http://www.fangraphs.com/blogs/on-the-magnitude-of-transaction-mistakes/
On the Magnitude of Transaction Mistakes.
Fangraphs
Let?s take a look at an extreme example, the Detroit Tigers. The Tigers, with the bloated contracts of Miguel Cabrera, Justin Verlander, and Victor Martinez, currently have the largest long-term dead money problem of any team in the game: according to NEIFI, the surplus values of those three bad contracts total -$128 million. (The Angels and Yankees have negative obligations slightly greater than the Tigers? $128 million, but they each have significant bad contracts coming off the books after 2016, so their long-term outlook is better than Detroit?s).
Now, $128 million in NPV is a lot of dead money, double the amount an average team is currently saddled with. But, first, it should be noted that that $128 million is distributed over eight years (the length of Cabrera?s contract). That?s $16 million per year, or roughly the equivalent of two wins per year in a world where the market rates per talent are $8m/win. Now remember, that?s two wins per year relative to the perfect scenario of having no dead money at all (currently, the only team in this category is the Marlins). So what we?re left with is the following:
Marlins (zero dead money): 1 win per year above average
Average team ($64m dead money): 0 wins per year above average (obviously)
Tigers ($128m dead money): 1 win per year below average
That is? pretty underwhelming, isn?t it? So the Tigers? albatross contracts effectively cost them one win per year relative to their competition. That?s not good, obviously, but it?s also not particularly devastating.
Another angle to approach this from is that negative assets can be offset by the acquisition of positive assets. The Tigers? entire dead money problem of $16m NPV per year, could be completely offset by the addition of one player guaranteed to produce +2 WAR while making the league minimum each year (again assuming the current market price of talent is roughly $8m per marginal win). Now, sure, acquiring such a player is easier said than done, and free league-average players are extremely valuable. They?re not, however, massive, franchise-altering assets. And if they?re not massive, franchise-altering assets, then Cabrera/Martinez/Verlander are not franchise-altering liabilities.
http://neifi.co/does-free-agency-truly-matter/#more-237
Does Free Agency truly matter.
