Is Freddie Freeman's New Contract a Smart Move by the Atlanta Braves?

He hit his first MLB home run off Roy Halladay, led the Atlanta Braves in hits as a rookie, and was an All-Star last year. At 24 years old, Freddie Freeman has accomplished quite a lot in the big leagues, and after this week's contract extension with the Braves, he's now the seventh highest paid true first baseman in all of baseball.

With eight years and $135 million now reportedly under his belt, the obvious question is: Was it a good decision by the Braves?

Front-office ability
It's no secret the team and its owner, Liberty Media (NASDAQ: LMCA  ) , like to make big roster moves. They brought in the Upton brothers last year, traded for Dan Uggla in 2010, and acquired Mark Teixeira a few years before that. 

But on an aggregate scale, its spending habits are mostly middle of the pack.

Atlanta Braves 2013 Ranks
Total Payroll 1B Payroll Team Value Revenue Cost Per Win*
16th 23rd 15th 12th 5th

Sources: USA Today, Forbes, and Ballpark Digest. *Ranked from lowest (best value) to highest (worst value), and uses the formula for Marginal Cost per Marginal Win, which assumes a baseline MLB team wins 1/3 of its games and pays the minimum salary to every roster spot.

Last year, the Braves ranked 16th of 30 MLB teams with an opening day payroll of $89.7 million, and spent even less on first basemen ($560K) comparatively. When ranked by valuation and revenue, Forbes estimates the team was in the league's middle-third.

However, remember what Jonah Hill's portrayal of Peter Brand said in Moneyball: "Your goal shouldn't be to buy players, your goal should be to buy wins."

That's the true measure of an MLB front office's ability, and it's exactly what the Braves are good at. With 96 wins in 2013, the team spent $1.6 million for each one on a marginal basis, making it more efficient than all but four of its peers. The average MLB team spent about twice as much, while Billy Beane's Oakland A's were the only club to spend less than seven figures per marginal win.

Analyzing the Freeman deal
There's more to it than that, though. Those numbers indicate the Braves used their money wisely last year, but how'd they do with the Freeman deal? Sabermetrics, specifically wins above replacement (a measure of a player's total offensive and defensive value), can help provide an answer.

According to CBSSports, the first baseman's contract extension is worth a little over $16.8 million per year, and will take him through his age-31 season, which, as mentioned

Image via Bruce Tuten, Flickr.

above, makes him the among the 10 highest paid players at his position.

Performance-wise, Freeman has averaged 3.0 wins above replacement since his rookie season in the bigs, and last year, his WAR of 5.5 was behind only fellow first basemen Chris Davis (6.4), Joey Votto (6.4), and Paul Goldschmidt (7.0). Assuming the widely accepted MLB standard value per WAR of $5 million, this means Freeman was worth $27.5 million in 2013, $10.5 million in 2012, and $7 million in 2011 -- an average of $15 million a year. 

The Braves, who paid him about $500,000 annually over this period, got an absolute steal, as Freeman's services were discounted by approximately 95%.

And that's not even the best part. 

Since he's yet to hit his 25th birthday, Freeman hasn't hit his peak, statistically speaking. As FanGraphs pointed out last year, batters typically reach their maximum potential between the ages of 25 and 26 -- Freeman's 2015 season -- before their skills begin to slowly decline. By using this historical aging pattern, it's possible to loosely project value over the life of the Braves' eight-year $135 million deal.

Year WAR* Salary Value/Win**
2011 1.4 $414K $295K
2012 2.1 $535K $254K
2013 5.5 $560K $101K
2014 (est.) 3.7 $16.8M $4.4M
2015 (est.) 3.9 $16.8M $4.1M
2016 (est.) 3.7 $16.8M $4.2M
2017 (est.) 3.5 $16.8M $4.4M
2018 (est.) 3.4 $16.8M $4.5M
2019 (est.) 3.2 $16.8M $4.6M
2020 (est.) 3.0 $16.8M $4.9M
2021 (est.) 2.8 $16.8M $5.1M

Sources: Author's calculations, ESPN and Baseball-Reference. WAR projections calculated using a 5/4/3/2/1 weighted average, sticking closely to methods used by Jay Jaffe and Tom Tango. *WAR adjusted +/- 0.4 depending on career arc for aging purposes. **Assumes a market value per win of $5 million, and an annual inflation rate of 2%.

Remember, the average MLB team pays about $5 million per win above replacement according to most estimates, with some placing this figure as high as $7 million. Even on the low end of this range, Freeman's extension appears to be a smart move for the Braves -- they are projected to pay him above this mark only once, in 2021.

Deviation from the mean
Throughout the life of his contract, the team is paying Freeman about 10% below the market rate, assuming his WAR projections hold. Obviously, there's room to deviate from this mean. I'm thinking of at least six different scenarios that could occur.

  1. If Freeman improves his defense at first base -- he was tenth in ultimate zone rating in 2013-- there's upside to his WAR estimates, and thus, the Braves will be getting an even better deal with his contract.
  2. If he can become a 30-home run hitter -- his career high is 23-- without sacrificing average or on-base percentage, there's potential for improvement.
  3. Likewise, if all else is constant, there's upside to Freeman's performance assuming opposing pitchers begin to walk him more. He was 33rd in the MLB in walks last year despite finishing 13th in on-base-plus slugging.
  4. And although he has just seven career steals, the base paths are another area for possible improvement.

On the flip side, there's also risk of negative deviation.

  1. If Freeman is injured any longer than a full 162-game season, the numbers begin to work against the Braves. The contract would no longer be a good value.
  2. As Shawn Childs of ScoutPro points out, Freeman's strikeout rate of nearly 20% is a potential issue, and it "isn't in an area to support a .319 batting average [last season's mark] without more growth." In other words, his batting average could dip if he doesn't cut down on the K's.

The final grade
Sabermetrics and WAR projections aren't foolproof ways to evaluate the baseball diamond, but they do help to illuminate if teams overpay or underpay for players on a long-term basis. In the case of Freddie Freeman, youth is his best trait. Unlike the mammoth deals received by Robinson Cano or Curtis Granderson this offseason, Freeman is on the right side of 30 and his career arc.

The Braves spent their money wisely last year, and their latest megadeal appears to be a smart move. Obvious risks remain, including injury and regression, but on the whole, I give the team's front office an "A" for keeping Freeman's extension below what most MLB teams would have probably paid for the first baseman.

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  • Report this Comment On February 05, 2014, at 8:48 PM, Clint35 wrote:

    I hate to be mean, but who cares?! What does any of this have to do with investing? Besides the fact that liberty media owns the Braves, nothing. What's next are you gonna show us a video of Freddie at his new multi-million dollar house. Leave this kind of fluff to entertainment tonight and ESPN.

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