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:

Pitcher	Team	Contract Amount	Contract Years	2005 VORP
Pedro Martinez	Mets	$53,000,000	4	66.2
Esteban Loaiza	Nationals	$2,900,000	1	44.3
Paul Byrd	Angels	$4,500,000	1	38.9
Jon Lieber	Phillies	$21,000,000	3	26.3
Matt Clement	Red Sox	$25,500,000	3	22.9
Derek Lowe	Dodgers	$36,000,000	4	22.6
David Wells	Red Sox	$8,000,000	2	21.7
Carl Pavano	Yankees	$39,950,000	4	-1.0
Russ Ortiz	Diamondbacks	$33,000,000	4	-20.3
Eric Milton	Reds	$25,500,000	3	-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.