a run scored is roughly as good as a run saved, and there are no bonus points for balance. So, unable to further upgrade the staff, further strengthening the offense is as good as anything. Hamilton is a very good hitter, in case you stumbled into a subscription-only baseball site and read this far without having ever heard of baseball. He has the 16th-best OPS+ in baseball over the past five years, the ninth-best over the past three, and posted the 17th-best last year. He has an .857 OPS on the road since moving to the American League, which is a) darned good and b) darned better when you consider more than a third of his road games are in Anaheim, Seattle, and Oakland (and none are in Texas). He replaces a man who had a very good 2012 season, and he displaces one who had a very good 2011 season, but the Angels did manage to improve:

• Hamilton: 7.4 WARP in 270 games from 2011-2012
• Hunter: 5.5 WARP in 296 games
• Bourjos: 3.7 WARP in 258 games

PECOTA has Hamilton as a 2.8-win upgrade over Bourjos in 2013. (My guess, based on PECOTA and Hamilton's career trends: Hamilton produces 13 WARP over the life of this deal.) Twenty-five million dollars is an awful lot to pay to go from a two-win player to a four-win player, especially considering the reasonable possibility that the two-win player will be better than the four-win player by the end of this deal. But, of course, the Angels don’t have to make Bourjos sit on the bench. They get to trade him, if they want to, presumably for some substantial deal of value—he’s more valuable to a team without a Gold Glove finalist manning center field for the next five years. Maybe they’ll get a pitcher! Maybe this is how they get their pitcher. So here's what I'm comfortable with: 

Angels improve at one position; free up valuable trade piece to improve at another; get an unpredictable but undeniably talented player who is likely aging into a less-productive part of his career; spend more money than you thought they had, but they had it; might regret it; probably improved.

At least I think I'm comfortable saying all that. 

Jerry Dipoto has been the Angels’ general manager for 13 months, and he has now made a whopping 13 moves at the big-league level. He has shown two skills that can make for a great GM: he’s great at picking up small pieces (especially in the bullpen) for cheap, and he’s great at making the big deal happen, which can be as easy as but also much more difficult than "offer the most money." Those big ones are the moves that get GMs into trouble. From a surplus-value calculation, the Albert Pujols deal alone threatens to undo all the other small, savvy moves Dipoto has made. Yes, the Angels have the money to outrun that mistake, and they have the money to outrun the Josh Hamilton mistake, if it is one. But avoiding the mistake in the first place would be best.