Tuesday, April 23, 2013

Detroit Tigers do it with smart money

We hear a lot about big league baseball teams spending foolishly. We do not hear that about the Detroit Tigers, who spend intelligently even when their contracts don't work out. Which means that the smart money is picking the Tigers to prevail in the American League Central.

Miguel Cabrera, the 2012 American League triple crown winner, is one example, among many, of the  Detroit Tigers being smart with their money (Creative Commons Attribution-Share Alike 3.0 Unported license).

Big Leagues in Los Angeles

The Detroit Tigers of 2013 stand to illustrate two central, recurring questions about baseball.

How important is defense? And how important is the relief closer?

However, the Tigers are raising no questions about who will win the American League's Central Division. It's going to be them. No other club in this group of Midwestern markets combines local resources with a commitment to winning so completely as the Tigers, who won the 2012 AL pennant before getting themselves swept out of a four-game World Series by the San Francisco Giants.

Between owner Mike Ilitch and general manager David Dombrowski, the Tigers have quite an ambitious combination in their front office. Ilitch is 82, he's worth $2.7 billion and he would rather win a World Series than take it all with him. Dombrowski is at the top of the heap as general managers go. But for the 1994 players strike, a cash-strapped Montreal club that he played a large part in developing as their former general manager could have won it all. He did win it all in 1997 with the Florida Marlins. When Dombrowski moved over to the Tigers in 2002, looking to revive a feckless operation, he left the Marlins with key elements for their 2003 World Series winner. That very year, 2003, as Dombrowski's old team won it all, his new team finished 43-119, most losses in American League history. Three years later, the Tigers were prohibitive favorites in the World Series, though they lost it to St. Louis. The Tigers were back last year and lost again. But they seem to be getting closer.

The Tigers are spending $150 million on players for 2013. In this division, the Tigers act like the big market team, and they do it effectively. They've taken up a habit of signing a good free agent every winter, and their track record in recent trades is hard to surpass.

The larger market is in Chicago, where the White Sox spend enough to win ($120 million this year), but they don't go the extra mile to stay with the Tigers. The White Sox have put together their usual "good enough" team this year. If the ball bounces their way, they'll win 90 and contend for a playoff spot. If the ball bounces the other way, they'll win 78, which is about fourth place. If the bounces are about even, they'll finish in the low 80s. That's always the prediction for the White Sox.

The White Sox like to go with their own guys, which, everyone agrees, is cost effective and morally upright. And it's true that there's no correlation between spending and winning. However, that's only because there's a big difference between smart money and dumb money. The correlation between smart money and winning is very high.

A study of some sort would be necessary for truly making that case, but the Tigers are a fine example of what "smart money" means (For a discussion of “dumb money,” we’ll soon enough consider the Los Angeles Angels of Anaheim). The Tigers’ money hasn't been especially lucky, but it has been effective and well considered.

For example, they played in the World Series last year with more than $15 million gone bust between the injured Victor Martinez and the ineffective Jose Valverde (Insurance reportedly covered about half of Martinez's $13 million salary, and the Tigers were out the $9 million that went to Valverde). But even in hindsight, knowing that Martinez wasn’t around and Valverde clunked so badly that Tigers manager Jim Leyland didn’t want to use him in the World Series, those were smart contracts.

In 2011, Valverde tossed a 2.24 ERA with 49 saves, leading his league in saves for the third time in five years. Due largely to Valverde’s performance, the Tigers won 95 games, easily captured the AL Central and advanced to the league championship series. The Tigers had a $9 million option for Valverde in 2012. Who wouldn't have picked up that option? So, it didn’t work out. And the Tigers took almost no nick last year with the Martinez contract. After insurance, he cost around $6.5 million, about a nickel of the Tigers payroll. Martinez drove in 103 runs in 2011, he’s back now for the last half of his four-year, $50 million contract, and he gives the Tigers a switch-hitting producer in the designated hitter slot, where a surprising number of teams lack any kind of juice.

The story of the 2013 Tigers really begins with the 2008 Tigers, who were basically the same team as the 2006 Tigers who went to the World Series, except the 2008 version finished last in the AL Central and paid out $138 million instead of the 2006 club's $82 million payroll. Knowing a bloated loser when they see one, the Tigers didn’t blow up the whole thing, slink into youth mode and plead with their fans for patience. Instead, they retrenched quickly at the major league level.

Within two years, the Tigers turned over their whole pitching staff, except for Justin Verlander. Within three years, they turned over their entire batting order, except for Miguel Cabrera, which started them on two straight division titles with a clear shot at a third. And their 2012 payroll that went to the World Series was $132 million, less than the Tigers paid for a last-place team four years earlier.

The Tigers are making progress, going to the AL championship series in 2011 and going to the World Series in 2012. They have to go right with the Texas Rangers and New York Yankees as the top AL clubs of the last three years, and those other two clubs are looking a little down this year, but the Tigers aren't. Like the Tigers in 2012 and 2011, the Tigers in 2013 look better than the year before.

Before the 2010 season, the Tigers made one of the master trades of recent years, moving Curtis Granderson to the New York Yankees and Edwin Jackson to the Arizona Diamondbacks in a three-way deal that brought back Austin Jackson from New York and Max Scherzer from Arizona. The same deal also gave the Tigers two relievers, Phil Coke and Daniel Schlereth. The implications of that trade for the Tigers are as deep as the implications of any trade for any club in at least this century.

Not only did the trade make the Tigers younger and better, not only did it more than replace Granderson in center field and Edwin Jackson as a No. 2 starter, but it also saved the Tigers more than $40 million in payroll over the next three years. With those savings, the Tigers had some of the flexibility to sign Valverde in 2010, Martinez in 2011, Prince Fielder in 2012, and Torii Hunter in 2013.

When the Tigers made the three-way deal, they owed Granderson $23.75 million through 2012 and $38.75 million through 2013. Edwin Jackson was due for three years of arbitration, for which he earned $24.35 million. Add them together, and the Tigers would have paid Granderson and Jackson $48.1 million for the three seasons through 2012. Instead, the Tigers paid the four players they received a nudge less than $8 million, total, for those three seasons. And, unlike the Yankees or Diamondbacks, the Tigers played in two LCSs and one World Series in those three years.

We can half-legitimately add 2013 to that equation because Granderson was under contract for it and Jackson was due for free agency. If we want to play that game, we can figure in Granderson's $15 million for this year and Jackson's $13 million, which is his annual salary for his four-year free-agent deal with the Chicago Cubs. Comparing that $28 million in 2013 with the $12.565 million the Tigers are playing the four players they received in the trade, that's more than $15 million in additional savings, if we want to look at it that way. If, for 2013, we just want to consider Granderson and not Jackson, which is more honest, then the Tigers still saved an additional $2.435 million in the exchange.

Following the 2010 season, another big salary, $17 million, came off the Tigers' books with the expiration of their contract with Magglio Ordonez. The Tigers re-signed Ordonez for $10 million in 2011, but then that number came off their balance sheet, as well.

By these adjustments, we can safely say the Tigers trimmed $50-55 million from their 2010-2012 payrolls. During those same three years, they paid Verlander, Cabrera and Fielder a combined $122 million, for which they received seven individual seasons of Hall of Fame productivity. Not that it's exactly the same thing, but any team presented with a veteran Hall of Fame quality free agent at seven years for $122 million before the 2010 season would have signed that paper before the player's agent sobered up.

And when you consider that the Tigers defrayed at least $50 million of that, mostly through the Granderson trade, they come out even better. By comparison, the best free agent contract of 2010 probably would have to be the eight-year, $136 million deal the St. Louis Cardinals signed with Matt Holliday. The worst was the New York Mets and their five-year, $80 million contract with Jason Bay.

We hear a lot about bad contracts in the game, but we don't hear much about the Tigers signing them. They pay players top dollar and the players return it with top dollar production.

Entering the 2008 season, the Tigers signed Cabrera for eight years at $152.3 million, right after they traded four players of minor distinction (the best was Cameron Maybin) to pick him from Florida along with Dontrelle Willis. The Tigers also immediately signed Willis, for three years at $29 million, and he's only won four games in the big leagues since then. Well, there's an exception to every rule. But Cabrera has been so good that the Tigers have easily won that trade, anyway. His worst year under that deal was 2008, when he hit 37 homers with 127 RBI and a .292 average. In the middle of a contract like that, a lot of guys might pace themselves a little. Last year, in the middle of his contract, Cabrera won the triple crown.

Last winter, the Tigers knew they would be out Martinez. But Prince Fielder was on the market. So was Albert Pujols. The Angels ended up signing Pujols, a right-handed hitter entering his age 30 season after declining in 2011. They gave him 10 years at $240 million. The Tigers signed Fielder, the consolation prize, a left-handed hitter entering his age 28 season and coming off an uptick performance in 2011. They gave him nine years at $214 million. Pretty easy to argue right now that the Tigers made the better signing.

Torii Hunter is 37 now and he isn't Spiderman, anymore, but he's still pretty strong in the outfield and he has been a better and more consistent hitter in his thirties than he was in his twenties. The Tigers signed him before this season for two years at $26 million. By comparison, they certainly could have played for B.J. Upton, who wound up with the Braves for five years at $72.5 million. The Tigers made the better deal.

This spring, the Tigers signed Verlander to a five-year contract extension that will pay him $28 million per year from 2015 through 2019. A lot of money that is, but Verlander is a franchise player, probably in the very broad sense of becoming an historically great player for that franchise. The Tigers might gnash their teeth fearing an injury, but they have no worries about his value otherwise. He clearly wants to be that guy, and he apparently knows how to be that guy.

The standard worries about the Tigers are their infield defense and their bullpen. Fielder is notoriously lucky to field a hotly batted ball at first base, Omar Infante made nine errors in 61 games he played for them at second base last year, Jhonny Peralta is in the bottom half defensively at shortstop and Cabrera exceeded very low expectations last year at third base. But Fielder and Cabrera hit so much that they almost made up for all of that.

It’s common to point out that the Tigers were second to last in defensive efficiency last year at .678. But it's less common to note that the Tigers had fewer defensive chances (5,872) than any other American League club last year, which is largely because the Tigers pitching staff was second in strikeouts (1,318). Tigers pitchers got so many hitters out by themselves that the shabbiness of their defense almost came out in the wash.

For now, the bullpen is a problem, 1-4 with a 4.53 ERA in 2013 through April 21. Only three saves, which comes to one each for Coke, Drew Smyly, and Joaquin Benoit. For now, Leyland is just trying to piece it together. But if he can't make it work, don't worry. They'll find somebody.

That's because the Tigers are smart money.

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