This post will be a bit off the norm for this blog. I’m a big fan of Detroit sports. The Miguel Cabrera signing was big news yesterday, and nationally, it was largely panned. Many compared it to the Albert Pujols signing, which is indeed looking rather albatross-like.
Here’s why I think that’s a bad comparison: Miggy’s already a Tiger. Why does that matter? Most of the time, if a team signs a pricey free agent from another team, they are paying for the premium numbers that he already amassed for the previous team. That is to say, in terms of baseball economics, super-duper-star players are often underpayed during their prime years.
(I’m not going to address the issue of athlete salaries.)
So when an Pujols-like hitter goes from the Cardinals to the Angels, the Angels are paying the high dollar salary, but much of Pujols’ production is already in the past.
In the Tigers’ case, by contrast, their overpayment for Miggy is likely not going to be so utterly outside market prices as one might imagine, even taking into account the inevitable decline that is part of such a long contract.
Look at it this way: statistically, a win in baseball is worth somewhere between $5–7 million. To date, the Tigers have paid Cabrera somewhere in the neighborhood of $107 million. In exchange, Miggy has delivered something in the neighborhood of 36 wins (using baseball-reference.com WAR). This works out to a bargain: the Tigers have paid approximately $3 million per win.
With the contract extension that he just signed (which includes the years he was already under contract in 2014–2015), he is now slated to make $292 million over the next ten years. All told, then, he will have made about $400 million dollars from the Tigers when this contract expires.
At the low estimate ($5 million/win), Cabrera would need to deliver a total of 80 WAR to make his overall contract worthwhile. This would require him to average 6.4 in wins for the next 10 years. This is, of course, not totally likely. For the sake of context, he had exactly a WAR of 6.4 in 2010, when he hit .328/.420/.622, with 38HR and 126RBI. Those are huge numbers.
At the higher estimate ($7 million/win), he would only need to produce a total of 57 WAR to justify his deal. Since he has already produced 36, an additional 20 is almost a given. Also, with the rising salaries in baseball, it is reasonable to expect that the cost of a win is simply going to continue to rise.
All this to say, Cabrera’s contract would be monumentally awful if he had just signed with some other team. But because the Tigers have already received value beyond the dollars for Miggy’s previous years, the inevitable overpay at the end of his new contract is much less objectionable.