One of the most beautiful things about the business side of baseball is that there is no salary cap, and save for some revenue sharing, is a good example of free-market capitalism at work.
The purpose of this article is neither to sing the praises of nor denounce free-market capitalism – politics and sports go about as well together as peanut butter and tuna fish. But in order to proceed forward with the rest of this article, we need to at least establish that Major League Baseball’s policy with regard to the way teams spend money and the way free agency works is roughly in line with free-market capitalism.
We’ll get back to the economics in just a bit, but first, John Harper of the New York Daily News published a column Saturday criticizing Mets General Manager Sandy Alderson for signing outfielder Chris Young to a one-year, $7.25 million contract in November, when outfielder Nelson Cruz recently signed a one-year, $8 million contract with the Baltimore Orioles.
Even with 20/20 hindsight, Harper is blind to:
- The basic economic principle of supply and demand and how it works.
- How that principle applies to the MLB free agent market.
- Statistical research, and how it shows that despite their different abilities, that Cruz and Young are roughly equally as valuable.
- All of the above.
Let us begin with that first point.
The Foundation for Economic Education’s website says about supply and demand: “The basic insight underlying the law of supply and demand is that at any given moment a price that is ‘too high’ will leave disappointed would-be sellers with unsold goods, while a price that is ‘too low’ will leave disappointed would-be buyers without the goods they wish to buy. There exists a ‘right’ price, at which all those who wish to buy can find sellers willing to sell and all those who wish to sell can find buyers willing to buy. This ‘right’ price is therefore often called the ‘market-clearing price.’”
Seems easy enough. If the price is too high for a player’s services, teams won’t pay, and players will remain without a team until they lower their price. A player with reasonable price demands is more likely to be signed quickly.
In the beginning of the offseason, the Texas Rangers offered Cruz a qualifying offer (more on those in an upcoming article) worth $14 million for one year which he promptly turned down, becoming a free agent. Cruz was said to be seeking a multi-year contract, and clearly thought he could earn a contract in excess of $14 million.
Meanwhile, Young was asking for far less – $7.25 million without a multi-year commitment. Alderson needed to make a move to improve the outfield, and pounced on Young at a price he liked before another GM was able to.
As the consumer, Alderson also had to factor in the possibility that waiting for Cruz’s demands to drop might cause him to get shut out all together and be left with nothing.
The Mets had demand for outfielders, and Alderson struck while there was still a large supply at a reasonable price.
The demand for Cruz’s labor remained low because of his high price and consumer demand dropped as teams secured the services of other reasonably-priced outfielders, and he was forced to lower his asking price.
And that’s how he ended up on the Orioles for $8 million.
What Harper ignores almost completely that if the Mets had tried to wait out the market on Cruz, one of two things would likely happen: either (a) other teams bidding for Cruz’s now discount-priced services would drive the price north of $8 million since higher demand leads to higher prices when the supply remains static, or (b) the Mets would be outbid by another team and would then be left with the prospect of Eric Young Jr. playing every day.
While some might be okay with Eric Young Jr. playing every day, that is a scary scenario meant for another day (and yet another article).
Harper rationalizes his ignorance by deflecting the blame: “[I]t is the GM’s responsibility to have a feel for the market, so Alderson can’t get a complete pass here.”
For the life of me, I can’t figure out what this statement is supposed to accomplish. Is it supposed to be a swipe at Alderson for not being able to predict the future? Perhaps it’s also supposed to imply that Chris Young is a vastly inferior player to Cruz.
The table below shows the Oliver and Steamer projections for Chris Young and Cruz for 2014.
| G | PA | AVG | OBP | SLG | wOBA | wRC+ | fWAR | |
|---|---|---|---|---|---|---|---|---|
| Chris Young (Oliver) | 143 | 600 | .217 | .300 | .390 | .304 | 95 | 2.5 |
| Chris Young (Steamer) | 126 | 536 | .225 | .311 | .402 | .314 | 102 | 1.5 |
| Nelson Cruz (Oliver) | 143 | 600 | .257 | .322 | .465 | .341 | 113 | 2.5 |
| Nelson Cruz (Steamer) | 122 | 514 | .257 | .320 | .481 | .346 | 116 | 1.2 |
All told, the overall production that these two projection systems foresee is not really that different. Chris Young figures to provide the Mets with superior defense and baserunning, compensating for Cruz’s more potent bat.
Chris Young’s more patient plate approach and better defense and baserunning fits in more with the kind of team the Mets are trying to be more than Cruz’s power does. To his credit, Harper does make mention of this in his column, but not without getting in an unnecessary and uneducated shot at that approach.
Alderson has done plenty of things that deserve legitimate criticism (see Carrasco, D.J. and Francisco, Frank), but fabricating criticism that ignores basic facts comes off as petty, sad, and unprofessional.
Joe Vasile is the voice of the Fayetteville (NC) SwampDogs of the Coastal Plain League. Follow him on Twitter at @JoeVasilePBP.
For me this isn’t Cruz vs. Young
It’s Cruz vs. Lagares/Young Jr./Den Dekker
Cruz is better off in Baltimore where he can hit more home runs which might be part of why he accepted the small contract.
I criticized SA for not getting into NC earlier in the past week.
Look, the guy took less at Baltimore than he was offered in Texas. There have been several reports that dialogue was at least open between the Mets and Cruz.
He went where he wanted to go. To me, it’s plain. He felt the bridges were burned in Arlington. He was either going to rebuild his world and take a one year deal, someplace where he could hit well. Or he wanted the safety of a long term deal.
The world broke down to places he would hit well this year, and everywhere else. Colorado and Boston weren’t as interested. NYM and Seattle have places that suppress offense.
Personally, I laughed off Sandy saying he wouldn’t have taken Cruz in November at 1/8. That’s just silly talk. But I can’t hold it against him that we didn’t sign him in February.
It’s nice to finally see someone connected to Biogenesis actually pay, in dollars, for their actions. Just like other cheaters, i wish the worst to Cruz in Baltimore.
On a related note, almost everyone thought Chris Young was an overpay when they signed him so it is very fair to say that he didn’t have a handle on the market. Where was the demand for Chris Young? Looking in hindsight, this is what all the mid-tier OF’s signed for:
Byrd-2/16
David Murphy-2/12
McClouth-2/10.75
Cruz-1/8
Hart-1/6
Morse-1/6
I’d really look at the 3 guys who were coming off down years like Young: Murphy, Hart, Morse.
In all 3 cases, they got 6 million annually. The absolute dollar terms in the difference may seem small, just 1.25 million, but on a relative term, it’s ~ 17% overpay, which is a pretty significant amount. Luckily for us, this is a small signing in terms of dollars, which means even if it is a mistake/overpay there’s no reason to get too worked up, but i’d still put a tally in the fail column if i’m keeping tracking of score for Alderson.
“almost everyone” thought it was an overpay?
Didn’t someone notable … Keith Laws comes to mind … give considerable props to SA on this one? I mean, depending on where you look, he’s got something like 5 to 7 WAR over the last three years.
A quick check also shows a Fangraphs article saying it was a great signing. Dave Cameron,”Mets Land Bargain in Chris Young”.
here are two types of overpay. One is overpay for production and another is overpaying market price. Everyone has their own methods of valuing and pricing production, so there’s often disagreement on that front. However, in this case, i’m referring to overpaying of market price. The guys i listed above, and more specifically the ones i singled out, are close to the talent level of Chris Young. The AAV of his comps is ~6 mil. Sandy overpaid.
But overpaying for production and overpaying for market price aren’t mutually exclusive. You can overpay market price, but still not overpay for production. Personally, i don’t agree with many of the comps Cameron uses in his article. Ludwick, Gomes, and Ross were all coming off great 800+ OPS seasons. Chris Young had a .659 OPS last season. What he should have been comparing to is Ibanez(1/2.75), Schierholtz(1/2.25), McClouth(1/2) and Torres(1/2).
Name, very good thought process.If I could have signed a Cruz in February at that price for *one* year I would have. Your’s (and Brian’s) recent research shows that teams need 5 outfielders and a competitive team and a solvent team would spend the money. Unfortunately the Mets are neither. I think the question posed is not Cruz vs C. Young but Cruz vs Andrew Brown.
I realize Cruz would have not signed without guaranteed playing time but for 2014 wouldn’t Cruz/C Young/Granderson make a strong outfield with the benefit of C Young and Cruz being trade chips (ala Byrd) to keep restocking the minor leagues if the Mets are out of contention.
As for value, both Young or Cruz just need to put up a 1.5 WAR to justify the salary. One year contracts maintain payroll flexibility.
Finally, TC thinks EY is better than Lagares so it stands to reason that Cruz is better than EY in TC’s mind. Notice that TC has taken Lagares out of the equation.
This is a fantastic article Joe! Very well done. The sports radio world is predictably upset and overblowing this. I’d put your article up against any criticizing the Mets for missing out on Cruz.