Why the Machado Deal Could be a Mistake

usp-mlb_-nlcs-milwaukee-brewers-at-los-angeles-dod.jpgPhoto Credit: USA Today’s FTW

If recent history tells us anything, the San Diego Padres may have made a huge mistake in signing one of the best infielders in the game in Manny Machado. Machado is a great player. That’s undeniable. He is a five-tool player with exceptional fielding abilities and a great bat. In his 7 year career, he has made 4 All-Star games, won two gold gloves, and finished in the top ten in MVP voting three times. That being said, the two concerning numbers for the Padres are the 10 years and 300 million dollars that they just committed to him.

In evaluating such a massive deal, I took a deeper look at the top ten average salaried contracts in the MLB right now. The current 10 highest average salary per year players are listed below, along with their average yearly earnings under their current contract:      

output-onlinejpgtools (1).jpg

In analyzing these contracts, I decided to use WAR (generally accepted as the most cumulative indicator of a players effect on winning) as the metric to trace from the three years prior to each player’s contract to three years after signing. I averaged the three years of WAR for each player prior to signing their current contract. The average of all these players previous 3 seasons came out to a WAR of 5.2. This makes sense. According to FanGraphs, a WAR above 5 indicates a superstar player, warranting a superstar contract. So what’s the big concern for the Padres? For the seven players in this top ten that are at least two seasons into their mega-deals, the average season WAR post signing their massive contracts is just 3.2. This indicates an average decrease in WAR of 2 full Wins Above Replacement or a 38% decrease in overall impact. (For Machado, Kershaw, and Arenado this average decrease was predicted in bold in the graphic below).

previous 3 year WAR.PNG

Post 3 yr WAR

In Manny Machado, the Padres are getting a player who, for the last three seasons, has been playing at a superstar level. And, they are paying him like one–and then some. But, the cause for concern is if he continues to follow the trend shown above and falls to a player who is in the 3-4 WAR range. At that point, the 300 million dollars committed to him becomes an incredible overpay, and could hamstring the organization for years to come. Looking at a measurement of value I’ve created, WAR(M), or WAR per million dollars of salary, a players value on these types of deals deteriorates very quickly. Here’s a look at the net change in WAR(M) for the players in this sample:

WAR(M)

The Padres are hoping that Machado can sustain his production of the last three seasons, but if history is any indication, the Padres just massively overpaid.

 

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