Massive contracts have become a cultural norm in the world of Major League Baseball. Different teams make massive investments in players every year in hopes of upping their chances of winning a World Series.

Without a doubt, the players that get these lucrative contracts are among the best in the game. However, the past is just that: the past. What matters is what a player does in the future.

Sabermetrics and statisticians have come a long way in projecting future production, but at the end of the day, it is only a projection, so nothing is guaranteed.

As if laying a contract worth hundreds of millions of dollars on a table in front of just one person is not stressful enough, if the player does not produce as he did in the past, the Front Office and everybody involved in the signing look silly and are subject to criticism. Such is the life of a baseball executive.

I recently did some research regarding the production of these hundred-million dollar men in hopes of finding out if these investments are worth their money. More specifically, I tried to uncover if there was an age where players sign massive contracts and regularly fail to produce thereafter.

I hypothesized that a player who is 30 years of age or older that signs a contract of at least four years earning and average of 15 million dollars annually would see a larger decrease in production than a player 29 or under with the same terms.

To answer this question I compiled a list of every player who signed a contract of at least four years, 60 million dollars since 2006. I recorded the terms of the contract, the age at which the player signed, and the year in which the contract was signed.

I then recorded each player’s Wins Above Replacement (WAR) for the two seasons prior to signing and the first two seasons after signing into tables sorted by age: 30 years old and older and 29 years old and younger.

From there, I found the average WAR for each year relative to when the contracts were signed (two seasons before, one season before, one season after and two seasons after). I created the following graph to show the results of the data collection:

As you can see, there is a significant drop in WAR after the first season (1) of the new contract. There is a slightly larger decrease for players 30 and over.

It is also worth noting the peak in WAR at -1, which stands for the final season a player plays under his old contract.

These seasons, know as walk years, often see spikes in player productivity. This is because players want to perform their best in these years in order to maximize their chances of receiving a big contract the following winter.

Notice that the 29 and under players see their WAR return to where it was two seasons before signing, after their first season under the new contract. This would suggest that they do not necessarily see a decrease from their norm, but rather a spike in their walk year.

However, they do see another drop after the second season under their new contract. This can be misleading, though, because the major league average for WAR is two, so these players are still well above average at 3.3. Whether this number is sufficient for these contracts is up to interpretation.

The drop from -1 to 2 is a 38.43 percent fall, which is significant. While the WAR is still respectable, most would agree that Front Offices would be more reluctant to hand out these contracts if this drop in production was evident.

Back to the players who are 30 and over, we see that the first season under the new contract sees a 30 percent decrease in WAR. Beyond that, we see another decrease of 25 percent after the following year.

By the end of the second season, players 30 and over with these huge contracts average just 2.3 WAR since 2006. This number, which is only slightly above average, does not warrant a contract worth at least 15 million dollars annually.

To put things into perspective, the major league average salary in 2015 was 3.3 million dollars. This nearly 12 million dollar difference would be enough to sign another star player, two above average players, or four above average bullpen arms.

The moral of the story is that players who are 30 and over should not be signed to massive contracts. Even though a few of them may continue to produce as they once did, it is better to stick to smaller contract lengths, perhaps up to two seasons. This way, when the player does inevitably see a decline in production, the team will be able to part ways with the once great player.

Even though the player will likely still demand the large sum of money, it would be much easier for the team to lay down a contract with a shorter term.

See Part Two Here

MGJ

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