Today Joey Votto signed an extension like we all hoped he would. Unfortunately, it was only for three years.
I think this extension is fascinating in terms of the motivations driving each party. From Votto's perspective, he was a property of the Reds for three more years no matter what. Signing only a 1-year deal is somewhat risky, as he'd risk getting substantially less in future seasons if he, for example, got hurt in a way that severely hampered his performance. But it also wasn't THAT risky. It was only two more seasons in which he'd have to perform well. And he was already guaranteed to get his first multimillion paycheck this coming season--the Reds' arbitration offer was reportedly something like $7 million. As we can all attest, the first one of those $7 million paychecks you get is the most important, right? Therefore, while I can see him giving a slight discount for the security, I wouldn't expect it to be massive.
From the Reds' perspective, as Fayman notes, the fact that they didn't get to buy out any of his free agent years is a bit surprising. That often is one of the benefits of offering a multi-year extension like this--you absorb some risk, but you get to own a player for longer. So in that case, the two benefits left are a) cost certainty, and b) a discount over what you can reasonably expect to pay the guy going year to year.
We can't know the exact numbers that the Reds have, in terms of what they expected to pay him going year to year. But we can make a reasonable guess by running our back of the envelope calculations as we have been doing for other signings. As usual, we'll start with hitting:
Votto really has been a best case development scenario given his draft position (2nd round) and minor league numbers (quite good, not mind-blowing). But hey, all superstars are exceptions. Votto, as we know him now, is a patient hitter, walking 13% of the time (for context, Brandon Phillips walks 6%, Adam Dunn walks 16%). But more importantly, when he hits the ball, he hits it hard, far, and to all fields. His career BABIP is .353, and it's been above (and often well above) league average every year of his career in the big leagues. BABIP doesn't work for batters like it does for pitchers--most of that is real talent, and is probably related to both how hard he hits the ball, and the fact that he's a spray hitter.
Unlike a lot of power hitters, Votto does not rely on pulling the ball, hitting as many of his home runs to opposite field as to right field. That's actually a pretty rare trait, and Dave Cameron proposed that it might be something we need to pay attention to when similar players emerge. Also, lest you think that his home run totals last year were a result of Great American Ball Park, Hit Tracker Online reports that only one of his GABP homers would have been a homer in less than half of all other MLB parks: his shot to left-center off of Barry Enright on September 13th (though he did have one home run that was legitimately cheap--a 345-foot opposite field job off of Roy Oswalt at Minute Maid Park, which would not have been a home run in any other park).
If there's a weakness in Votto's offensive game, it's his strikeout rate. But it probably is the case that many of the traits that make him successful, like his tendency to wait for a good pitch to hit, probably also results in those strikeouts. When he strikes out with a man on first and less than two outs, just remind yourself that at least he didn't ground into a double play!
The two projection systems I'm using (ZiPS and THT's Oliver) are remarkably similar in terms of their overall rate stats for him: both project over a .400 wOBA for him, and at least in Oliver's case it's the fourth-best projected offensive performance in baseball (behind only Pujols, Miguel Cabrera, and Adrian Gonzalez). The reason they both look weaker than his last two seasons' performances is simply regression to the mean: a guy who is on top of the world may certainly stay where he is, but is far more likely to fall back down to earth than to launch his way to an even higher level. He simply has farther to fall than most players, and so the regression appears larger. Overall, on a per-season basis (we'll do playing time later), the two systems average out to project 43 runs above average from Votto's hitting.
To my eye, Votto looks good out there. He's a bit flashy when he digs a ball out of the dirt (which I love), makes all the plays you expect him to, and I've seen him get to a few balls I expected to see go by him. The Fan Scouting Report generally agrees, rating him as a +5 run per season player last year. That survey reports better than average reactions, good hands, but only average range. I'll buy that.
The objective systems pretty much agree. His 3-year UZR/DRS per 162 G average is +6 runs above average. So I'm going to call him a +5 run fielder moving forward.
Position: 1B is, on average, operated by well below-average fielders, and therefore we give a -12.5 run per season penalty to those playing that position.
Replacement: we use +20 runs per season as the difference between league average and league replacement level. We can add in this total to convert the runs above average numbers to runs above replacement.
Playing Time: the two projection systems differ a bit. ZiPS has Votto at 89% playing time, while Oliver has him at 83%. The only significant playing time Votto has missed in his still-young career had to do with a mental health crisis stemming from the then-still-recent passing of his father. While I certainly can't guarantee that it won't happen again, my feeling is that he's far better in command of these problems now than he was even a year ago--and last year played pretty much all year (91% PT). So, I'm going to lean 2:1 toward the ZiPS playing time projection and peg him at 87% playing time.
Total Projected Value
Combining everything above gives us: +43 runs hitting, +5 runs fielding, -12.5 runs position, +20 runs replacement = +55.5 runs above replacement per 162 G. At 87% playing time, that puts him as a +48 RAR, or ~5 WAR player. That's pretty amazing. You won't find many other players who project as 5 win players in 2012.
The Reds are paying $38 million. Here's a "schedule" that fits that offering:
Total: $38.3 M
Note: there are discounts in place that reflect the average arbitration discount for each year of arbitration, and I'm having to make assumptions about how the market will change over the coming years and such. There's lots of assumptions that feed into this--not the least of which is our estimate of Votto's true talent--but it's a good place to start.
If you instead start him as a 5 WAR player, as I'm projecting we should, the deal would be worth $43 million instead of $38 million. So, essentially, the Reds are paying him to be a superb player...but just not quite as good as he probably is. Therefore, the Reds may be saving themselves an expected $5 million over the life of the deal in exchange for absorbing Votto's risk over going year to year.
Some may think the aging I used is too severe, and prefer to not start taking off a half-win per season until they start hitting 30. If we instead use -0.3 WAR per season, Votto's expected year-to-year deal would be worth $45.8 million, meaning the Reds saved ~$7.5 million with the deal.
Be it $5M or $7.5M, that's about what I expected to find. The Reds probably got Votto at a slight discount, but it's not so much where he sacrifieced a lot of potential earnings.
If Votto plays like a league-average player the next two years--or even an above-average 3 WAR player--the Reds probably end up paying a bit more on this contract than they would have going year to year.
But here's the thing: Votto was a 7 WAR player last year. He probably won't, but if he goes and does that again in 2011 and 2012, the Reds could find themselves paying an enormous contract during his walk year in 2013. This is what teams mean by cost certainty--they agree to pay a fair amount to prevent having to pay an enormous contract at the end of the period. Honestly, prior to working through this deal, I was pretty sure that cost certainty was a meaningless talking point for press conferences. But here, I can actually see the chance that a 2013 Votto arbitration contract could be disastrous for the team's finances. Here, they prevent that from being a possibility while simultaneously saving a few million per year over a reasonable, "fifty-percent" projection of Votto's production.
I'm sure the Reds would have loved to lock him up for more years. I certainly wish they could have done so. But a player has to be party to such a deal, and every indication is that Votto was not. At the very least, however, this gives the Reds 2-3 years of Votto at a locked-in, slightly discounted rate. Hopefully the Reds can capitalize on that window! My hope is that we don't hear a whisper about a trade until after the 2012 season...