Present Value of Strasburg’s Contract

August 21, 2009 at 3:14 pm by Capitol Avenue Club under Draft, Front Office, Washington Nationals

With the help of one of my economics major friends, I’d like to present a break-down of the Present Value of Strasburg’s contract.  For those of you unfamiliar with the concept, since money has a time-value (i.e. a dollar today is worth more than a dollar tomorrow), Strasburg’s $15.1 million, to be paid in certain increments, does not equal $15.1 million if he were to recieve a lump sum today.  Here’s how it breaks down.

The deal is a 4-year deal with a signing bonus.  This year, 2009, Strasburg gets a pro-rated portion of the MLB league minimum (~$400,000, so ~$100,000 for him) and a $2.5 million dollar portion of his signing bonus.  Since he’s making that money right now, we’re assuming he gets it today.  So the present value of his $2.6 million for 2009 is $2.6 million.

In 2010, Strasburg receives a $2 million salary and a $2.5 million dollar portion of his signing bonus.  This $4.5 million does not equal $4.5 million 2009 dollars.  Assuming a 12% rate of return (and daily compounded interest), the present value of Strasburg’s 2009 earnings is $3,991,221–over half a million less than what he would receive if he’d gotten paid today.

In 2011, Strasburg receives a $2.5 million salary and the final $2.5 million portion of his signing bonus.  Again, assuming a 12% rate of return compounded daily, Strasburg’s 2011 earnings in 2009 dollars equals $3,933,216.

And in 2012, the final year of Strasburg’s deal, he receives a $3 million salary.  This salary, in 2009 dollars, equals $2,093,070.

Adding it all together, Strasburg’s deal is worth, in 2009 dollars, $12,617,507.  Nearly $2.5 million gets lost due to the time value of money.

My methods and assumptions are rather crude and this is more of an estimate than anything else.

That’s the advantage signing a MLB deal rather than just a bonus has for the club.

Of course, the main disadvantage is you have to place the player directly on your 40-man roster (i.e. you begin using his options immediately and don’t have those first 3-4 years of MiLB development).  But with a player like Strasburg, he supposedly won’t need to develop in MiLB very much.  So I think doing a MLB deal was the correct path for the Nationals.

Rizzo was the Correct Choice

August 20, 2009 at 1:55 pm by Capitol Avenue Club under Defense, Front Office, Washington Nationals

If your interim GM did the following, you’d be pretty pleased with him and want him to assume your team’s permanent GM position.  Here goes:

1. Locked up your team star for 5 years at below-market value.  One that hits for power, plays excellent defense, gets on base, and plays a premium position–3B.
2. Drafted the best available player in the draft and signed him for less money than most people thought he’d get.
3. Focused on youth in the rotation, developing very interesting, young pitchers during a meaningless season.  If you’re going to lose, do it with the kids.  Do it with someone who will actually learn something.  Someone whose interesting.  Someone who you have a future with.  I do this rant all the time, but it gets ignored regularly by certain GMs.  Go figure.
4. Improved the team’s defense and figures to keep doing so.  First of all, the Nyjer Morgan acquisition really shored up the CF defense.  Your outfield is never dysfunctional if you have an elite center fielder.  Secondly, trading away Nick Johnson (for a very interesting prospect) and moving Dunn to 1B and moving Willingham to LF for good is a huge upgrade defensively.  Going with Dukes, Morgan, and Willingham right-to-left as opposed to Willingham, Dukes/Milledge, and Dunn is worth nearly 9 wins a season in the outfield.
5. Got all of the questionable personalities.  I’m looking at you, Lastings Milledge.  Julian Tavarez.
6. Has confidence in the team.  And I quote:

“We are in the building process,” Rizzo said. “We are not rebuilding. This is a team that is, in my opinion, not far away from being a good, solid baseball team. …

“I understand we’ve got holes to fill, we’ve got a lot of work ahead of us this season, this offseason and through spring training. But I feel like we’re prepared for it, we’re going to get it right, and I do not believe that this needs total rebuilding.”

Rizzo is right.  They’ve got this team going in absolutely the correct direction.  This team was so bad, so hopeless for most of this decade.  They’re finally committed to doing it right.  Building from within.

I’ve pointed this out before, but the Nationals have used 10 starting pitchers this season.  Look at their ages:

Shairon Martis, 22.
Jordan Zimmermann, 23.
Ross Detwiler, 23.
Collin Balester, 23.
John Lannan, 24.
Scott Olsen, 25.
Craig Stammen, 25.
Garrett Mock, 26.
J. D. Martin, 26.
Daniel Cabrera, 28.

Nine of them haven’t reached their peak years and the 10th, Daniel Cabrera, who arguably had reached his peak years and was brought in as a no-risk exercise, someone they took a flyer on, got released when Rizzo, delivering the quote of the year in the process, realized Cabrera wasn’t going to pan out.  The quote:

I was tired of watching him.

Just priceless.  So even if he’s a bust you’ll be entertained.  And Jim Bowden was your last GM, not like the expectations are high, right?

Back to seriousness.

I pointed out earlier that his draft was a huge success.  Especially the 1st round.  Just look at how the 2009 Nationals draft went and how the 2008 Nationals draft went.  The 2008 one was a complete disgrace.  The 2009 one may have been the best of the year.

I think, without a doubt, Mike Rizzo is the best choice for the job.  He has been a god-send for that franchise.  It’s like John Schuerholz was for the Braves.  Actually, some of his moves strongly resemble what Schuerholz did in 1991.  Shoring up the defense, going with a young, talented pitching staff, etc.

They still have a ways to go.  They need a real defensive SS, a 2B, and a catcher (Ryan Doumit???).  They also need to shore up the bullpen, a lot of which can be accomplished through the young rotation depth they’ve built up and developed.  They’ll look to add a closer this off-season, I imagine.  They’ll also look to bring in a veteran sort of player-coach for the rotation.  Mentoring that talented young staff they’ve got (Randy Johnson???).  But apart from that, they’ve got the makings of a winning team.  I really believe they do.  Five smaller acquisitions (or maybe they have answers stashed away in the minors, I don’t know, I don’t know their system at all) and I think they’re a playoff team.  When’s the last time that the Nationals, or the Expos for that matter, were 5 small acquisitions away from being a playoff team?  It’s phenomenal how close this team, who was so bad for so long, is to being very good.

Rizzo acknowledges this, as the quote read earlier.  But he’s confident.  As he should be.

Rizzo’s done an unbelievable job as interim GM and he is, without a doubt, the correct choice to be Washington’s permenant GM.

Series Thoughts: Nationals / Series Preview: Reds

April 24, 2009 at 4:14 am by Capitol Avenue Club under Atlanta Braves, Cincinnati Reds, Series Preview, Series Thoughts, Washington Nationals

Overall a very uninspiring performance from all of the position players.  The offense was simply not there in this series as the Braves scored in exactly 3 of 27 innings they played.  They averaged 2 runs/game this series and if their pitching hadn’t been brilliant they would’ve been embarrassingly swept by the team with last year’s worst record.  In addition to the offense not being there, the defense was again embarrassingly unprofessional.  Missing fly balls, infield errors, throwing the ball away, etc.  Another weak, weak performance from our defense, who hasn’t really preformed well since that Philadelphia series, well the first two games thereof.  To illustrate this point, I’ll tell you that we’re currently LAST in the National League in defensive efficiency and 29th out of 30th in MLB.  Thank god the Orioles suck worse than us in the field.

The first two games of the series the Braves nabbed early leads and gave them back pretty promptly and played down 1 run for the rest of the game.  The most pathetic showing was the middle game in which we had runners at 2nd and 3rd and nobody out down by 1 in the top of the 9th and failed to get a single run home.  In that same game we doubled twice in the same inning and didn’t score.  I’ll let you try to figure out how we pulled that off, but the real answer is because we suck.

Once again, there is much reason to be encouraged by the performances of the starting rotation.  Lowe gave up 3 earned in 6 innings, Kawakami gave up 2 earned (4 total, terrible defensive day) in 5 innings, and Jurrjens pitched 7 and 2/3 scoreless innings in the series finale.  Incredible how a 24 year old Sophomore is picking the team up and carrying it on his back.

A point, though; the Nationals have a good offense.  Adam Dunn, Christian Guzman, Nick Johnson, Elijah Dukes, Austin Kearns, and Ryan Zimmerman make a great front 6 of a line-up.  I know they don’t have that prototypical lead-off guy, but it doesn’t matter, their first 6 are pretty well above average.  Plus you’ve got Willingham on your bench (which he should be as Dunn and Kearns are better and organizational players, well not Dunn, but he’s their new free agent toy, he’s their favorite to play with), which means when a corner OF/1B type needs a break you’ve got a top back-up and a RH bench bat.  Overall, they figure to score more runs than most people think.  I guess I’m just trying to say that our starters did really well.  And don’t say “it’s just the Nats”, because their offense doesn’t suck.  Their pitching does, so that probably means our offense sucks.

At least it did last series.  We did get to see something special, though: Jordan Zimmermann’s MLB debut.  He’s going to be good for awhile and it was nice to see his debut.  Think of it as a “Tommy Hanson Debut” type event, except for Nationals fans.  Ya, they actually exist.  That was actually probably the highlight of the series.  Though Jurrjens pitched brilliantly.

Speaking of brilliant pitching, Soriano is back to his 2007 form.  His fastball’s being clocked at 93-94 MPH and over the series he pitched 2 scoreless innings walking 1, allowing 1 hit, and striking out 5.  Eric O’Flaherty, Peter Moylan, and Mike Gonzalez all pitched scoreless innings and Gonzalez added a big out in game 3 for a hold.  With 2 outs in the 8th Gonzalez relieved Jurrjens and struck out Adam Dunn to end the inning.  The next half inning we’d score via a walked in run and Soriano would nail down the save for a 1-0 win.  I digress.  Jeff Bennett relieved Kawakami in game 2 after giving up an error-by-Diaz-turned-triple with nobody out and a runner on 3rd.  Bennett got 2 big outs without allowing the runner on 3rd to score but just when I exhaled he turned around and gave up back to back singles before I could finish exhaling.  He limited the damage there striking out Nick Johnson to end the inning.  It wasn’t a terrible Jeff Bennett outing, Bobby had pretty much conceded that run.  No matter who you brought in, you figure with nobody out and a runner at 3rd, he’s going to score.  Yet he was so close to getting out of it.  That’s what is frustrating about being a Braves fan.  We always put almost enough effort in.  And almost enough is still not enough.  I feel like this team has enough starting pitching to stay in every game and not enough offense to win any of the games we stay in.

I’m looking forward to our upcoming series in Cincinnati.  Maybe the high-octane offensive environment will get us going.  Maybe not, I like watching Cincinnati play anyway.  I like their young offense with Bruce and Votto and I love their pitching.  Depending on what teams show up which night this could turn out to be an offensive juggernaut of a series or a series full of pitchers’ duels.  We’ll see.  We’re starting Vazquez, Lowe, and Kawakami and they’ll be opposed by Edinson Volquez, Bronson Arroyo, and Micah “I’m not necessarily an easy out even if I’m a pitcher” Owings.  All three of them have had pretty crappy beginnings, with Bronson Arroyo posting the least crappy string of starts which isn’t really crappy at all but crappy by association with his rotation mates, Owings 2nd, and Volquez the crappiest.  Volquez has a 6.46 ERA through 15 and 1/3 innings pitched.  Every year people get off to bad starts and every year one or 10 of them never get on track ala Barry Zito.  I doubt Volquez fits into this category and I believe he will get on track.  But I hope he has 1 more crappy start.

Owings will be fun to watch.  He can hit the ball.  Very well.  He’s frequently called on as a pinch-hitter on his off-days.  He came to Cincinnati in the Adam Dunn trade.  He also played 2 years at Georgia Tech.

I don’t care for Bronson Arroyo.  His pitching mechanics are kind of annoying and he looks like a complete idiot with that hairstyle.

Anyway, just a crappy preformance by our offense.  We should have a healthier Chipper, a healthier Escobar, an adjusted McCann, and hopefully no Garret Anderson next series so we’ll be in a better position to score more runs.  Especially in that bandbox.  We will be facing 3 righties, so it would be nice to have that LH bench bat.  Hopefully that comes in the form of a DL-ed Garret Anderson and a called-up Brandon Jones.