Tuesday, September 27, 2005

Can we afford Esteban Loaiza?

Esteban Loaiza has said he will test the free agent market after this season, although he says he would like to be back in DC next year. Of course, every free agent says he wants to be back with his team, but then most every free agent goes to the highest bidder. We don't blame players for doing that, but we shouldn't have any illusions about Loaiza's intentions.

Loaiza has been a very pleasant surprise this year. He is arguably the 11th best pitcher in the National League when measured by VORP, better than some very high profile free agents like Tim Hudson and Mark Mulder. So, there's nothing not to like and we need to sign Loaiza, right?

Maybe, but maybe not. Loaiza has been inconsistent over the last five years, with his ERA being 4.56, 5.02, 5.71, 2.90, 5.71, and 3.63 from 2000 through this year. So we'd like to have Loaiza, but not at an exorbitant price. What price will he command? Here is a list of some pitchers who were signed as free agents after last season:

PitcherTeamContract AmountContract Years2005 VORP
Pedro MartinezMets$53,000,000466.2
Esteban LoaizaNationals$2,900,000144.3
Paul ByrdAngels$4,500,000138.9
Jon LieberPhillies$21,000,000326.3
Matt ClementRed Sox$25,500,000322.9
Derek LoweDodgers$36,000,000422.6
David WellsRed Sox$8,000,000221.7
Carl PavanoYankees$39,950,0004-1.0
Russ OrtizDiamondbacks$33,000,0004-20.3
Eric MiltonReds$25,500,0003-27.3

Another free agent--Jaret Wright--signed a $21,000,000 contract, but has been a complete washout.

Loaiza arguably was the best signing of all of these pitchers. Martinez has a higher VORP, but his salary this year is six times as large as Loaiza's. So, it's been great for the Nationals this year, but Loaiza won't come as cheap next year. If the market is about as same as it was last year, it's not hard to imagine Loaiza banking a $5-7 million a year contract (or larger if teams display the insanity on which the Ortiz and Milton contracts were based).

Let's put aside for the moment the issue of whether the Nationals should sign Loaiza to such a contract and focus our attention on whether they can afford it. After all, if the Nationals don't pay that money to Loaiza they likely will have to pay something like it to another starter--if they want to win, that is. The Nationals will pay Livan Hernandez $8 million next year. Assuming that the Nationals pay $7 to $9 million on a free agent starting pitcher, signing Loaiza (or some other pitcher like him) would mean devoting $20 to $24 million to three starting pitchers next year.

Could the Nationals afford all of that? Not if Major League Baseball is the owner of the team and limits the payroll to $45-50 million. The only way the Nationals will be able to afford all three pitchers is if a new owner is willing to authorize a payroll consistent with Washington's status as the eighth largest media market and with the fact that the Nationals' will have the 12th or 13th largest attendance in baseball this year.

Those two facts should support a payroll of about $75 million. Most of the teams with that type of payroll pay three pitchers between $20-30 million. For example, the Astros pay three pitchers (Clemens, Pettite, Oswalt) $32.4 million, the Braves $29.75 million (Hampton, Smoltz, Hudson), the White Sox $22.5 million (Contreras, Garcia, Buehrle), and the Dodgers (not counting Dreifort) $21.45 million (Weaver, Lowe, Penny).

So, paying three pitchers that amount of money wouldn't be unreasonable. But assuming the Nationals want to sign Loaiza (or someone like him) and a free agent starter, they'll probably have to wait for a new owner to do so. Hopefully we'll get a new owner before free agent signings end.


Basil said...

Good post.

The one thing that probably needs to be considered is the future beyond '06. We've got Patterson cheap for one more season (assuming he's not a super-two after this season), but then he's arb-eligible after '06. Livan is signed through '07. Any extension with Loaiza will take us through '07, at least (hopefully not any farther, though). Any FA pitcher signed this offseason will go at least through '07. Long and short is that if we keep Loiaza and sign a guy this offseason, that's going to be a lot of $ devoted to four starters. (I'm assuming we'll want to lock up Patterson at some point.)

Of course, we'll (HOPEFULLY!) have a new owner installed by then, but I think Sheinin is right in today's Post chat: payroll increases will occur incrementally.

The long and the short is that I don't know if a "big four" of Livan, Patterson, Loaiza, and FA would be intact by '07.

Leiv & Erik said...

Very good point. The '07 issue will be interesting with respect to Livan. I suspect that he won't be the same pitcher in '07 that he is today, so a trade next year might be a good idea. Paying Livan $7 million in 2007 doesn't sound like a great idea to me.

Basil said...

Definitely possible.

Of course, if he gets the knee fixed up and keeps himself in relatively decent shape, he might age well, given his "old school/not-max-effort" pitching style.

El Gran Color Naranja said...

Would you favor just resiging Esteban for a couple years over going into the free-agent pool at all?

It's not very strong even with Burnett.

Leiv & Erik said...

It's an interesting question. Loaiza has been great this season, but given his past it's hard to be confident that we'll see a repeat performance next year. I'm in favor of resigning Loaiza, but I would be very careful about the contract price. Given what happened last year in the free agent market, I'm not confident that the price Loaiza commands will be reasonable. I guess that's a long way of saying that I'd try to sign a free agent. That would permit the Nats to trade Livan next year to fill a hole.

section 320 said...

We might want to consider the advantage RFK seems to give pitchers and contemplate whether it's real or imagined.

If we think the park "plays large", we can probably make do with some mid-level guys. (Frankly, it's what they did this year.) With the new stadium not coming until '08, we might be wise to look at the "transformational" effect this stadium has had on pitchers. Traditional fly ball pitchers seem to thrive more at RFK. (Of course, we're looking at one year...perhaps a fluke. After all, Frank and Co. kept assuring everyone that the ball would start flying out of the park.) This could save some payroll for some quality bats.

I don't disagree with any of the thoughts previously expressed. Just a thought at a different way to go. This team needs to aim for 2008 and build for that stadium, eventually. I agree the 2007 season is key.