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Monday, March 29, 2004

PEDRO! PEDRO! PEDRO!

The Red Sox should sign Pedro Martinez because he is likely to provide more value relative to risk/cost than any of the other available pitchers after the 2004 season. The concerns are legit, but do not outweigh Petey’s likely production. The usual worries are that his stuff is deteriorating, his lack of durability or ability to pitch 220 innings and throw complete games. Each is addressed below.

Pedro’s K/9 has dropped each year since his injury plagued 2001 season going from 12.57 to 10.79 to 9.93 last season. It is certainly a concern that Pedro’s ability to make hitter’s miss and his stuff is fading. It should not come to anyone’s surprise after the shoulder issue and his age. Relative to his peers, Pedro is still among the top five in K/9 as he was in 2001 and 2002. His stuff is still among the best in the world just not undeniably the best any longer. Pedro’s control or BB/IN slightly increased over 2001 and 2002, but not at an alarming rate or at a figure that RSN has not witness before in 1998. The other critical pitching stat, HR allowed, did not vary much slightly dipping in 2003 over 2002. Pedro is unlikely to have another historic season of near infallibility like in 1999 and 2000, but he is still one of the best pitchers in the world and should be in the near future if he stays healthy.

Med Man, Will Carroll, thinks that

Pedro is watched more closely than any other pitcher, and the continuing focus on preparing his body to pitch makes Chris Correnti one of the real up-and-coming trainers in the business.

Pedro gets a yellow light based on injury history, but honestly, he's much less likely than last year to come up lame.


Encouraging news but Petey’s health is still a concern. The long-term injury risk is addressed later in the post.

First off, the game has changed. Pitchers very rarely throw complete games. CHB and others need to understand this and lay off Pedro. An “Ace” in today’s game does not have to throw eight or nine innings. Clubs do not expect nor desire starters to throw more than 110 pitches in a game which usually only allows him to go seven. Pedro’s innings per start is slightly below his peers over the last three seasons. The top 40 ERA qualifiers averaged 6.6 innings per start and Pedro’s is 6.5. The issue is keeping Pedro health enough to make more than 30 starts per season not throwing complete games. Pedro has not started more than 30 games since his first season in Boston – 1998 when he made 33 starts. It is an issue, but even at 30 starts Pedro is just as valuable as a good pitcher that makes 35 starts and logged 220 innings.

VORP, created by Keith Woolner, is an estimate of a pitcher's value over and above a replacement player, as measured in runs. Because it accounts for both quantity and quality of a pitcher's performance, it is the single best measure for assessing his value. Runs allowed, rather than earned runs allowed, are used in the calculation of VORP.

Since Baseball Prospectus’ VORP stat considers both quantity and quality, it is the best measure for evaluating Pedro relative to his peers. In this case, Pedro’s peers are the likely available starting pitchers on the market after the 2004 season. Three pitchers come to mind: Derek Lowe, whom I have already discussed, Matt Morris, and Kevin Millwood. Baseball Prospectus’ PECOTA system forecasts player performance (I am deferring to PECOTA because like Nomar, Pedro has no good historical comps to make an educated guess on future performance, and pitcher are more difficult to project than hitters. Pedro’s only decent comps were Sandy Koufax and Tom Seaver in case you were wondering and Pedro’s stats were better). PECOTA has Pedro in 2005 at 4.2 wins or roughly 42 VORP, 4.8 in 2006, then 4.8 and 3.9. Morris is at 2, 1.8, 1.5, and 1 wins. Millwood is even less impressive – 1.8, 1.7, 1.2, 1.1. BTW, Lowe is even worse forecasting at 1.5, 1.6, 1, .6 wins. Given the alternatives in the upcoming winter, Pedro is clearly the best starting pitcher on the free agent market.

Tim Hudson is due to be a free agent in 2006. He would be an admirable replacement but he is the ONLY possibility. The Sox can not wait a year hoping that Hudson doesn’t sign with the A’s and that they can lure the one guy who may be able to replace Pedro. The Sox would be forgoing a season while putting all of their eggs in the Tim Hudson basket. It is very risky and foolish notion. The signings of Roy Halladay, Kerry Wood, and Javy Vazquez killed the starting pitcher market. (If the Sox are really unsure of Pedro, they should have acquired Vazquez but that is for another post.)

Gammons wrote that Pedro feels he can get a Kevin Brown type deal - $105 over seven years. I bet Petey was referring to the $15 million per season not the length of the deal. Pedro’s own health issues and the lack of insurance for baseball contracts make a seven year deal for the superstar unlikely. If Colon gets an average annual salary of $12.75 million, then Petey deserves around $15 million. Colon’s total VORP from 2001-2003 was 161.8 in nearly 698 innings. Pedro was numbers were 184.8 in 503 innings. $15 million is his market value.

Pedro’s age, health issues and being a pitcher all make him a risky investment but given the lack of comparable alternatives, it is a venture the Sox have to take on. In order to minimize the risk for the Sox, ease the luxury tax concerns, and provide Pedro with the contract he deserves, I proposed that the parties agree on a one-year deal worth $11 million for 2005, a player option at $21 million for 2006 with a $10.6 million buyout payable over ten years, a 350 innings pitched in 2005 and 2006 option for 2007 and 2008 worth $30 million with a $5 million buyout. The incentive based option for 2007 minimizes the Sox risk of Pedro not pitching the entire length a guaranteed contract. If the reasonable innings pitched level is attained, Pedro is guaranteed another $30 million. Both parties are sharing the long-term risk of injury with the Sox taking on all of it in the short-term. (Since the Pudge deal in Detroit and insurance companies denying coverage of baseball contracts, I would not be surprised to see more deals like the one proposed above in the near future.)

Pedro’s 2006 $21 million player option, including a $10.6 million buyout, should allow the Sox to avoid paying the luxury tax in 2005 and 2006 (the large buyout makes the player option a non-guaranteed year and not subject to a luxury tax number of $16 million or the average annual value of $32 million over 2005 and 2006). If the Sox stay under the luxury tax threshold in 2005, they can go over the 2006 limit without being taxed. Structuring the deal with options containing a lower salary in 2005 with a balloon payment in 2006 should keep the tax collector away while keeping a similar payroll budget and provide Pedro with the salary and security he deserves.

As you can see, the proposal above has an average annual value of a little over $15 million per season as essentially two two-year contracts minimizing the risk of injury while avoiding the luxury tax and locking up the best available starting pitcher.

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