Earlier this week the White Sox gave Gavin Floyd an extension, effectively buying out his arbitration years plus one year of free agency. The structure:
'09: 750K
'10: 2.75M
'11: 5M
'12: 7M
'13: 9.5M/Club Option
There's a whole host of problems with this deal. First of all, Floyd has a touch over 2 years of major league service, meaning that he would have been a free agent following the 2011 season. Let's compare Floyd with another pitcher who is going the year-to-year route.
Player A
'06: 12-10 4.04 ERA, 166:75 K/BB, 180.2IP Salary: 327K
'07: 10-15 5.81 ERA, 133:85 K/BB, 176.2IP Salary: 380K
'08: 8-11 4.20 ERA, 113:69 K/BB, 201.2IP Salary: 405K
2009 Salary (Avoided Arbitration): 2.8M
Player B
'06: 4-3 7.29ERA, 34:32 K/BB, 54.1IP Salary: 330K
'07: 1-5 5.27ERA, 49:19 K/BB, 70IP Salary: 330K
'08: 17-8 3.84ERA, 145:70 K/BB, 206.1IP Salary: 400K
2009: 520K
You can probably tell that Player B is Gavin Floyd. The Nationals Scott Olsen is Player A. He has 1 more year of service than Floyd. Floyd was set to make 520K this season before signing the extension. Players going into their 4th season and beyond gain more flexibility in regards to what they receive in arbitration, but even if Floyd were to repeat his 2008 numbers (not gonna happen) he would make something similar next year to what Olsen is making this year. The 2010 and 2011 contract figures in his extension reflect pretty well what he would have made given the assumption that he continues pitching well (although if he were to sustain any elbow or shoulder injury the 5mil becomes more trivial, more on that later). So what we're really looking at is the 7mil figure for 2012 and the 9.5mil club option for 2013.
So is Floyd worth the gamble that he's worth $7 Million in 2012? Well last year Floyd was worth $11.3 million (per
fangraphs). But Floyd's true talent level is far less than that figure. Using
David Gassko's DIPS 3.0 formula, which calculates a pitcher's ERA based on the predicted outcomes of each batted ball, Floyd should have had an ERA of 4.31, nearly half a run worse than his '08 figure. Backing this up is the fact that 18% of the runs Floyd gave up (19 of his 107 allowed) were unearned, which is an unusually high number. Digging deeper, Floyd's Batting average on balls in play against (BABIP) was .268, significantly lower than his career line of .290 (league average in the AL was .304). Because the DIPS 3.0 statistic is a defense independent measure, it is reasonable to suggest that his ERA should have been even higher than 4.31 as the White Sox are a below average fielding team (-2.1 runs/150 in 2008), and play in a ballpark that inflates Home Runs.
Another potential factor for Floyd going forward is going to be his workload. Floyd now qualifies for the
"Verducci effect" after logging 206.1 innings last year (30 more than his combined ML and AAA innings last year). I'm not sure how much to buy into this though, as he has been remarkably durable, averaging 171 innings per year over his professional career. Although I suppose you could argue he's had significantly more wear and tear than the usual 25 year old.
It's certainly possible that Floyd improves in the next few years, but why take that gamble if you have him locked up through 2011 anyways? While there is significant value to be had in buying out top young position player's arbitration years, top young pitchers often have more checkered injury profiles and are bigger risks. My problem with the Floyd deal is not that the White Sox will get the raw end. I'd say that Floyd has a fair shot to exceed in value the $15 million that is guaranteed over the next four years. In fact if Floyd is able to post an entirely reasonable 4.50 ERA over the next 4 years, he will be worth close to $24 million (per fangraphs WAR/$ formula). But Floyd would have exceeded his value even more had he gone year-to-year with the Sox without the risk. For the first time since the '94 strike, the financial future of baseball is in serious question. The effect of the struggling economy has yet to be seen in attendance figures, but it seems that teams have been much more conservative the past few months and are trending towards cheaper home-grown talent and bracing for a downturn. The 7 mil owed to Floyd certainly will not be a backbreaker (although it's a lot to pay for a #4 or #5 starter), but it could influence how the Sox decide to handle extensions for core players whose arbitration clocks run out around or before 2011, including Bobby Jenks, Carlos Quentin, and John Danks. All in all, the extension seems to be a case of buying high for the Sox, and an unnecessary risk.
