How Much Is Jon Lester Worth?

Jon LesterWhile having my morning coffee I was listening to last night’s Baseball Tonight podcast and the topic of Jon Lester came up.  He was reportedly offered $70M over 4 years by the Red Sox which both he, and the members of the podcast thought was a joke.  The main driving point for that argument was comparing it to Clayton Kershaw‘s monster 7 year, $215M deal and seeing how short it falls.  Well that’s true, there’s a lot less value going to Lester if he signs that deal but my initial instinct was that comparing it to Kershaw’s isn’t fair since Kershaw is in his own league.  Rather than just say the two pitchers aren’t the same, I want to look into how much Lester really should be offered.

It’s fairly common practice to pay MLB players based on their WAR where the estimated cost of a win can fall between $5-$7M according to FanGraphs.  However, if we’re looking at a pitching market that has been reshaped by Kershaw’s contract, then we need to see how much he’s getting paid per win and go from there.  During the past 3 seasons, Kershaw averaged a WAR of 6.2 on top of winning 2 Cy Youngs and finishing 2nd in voting the other year.  His 7 year contract will give him an average of $30.7M per year.  If Kershaw keeps up a WAR of 6.2 per season for the length of the contract, he would actually be getting paid just under $5M per win, making this a great deal for the Dodgers.

Luckily, I don’t have to simply speculate whether Kershaw will put up a 6.2 WAR during that time period as there are Steamer projections for the next 5 seasons.  Although this leaves 2 years unaccounted for, the 5th year of his contract is his age 30 season which is right around the age when pitchers typically begin to decline.  Since the projections have his WAR improving each year until his age 30 season, I’ll use the numbers from the 3rd and 4th season as a reasonable expectation for the 6th and 7th, though this is admittedly speculating a bit.  Keep in mind we’re ignoring the case of injury (including the one he has right now) or him pulling a Tim Lincecum, but his average WAR during the 7 years, if the projections are to be trusted, comes out to just over 6.0.  That makes Kershaw’s cost per win to be around $5.1M.  So while he is making a ton of money over a long period of time, the Dodgers are projected to be getting some good value.  So now the question is: what does Lester deserve in light of this contract?

The first thing to note is that Lester is 30 years old, 4 years older than Kershaw.  This is important because while Kershaw is entering the prime of his career, Lester is entering the point where he is expected to start to decline.  Right off the bat, a 4 year deal instead of a 7 year deal seems more appropriate.  Let’s look at what he did the past 3 seasons.  Lester’s WAR averaged 3.7 during the past 3 seasons which was down from a 5.5 average in the 3 seasons prior to that.  Again, rather than speculate whether his numbers will continue, I’ll turn to Steamer’s 5 year projections and see that if he received a 4 year deal, he could be expected to average a WAR of right around 3.2 or just more than half of what Kershaw is expected to do.  Part of this is because where Kershaw’s WAR is expected to improve in each of the next 4 years, Lester’s is supposed to decline, and the other part is because Kershaw is truly in a league of his own.

So now the math – If Lester signed a $70M deal for 4 years, he makes $17.5M per season which would work out to just under $5.5M per win.  This deal is on the lower side of how much a win is worth, but he would be making more for his value than Kershaw would.  So if you want to argue that Lester would be underpaid, that’s fine but it’s not because Kershaw’s contract would put his to shame, at least not in terms of value.  If you take the upper limit of how much a win is worth – $7M – then Lester could demand a 4 year contract worth $89.6M.  However, the opinion seems to be that the $70M offer is a joke and he really deserves closer to $110M.  Unless you expect Lester to suddenly put up numbers closer to the 2008-2010 stretch of his career, I don’t see how that number is warranted.

However, the analysis doesn’t quite end there, although maybe it should.  Sports have a market driven by comparable contracts which can lead to teams overpaying for talent just because another team overpaid first.  I don’t think that comparing Lester to Kershaw is fair, because comparing anyone to Kershaw is unfair but Lester can draw a strong comparison to Cole Hamels.   The similarities are striking.  Both pitchers debuted in 2006, are 30 years old (and only 11 days apart at that), and have very similar statistics.  Hamels beats Lester by a bit in ERA, FIP, xFIP, K/9, and BB/9 but through 244 starts for Hamels and 223 starts for Lester, Hamels has a WAR of 30.8 to Lester’s 29.8.  It’s fair to say that Hamels is much closer in talent to Lester than Kershaw.

In 2013, Hamels signed what was, at the time, the 2nd largest contract for a pitcher for 6 years, $144M.  It may be worth mentioning that at the time he signed, Hamels had an average WAR of 4.2 for the 3 seasons prior (remember Lester’s was 3.7) and he was 2 years younger than Lester would be when he starts his contract so there’s an argument that Lester can’t get quite as much as Hamels but let’s move forward anyway.  It’s a bit unfair to do the same analysis for Hamels since we have the benefit of hindsight for the first year of the new deal but we’ll do it anyway.  Hamels put up a 4.2 WAR last season and is projected to average a 3.5 WAR for the last 5 years of the deal which works out a a 3.7 WAR average for the length of the deal.  At $24M per year, that would give Hamels $6.5M per win over his 6 years (again remember Lester’s was $5.1M).  That approaches the upper limit of how much a win is really worth but isn’t really an overpay if Hamels can put up those numbers.  So if we use Hamels as the bench mark for a Lester contract, despite some reasons to suggest Lester should get less value per season, that would put a 4 year contract at $83M which would also make Lester and Hamels free agents at the same age of 35.

It’s impossible to find an exact method for measuring a player’s value but WAR has been a commonly used method.  Many people have suggested that a 4 year, $70M contract is an insult to Lester because it pales in comparison to Kershaw’s but in reality that deal would provide a worse value to the Red Sox if the projections are accurate.  Even when compared to Hamels, the projections suggest that a slight increase is all that is needed.  It’s easy to see big name pitchers getting 9 figures and assuming any All-Star pitcher deserves huge deals but a 30 year old very good pitcher is different than a 26 year old elite pitcher and the contract needs to reflect that.