Orioles overspend with poor long-term investment in Chris Davis

Chris Davis is returning to Baltimore after the Orioles made a poor investment in committing $161 million to the 29-year-old.

You have to give Scott Boras credit. The Orioles reportedly offered Chris Davis a seven-year, $154 million contract in early December, a deal most people would have strongly encouraged Davis, a 29-year-old first baseman with just two above average seasons under his belt and no known rival suitors, to accept. Instead, Boras encouraged his client to wait the Orioles out while attempting to portray Davis as comparable to Mark Teixeira, Prince Fielder and Joey Votto, fellow first basemen who signed long-term deals worth $180 million or more, the first two while represented by Boras.

On Friday, the Orioles were reported to have moved on, making a low-ball offer of roughly five years and $90 million to fellow slugger Yoenis Cespedes, whom I argued on Friday’s Strike Zone podcast would have been a better fit for the Orioles. On Saturday, the Orioles and Davis reportedly came to terms on a seven-year deal worth $161 million.

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There’s a lot to unpack there but let’s start with the obvious, Davis’s contract. Of the $161 million Davis is guaranteed in his new deal, $42 million of it is deferred, due to be paid in small increments over a 15-year period starting in 2023, the year after the seven-year service portion of the deal expires. As a result, the present-day value of the deal is estimated at less than $150 million. According to Fox Sports’ Ken Rosenthal, the Orioles’ initial $154 million offer to Davis also included deferrals, but we don’t know if they were as significant. It’s entirely possible that this $161 million contract has an identical or even lower present-day value than the $154 million deal the Orioles had offered him last month. If so, both sides could claim victory in these negotiations, Boras trumpeting the larger guarantee and the Orioles trumpeting the comparable actual value.

In reality, however, the Orioles likely lost regardless of whether or not Boras and Davis actually got them to increase the value of their offer. As I wrote a month ago, Davis is very simply a bad investment. Running Davis through our What Is He Really Worth? formula produced a projected value comparable to the contract Davis received ($157.8 million over seven years), but that projection was based on a typically gentle decline which I do not believe that Davis is likely to have. Again, Davis is a player entering his age-30 season who had just two above-average major league seasons in his 20s, and those two seasons did not come consecutively.

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Because those above-average seasons were two of Davis’s last three seasons, our 5/4/3 weighting of those three seasons (five times his 5.2 wins above replacement, baseball-reference.com version, from 2015, four times his below-average 1.8 bWAR from ‘14 and three times his 6.5 bWAR from his breakout ‘13 campaign) generate an encouraging 2016 projection of 4.4 wins above replacement. Projecting a slow and steady decline from that point would result in Davis being clearly above average in each of the next five seasons (making it six straight above-average seasons) from the age of 30 to 34 and compiling 18.3 bWAR from his age 30 to 36 seasons after accumulating just 14.7 bWAR in his 20s.

To correct for what would be an extreme outlier of a career path, I ran Davis through the system a second time, accelerating his decline. I did this not only because that career path seemed extremely unlikely, but because there was something about Davis’s game that gave me good reason to expect a more dramatic decline: his contact rates. Davis made contact with just 64.4% of the pitches he swung at in 2015 and his career contact rate is just 66%. None of the other nine men to hit 40 or more home runs in 2015 (Davis led the majors with 47) made contact less than 69% of the time they swung the bat last year. Fielder, the most free-swinging of the three stars Boras used as comparisons for Davis, made contact with 76% of the pitches at which he swung at prior to reaching free agency. My own search for a similar combination of big-time power and poor contract rates turned up a far more appropriate and alarming comparison for Davis: fellow big-money first baseman Ryan Howard, whose contact rate through his age-29 season was an identical 66%.

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Howard compiled 17.0 bWAR in his 20s, but has thus far been below replacement level in the aggregate in his thirties. He’s obviously an extreme example whose value is further undermined by his poor play in the field, which should be less of a problem for the comparatively slick-fielding Davis. Nonetheless, he serves as a loud reminder of how quickly things can go south for a hitter who struggles to make sufficient contact. At the age of 29, Howard hit .279/.360/.571 (141 OPS+) with 45 home runs, a contact rate of 66.4% and a strikeout rate of 26.5% (K/PA). Davis in 2015 hit .262/.361/.562 (146 OPS+) with 47 home runs, a contact rate of 64.4% and a strikeout rate of 31.0%.

Re-running Davis through the WHRW formula with an accelerated decline (subtracting 0.8 bWAR per season rather than 0.5 bWAR as in the initial projection) resulted in a maximum value of $107.2 million over six years with Davis dipping below replacement level in his age-36 season. I see that as his upside as it still requires him to stay healthy and reasonably productive in the near term. That projection finds Davis compiling 14.4 bWAR in his thirties after that 14.7 bWAR in his twenties, and provides room for the sort of continued fluctuations that may continue to occur in his production. For example, rather than being worth 4.4 bWAR, 3.6 bWAR and 2.8 bWAR over the next three seasons, as projected, he could just as easily be worth 5.0 bWAR in two of those seasons and 0.8 in the third, with those values coming in no logical order, much like his last three seasons.

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The Orioles would be happy to get two more five-win seasons out of Davis, but that won’t be nearly enough to justify the contract they just gave him. Davis’s contract is nearly twice as large in terms of guaranteed dollars as the previous largest contract ever handed out by the organization, Adam Jones’ six-year, $85.5 million extension signed in May 2012, more than a year before the centerfielder was due to hit free agency. Jones, it should be noted, is also entering his age-30 season this year, but will already be in the fourth year of that contract, which, like most extensions handed out to stars in their mid-20s, has proven to be a good one.

Davis’s contract not only doesn’t seem likely to be a good one, it wasn’t all that necessary, either. As I argued on the podcast on Friday, the Orioles had a greater need for a rightfielder than they did a first baseman this off-season. With Matt Wieters, who started two games at first base last year, having accepted his qualifying offer despite the team’s apparent willingness to start elite pitch-framer Caleb Joseph at catcher, and the Orioles subsequent trade for slugging first baseman Mark Trumbo, Baltimore already had options at first base. As things stand, however, they lack a viable every-day right fielder. The in-house candidates for the position include Nolan Reimold, Jimmy Paredes, Joey Terdoslavich, Henry Urrutia, L.J. Hoes and light-hitting utility man Ryan Flaherty. Of the men currently on the Orioles 40-man roster, the leaders in games started in right field for Baltimore in 2015 are Dariel Alvarez (10) and Reimold (3). Davis himself, not officially back in the fold just yet, trumps both having started 29 games in right field last year.

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Davis is not a viable full-time option in the outfield, however, which is why I think Baltimore should have gone after another outfielder instead of Davis. Add to that the fact that both Cespedes, also heading into his age-30 season, and Justin Upton, who is two years younger, would have been better investments at Davis’s price point. What’s more, while I’m cautiously optimistic about Korean left fielder Hyun-soo Kim, who I expect to at least generate a robust on-base percentage as a 28-year-old rookie in the first year of a very reasonable two-year, $7 million contract, there’s very little certainty to be had in that outfield corner, either.

The Orioles’ 2016 lineup does look a lot better with the lefty Davis complementing righty power sources Jones, Manny Machado, Jonathan Schoop and Trumbo, but I remain unconvinced that the Orioles have done enough this off-season to challenge the Blue Jays, the resurgent Red Sox or even the increasingly youthful Yankees in the American League East. That makes the Davis contract look even worse, because the key to the contract is making the next few years count, before Jones and Machado reach free agency after the 2018 season and before Davis’s likely collapse takes hold.

If the Orioles were dead set on spending $150 million this off-season, the best way to spend it would have been on an extension for Machado, whose age-26 season is on the other side of his scheduled free agency. That could have been the first step in a multi-year plan to outlast the Blue Jays, who will face their own free-agent challenges in the coming off-seasons. Instead, they spent that money carelessly with no apparent plan beyond an apparent belief that last year’s 81-win team underperformed. With Davis back in the fold, that team will return largely intact with one key exception, its best starting pitcher, new Marlin Wei-Yin Chen.