A Market Deal Isn't Always A Smart Deal

In the fallout over the loss of Jose, many critics claim that matching the Marlins offer was a no-brainer because it's nothing more than a "fair market" deal. The implication is that Mets management failed to recognize the deal was too good to miss.

While that sounds intuitive it ignores important context. Not every market deal is a smart deal for every club. Remember, it appears 28 other teams declined to make a bid on Jose, many of whom could use a SS upgrade.

The argument that the Marlins got a good deal with Jose is largely based on a calculation that a win on the free agent market should cost $4-6m during the duration of Jose's contract and even with some injuries he's a reasonable bet to net that type of value. Let's use $5m for this discussion.

But that doesn't mean every time there's a player available who "only" costs $5m a win you should buy him. Based on that valuation, to get the 42 wins above replacement level needed to be a 90 win club solely from the FA market you'd need a budget of $200m+.

That's not in the Mets near future. You must have a mix of "cost per win" players. You need some really cheap guys who cost $150k, $300k, $1m/win to balance out the $5m/win players. And you need to avoid having a roster with too many bad contracts that pay substantially more than $5m/win.

When does a player like Jose make the most sense?

He'd be a great fit for an 85 win club that got zero WAR from SS with $18m to spend. He's in your budget and all else remaining equal, his 6.2 WAR gets you to 90-91 wins and playoff revenue! A great deal for that club.

Unfortunately the Mets are not that mythical 85 win club.

They are a 77 win club that would gain zero wins from re-upping Jose. Yes, they'd avoid losing his production but they wouldn't be adding wins. And unless they improve over last season they're likely to draw fewer fans in 2012 with Jose than they did in 2011.

The Mets reality is that they paid $52.5m for 2.6 WAR in 2011 from Wright, Bay & Santana. That's $20.2m/win from players that will cost $55m in 2012 and $57.5m in 2013.

That's why big-dollar contracts are so dangerous - we paid 4X the market value per win to three players who will make up over half the 2012 payroll. That big an under-performing fixed cost can keep you from affording "market" contracts - even for elite players.

Now hopefully they'll all improve in 2012.

If Santana can reach his Mets 3 year average WAR of 3.6 and both Bay and Wright double their 2011 WAR we'll get 8.8 WAR for $55m or $6.875m per win. That's about 35% over the $5m/win "market" value figure.

Bring back Jose and the Mets, while likely out of money, pick up 4.6 wins and get to 81-82 wins (I netted out Capuano against Santana). Of course, that assumes we replace the 23 for 26 save rate K-Rod provided over the first four months.

And 2013 may not be any better. It's entirely possible the Madoff trial is still being litigated and financial restraints are still an albatross, the big $ three cost $57.5m and I'd suggest Bay & Santana would be reasonable bets for regression from their 2012 performance.

So 2014 when that $57.5m becomes $8.5m worth of buyouts plus a decision on DW, is also probably the likeliest time frame for either a favorable resolution of the Madoff mess and financial certainty OR new, hopefully better, ownership.

That's also probably a reasonable time frame for knowing who of Wheeler, Harvey, Familia & Mejia stay healthy/can contribute. Of course in June of 2014 Jose will turn 31 and while he might sustain his recent performance, there's at least a decent chance, he'll be a bigger risk for injury and regression than he is right now.

If the Mets had a solid ownership team, increasing attendance, a $120m budget for the next two years and fewer question marks (Santana, Thole, Pagan, Bay, closer, set-up, Pelfrey maybe even Wright) then shopping for $5m/win deals is a no-brainer.

But that's not our current reality. Our current reality is that $5m/win deals don't really fit into our current budget.

That's not how it ought to be. We can/should be mad it isn't. But that's about the failure of ownership, not the failure of the GM to recognize value and market efficiencies.