The most surprising thing to happen in baseball on Friday wasn’t Gleyber Torres hitting another historic home run, although that was more than welcome. It was the Boston Red Sox shedding the last major contract of their 2014 spending spree and designating Hanley Ramirez for assignment. Ramirez struggled mightily in Boston, being a below-average hitter in three of his four seasons with the Red Sox. With an annual salary of $22 million, and taking up a valuable roster spot, Boston brass decided it was time for him to go.
The move freed up one of those roster spots, but will leave the Red Sox on the hook for just over $15 million this year in “dead money”. They’ll add that to a ledger that already includes the remainder of Pablo Sandoval’s contract, as the Giants pay him just over $500,000 and Boston covers the rest. The league’s highest payroll will soon be devoting a not-insignificant chunk to two players on different teams.
Hanley’s swift DFA got me thinking about the changing attitudes of front offices when it comes to big contracts, and their increasing embrace of the sunk cost principle. Front offices used to work on the idea that a long-term contract was a capital expenditure, similar to purchasing and maintaining a machine in a factory. The machine may not be as state-of-the-art as it could be, but it’s still providing some value and has associated legacy costs that demand usage.
Now, though, teams are increasingly looking at big contracts, especially as players age, as sunk costs. A sunk cost is essentially lost money, costs that have been incurred and cannot be recovered. The return on a sunk cost is negligible, or downright nonexistent, and an organization may as well just move on, writing off the cost as a mistake. This is clearly the path Boston’s taken with Ramirez and Sandoval, and so has another team in the majors.
The Minnesota Twins also designated a big contract for assignment, leaving Phil Hughes in the limbo of DFA-land. Under contract through the end of 2019, for over $21 million, Hughes was jettisoned off the 40-man roster and has become another sunk cost to a front office.
As teams change their attitude towards the nature of large contracts, it naturally throws suspicion on two large contracts held by two rapidly depreciating players. Jacoby Ellsbury and Albert Pujols are owed a combined $165 million over the next three years, and are becoming increasingly unplayable. It’s very possible that the one or two wins Pujols is going to cost the Angels this year may be the difference between a Wild Card spot and not.
Ellsbury, meanwhile, is probably still close to a serviceable player. He was essentially a league-average hitter last year and can still play capable defense in center field, but his injury history and lack of any surplus value make him a tough fit for the Yankees. That’s before even considering how stacked the Yankees’ outfield is at this time. Both Pujols and Ellsbury have become the targets of whispers and rumors that they’re next to be DFA’d with large outstanding value on their contracts.
There are a couple of holes with these whispers, though, and it starts with the term and value of the contracts. The table below shows the term in years and dollar value outstanding for the three big DFAs discussed above, as well as Pujols and Ellsbury as a comparison.
So the first problem with the idea of cutting a player like Ellsbury loose is the years remaining. He’s under contract for longer than any of the previously DFA’d big contracts, and his closest contemporary is Sandoval. He also happens to be the closest in terms of dollar value, although he was owed about $15 million more than Ellsbury at almost the same point in the contract.
The problem with that is the fact Sandoval was way worse than Ellsbury at the time he was jettisoned. Ellsbury in 2017 was a league average hitter, and Panda was a 60 wRC+ bat when he was cut. Ellsbury was worth about a win and a half last season, while Sandoval was providing negative value. To boot, both Hughes and Ramirez have also been worth negative fWAR in the months leading up to their designation.
The other major roadblock to Ellsbury’s possible DFA’ing is the position he plays. As a center fielder, his defense is far more valuable than the other four names in that table, and the Yankees don’t have great depth there. Brett Gardner becomes a free agent after this season, and if the Yankees want to make a run at a Manny Machado or Bryce Harper, Gardner could find himself the odd man out. That would leave Aaron Hicks and Ellsbury as the only center fielders on the roster, and although the Yankee brass has put a lot of faith in Hicks, he hasn’t exactly been a paragon of health. Ellsbury’s job may be saved purely out of positional necessity.
Now I know what you’re thinking; Estevan Florial! The Yankees best position player prospect, or at least the best still in the minors, Florial could very well be the center fielder of the future. The trouble is, he’s been merely meh as a 21 year old in High-A this year and is going to miss a significant chunk of time due to hamate bone surgery. Plus, he could even find himself traded before the end of the season. Should a top-end rotation arm become available towards the trade deadline, Florial probably becomes the Yankees best trade chip.
There are a lot of hurdles to getting Ellsbury off the Yankees’ 40-man roster. The fact is he’s still just fine as a baseball player, and with a potential deficit of CF depth, he may become more valuable to New York than we think. The precedents for large-contract DFAs are adding up, though, and Brian Cashman has to decide whether Ellsbury is a sunk cost or capital expenditure.