Monday, May 13, 2013

Contract Analysis: Anthony Rizzo

Anthony Rizzo flopped as a Padre in 2011.

He was good as a Cub in 2012.

He's been excellent as a Cub thus far in 2013.

Now he's a multi-millionaire 41 times over.

You probably know about Rizzo's and Jed Hoyer's history.  Hoyer drafted Rizzo when Hoyer with with the Red Sox.  Hoyer traded for Rizzo when Hoyer was with the Padres.  Hoyer traded for Rizzo again when Hoyer was with the Cubs.  Now, they look to united for the near future as Rizzo and Hoyer agreed on a 7 year-$41 million deal (it's more complex than that with a couple of option years and some bonuses.  $41 million is the minimum).

Is it a good deal?  Of course it's a good deal.  If it wasn't then one of the parties wouldn't have signed it.  But who was it good for?

Both parties, most likely.  It's hard to say that a 23 year old assuring himself $41 million is in any way getting a bad deal.  He's set himself up for the rest of his life.

But, how does this deal look in more businesslike terms?

As of right now, Rizzo is on a pace for about 3.5 WAR this season.   Some of that is due to a somewhat unforeseen hot start.  STEAMER and ZiPS projections (available on FanGraphs) project Rizzo for about 2.5 WAR over the rest of the season.  That's a 3.0 WAR pace for an entire season.  Let's say that's Rizzo's real, current, talent level.

Using the same assumptions that I've used with Buster Posey and Justin Verlander, to name just a couple (not that Justin and Buster are dating), what do I end up with for Rizzo?

YEAR      projWAR     SALARY     WARvalue
2013        3.0       $1.0       $15.0
2014        3.5       $3.0       $18.4
2015        4.0       $5.0       $22.1
2016        4.0       $5.0       $23.2
2017        4.5       $7.0       $27.3
2018        4.5       $7.0       $28.7
2019        4.0      $11.0       $26.8
2020        0.0       $2.0        $0.0
TOTAL      27.0      $41.0      $161.0

*NOTE: the $2 million in 2020 is a buyout if the options are declined.
*Cot's Contracts

I get Rizzo producing 27 WAR worth $161 million over the life of the contract and being paid $41 million.  Pretty fine deal for the Cubbies.

A few things are left out of this
First, The Cubs have all of the risk.  If Rizzo never gets another hit, the Cubs are paying him $41 million dollars.
Second, Rizzo wasn't even arbitration eligible yet.  This would have significantly depressed his salary the next few seasons.  Rizzo would have been eligible for arbitration after 2014.  If we use the standard 40/60/80 model (plus a year for super-two eligibility) then the chart looks something like:

YEAR      projWAR     SALARY     WARvalue
2013        3.0       $1.0         $.5
2014        3.5       $3.0        $1.0
2015        4.0       $5.0        $2.0
2016        4.0       $5.0       $13.9
2017        4.5       $7.0       $21.9
2018        4.5       $7.0       $25.8
2019        4.0      $11.0       $26.8
2020        0.0       $2.0        $0.0
TOTAL      27.0      $41.0       $91.9

The Cubs still come out WAY ahead.

The break-even point is a little under 2 WAR per year.  Rizzo would have to be something like 2007-2011 James Loney for the Cubs to come out on the wrong side of this deal.

Anthony Rizzo on FanGraphs

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