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On Tejada: Money Matters

First in a series of articles about the Orioles' most prominent newcomer, Miguel Tejada

Shortly after Miguel Tejada signed with the Orioles last December for six years and $72 million, ESPN.com columnist Rob Neyer wrote in a column that the Orioles may have landed a bargain. Neyer contended that Tejada, of late, has been about as good as fellow shortstops Derek Jeter and Nomar Garciaparra, and considering what Jeter and Garciaparra will make in upcoming years, Tejada might actually be underpaid. Neyer is probably the most widely read columnist in sabermetric circles, so his opinion carries considerable weight. But he made this comparison with a broad brush, using only Win Shares and salary estimates to illustrate his point. This article will take a closer look at that trio. Is Tejada really as good as Garciaparra and Jeter? How much bang are the Orioles and their fans getting for their 72 million bucks?

In his column, Neyer ran a brief, unscientific analysis comparing Tejada, Jeter, and Garciaparra, using their 2001-2003 Win Shares and projected 2005 salary figures. I'll do something similar, except I'll use WARP (Wins Above Replacement Player), developed by Clay Davenport at the Baseball Prospectus. WARP comes from the Davenport Translations, which measure the contributions made by a player's offense and defense while accounting for conditions of league, home park, and era.

Wins Above Replacement Player, 2001-2003
Player 2001 2002 2003 Ave. WARP3,
WARP3/162 G,
Derek Jeter 7.2 6.1 4.2 5.8 7.0
Nomar Garciaparra 1.0 9.1 8.1 6.1 8.5
Miguel Tejada 6.6 8.5 6.6 7.2 7.2

Keep in mind that we are not comparing apples to apples here. Jeter and Garciaparra are older than Tejada—Jeter by two years and Garciaparra by three years—so this chart covers Jeter's and Garciaparra's late twenties and Tejada at ages 25-27. There is also a significant gap in games played over this time period. Garciaparra missed 141 games in 2001, Jeter 43 last year, while Tejada made it through all three years without missing a game. But staying healthy does matter, so it makes sense to give Tejada some credit for perfect attendance. Looking solely at rate of production, Garciaparra outproduced the others at 8.5 WARP per 162 games, followed by Tejada (7.2) and Jeter (7.0). However, Tejada's durability helped make him the largest overall contributor to his team's wins over the three-year period.

WARP has given us recently established levels of play for Jeter, Garciaparra, and Tejada. Do their salaries correlate with their production on the field?

Tejada's take, year by year
Year Base
2004 3 4 7
2005 9 2 11
2006 10 2 12
2007 12 0 12
2008 13 0 13
2009 13 0 13
2010 n/a 2 2
2011 n/a 2 2
Total 60 12 72

Tejada's $72 million payout breaks into $60 million in base salary and $12 million in bonuses (lump payments), of which $4 million is deferred until 2010-2011. Apparently, Tejada and the Orioles made a compromise by which Tejada received a large $4 million bonus on signing, but accepted a low $3M first-year salary as well as deferred payments that decrease the contract's present-day value.

Tejada's birthdate on file is May 25, 1976, so he will turn 28 during the 2004 season and will be 33 when the contract expires in 2009. Most players peak between 25 and 29, so while the Orioles can reasonably expect good things out of Tejada over the next few years, there's a chance that his best years are behind him and that his performance will take a downturn midway through the contract.

Other factors could affect the cost-effectiveness of this deal. If Tejada is three years older than his reported age—a rumor that has been circulating for a while, although the Orioles have discounted it based on their background research—the O's could well be overpaying him. On the other hand, if the economy kicks back into gear and salaries rise again, if the Orioles sell lots of tickets and go to the playoffs, if Tejada stays healthy and continues to produce like he has the last three or four years—then this contract could look like a masterstroke. But as with any multi-year signing, there is risk involved for the Orioles, and one ill-timed injury could turn this contract into a flop.

For a more mathematical appreciation of the value of this contract, one could use Doug Pappas's Marginal Payroll/Marginal Wins (MP/MW) statistic, described in Baseball Prospectus 2004. MP/MW measures the amount of money a team spent per win over a hypothetical team of minimum-salary players with a .300 winning percentage. If Tejada averages about 6 WARP per year over the next six years—an attainable level, if he stays healthy—the Orioles will have paid about $2 million per marginal win. That's slightly higher than the 2003 MLB rate of $1.9 million MP/MW. So from this perspective, the Orioles appear to have paid fair market value for Tejada.

Jeter's take, year by year
Year Base
2004 17 2 19
2005 18 2 20
2006 19 2 21
2007 20 2 22
2008 20 2 22
2009 20 0 20
2010 21 0 21

Note: contract information from Major League Baseball Player Contracts

Jeter, the best compensated of the group, signed a ten-year, $189 million contract in February 2001. He made about $16 million (including bonuses) in 2003 and will earn about $18 million in 2004. His salary will rise to $22 million in 2007-2008 before settling to $21 million in 2010.

Back in 2001, Jeter's contract did not raise too many eyebrows, as it came on the coattails of the Yankees' fourth championship in five years and A-Rod's $250 million fortune. Also, Jeter was coming off three excellent seasons in which he averaged 8.7 WARP. But today, now that the free-agent market has undergone a correction, now that Jeter's production has taken a step downward from his 1998-2000 level, Jeter's mega-haul looks excessive.

On-field performance is not everything, of course, and Jeter has a lot of other things going for him that add to his box-office value. His good looks, celebrity bachelor status, positive relationship with the dogged New York press, captainship of the Yankee squad, and gaudy championship résumé—all these things stoke interest in the team and help sell tickets and merchandise. But even after taking those factors into account—not to mention the cost of getting an apartment in New York—I hardly think it a stretch to say that the Yanks are overpaying Jeter and will regret this contract sooner or later. No matter how much devotion he inspires in the Yankee faithful, Jeter's on-field accomplishments do not justify the length and sum of this contract.

By contrast, Tejada's deal looks like a pittance compared to Jeter's. As pointed out before, not only is Tejada younger, but he has also out-produced Jeter over the last three years. Yet the Yanks will pay Jeter about 70% more than the Orioles will pay Tejada over the next six years. This is too much of a premium, although the Yankees have the capacity to absorb it.

Nomar, meanwhile, has been paid well for his services, but not nearly as well as Jeter. He signed his current deal in 1998 for seven years and $44 million. In 2003 he made $11 million, and he will make about $12 million in 2004, the last year of the deal. Garciaparra has a well-deserved reputation as a fragile player, with only three seasons of 150 or more games played in his career. Lately, however, he has been holding up well and earning his pay; he missed just twelve games total in 2002 and 2003. Neyer seems to think that Garciaparra will fetch more than Tejada on the free-agent market next winter, but I'm not so sure. Garciaparra's age and health issues will probably curtail the length of his next contract. It's also possible that bidding teams will offer him conditional bonuses and incentives in lieu of some guaranteed money.

Although I wanted to focus on Jeter, Garciaparra, and Tejada because they play in the same division, I do not want to leave other shortstops out of the discussion. Here is a list of some other worthy contenders and their 2004 salaries:

Wins Above Replacement Player, 2001-2003
Player 2001 2002 2003 Ave. WARP3,
2004 income
Rich Aurilia 10.6 3.9 4.0 6.2 $3.15M–$3.5M
Orlando Cabrera 8.6 5.6 7.5 7.2 $6M
Alex S. González 6.5 4.8 5.8 5.7 $5.5M
Edgar Rentería 4.8 5.5 8.9 6.4 $6.5M
Alex Rodríguez 13.8 12.8 12.0 12.9 ~$19M

Note: contract information from Major League Baseball Player Contracts, Dugout Dollars, and wire reports

I included Alex Rodríguez here because to me, he is a shortstop in third baseman's clothing. It is apparent that even with his enormous contract, A-Rod's performance has been otherworldly enough to make him well worth the money. Orlando Cabrera, for his part, may be the most underrated shortstop in the majors (he will become eligible for free agency next winter). 33-year-old Rich Aurilia had a tremendous 2001, but has been so-so since, and as a result he was available at a discount last winter. Edgar Rentería was excellent last year, but was it just a one-year spike not to be repeated or a real and sustainable breakthrough? Alex S. González, unfairly remembered for his error in last year's NLCS, is good enough to join the discussion of the finest shortstops, but he is outdone by the others here.

The Orioles indeed put a lot of dough on the line for Tejada. But the sum appears to be appropriate for a player in his class. Moreover, compared to at least one of his counterparts he appears to be vastly undercompensated (or, to put it another way, his counterpart appears to be vastly overcompensated). Is Tejada's contract an out-and-out bargain? It would be foolish to call anything a bargain when so many dollars are yet to be paid and so many games have yet to be played. But Tejada's durability and recent performance history indicate that it could turn into a sweet deal for both parties.


This page contains a single entry from the blog posted on March 29, 2004 11:25 AM.

The previous post in this blog was Roster trimming.

The next post in this blog is Setting the roster.

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