Friday, March 28, 2014

The Case for Signing Tony Cingrani to a Long-Term Extension....Like, Right Now


"There are contract extensions and contract extensions. This is the latter."



Earlier this offseason, Walt Jocketty stepped up and got a long-term extension done with Homer Bailey. Prior to that point, media reports stated that the Reds and Homer were "far apart" in negotiations. Like most Reds fans, conditioned by years of ownership frugality, I had fully expected Homer to walk after the year, but when I saw the arbitration hearing deadline looming on February 20th, it suddenly hit me that this is exactly how Jocketty operates. He waits until there is some type of pressure, some level of urgency for both sides to get a deal done and then he strikes.

More than most GMs, Jocketty seems to operate in shadow. It can make for interesting times for the fan base. It may be his preferred working style. It may allow him to get things done free from scrutiny. But, it can also be a weakness. He doesn't control the message that fans receive. He passes on the chance to control public opinion. That's fine when you're winning, but if things turn south then you run the risk of losing the fan base.

But, this isn't a post about Jocketty's operating style. It's about why the Homer extension and others like it make a tremendous amount of sense for the Reds right now.


TWO TYPES OF INVESTMENTS

There are two types of investment gambles: (1) finding an individual asset in which to invest that you feel is valued inaccurately by the market, or (2) finding flaws in the market itself and betting against the entire system.

An example of the first would be finding a single family dwelling that is priced $50,000 below where it should be. A residence that, because of a solid foundation, an unappreciated chandelier, and a great location is worth more than others realize. So, you buy that asset for less than it's worth and reap the value.

An example of the second would be recognizing that the entire subprime mortgage industry is completely corrupt, setting the entire housing market up for imminent collapse, and betting against the entire system.

The first type of gamble can earn you a tidy profit, the second type of gamble can make you stinking rich...if you invest heavily enough in it.

Courtesy: Gene Puskar, AP

Homer's contract extension (even if the Reds don't recognize it) actually works well under both investment scenarios.



I support the extension given to Homer Bailey. I support it because of reasons specific to Homer, including his performance line trending upward and his impressive durability. Homer seems like a good individual investment. However, in addition to these Homer-specific reasons, it's an even better idea for systemic reasons.


EXPLODING MLB REVENUE AND LAGGING PLAYER SALARIES

Revenue is exploding in Major League Baseball and has been for a number of years. However, unlike salary cap leagues that base their salary structure expressly on a percentage of league-wide revenue, MLB relies on market forces to determine the percentage of revenue that will trickle down to the players. One of the big knocks on salary caps is that they are a "wealth transfer" mechanism, shifting money from players to owners. Instead of letting market forces dictate how much of the revenue naturally goes to the players, the percentage that goes to the players is artificially established through collective bargaining. Not surprisingly, market forces typically allocate more revenue to the players than the percentages that are collectively bargained by the owners. However, when the salary structure is determined by a percentage of revenue, it is calculated on an annual basis. As a result, salary cap systems more quickly allocate revenue gains to player salaries than market forces, even if those slower market forces eventually allocate a significantly greater share of the new revenue to player salaries.

Currently, the revenue in Major League Baseball is increasing at such a massive rate that the percentage trickling down to player salaries is lagging behind. It just can't trickle down fast enough to keep pace with the new revenue, resulting in the percentage of league-wide revenue that is allocated to the players falling far below where it used to be. As of now, the MLB percentage has even fallen below the percentage of revenue that salary cap sports (NHL players receive 50% of Hockey Related Revenue; NBA players receive 49-51% of Basketball Related Revenue) mandate be allocated to player salaries.

What this creates is an opportunity for teams bold enough to grab it. As it stands, players are being paid based on an outdated reality. Player salaries haven't caught up to the revenue boom, so players are being paid less than they should be.

In short, the owners are living in the luxurious "new revenue" world, but are still paying costs under the "old revenue" reality.

Baseball contracts are largely pulled upward by the contracts of superstar players. As their contracts are extended or they receive a free agent contract, those contracts set the market for everyone below. The new market creates upward pressure on the salaries of all players below. Unfortunately, those deals don't come up all that often, so it may take awhile for those deals to reset salary expectations. That is clearly starting to happen with the recent deals for Clayton Kershaw and Miguel Cabrera, but it seems clear that there are still bargains to be had because the percentage of total revenue that goes to MLB salaries is lower than standard business practices would dictate.

Here are some rough numbers to illustrate the point:



Major League Baseball Salaries as a Percentage of MLB Revenues, Salaries per Cot's Contracts

2000: 50.02%
2001: 53.08%
2002: 56.24%
2003: 54.55%
2004: 46.03%
2005: 43.84%
2006: 41.55%
2007: 40.64%
2008: 41.33%
2009: 40.40%
2010: 40.12%
2011: 41.10%
2012: 40.14%
2013: 39.79%



Major League Baseball Salaries as a Percentage of MLB Revenues, Salaries per Lahman Database

2000: 49.00%
2001: 52.99%
2002: 56.34%
2003: 54.70%
2004: 46.05%
2005: 43.85%
2006: 41.53%
2007: 40.69%
2008: 41.40%
2009: 40.48%
2010: 38.91%
2011: 39.82%
2012: 39.10%
2013: --------



Again, what's important is the trend line, not the specific percentages. Under each salary calculation, the percentage of revenue that goes to player salaries has fallen ~10% since the 2000 season. Forbes just reported, citing to The Associated Press, that Major League Baseball spent $3,767,445,277 on total player salaries in 2013, representing 47% of total league wide revenues. So, Forbes is obviously calculating salaries differently (and, probably more accurately), but, despite the different methodology, 47% is still significantly lower than in previous years.

As it stands, the percentage may not catch up until revenue growth slows, but it seems very likely that owners will eventually, and naturally, spend what they used to spend on players. So, if the market for players isn't reflecting the "true" percentage of revenue that typically goes to players, then there are bargains to be had system-wide.

If owners are spending a lower percentage of their total revenue on labor costs, then they can afford, and will ultimate be forced, to spend more. They have shown in the past that they can effectively operate their business while paying more for labor costs. If the market for labor is lagging behind the revenue, then longer term contracts that take advantage of this disparity make sense. If you can lock in talent at the current "lower percentage of revenue labor market rate", then you can lock in a below market rate for years to come. Act before the market correction and you are ensuring significant cost savings, which would seem to mitigate much of the risk of a signing someone like Homer Bailey in the first place.

If the Reds were smart, then they'd lock up desirable assets to long-term deals now, BEFORE the market correction arrives. One asset I'd look to lock up right now is Tony Cingrani.


WHY CINGRANI IS WORTH A LONG-TERM EXTENSION

Courtesy: Tom Uhlman, AP
Personally, I don't share the common fear that hitters will suddenly adjust to the fastball. It's obviously a plus-pitch with good velocity and late hop. And, to the extent that they do adjust, it seems very likely that Tony's improved secondary offerings, which should only get better, will counteract that. And, I'm a big fan of Tony's pitching mechanics, which should reduce his risk of arm injury. So, I buy the performance level, believe he has a lower injury risk, and give him a boost in value for being a southpaw. He's a good investment from an individual point of view.


And, it's a good bet from a systemic point of view, as there are two scenarios where this type of contract would pay off:


  1. Either revenues level off, but the % of revenue that goes to labor costs increases back to more "normal" levels, or
  2. Revenues continue to grow, making it irrelevant whether the % of revenue increases back to more normal levels. 

Basically, this type of extension would pay off if (1) the future slice of the pie that goes to players increases or (2) the whole pie continues to grow. Either way, any contract signed under today's market reality is a potential bargain because both scenarios reflect continuing market escalation. And, quite frankly, I'm not sure I see any scenario OTHER THAN continuing market escalation playing out over the next 5 to 7 years.


MATT MOORE AS A COMPARABLE

I'm higher on Cingrani than most, so that needs to be factored in, but I think there's very likely a deal here that makes sense. If you consider the deal the Rays handed to Matt Moore as a baseline, then I think it would make a lot of sense. So, let's revisit it:


Matt Moore lhp

5 years/$14M (2012-16), plus 2017-19 options; signed extension with Tampa Bay 12/9/11
$0.5M signing bonus

12:$1M, 13:$1M, 14:$1M, 15:$3M, 16:$5M, 17:$7M club option ($2.5M buyout), 18:$9M club option ($1M buyout), 19:$10M club option ($0.75M buyout)

2017 club option increases by $0.5M with 600 IP in 2014-16
2018 club option increases by $0.25M each with 1) 85 starts or 570 IP in 2015-17, 2) 90 starts or 600 IP and 3) 95 starts or 630 IP
2019 club option increases by $0.5M each with 1) 98 starts or 600 IP in 2016-18 and 2) 66 starts or 400 IP 2017-18


The Rays signed Matt Moore to this extension after he had thrown something like 10 MLB innings. Now, the key to this deal making sense is the existence of team options. Contracts are substantially about risk allocation, the team option years shift that allocation more favorably in the direction of the team. The Rays were undoubtedly comfortable handing this type of deal out because (1) Moore had a longer minor league track record of success and (2) was more highly regarded than Cingrani.

The Moore extension was signed prior to the 2012 season, but it was also given to a pitcher with (arguably) less risk and more certainty. So, maybe a similar deal (maybe a couple million needs to be tacked on to each year's salary) could be struck now, as Cingrani's higher level of risk would help offset inflation and the revenue explosion. And, seriously, how much risk is there in that Matt Moore deal? He's set to earn $9M and $10M in 2018 and 2019? Is there ANY scenario, other than injury, in which a lefthanded pitcher with a mid-90s fastball ISN'T worth that?

Given what Clayton Kershaw just signed for and, hell, what Jason Vargas just signed for, I see very few ways in which this type of deal DOESN'T pan out. If Jason Vargas is worth $8.5M NOW, then what are the odds that Cingrani ISN'T worth ~$12M in 2019?


FINAL THOUGHTS

Personally, I think an extension for Tony Cingrani is something that should be seriously considered. Given the explosion of revenue and the lag in it trickling down to player salaries, it seems like there are more ways for this type of deal to pay off than not. Realistically, how much risk is there in a ~$12M salary in 2018 and 2019?

If I could extend Tony through his first 6 years AND get a team option year or two, then I'd jump at the chance to do it. Now is the time to spend. Take advantage of the league-wide financial conditions and the fact that Tony's reputation has yet to catch up to his performance level. Waiting, even a year, could change both of those realities. Kershaw type contracts and a top flight year by Tony would make this opportunity far less likely to happen.

The Reds were smart enough to lock up Homer Bailey under the current, below-market salary structure, but in order to get really wealthy they need to double down in their bet against the system. There is a low risk, high reward opportunity right now to exploit a systemic inefficiency. Right now, it's as much about being right about this systemic inefficiency as it is being right about the player who will receive an extension. In fact, the former will mitigate the risk of being wrong about the latter.

Sign Tony BEFORE the market correction arrives!!!


Tuesday, March 25, 2014

2014 Breakout Candidate: Brad Miller, ss



I'm a huge Brad Miller fan. I'm as high on Brad Miller for 2014 (and beyond) as I was on Carlos Gomez for 2013. I have snatched up Miller in all my fantasy baseball leagues. Earlier this offseason, I argued that the Reds should trade for him. And, now, he's one of my 2014 breakout candidates. Suffice it to say, I'm all in on Miller for 2014 and beyond.

I just struggle to find things to not like about Miller. He's a very well-rounded player with a strong collegiate pedigree earned at the University of Clemson. Miller has tools, skills, and intangibles and I really can't fathom why he isn't more highly regarded in scouting and pundit circles (with the exception of John Sickels, who seemed to be both earlier and higher on Miller). Those circles seem to have him pegged as something less than an impact talent, which is where I have him pegged. Miller has the ability to control the strike zone, hit for average, and hit for solid power. He also has strong intangibles and leadership skills, as evidenced by his amateur travel team coach Chet Lemon calling him "a coach's dream". He hits without batting gloves and he wears old school stirrups. Everything he does just seems to work.

As for mechanics, I really love his swing, which generates a lot of leverage.


Courtesy: Unknown


In the above photo, which I love, there's really a lot to like. He has his back elbow in tight to his back hip, which increases his rotational speed and gives him a more direct hand path to the point of impact. His hip rotation is powerful and drives his weight up on to the toe of his back foot. And, finally, I love the angle of the bat in relation to his left forearm. His hips have already fired, but he hasn't yet released the barrel of the bat, which gives him strong rotational power and allows him to whip the bat through the strike zone with very good speed and force. He has a short, compact swing to the point of impact, but still gets very good extension out-and-through the pitch. Despite not being the biggest guy on the block, his swing generates very good leverage and power.

In addition to strong swing mechanics that generate substantial force, Miller also has good pitch recognition and hand-eye coordination skills, which enable him to identify pitches he can drive and consistently get the barrel of the bat on the pitch. His hands work very well in the swing. Overall, his combination of skills allows him to drive the ball to all fields.

In the field and on the bases, Miller has a long and lean type of athleticism. He's not the fastest guy on the field, but he runs up on the balls of feet with the exuberance of a young gazelle. In the field, he has smooth fielding actions and soft hands. His range is solid/average and he has good arm strength, but has battled inconsistency in his accuracy, perhaps due in part to his non-traditional arm stroke. He should have more than enough ability to be a league-average defensive shortstop with room to grow into something more.


Here's a look at Brad Miller highlights from the 2013 season, courtesy of TanzeHighlights14 on YouTube:







Miller is a unique talent and one I really wish was on the Reds.

One interesting note about his 2013 season was that Miller hit 2 homers in a game three separate times. Maybe that doesn't mean anything more than his production was clustered over fewer games than expected. Or, maybe it means that his bat is more explosive than commonly thought.

I have high hopes for Brad Miller in 2014 and beyond and there isn't much he could do that would surprise me. I could see a 15/15 season. I could see 20+ homers. I could see a .285+ batting average. I think the offensive upside is higher than the general consensus and he's certainly ripping the cover off the ball in spring training, which could carry over into the early part of the 2014 season.

Overall, I'm very bullish on Brad Miller for 2014 and beyond. I like pretty much everything he does on the baseball field, as well as the manner in which he does it. All that said, I'm pretty much all in on Miller and I'm expecting a breakout season in 2014.


2014 Top Prospect List: #8 Tucker Barnhart, c

TUCKER BARNHART
DOB: 1/7/1991
HEIGHT: 5-10 WEIGHT: 185 B/T: B/R

Courtesy: MILB.com


The more I see Tucker Barnhart play, the more I like him. His approach, both at the plate and behind it, is simply stellar. He's a player whose game is predicated on baseball specific skills, rather than mind blowing tools. In many ways, skills create a prospect's floor, while tools determine his ceiling.

Whenever you hear about a prospect with sublime tools who struggles to convert those tools into production, it's the lack of baseball specific skills that are dragging him down. So, a lack of skills can derail even the most promising prospect, but, at the same time, an impressive set of skills won't create an impact player in the absence of quality tools.

This is an aggressive rating for Barnhart, but his skills are so impressive that I'm comfortable giving them more weight than his less robust tool box. His impressive floor makes him a very high-probability prospect. It's very difficult to imagine him not having an MLB career. At this point, it's much more about what that career will ultimately look like than whether he'll ever reach the majors.


2013 SEASON

In 2013, Barnhart had a return engagement with double-A Pensacola. He spent 41 games there in 2012, hitting a paltry .200/.262/.292 over 130 ABs. It went better the second time around, as he hit .260/.348/.348 with 45 walks and 57 strikeouts over 339 ABs. The problem with his slash line is clear; he simply doesn't produce much power. He posted 23 extra base hits, including 19 doubles, 1 triple, and 3 homeruns.

Obviously, that's concerning, but there is a silver lining. His left/right splits reveal him to be significantly better as a lefthanded hitter, which should improve his chances of having a productive MLB career. In 2013, he hit a robust .280/.380/.375/.754 as a lefthanded hitter against righthanded pitchers, but a far lesser .172/.194/.234/.428 as a righthanded hitter against lefthanded pitchers. And, that heavy platoon split has been an issue throughout his career and doesn't seem to be going away. However, given that the substantial majority of pitchers are righthanded, Barnhart will spend the majority of his career hitting from his stronger half. That will only help his career prospects.

The nature of the catching position naturally lends itself to the use of platoons, but even so there just aren't many catchers who hit from the left side. Barnhart could be just such a catcher, which would land him on the heavy side of the platoon. Still, without further offensive improvement, his bat will be fringy at best, better suited to backup catcher duties at worst.

However, Barnhart's ability to control the strikezone is as impressive as his lack of power is problematic. Just as there aren't many lefthanded hitting catchers, there aren't many catchers who employ the disciplined approach necessary to control the strikezone. Barnhart is one who does and that has real value.

So, in Barnhart, we are looking at a player who profiles out as defense-first catcher with good on-base skill and minimal power. The upper end of that profile finds players like Rays Ryan Hanigan and current Dodger catcher A.J. Ellis. The lower end of that profile, players who fit the pure defense-first, backup catcher profile, would include Jose Molina and Chris Stewart.

Here are the career minor league numbers for the upper tier, Tucker Barnhart's total stats as well as his numbers from the left-side only, and the lower tier:

R.Hanigan - .294/.382/.371/.753
A.J. Ellis - .279/.404/.378/.782

T.Barnhart - .262/.346/.363/.709
T.Barnhart (LH only) - .288/.379/.408/.787

J.Molina - .245/.314/.319/.633
C.Stewart - .256/.328/.360/.689


As it stands, Barnhart's career minor league numbers are better than the bottom tier, a bit short of the top tier. So, the MLB careers of those are tiers are probably the ceiling and floor for Barnhart. With a little offensive improvement or proper utilization by the organization (meaning largely from the left-side of the plate), Barnhart could reach the top tier, meaning he could handle the starting job at the MLB level. If his offense doesn't improve or he's used from the right-side too much, then he probably slides down to the bottom tier, filling the back-up catcher slot very ably for a number of years with his plus defensive skills.

So, Barnhart's ceiling would make him a valuable starting MLB catcher, while his floor would still make him a valued part-time contributor. Where he lands between those potential outcomes will be largely determined by his bat.


SWING MECHANICS

One of my favorite hitters to watch is Jason Kipnis, because he's so quiet in his pre-pitch stance. While that's certainly no determinant of success (as there are countless successful hitters who move all over the place before the pitch is delivered), it does give the hitter an air of calmness, tranquility, and control. It's as if the hitter *knows* that the pitcher has to come into the strikezone and he's willing to wait patiently until the pitcher does just that. No nerves. No jitters. Just certainty. Barnhart utilizes a similar approach.

The air of calmness and control over the zone is reinforced by good pitch recognition. Barnhart has a good eye and can dismiss out of hand those pitches that don't threaten the strikezone. He'll wait for something better. As a shorter hitter, he has a smaller zone and he protects it well, rarely helping the pitcher by expanding it, factors that explain his consistently strong walk and strikeout rates.

So, Barnhart excels in the first phase of hitting (i.e. everything up to, and including, the "go/no go" decision"), but just isn't as strong in the second phase. He works himself into good position by getting a pitch to hit, but he doesn't always have the ability to take advantage of that pitch. His main problem is that his swing just doesn't generate much power. Part of that is simply his size, as it's more difficult for a shorter hitter to generate leverage in the swing. Taller hitters typically have greater strength and longer levers, but there are some shorter hitters who generate leverage with good bat speed (i.e. Dustin Pedroia). Barnhart's swing simply isn't geared to power hitting. Barnhart's value is always going to be driven by batting average and on-base ability, which works just fine from a premier defensive position IF you can generate enough of each.

Here's a look at Barnhart in the 2013 Arizona Fall League courtesy of rkyosh007 on YouTube:






Barnhart utilizes a quiet pre-pitch stance; a small bat waggle the only nod to movement. He starts from a slightly wider than shoulder-width stance and takes a one piece stride to meet the pitch. He starts with a high back elbow and raises it up a bit higher when drawing his hands back to load up. That said, he still does a good job of burying his back elbow into his back hip, keeping his arms in close to the body to maximize rotational power generated by the hips. Drawing his back elbow in tight also gives him a shorter hand path to meet the pitch and ensures that he doesn't cast the bat head too early, instead keeping his swing fairly short and compact. Barnhart's rotational energy is also strong enough to drive him up on the toe of his back foot, which helps him generate what power he produces. He also maintains good balance and body control throughout the swing. Barnhart's swing mechanics are fundamentally sound and without obvious red flag.

While his swing doesn't generate significant power, it does create solid, consistent contact when paired with his good hand-eye coordination. He does a good job of getting the barrel of the bat on the ball, which plays well with his contact-oriented approach to hitting. He also understands who he is as a hitter, as evidenced by his two-strike approach, which includes choking up on the bat to increase his chances of putting the ball in play.

Overall, Barnhart's swing is fundamentally sound and he seems to get the most out of it, even if his hitting ceiling is ultimately limited by his physical stature and athletic tools. It's just a question of enough. Whether his hitting is enough, whether there's enough projection left in his hitting to make him a viable MLB hitter, whether he can improve enough to land a full-time catcher gig. Is it enough? Time will tell.


DEFENSIVE SKILLS

This is where Barnhart truly earns his living. I find it hard to believe that there is an appreciably better defensive catcher in the minors than Tucker Barnhart. I would imagine Austin Hedges is the one to whom talent evaluators would point, but if that's true, then pure arm strength would be the only area where I could imagine him grading out appreciably better than Barnhart, though Barnhart is certainly no slouch in that department.

Footwork is one of the most important aspects of baseball defense. The late, great Herb Brooks, the famous U.S. hockey coach, would tell his Miracle on Ice team that "The legs feed the wolf." It was his way of saying that they needed to be very physically fit in order to be competitive. In terms of baseball defense, it may well be that "the feet feed the wolf," especially for catchers and infielders.

Footwork puts baseball players in the position to make the play. For catchers, it puts them in position to block a ball in the dirt or to try to catch a runner stealing. It doesn't matter how good your technique is in blocking pitches if your footwork doesn't get you into position to use that technique. It doesn't matter how strong your arm is if your footwork doesn't get you into proper position to make the throw. Footwork feeds the wolf.

Footwork comes down to a combination of quickness, agility, and balance. Barnhart is very strong in all those areas, enabling him to move very well laterally and pop up into proper throwing position very quickly.

Here's a great look at his footwork, agility, and blocking technique courtesy of Chris Briones on YouTube:








And, here's a look at Barnhart's pop-and-throw during warmups, once again courtesy of Chris Briones on YouTube:






I just love watching Barnhart catch. He is so fundamentally sound and polished in all areas that the eye is naturally drawn to him, which isn't something that happens with catchers, as pitchers or hitters are usually where my focus falls.

If you focus on Barnhart, then his receiving skills really stand out. An impressive aspect of Barnhart's receiving is how early he sets the target for the pitcher. As of late, it seems like a lot of the top MLB catchers really set the target late. There is undoubtedly a need to avoid tipping location, but setting a good target for the pitcher to focus on during his delivery is also important. Barnhart sets his glove early and really gives the pitcher a good, steady target. It's another little nuance to his defensive game that, when added up, really drives his value.

Finally, Barnhart catches the ball with soft hands. He doesn't fight the pitch or stab at it, rather receives it softly with slight give. This receiving ability enables Barnhart to frame pitches very effectively. I wrote in last year's write-up how I thought the game was coming back around to defensive minded catchers because of the impact of pitch-framing. I still think that. That works in Barnhart's favor because he's very good at pitch framing.

Barnhart has the ability to make those subtle movements needed to steal a strike here or there, catching the pitch just off the corner and pulling it slightly back into the zone. I've also seen him reach all the way across the plate to catch a location mistake and hold the pitch in the zone long enough to get the called strike, which is impressive because umpires frequently give up on pitches that miss location by such a massive distance.

In an era that will value catcher defense much more highly, Barnhart is arriving right on time.


FINAL THOUGHTS

Barnhart is an impressive defensive catcher, but his on-base ability and lefthanded swing may be enough to make him a positive on the offensive side of the ledger, too. If not, then he'll be a very talented defensive minded backup catcher. Either way, he should both reach the majors and be an asset with value when he does.

Barnhart still has some development remaining on the offensive side and that may take some time. In fact, two of the MLB catchers who share his profile didn't reach the majors until reaching a more advanced age (R.Hanigan - 26; A.J. Ellis - 27), so Barnhart may have to travel a longer development path to reach the majors.

Still, a little bit of offensive development and proper utilization at the MLB level could make Tucker Barnhart a valuable player at the MLB level. For now, he checks in at #8 on the list. 

Monday, March 24, 2014

Trevor Bauer on the Mental Game, Nerves, and Routine



If you have any interest in the mental side of pitching, then this video from Indians pitcher Trevor Bauer is well worth a watch. Interesting, informative, and entertaining.