The Toronto Blue Jays & The Idea of Surplus Value

 

Jays From the Couch looks at the Toronto Blue Jays current situation through the lens of surplus value

 

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The Toronto Blue Jays’ front office has come under criticism from certain segments of the fan base for the way they do business. Some fans think that by signing the biggest name every year, the Blue Jays would find themselves in the postseason picture, as if throwing money at Yu Darvish would be the move that catapults this team to greatness. He is heading to the Cubs thanks to a 6 year, $126M deal. That’s just something Toronto would not do.

 

In 2018, there aren’t too many front office executives remaining in baseball that buy into the ‘throwing money’ approach to building a roster. Spending in free agency is starting to be regarded as the least attractive way to build a winner. Comments from Ross Atkins and Mark Shapiro (shared by Ian Hunter) explain the club’s stance:

 

The industry is seeing that free agency is a less-than-ideal place to make your team better. –Atkins

Front offices are just getting smarter. There’s a better understanding of what age means and how it impacts performance. –Shapiro

When you’re talking about free agency, you’re talking about older players. I think the industry is realizing that older players have been compensated, potentially – the player’s association and there are a few agents that would really be disappointed in hearing me say this – the aging curve has potentially been overcompensated in the past. That seems to be correcting a bit. However, all trends come to an end. –Atkins

 

The Blue Jays are not the only front office that feels this way. Much has been made about the free agents who have yet to sign this winter. It’s to the point where the MLBPA is setting up a spring training facility, there are that many players unsigned.

 

But, looking at the players still out there, a common thread is noticeable. The grand total of those under 30 years old is FIVE. Teams are shying away from paying big money for aging players. Committing a large amount of money over seven years doesn’t make sense for the Blue Jays. And, really, it comes down to the idea of surplus value. Right now, Toronto already has lots of money tied up in a couple players (Troy Tulowitzki and Russell Martin) that have the ability to provide surplus value, but may to live up to that as their contracts expire.

 

The simple calculation of surplus value is take a player’s overall production value (based on WAR) and subtract his actual value (dollar amount) and what remains is his surplus value.

 

To demonstrate this, let’s examine the case of Blue Jays legend, Jose Bautista. Before the 2016 season began, he told the world that there would be no “hometown discount” for his next contract. In his mind, he’d already given the Blue Jays a discount. And, he is right. His 2011- 2015 seasons paid him a total of $65M. At the time it was signed, it was recognized that it was a gamble, but a calculated one.

 

It turned out to be a great one. According to Fangraphs, Bautista’s production was valued at a total of $195.8M. that is a surplus value of $130.8M. He wasn’t kidding when he said he’d given the Blue Jays a discount already. And, one could hardly blame him for looking to get paid accordingly in his next deal. But, instead, the Blue Jays simply picked up his option and waited to see how he would perform with another year on his bat.

 

His $14M salary in 2016 resulted in $11.1M in value, which adds negative surplus. You can see why the club would hesitate to work out another deal when the season ended. It took quite a long time for an agreement to take place, and there weren’t exactly other suitors lining up around the block to sign him. He would agree to $18M for 2017 with an option for 2018. Bautista’s 2017 was valued at -$4M, which made the decision to decline his option an easy one. He had not provided any surplus value in two seasons.

 

This conversations will come in to play when the club actually decides to get down to the nitty gritty of extending Josh Donaldson. Since coming to Toronto, he has produced at a value of $170.9M, making $32.95M for a surplus higher than Bautist’s: $137.95M. Yet, at age 32, the Blue Jays have to decide how much surplus value they expect to get from the Bringer of Rain. Atkins has said they have an idea of what that would be, thus have a number in mind in potential negotiations.

 

The idea of surplus value also comes into play when looking at potential trade deals. Recently, the Blue Jays finished in second place to the Brewers in the sweepstakes for Christian Yelich.

 

Yelich is the kind of player that would certainly provide tremendous surplus value over the remaining four, potentially five, season of his contract. The total value of his 5 years would be $58.25M and he would be turning just 31 at the end of it. If you’re a club, this is prime money in the prime of a career that has already been worth $135.3M. It is entirely possible that Yelich would provide well over $100M in surplus value over the next 5 seasons.

 

If you’re the Blue Jays, this is an investment worth pursuing. But, if the cost of doing so is Vladimir Guerrero Jr, you have to stop and think. If we look at the next 5 years of Vlad Jr career, and factor in all of the glowing reports and predictions of his success, he looks to provide tremendous surplus value of his own. When a player will be making the league minimum and produce the way he is expected to, an organization has to consider this player as close to untouchable as possible. While his production may not be quite as high within the next 5 years as Yelich, it doesn’t have to to produce the same surplus value, thanks to his very low price tag.

 

You can see why the Blue Jays balked at the Miami Jeters requesting Vlad Jr. As cold as it sounds (we are talking about people as commodities), it doesn’t make any financial sense for the Blue Jays to pull the trigger on the Yelich deal.

 

Moving forward, the Blue Jays will have an interesting time going about their business in the next few weeks. They aren’t done adding to their roster. are the better off, from a surplus value standpoint, going after minor league deals and hoping for major league performance? Do they feel they could find surplus value on the open market? It’s doubtful. Alex Cobb is likely looking for a deal that pays him right around where his previous performance has been valued at (~$18M). That doesn’t present much surplus value. Maybe a trade can yield more. But, then the club has to consider how much surplus value it is giving up.

 

Let’s be clear, this conversation about value has nothing to do with how much the team will make off ticket or jersey sales by signing Player X. This conversation isn’t about bringing in money. Surplus value has to do with how much money a team is going to spend and what kind of return they can expect. Whether we like it, or not, this is going to become a front and centre part of the discussion in the business of baseball. For the Toronto Blue Jays, it already has.

 

 

 

*Featured Image Courtesy Of DaveMe Images. Prints Available For Purchase.

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Shaun Doyle is a long time Blue Jays fan and writer! He decided to put those things together and create Jays From the Couch. Shaun is the host of Jays From the Couch Radio, which is highly ranked in iTunes, and he has appeared on TV and radio spots.

Shaun Doyle

Shaun Doyle is a long time Blue Jays fan and writer! He decided to put those things together and create Jays From the Couch. Shaun is the host of Jays From the Couch Radio, which is highly ranked in iTunes, and he has appeared on TV and radio spots.