Two interesting and somewhat related stories came out in the last few days. The first to come out was Forbes’ annual team valuations for Major League Baseball.
There is always much hand-wringing around baseball when these come out; people in the game will moan that the numbers are way off and have no relation to reality and are completely misleading and so on. They probably are, but maybe not in the way baseball owners would like everyone to believe.
In the team valuations, by the way, the Detroit Tigers are said to be worth $680 million and had an operating income of $7.5 million last year.
The second story to come out was that the Tigers, according to numerous reports, agreed to a 10-year, $292 million extension with superstar Miguel Cabrera. The extension tacks on $248 million to what he was already going to make the next two years. CBS’ Jon Heyman reports that there are a couple of vesting options for years 11 and 12 of the deal, each worth $30 million. Cabrera would be 41 and 42 in those years so let’s not worry too much about that right now.
Hmm. Team worth $680 million pays player $292 million. Odd.
The deal, from what I can tell from an Internet scan, is being pretty widely panned, and as a Board of Director Member of the “Players Age Way Faster Than You Think” Corporation, I concur with the panning. But there’s something else here. It’s tempting to think baseball decision-makers are stupid, tempting to blame their mistakes on stupidity, tempting to believe that if only someone smarter was in place these sorts of insane, endless and doomed quarter-of-a-billion dollar deals would stop happening.
But here’s the thing: The people who run baseball teams are not stupid.
There has to be something else going on here.
* * *
Let’s handle the age question first: Miguel Cabrera’s deal will almost certainly end very badly on the field. There have been great players who have aged to 40 gracefully -- Henry Aaron was one extreme, Barry Bonds and Roger Clemens were another -- but it’s a short list. This can be calculated about a million different ways, but here’s one: I looked at the Wins Above Replacement for Hall of Famers. You don’t have to use WAR, you can use any stat you want: hits, homers, RBIs, runs, doubles, stolen bases, you name it. I used WAR for convenience.
I then totaled up the WAR of the Hall of Famers by age. As you might imagine, the Hall of Famers were at their best at age 27. I think it is generally accepted that 26-27-28 are the peak ages for typical baseball players.
And so, using percentages, here’s how Hall of Famers age.
Age 23: 69.5 percent (of peak value)
Age 24: 81.3 percent
Age 25: 86.5 percent
Age 26: 96.8 percent
Age 27: 100 percent
OK, we’re at the peak. Now how long do they sustain that peak?
Age 28: 96.8 percent
Age 29: 95.8 percent
Age 30: 90.6 percent
Yes, they stay pretty close to their peak for a while. Now we are up to 31, Miguel Cabrera’s age. And the drop-off comes fast …
Age 31: 87.7 percent
Still not bad.
Age 32: 84.3 percent
Holding on ...
Age 33: 71.3 percent
Age 34: 60 percent
Age 35: 51.6 percent
So at age 35, Hall of Famers as a group are producing roughly half of what they were producing at their best. This is not good. We are now only in Year 5 of the Cabrera 10-year deal. And the news gets even worse very rapidly.
Age 36: 41.3 percent
Age 37: 28.8 percent
Age 38: 15.8 percent
Age 39: 12.2 percent
Age 40: 7.5 percent
Ugh. Those last five years ... not good. And remember, I’m only talking about Hall of Famers here, players who, in many cases, held off the years (that’s how they became Hall of Famers in the first place). Mere mortals age even more decisively.
What about players like Miguel Cabrera? That’s a tough one because there really haven’t been many players like Miguel Cabrera. After all, we’re talking about the first guy to win a Triple Crown since 1967, and he followed it up with an even better offensive season. We’re talking about the first guy since Tony Gwynn and Wade Boggs to win three consecutive batting titles -- and, no offense to those guys, but Miguel Cabrera is NOTHING like Gwynn and Boggs, who were slapchop hitters looking for cracks in the defense. Cabrera crushes balls THROUGH defenses.
Cabrera is huge, he’s pretty slow, and he has already played more than 1,600 games -- only 16 players in baseball history played more games through age 30. So who is comparable to a 6-foot-4, 240-pound hitting machine? Albert Pujols? Maybe. He’s not showing great signs of aging well. David Ortiz? He is aging well, but even people in the Red Sox organization find him somewhat miraculous. Ryan Howard? Jason Giambi? Dave Parker/ Frank Howard?
Frank Thomas seems about as good a comparison as I can find. Thomas did not age particularly well. He did have a couple of good offensive seasons in his later years, but more seasons where he couldn’t even get on the field.
Anyway, it’s close to a sure bet that Cabrera will be a salary albatross by the end of this deal, and it’s a pretty good bet he will be a salary albatross for several years before that. But this gets to the point: The Tigers surely know that. The Tigers are not being run by those tic-tac-toe playing chickens (thought that would be awesome). They are aware of age patterns. They know his physical attributes. They signed him for ginormous money anyway -- and did so two years before his contract was up.
* * *
Let’s talk about what Cabrera would need to do on the field to break even on his contract. One way to do this is to look again at WAR -- these days, teams are paying roughly $5 million or so for one win above replacement. That number figures to go up over the length of the contract.
So, one way to look at this is that Cabrera will need to be worth about 50 wins above replacement over the next 10 years to make the contract an even proposition ($292 million divided by 50 comes to $5.85 million per win). Can he do it?
Well, yeah, he COULD do it. Last year, Cabrera was worth 7.5 WAR -- about the same as the year before and the year before that. If he can stay at that level for the next three seasons, he could get pretty close to halfway there -- and would not need to be nearly as good the last seven years on his deal.
Let’s look at Henry Aaron’s comparable seasons:
Age 31: 7.8 WAR
Age 32: 7.8 WAR (15.6 total)
Age 33: 8.5 WAR (24.1 total)
Age 34: 6.8 WAR (30.9 total)
Age 35: 8.0 WAR (38.9 total)
Age 36: 5.0 WAR (43.9 total)
Age 37: 7.2 WAR (51.1 total)
Note: Aaron has already passed the break-even point.
Age 38: 3.9 WAR (55 total)
Age 39: 4.7 WAR (59.7 total)
Age 40: 2.1 WAR (61.8 total)
So, there’s the template. It can be done. All you have to do is age as well as Henry Aaron. No sweat.
The trouble is, Cabrera is not the same kind of player Aaron was. Henry Aaron was a good fielder. Cabrera is not. Aaron was a really good baserunner ... it might be the most underrated part of his extraordinary career. Cabrera is not. Aaron was an athletic phenomenon; he played 120-plus games in a season 21 times. No one in baseball history did it more. Will Cabrera’s body hold up like that? How could you possibly bet on that?
But if you look at the way Aaron aged you can see the obvious -- his great years were front-loaded. He was a great player from ages 31-35. He happened to be a very good player (and sometimes even great) after age 35, but that’s only because he was a one-of-a-kind player. The first five years ... it seems obvious that’s what the Tigers are looking at when it comes to Cabrera.
In fact, I think the Tigers basically view this as a five-year, $292 million deal.
Isn’t that even crazier than 10 years, $292 million? Not necessarily. Look at some simple facts here. The Tigers’ owner, Mike Ilitch, turns 85 in July. He admits that he’s in failing health. He has owned the Tigers since 1992, a very long time -- and they have not won a World Series for him. Twice they’ve gotten to the Series. Twice they’ve lost.
In those 22 years of owning the Tigers, Ilitch has dealt with a lot more baseball heartache than joy, a lot more criticism than applause. From 1994 to 2005, the Tigers had losing records every single year. This included the 2003 Tigers, probably the worst team in American League history. Managers were fired, trades were panned, signings were ridiculed ... Ilitch was called incompetent and cheap and uncaring and selfish everything else that American sports owners are called.*
* Owners make up for the name-calling by cashing in countless ways, so nobody is feeling sorry for anybody here.
Then, suddenly, out of nowhere, for reasons nobody could quite fathom, the Tigers won in 2006. How did it happen? It made almost no sense at all except rookie Justin Verlander was really good, and young players like Curtis Granderson and Joel Zumaya were productive, and that crafty old manager Jim Leyland did whatever it is he does, and the Tigers went to the World Series. For Ilitch, the flailing Tigers organization, for the city of Detroit -- this was all kinds of awesome, and everybody wanted more of it.
But such magic is elusive. The Tigers were not as good the next year, and were lousy the year after that. But by then, Detroit had gotten Miguel Cabrera. In 2010, Cabrera emerged from a great hitter into probably the best hitter in the league. In 2011, the Tigers started winning big -- three consecutive division titles, two appearances in the championship series and one pennant. Cabrera was the offensive force all three years.
And ... now what? Do you think Mike Ilitch cares about how Miguel Cabrera will perform when he’s 39? Do you think the Tigers care about the ramifications of 2023? Everyone wants to win now, needs to win now, and to do that they believe that they need a contented Miguel Cabrera, unconcerned about future contracts, unworried about where he will be playing in three years, entirely focused on one city and one team and one championship.
What is Miguel Cabrera worth? Well, like everything else, he’s worth exactly what the top bidder thinks he is worth. Let’s go back to the Forbes financial numbers. According to Forbes the Tigers made $7.5 million in 2013 -- that was paying Cabrera $21 million. The new deal will pay him more than $29 million per year. So if you buy the numbers, the Tigers basically just gave Cabrera their entire operating income (and then some) in order to keep him happy and in Detroit. By those numbers, it doesn’t make much sense at all.
But I don’t buy the numbers -- I think Major League Baseball teams are very good at keeping their true value and true revenue to themselves. And, anyway, baseball teams are often just owner playthings. While the rest of us might look at the big picture and see a drastic overpay (this is, after all, $50 million more than the Robinson Cano contract), while the rest of us might think about age and remember just how bad Manny Ramirez looked at age 39 (he hit .059 in five games for Tampa Bay and looked even worse than that), Mike Ilitch (and Tigers GM Dave Dombrowski) are probably thinking:
1. We really better win a World Series in the next three or four or five years.
2. To win a World Series, we need Miggy Cabrera to absolutely crush baseballs.
And there it is. How much is a world championship worth to an 84-year-old man battling health issues who is worth a reported $2 billion?
Well, it seems those numbers are in: A world championship is worth $292 million spread out in 10 payments. If the Tigers win the World Series, you suspect everyone involved will believe the deal was won. If the Tigers don’t win the World Series, the deal was lost. And everything else – Cabrera’s age-pattern, the financial absurdity of these deals, the astonishing price being set for Mike Trout -- is just stuff baseball fans talk about and future generations will have to clean up.