The Obligatory Cole Hamels Contract Analysis

In what could probably best be described as “throwing good money after bad,” the Phillies followed up the mega-contracts of Ryan Howard, Roy Halladay, Cliff Lee, and even Jonathan Papelbon with a 6-year, $144 million deal for the current ace of their pitching staff, Cole Hamels.  Now, I’m no Wharton grad, so I’m not going to get into the economics of the $24 million per year the Phils will be shelling out on top of the $20+ million each for Halladay, Lee, and Howard.  I’m more interested in whether or not, given the state of the pitching market, Hamels has been or will be worth the investment the Phillies made in him. 

            Let’s go to the stats first.  Here are Hamels’ ranks among MLB starters since 2007 (his first season over 140 IP), and since 2010 (his first year with the cutter in his pitch repertoire):

	2007-12	2007-09	2010-12
Innings	1159.2 (10th)	604.1 (15th)	555.1 (15th)
ERA	3.29 (19th)	3.57 (23rd)	2.98 (9th)
Strikeouts	1076 (6th)	541 (11th)	535 (7th)
Wins	76 (7th)	39 (22nd)	37 (14th)
WAR	22.9 (12th)	11.8 (16th)	11.1 (14th)

            The first thing that should jump out of this table is the dramatic improvement in ERA in the past three years, which by the end of this season will be accompanied by improvements in each of the other four categories shown.  At the very least, these statistics indicate that Hamels is one of the 15 best pitchers in the game, but that’s hardly a case for a contract that has the second-highest total value of any starting pitcher contract ever. 

           

            However, one key thing to look at here is the market context that was at play.  According to FanGraphs, one Win Above Replacement has been worth about $4.5 million over the past few years.  By this metric, eleven starting pitchers “earned” at least $24 million in 2011, the per-season amount of Hamels’ contract.  Can Hamels be at least that good for the next six years, after being just outside that range for the past six?  Age notwithstanding, it seems plausible.

           

            How does this deal look compared to recent big-time contracts?  Here are the three-year totals (including the year that they signed the deal) for a few other pitchers who received big contracts in the past few years, CC Sabathia, Cliff Lee, Jered Weaver, and Matt Cain:

	Sabathia ’06-08	Lee ’08-10	Weaver ’09-11	Cain ’10-12
Age	26-28	29-32	27-29	25-27
Innings	686.2 (4th)	667.1 (5th)	671 (8th)	579.2 (6th)
ERA	3.03 (2nd)	2.98 (8th)	3.03 (10th)	2.95 (8th)
Strikeouts	632 (2nd)	536 (16th)	605 (11th)	484 (18th)
Wins	48 (4th)	48 (6th)	47 (5th)	35 (20th)
WAR	20.2 (1st)	20.9 (2nd)	15.3 (12th)	11.5 (12th)
Contract	7 yr, $23M/yr	5 yr, $24M/yr	5 yr, $17M/yr	5 yr, $22.5M/yr

            It’s clear that Sabathia was at worst the fourth best pitcher in the league prior to signing his megadeal, and while the length of the contract is suspect for a pitcher of his girth / age, he warranted the record investment.  Lee was clearly better than Hamels during the stretch prior to his contract, but there is no chance that he lives up to the worth of the contract considering that it started when he was 32.  Both Weaver and Cain provide closer comparisons to Hamels, although both players’ contracts look significantly more team-friendly considering the yearly salary of Weaver and the youth of Cain.  Based on reports around the league, it seems like Hamels would have received even more in the open market, despite the fact that the contract he ended up signing appears bloated already.  A more reasonable contract would probably have been in the realm of Cain’s $112.5 million deal over 5 years.

            So what are the chances that Hamels actually lives up to this contract?  I’m not seeing it.  By sabermetric standards, if Hamels copied his past six seasons, he’d produce about 24 WAR, which fewer than 30 pitchers have accomplished in their age 29-34 seasons since 1970.  At $4.5 million per WAR, that’s good for $108 million over 6 years (which is right in the ballpark of what Weaver’s contract would look like with an extra year on it).  That’s solid, but almost $40 million short of what he’s being paid.  He would have to garner 32 total WAR to earn the value of his contract, which would represent a 1.3 WAR increase per year over his career average.  To clarify, that’s the difference between Weaver / Cain and Justin Verlander over the past six years, or the difference between Cain’s 220-inning, 2.88 ERA 2011 season and Zack Greinke’s 172-inning, 3.83 ERA 2011 season.

            While I certainly agree that it was the right thing for the Phillies to do to lock up Cole Hamels, I don’t think that his performance will live up to his price.  Having said that, at least Ruben Amaro Jr. didn’t make as crippling a contract decision as he did with the 5-year, $120+ million contracts for 32-year olds Ryan Howard and Cliff Lee.