Saturday, June 23, 2012

Baseball Contract Analysis

We've been going through contract and salary data, in order to improve the artificial intelligence in Baseball Mogul 2013 and future versions.

Contract Lengths for Major League Baseball Players (n = 516)
We examined the 516 players on Major League 40-Man Rosters (as of opening day) that had reached either arbitration or free agency. The first fact worth noting is that the vast majority (84%) of all player contracts are between 1 and 3 years. The longer deals get all the headlines, but the shorter deals dominate team rosters.

In fact, more than half of the contracts (almost 53%) were for just one year. As might be expected, these one-year contracts were at the lowest salary levels. They were also awarded to older players (age 31.2) showing that one-year contracts are used primarily to sign journeymen that fill out the roster and provide depth in case of injury.

Contract Length Players Share Average Salary Average Age
1 Year 272 52.7% $3.51 Million 31.2
2 Years 126 24.4% $4.86 Million 31.4
3 Years 34 6.6% $7.80 Million 29.7
4 Years 22 4.3% $9.45 Million 28.9
5 Years 203.9% $10.16 Million 28.5
6 Years 26 5.0% $13.01 Million 28.7
7+ Years 16 3.2% $19.18 Million 30.1

Of the 272 players with 1-year contracts, almost half (42%) had been awarded those contracts during arbitration. The average age of players with contracts awarded in arbitration was 28.6. If we remove those contracts from the pool of 1-year contracts, the average age rises above 33.

1-Year Contracts Players Share Average Salary Average Age
Arbitration 113 21.9% $4.41 Million 28.6
Non-Arbitration 159 30.8% $2.24 Million 33.1

Finally, if we look at the "Overall" rating assigned by Baseball Mogul, we see that the longer contracts at higher salary levels are awarded to the more talented players.

(Here is the data with the arbitration contracts split out from the pool of 1-year players)

Contract Length Players Overall Rating Average Age Average Age
at Signing
(Arbitration) 113 78.9 28.6 28.6
1 Year 159 79.9 33.1 33.1
2 Years 126 81.4 31.4 30.8
3 Years 34 84.7 29.7 28.6
4 Years 22 85.6 28.9 27.4
5 Years 2085.0 28.5 26.5
6 Years 26 88.2 28.7 26.1
7+ Years 16 90.7 30.1 26.6

It seems that the youngest group of players are those with 5-year contracts, with the average age rising again for 6-year and 7-year contracts. However, if we instead calculate the average age at which the contract was signed, we see a steady downward trend towards signing younger players to longer deals. This would seem to go against the conventional wisdom which holds that players don't sign deals of this magnitude (7+ years) until their late 20s (or early 30s), when they have had enough time to prove their worth on the free agent market.

6 comments:

Zug said...

Shouldn't the average age of signing for the arbitration row (first row) of the last table be 28.6, not 33.1?

Lex Logan said...

Great stuff, Clay! I've always signed younger players to long-term deals in Mogul, and am reluctant to commit to a player who will be in their late thirties when a contract expires. Jay Bruce is a real-life example of this strategy; Pujol's first contract is another.

Anonymous said...

Awesome stuff, Clay. David Ortiz should try reading the blog, and realize that his salary is 10M above the average for someone with a one year arbitration contract, and 11M above the average for any 1 year contract. Maybe then he'd stop complaining about not having that 2 year deal.

Clay said...

Zug - a belated thanks for noticing that typo. Fixed.

Future Marlins GM said...

Based on this analysis, does that mean that we will finally see that journeyman or aging veteran contract demands decreasing in both length and value? In addition, will there be the ability to offer guys just minor league contracts just like most journeyman or veterans get when they're on the free agent market very late in the offseason, spring training, or during the season?

Anonymous said...

Awesome game that keeps getting better! I would like to see the use of the 40 man roster and rule 5 draft. Also, would like to see an energy bar for players so I know when to sit a player. Best game ever!