Hamilton Signs Two Year Extension

According to Jon Heyman of SI, the Rangers and Josh Hamilton have come to terms on a two year $24M deal.  The contract includes a $3M signing bonus, $7.25M for 2011, and $13.75M for 2012.

There's not a whole lot to say about the signing that I didn't say on Monday when rumors of a possible extension started flying.  The two year contract not only allows the two sides to avoid a potentially messy arbitration hearing on February 14th, but also buys out the final two seasons of Hamilton's arbitration eligibility. 

Last season, Hamilton won the AL MVP Award on the strength of a .447 wOBA, 40 doubles, 32 home runs, and 8.0 fWAR.

Hamilton, Rangers Working on Two Year Deal

According to T.R. Sullivan of mlb.com, 2010 AL MVP Josh Hamilton and the Rangers are "making progress towards settling his contract situation so they will not have to go to an arbitration hearing."

Unfortunately, the article didn't include anything really specific, although I'm sure more information is coming.  Hamilton is in his second season of arbitration eligibility.  When the two sides exchanged arbitration figures last month, Hamilton requested $12M and the Rangers countered with $8.7M.   If both parties can't come to an agreement, they'll have to appear in front before arbitrator on February 14th.  Arbitration hearings tend to be incredibly uncomfortable affairs, so they'll likely do whatever they can to avoid that fate.

A two year deal would only put Hamilton under the Rangers control through 2012.  After that, he'd become a free agent.  While no information has been released as to the size of the potential deal, I'd have to guess it will end up being worth around $22-28M.  That's purely speculation on my part, but it's an educated guess based on the going rate of similar players.  While this deal would a certain level of cost certainty for the Rangers, it also increases the likelihood he leaves as a free agent in a couple of years.  If he continues to play at the level he did in 2010 (unlikely considering his BABIP driven OBP), he could price himself out of the Rangers comfort zone.

Hamilton, Rangers Still Negotiating

According to Richard Durrett of ESPN Dallas, the Rangers and AL MVP Josh Hamilton are still negotiating a deal for the 2011 season in hopes of avoiding salary arbitration. 

"We have a very good relationship with Mike Moye," Levine said. "I would characterize our communication as very open and strong. Needless to say, we may have slightly different opinions, but we're working through things and with each call we're making progress. We haven't announced a deal yet, so we still have work to do. But I think both sides have talked about things and made progress."

While it's possible the two sides are still working on negotiating a long-term deal, it seems much more likely that the two sides will agree to a one year deal.  When the two sides exchanged arbitration figures on January 18th, the two sides were $3.3M apart.  Though it seems logical that both parties would meet somewhere in the middle at $10.35M, that doesn't always happen.  After the season Hamilton had last year (.447 wOBA, 8.0 fWAR, AL MVP, ALCS MVP), he looks to be in a great position to win his arbitration case should it get to that point.  If I were his agent, I'd be advising him to sit tight.

Arbitration Figures Requested

Arbitration requests are starting come in fast and furious now.  Let's take a look two of the highest profile requests that didn't get reconciled today.

• According to SI's Jon Heyman, AL MVP Josh Hamilton has requested a hefty $12M salary in his second season of arbitration-eligibility.  Last season, he made $3.25M, so this represents a pretty sizable raise for Hamilton.  The Rangers have countered with $8.7M.  This one could go down to the wire, but many insiders see the two sides meeting somewhere in the middle.  For Texas's case, I hope so.  If this one makes it to arbitration, I see Hamilton having a 75% chance of winning his case.  The guy hit .359/.411/.633 last season while displaying solid base running skills, and an ability to play all three outfield positions.  
• According to Gregor Chisolm of mlb.com, Jose Bautista is requesting an eye-popping $10.5M in his final year of arbitration-eligibility.   This one is going to be a very interesting case.  Bautista came out of nowhere last season, hitting 54 home runs.  (For the record, he'd hit 59 home runs in his previous four-plus seasons.)  While no one expects to see Bautista provide an encore performance in 2011, many can see him being a consistent 30-35 home run hitter for the next few years.  While I can't find the Blue Jays counteroffer at the moment, my guess is that it's around $6.5-8.0M.  Despite his huge season last year, I think there's a 50/50 chance the arbitrator sides with the Blue Jays on this one. Bautista only made $2.4M last year, so his $10.5M request represents nearly a 400% salary increase. 

I'll update later, as I hear more information about other arbitration-eligible players.

Hot Stove Season Ends, Arbitration Season Begins

Mmmmmm...Donut

It's that time of year again.  The Hot Stove Season is quickly cooling down, and the arbitration season is starting heat up.  According to Ronald Blum of the Associated Press, 119 major league players filed for salary arbitration yesterday.  This list includes AL MVP Josh Hamilton, NL MVP Joey Votto, power hitting first baseman Prince Fielder, closer Jonathan Papelbon, and surprise power hitter Jose Bautista. 

The salary arbitration process is pretty archaic.  When players and teams exchange salary figures in mid-January, they are given the option to negotiate a contract.  In most cases, the negotiations are fairly simple, and contracts are finalized by the mid-February deadline.  In situations where both parties can not come to an agreement by the deadline, they're required to appear before an arbitration panel and plead their cases.  These situations are often ugly, partisan, and uncomfortable. 

The way the system is set up, nearly every player that files for arbitration ends up receiving a substantial raise. About half of the players are expected to agree to terms with their teams within the next week.  Only a handful of the cases will actually get heard by the arbitration panel. 

Rangers Interested Signing Hamilton Long Term

Earlier today, ESPN Dallas's Tim MacMahon reported the Rangers are interested in locking up Josh Hamilton to a long term deal this offseason.  This shouldn't be a surprise to anyone.  Hamilton not only won the AL MVP award in a landslide this season, but also led his team to it's first World Series appearance.  To say Hamilton was at the top of his game is an understatement.  MacMahon offered an interesting perspective for the upcoming negotiations:

"...Hamilton wants to be paid fair market value. How much is that for an amazing physical specimen who played a major role in winning the franchise’s first AL pennant? The debate on the financial value of Hamilton, who is entering his second year of arbitration eligibility, is complicated by his age (29), unique off-field issues and durability concerns.

But he’s still arguably the best player in baseball. It’s likely to take a deal in the high eight figures to lock up Hamilton for the next five years or so."

Hamilton's off-field issues are well documented.  While it's understandable the Rangers would factor this into the equation when determining Hamilton's value, it almost seems a little unfair.  The man has conquered some very serious demons, and one hopes he would remember the hell he went through in breaking his addiction.  That said, there's always a chance a recovering addict relapses.  Drug and alcohol addiction is a powerful force that no addict ever truly gets over.  (Just ask a former smoker if they ever miss smoking, even if it's rare.  The urge never fully goes away.)  The Rangers would be foolish not to protect their investment whether it's with a contract clause or a reduced offer.

My biggest concern with Hamilton is neither his past, nor his age.  It's his durability.  Since entering the major leagues in 2007, Hamilton's missed 180 games, and has made multiple trips to the disabled list.  For those of you who aren't quick with math, that's one full season plus an additional 18 games.  That's a lot of missed action in a four year period.  His injury problems didn't just start once he made it to the majors.  He suffered through serious injury issues while in the minors during 2001 and 2002.  I don't want to call Hamilton the Rangers version of J.D. Drew, but if the shoe fits...  Hamilton, like Drew, is a supremely talented player, but talent only gets you so far when spend 30-45 games a season on the DL each season.  Plus, injuries tend to become more frequent as a player ages.  The Rangers durability concerns will need to be factored into any contract offer the they present to Hamilton and his team.

Josh Hamilton had a career year in 2010.  Assuming he's healthy enough to do so, I wouldn't be surprised to see him put up another couple of 5-6 WAR seasons.  That said, we shouldn't expect to see a repeat of his .390 BABIP, especially since his 2010 batted ball rates were nearly identical to his rates from 2007-2009 (BABIPs of .315, .333, and .319).  I expect to see him regress back to his career norms in 2011, at least when it comes to his batting average on on base percentage.

So what will Hamilton be worth over the next five seasons?  Based on my initial 2011 projections, Hamilton will be a 5.5 WAR player.  In years two and three, I'll set the regression rate at 0.5 WAR per season, and in years four and five at 0.75 WAR per season.  As with my previous examples, I will assume a 5% increase in the value of a win on the free agent market over each of the next five seasons.

                Age       WAR        Value      
2011          30         5.5         $22.6M     
2012          31         5.0         $21.5M     
2013          32         4.5         $20.3M 
2014          33         3.8         $17.9M  
2015          34         3.0         $14.7M 
Total                      21.8        $97.0M

(All monetary values in millions.)

Based on my projections, Hamilton will be worth $97M over the next five years.  Does that mean the Rangers should start the negotiations at $19-20M?  No.  The difference between Hamilton and the other examples I've presented (Lee, Crawford, Jeter, Beltre, etc.) is that Hamilton is not eligible for free agency.  This distinction is incredibly important.  The values I've presented above are based on the average cost of a win on the free agent market.  Since Hamilton is still two years away from free agency, he doesn't have the option to auction his services to the highest bidder; therefore, it's unlikely he'll be able to negotiate a contract that's in line with his true value.  In all likelihood, he'll end up signing a contract for 25-35% below his estimated free agent value of $97M.  Based on his 2010 salary ($3.25M), position in the arbitration process, and recent MVP honors, I believe a 5 year $70M contract is a fair market value for a player of Hamilton's talents. 

This contract not only gives Hamilton the financial security he desires, but also provides the Rangers a significant margin for error should Hamilton struggle to meet expectations.  Under the current scenario, Hamilton would only need to provide 15.7 WAR (instead of 21.8 WAR) over the next five seasons, in order to justify his contract.  This is definitely doable unless he suffers from a multitude of injuries.  All in all, this looks like a winning option for both parties involved.

AL MVP Award: A Chance at Redemption

Tomorrow afternoon, Josh Hamilton will be awarded the American League MVP award.  I’m not even going to preface that statement with the terms “likely” or “probably”.  He is going to win the award.  It’s a guarantee.  Hamilton put together a fantastic season that was unrivaled by his American League peers.  If that wasn’t enough, Hamilton’s of story of redemption is enough to break nearly any tie.  The only question that remains in my mind is whether or not he wins the award unanimously.  I think he probably does, but I’m not going to make any guarantees on that.  The BBWAA if filled with voters that seem to have no rhyme or reason for voting in the manner in which they do.  (See Dejan Kovacevic of the Pittsburgh Post-Gazette who left Jason Heyward off of his ballot in favor of two undeserving Pirates rookies.)

Statistically, Hamilton had few peers.  He finished first in the AL in batting average (.359), SLG (.633), wOBA (.447), OPS (1.044), wRAA (57.6), and WAR (8.0); second in OBP (.411); fifth in home runs (32); eleventh in runs scored (95); and twelfth in RBI (100) and doubles (40).  To top it off, he played above average defense in both center and left (7.9 UZR, +7 DRS) and was a positive asset on the bases (worth +3.0 runs on the EQBRR scale).  Hamilton was at his most impressive from June 1^st through September 4^th (when he got injured) hitting .410/.461/.717 with 27 doubles, 22 home runs, and 70 RBI.  During his torrid stretch, the Rangers went 48-34 (.585 winning percentage), thereby increasing the Rangers division lead by eight games over the Oakland Athletics.  Hamilton was the engine that drove the Rangers, and he drove it back to the playoffs for the first time since 1999. 

While Hamilton’s on-field performance was the most important factor in winning the MVP award, it won’t likely be the most talked about reason.  As pretty much everyone knows, Hamilton has suffered through a great deal of adversity over the years.  Tampa Bay had high hopes for Hamilton after drafting him with the overall number one pick in 1999.  Through his first two professional seasons, he developed exactly as they’d hoped showing an ability to hit for power and average, while playing above average outfield defense.  In 2001, Hamilton was involved in a serious car accident, which caused him to miss most of the season.  Around the same time, he started abusing drugs and alcohol.  While Hamilton played generally played well 2002, he suffered from lingering issues that caused him to miss significant action.  The next four seasons were a constant struggle.  His behavior was erratic, and he shuffled in and out of rehab.  In 2006, Hamilton successfully completed rehab, and returned to baseball late in the season. 

While Hamilton’s return to baseball was initially successful, many in baseball openly questioned whether he would ever be able to reach the potential he once showed.  Tampa Bay, tired of waiting for him to develop, left him off of the 40 man roster, and exposed him to the Rule V draft.  The Chicago Cubs selected him with the third pick in the draft, and promptly traded him to the Cincinnati Reds for cash.  Being forced to keep Hamilton in the majors for the entire season (or else risk being forced to send Hamilton back to Tampa) the Reds gave him a job as their utility outfielder.  Hamilton started the season very strong, and within a couple of weeks had seized the starting CF job.  Exhibiting many of the skills he flashed during his early seasons in the minors, Hamilton had completed his improbable comeback.  His story doesn’t end there.  Prior to the 2008 season, Hamilton was traded to the Texas Rangers for starting pitcher Edinson Volquez.  After an insanely hot start to the season, Hamilton was selected to his first All-Star team, and was asked to participate in the Home Run Derby.  At the Home Run Derby, he put on an unbelievable show by breaking records for home runs hit.  While he didn’t end up winning the Derby, he certainly put a cap on his unbelievable comeback. 

I’m not one to enjoy human interest pieces.  In fact, when ESPN plays those pieces on Sportscenter or E60, I usually change the channel as fast as I can.  Hamilton’s a little different.  He’s a guy that hit rock bottom, and somehow found the will to scratch and claw his way back.  I have a lot of respect for someone that can do that.  This MVP award is not only a validation of his tremendous season, but his new lease on life.  He deserves it.  He’s been through hell and back.