The Cleveland Indians Still Control the Most Surplus Value in Baseball

Writing about surplus value in baseball has become tricky. Two straight offseasons of tensions between MLB players and owners have turned the issue from innocuous and interesting into a landmine. After all, surplus value for teams can be viewed as lost wages for players. It’s this view that drove analysis of, say, Ozzie Albies’ recent extension. Even the best player in baseball isn’t immune. Karl Marx would be proud.

Still, it’s how teams are run. And for the past two years, I’ve made a habit of seeing which teams control the most surplus value, so I wanted to see where teams stand now.

Before the 2017 season, the Cubs controlled the most surplus value in the sport by virtue of having a stable of highly talented, young (meaning: cheap) players. At the time, Kris Bryant had superstar-level projections at a league-minimum salary, Addison Russell had a bright future, and Anthony Rizzo was projected for 4.0-plus WAR per year on an incredibly team-friendly deal.

A year later, their 2016 World Series opponents stole the limelight. Francisco Lindor, Jose Ramirez, and Corey Kluber headlined a crop of talented Cleveland players who were making very little money relative to the on-field value they produced. By drafting and developing talent while largely avoiding free agency, Cleveland was able to get a ton of value out of their payroll.

The title of this article gives away the league leader in surplus value for 2019, but it’s worth seeing how we got there.  

Methodology

I started with payroll and salary information from Baseball Reference. To make things simple, I assume no player, team, or mutual options get picked up. I then project talent using Tom Tango’s WARcels method he devised a few years ago. I do this for all years during which a player is under control by his current team, for a maximum of five years out. Although the 2019 season is underway, I used only data from 2016–2018 to inform the projections.

If a player is pre-arbitration but has no salary listed, I assume he will make the minimum salary, which in 2019 is $555,000. I predict first-year arbitration salaries using a basic linear relationship I developed that takes into account how much WAR a player accrued in the three years prior to entering arbitration. I then project all second-, third-, and four-year arbitration salaries using a relationship developed by Kevin Creagh a few years ago. I also model inflation by devaluing all salaries by 2.15 percent annually.

This method introduces a whole lot of error into the system, but the results still are directionally useful. In my system, a good performance by a pre-arb or arbitration-eligible player increases his projected WAR, bringing with it an increase in projected arbitration salaries for future years. This is what happens in practice today.

I assign a dollars-per-WAR value of $9 million, based on recent work by Craig Edwards, and assume five percent inflation in that value each year. With this number, I can translate each player’s projections into a dollar amount that I compare to how much he actually earns. The difference between the two dollar amounts is the surplus value.

I then focus only on guys who will play every day and who are likely to be with the team in the near future. Baseball Reference’s pages list a lot of scrubs who aren’t guaranteed playing time alongside established regulars. And a lot of the pre-arbitration guys listed on their pages are in danger of being optioned to the minors at any time or outright non-tendered in the near future.

I don’t want to penalize teams for paying these guys, especially not the ones who are relievers. Therefore, I analyze only guys with more than 0.0 controlled WAR or whose contract averages at least $3 million annually. This prevents the scrubs from polluting the analysis while penalizing teams for continuing to play dead-weight contracts such as Chris Davis, Albert Pujols, and Miguel Cabrera.

Let’s start by looking at only controlled WAR.

Controlled WAR

Under this system, the following graph shows the players with the most controlled WAR.

You see a lot of extension signees here. Fifteen of these 25 players are playing on one with their current team. Only three are playing on free agent contracts — Manny Machado, Bryce Harper, and Max Scherzer. The rest have yet to sign either kind of deal. You can imagine the A’s trying to extend Matt Chapman soon and the Nationals making overtures to Trea Turner and Juan Soto.  

The Red Sox, Yankees, and Nationals each have three players in the top 25. Atlanta, Cleveland, Houston, and Philadelphia have two apiece. But when you expand the list to all 540 players analyzed, the Yankees come out on top.

As headlined by Aaron Judge, Giancarlo Stanton, and Luis Severino, the Bombers control 103 WAR to the Astros’ 91 and the Red Sox’s 88. But this graph has two problems. The Yankees care more about the Red Sox, since they’re in the same division. And teams compete every year, not every five years. So let’s look at a divisional breakdown of controlled WAR per year.

As their current rosters stand, the Yankees and Red Sox should battle it out for the next several years in the AL East, no doubt to the delight of ESPN and FOX. The Red Sox may be in a deep hole in the current standings, but the talent is there. Houston has a wide berth in their division, as Cleveland and Los Angeles do in theirs. Meanwhile, the NL East and NL Central divisions look to be highly competitive (unless you’re the Marlins).

Controlled Salary

Now that we have a sense of teams’ talent levels, it’s time to look at how much they’re paying for that talent. The following graph shows how much salary team team controls for this year and the next four.

The Yankees’ talent comes at $600M in controlled salary. That’s only $120M a year for five years, but the real-life team has more players to worry about than whom I’ve analyzed here. They may no longer be the Evil Empire that signs the best free agents to the most lucrative deals, but the Yankees still spend a lot.

Controlled Surplus Value

The following graph plots controlled talent vs. controlled salary.

You can see a rough trend; teams that control a lot of talent typically are on the hook for higher salaries. One huge outlier is the Giants. Saddled by payments to Evan Longoria, Johnny Cueto, and a still-good but now-32 Buster Posey, the Bay Area team is projected to spend over $400M while getting only about 12.6 WAR for their efforts. Meanwhile, the Red Sox and Yankees, while controlling a lot of talent, are both spending quite a bit for that privilege.

The sweet spot is in the bottom right, teams that control a lot of talent but aren’t paying that much for it. This is surplus value. When we look at this, we see how Clevleand comes out on top.

The combination of Ramirez ($142M in surplus value), Lindor ($104M in surplus value), and the recently extended Carlos Carrasco ($63M in surplus value) keeps Cleveland at the top of this list for the second straight year. Mike Clevinger’s $49M in surplus value stems from his very good 2018 season, and Shane Bieber projects for $28M in surplus value himself. Trevor Bauer’s continued search for improvement keeps his surplus value at a healthy $28M over two years, and the recently-acquired Jake Bauers adds $21M in surplus value, too.

The Braves control plenty of surplus value themselves. Albies tops the team’s list with $121M in surplus value over the next five years, followed by teammate Ronald Acuña, Jr., whose extension is worth $78M in surplus value over that same time frame. Johan Camargo provides talent while making barely any money, and Freddie Freeman and Ender Inciarte contribute about $35M in surplus value each.

The Rays have also focused on surplus value, and it shows. Tommy Pham seems to be a steal at $57M of surplus value over his remaining three years of control. Despite signing a contract extension, Blake Snell’s 2018 season boosts his projections enough to give the Rays $46M in surplus value.

The Cubs have fallen pretty far. In the three years I’ve been doing this work, they’ve dropped from first on the list to 27th overall. Yikes. What happened?

Bryant was the No. 1 value in baseball after the 2016 World Series. He repeated his MVP-level of play in 2017 but got a pay raise to $1.05M. The next year, he received $10.85M but proceeded to record only 2.3 WAR. This combination of increased salary and poor (for him) performance torpedoed his surplus value.

Addison Russell also hasn’t lived up to his hype. Entering 2017, he had record years of 2.6 and 3.3 WAR. Since then he’s topped out around 1.3 WAR, all while seeing his salary increase from the league minimum to $4.3M in 2019. And this is without considering his domestic violence suspension.

The team also leaned into free agency. Since their World Series win, they’ve signed Yu Darvish, Brandon Morrow, Tyler Chatwood, and others. Free agent contracts are notorious for their lack of surplus value. They also took on Cole Hamels’ contract and signed Kyle Hendricks to an extension. As far as winning games, these moves seem sound, but finding surplus value on the free agent market is difficult.

As always, these numbers aren’t gospel. The graphs above have wide margins of error due to the usage of multiple combined projections of both talent and salary. Many factors aren’t accounted for. And players and teams aren’t static. Guys break out or slump all the time, and GMs are constantly tinkering with their rosters. Further, a new collective bargaining agreement looms on the horizon.

But it’s this fluid nature of teams and players that makes Cleveland’s run so impressive. They’ve proven year after year they can find surplus value while winning games. The 2019 campaign will mark their seventh straight year of contention dating back to the 2013 AL Wild Card game. Whether you view surplus value as a positive for team, a negative for players, or a blend of both, there’s no denying Cleveland’s skill at finding it and putting it to good use.