Everth Cabrera and PEDs: what it means

Last week, ESPN's Outside the Lines reported that documents obtained from Biogenesis, the PEDs distributor in the Melky Cabrera and Alex Rodriguez cases (among others), indicated that five new players allegedly received products from the South Florida clinic in 2012.  Among the new names are two Padres: Everth Cabrera and Faustino de los Santos.

The more disconcerting player is certainly Everth Cabrera, who has a clear hold on the starting shortstop position for the Padres' 2013 team.  While it feels as if Everth has been around forever -- recall, he was a beneficiary of a lot of playing time in 2009 after being one of the Padres Rule V selections -- without much to show for it, he was actually worth 1.7 wins over replacement (according to Fangraphs) in just 115 games in 2012.  While projection systems are somewhat bearish on Everth Cabrera's 2013 season -- the most optimistic publicly-available system projects 1.7 WAR over a full season -- losing 50 games from Everth in 2013 still projects to have a non-negligible impact on the Padres.

The following table shows the projected wins above replacement difference, from numerous projection systems, if 50 games worth of Everth Cabrera were to be replaced by an equal combination of Cody Ransom and Logan Forsythe (as Bill Center believes would be the case):

System	PA	WAR	PA adjusted	WAR adjusted	PA sub	WAR sub	Difference
Steamer	443	0.9	306	0.6	137	0.3	0.0
Oliver	488	0.5	337	0.3	151	0.0	-0.2
ZIPS	481	1.7	333	1.2	148	0.1	-0.4

Depending on which source you trust -- note, I'm a huge believer in ZIPS -- having Everth Cabrera replaced by Logan Forsythe and Cody Ransom for 50 games costs the Padres roughly one-third of a win.  For a team projected to win between 74 (ZIPS) and 79 (CAIRO) games, every fraction of a game lost really hurts. Especially since a team with a low win projection making the playoffs is reliant upon some high variance event occurring. At just 26 years old entering the 2013 season, a big improvement from Everth stands as one possible source of a high variance event.  More-so than that average projected one-third win taken away by a 50 game suspension, losing 50 games from the huge season that is possible from Everth Cabrera really hurts the Padres.  According to ZIPS, Everth Cabrera has a 14% chance of producing in the top quintile among shortstops; Cody Ransom has just a 2% chance.

Additionally, having Everth receive an entire season's worth of plate appearances would allow the Padres to better evaluate their shortstop position heading into 2014; as the organization has little depth at shortstop -- the only legitimate shortstop prospect will begin the season in the California League -- this is one the more pivotal evaluations the Padres could make in 2013.  Losing 150 plate appearances and hundreds of innings in the field upon which the Padres can make an accurate evaluation is arguably more damaging than the third of a win they are projected to lose if Everth is suspended as a result of the link.  (After all, the odds the Padres win the World Series is just 0.3%.)

Fortunately, it doesn't appear that Everth will be facing a suspension.  As noted by Marty Caswell, producer of the Darren Smith Show on the Padres' flagship radio station, a suspension would require "indisputable proof" that he purchased PEDs:

Everth Cabrera has not tested positive for PED's but he "could" be popped 50 games should there be indisputable proof he purchased them
— Marty Caswell (@MartyCaswell) February 20, 2013

Which begs the question: what are forms of indisputable proof?  Signed checks?  Visual proof of an exchange?  The jury remains out on what would be considered "indisputable proof".  The evidence that is currently known by the public is all that was reported by Outside the Lines: Everth Cabrera paid $1500 in March 2012 for whatever it is he received from Juan Carlos Nunez, the liaison between the player and the company.  ESPN's T.J. Quinn explicitly stated that these players (which includes Everth) were to receive shipments of PEDs, according to these documents.  Presumably, these documents aren't "indisputable proof" that Everth ever received or used any PEDs, or else we'd be hearing more regarding a looming suspension.

If Everth is suspended because there is proof he purchased performance enhancing drugs, it would be one of the first instances of a player suspension due to the purchase itself, and not its use.  (In fact, this table of all steroid/PED-related suspensions in baseball includes no such instances).  The new collective bargaining agreement implemented in 2012 made this subtle change that allows for a suspension even without a positive test.  Padres fans will probably agree that it would be remarkably "Padres" if Everth were to be the first player to ever be suspended under the "indisputable proof" clause.

At this point, all fans can do is sit back and wait while the investigation continues and the pieces fall into place. Hopefully Everth is not suspended; clinging to the very remote possibility of winning it all in 2013 is already difficult enough.

New owners and how it affects payroll

With the recent news regarding the sale of the San Diego Padres to the O'Malley group, reportedly scheduled for an approval vote on August 16th, can Padres fans expect immediate changes to the quality of the product on the field?  Noting the circumstances of the sale -- in particular, the increase in the purchase price related to the upfront payment from the Padres new television deal -- this is not an easy question to definitively answer.  However, what I can do is examine ownership transfers and team purchases in recent history to deduce an estimate of the effect the change in ownership may have.

Without much theoretical motivation to warrant an examination of win/loss differences related to an ownership change, I will instead focus on the immediate effect on the opening day payroll (using USA Today's database).  The reason for this is two-fold: there is a relationship between an increase in payroll and an increase in team winning percentage, and (in general) the payroll is a more direct reflection of the decision making process of owners than wins and losses.

Before we understand how the payroll changes with respect to an ownership change, we should first have some context about Major League Baseball payrolls in general.  The following chart tracks the MLB opening day payroll for each team from 2000 through 2012, along with the league average (in large, red, upside-down triangles) and league median (in large, black triangles).

As can be viewed, the league average steadily increases by roughly three million dollars per season while the league median trails for most seasons, increasing by roughly two million dollars per season.  So, if a change in ownership does not affect payroll, we should expect an average increase between two and three million dollars per season.  A different result may be indicative that an ownership change is predictive of an atypical change in payroll.

Since 2000, there have been sixteen changes in ownership and one additional effective/operational change in ownership -- the Moores to Moorad rejected sale -- from which we can deduce an estimate.  I researched each of these sixteen ownership changes since  2000 to determine the year that should be considered the initial season to use for each new ownership.  In order for a season to be considered the initial season, the new owner(s) must have had a significant portion of the free agent signing period fall under their reign.  For example, the Oakland Athletics, purchased on April 1st 2005, have an initial season of 2006 in this study, as the new owners wouldn't have had an adequate opportunity to increase payroll.  However, the Brewers, whose sale to Mark Attanasio completed on January 13th of 2005, have an initial season of 2005.  Additionally, the Mets sale to the Wilpon family was excluded as the Wilpons already owned a significant portion of the team prior to increasing ownership to 100%.  There is certainly some arbitrariness in this method, but it is tolerable for the exercise at hand.

For each team, I compared the average opening day payroll for the three seasons prior to our assigned initial season to the team payroll in the initial and second seasons.  The second season was added to minimize the effect of having a full initial offseason, as not every case had a clear cutoff.  The result:

Avg. Prior	Avg. Next 2 Seasons	Avg. Difference	Relative increase
$64.98 million	$73.72 million	$8.74 million	13.5%

As previously mentioned, however, there is a year-to-year increase that should be expected anyway. How does the $8.74 million figure compare to our expectation of a normal salary increase? Performing the calculation as above for all combinations -- meaning, I calculated the three seasons prior to 2000 for every team and compared that to the two seasons after, and repeated for all years through 2011 -- results in the following league average expectation:

Avg. Prior	Avg. Next 2 Seasons	Avg. Difference	Relative increase
$67.98 million	$75.88 million	$7.89 million	11.6%

As seen in the tables above, our methodology shows that, since 2000, an ownership change has been met with a 2% relative payroll increase in the first two seasons of ownership compared to the three years prior, on top of the standard 11.6% increase that is seen league-wide.

In addition to the averages presented above, we may also want to examine what happens in the typical purchase. Of the fifteen data points, just four experienced a decrease in payroll, while three teams experienced an increase of over twenty-nine million. Overall, ten of the fifteen have a payroll increase higher than the $8.74 million figure, giving a median value of $11.6 million: a 17.8% relative increase.

What does this mean for the Padres? Over the past three seasons, the Padres have had an average opening day payroll of $46.4 million. Projecting the average relative increase from our examined ownership changes results in an average payroll of $52.7 million over the next two seasons. This increases another two million when using the median value. If the Padres new ownership emulated the largest new ownership relative increase since 2000, the payroll would open at 79.0 million.

However, perhaps the three year average as the starting point is not accurate for the Padres. Outgoing minority owner Jeff Moorad's opening day payrolls have gone from $37 to $45 to $55 million in the past three seasons, which makes using a three year prior average somewhat misleading in this case. If the most recent opening day salary was used as the three year average, the 17.8% relative increase results in a $64.6 million average opening day payroll over the next two seasons.

This $64.6 million figure can serve as an optimistic, but reasonable projection for the average payroll in the 2013 and 2014 seasons, if we accept that the result of our fifteen point dataset is meaningful (which is not necessarily the case). Of course, this is not a robust model (nor really a model at all), just a simple projection based on a surface examination of what has happened when ownership has changed hands historically.

With the team discussing moving in the fences and a long-overdue scoreboard upgrade potentially on the calendar, in addition to eating the salary of any contracted executives to be cut loose (like what's left on the recent Josh Byrnes extension), I don't think there is much reason, that isn't guided by sheer wishfulness, to believe the team will exceed the ~$65 million figure in the immediate future. The rumored retention of several of the minority owners from the penny-pinching Moorad group certainly doesn't bode well for a sudden change of direction, either.  (Note: this is an entirely different argument from whether or not the team is justified in not increasing payroll.  For more on this, see our initial post on Empiricism.)

One final consideration is the effect of the new revenue sharing system on increasing payroll. With the new revenue sharing rule, whereby the payroll of your 40-man roster now has to be at least 25 percent larger than the amount you're receiving from revenue sharing, the Padres payroll may have to increase by a certain amount just to avoid losing its stipend. In other words, the Padres payroll may have had to increase regardless of a change in ownership. There is also the new caveat that the team must prove that revenue sharing dollars are spent on improving the Major League team. (In the past, the burden fell to the Players Union; without the books to prove their case, it is widely accepted that teams were using these revenue sharing dollars to pay down their debts.) As any new owner(s) of the Padres come on board with significant debt owed for the construction of Petco Park in addition to paying nearly $800 million for a team valued at less than $500 million by Forbes, it seems unlikely that the new owners would add to the payroll with their own dollars, rather than just trying to attribute the increase in payroll related to revenue sharing stipends to their interest in improving the club.

All in all, pessimistic Padres fans should temper their pessimism, at least recognizing that it seems unlikely for new owners to willingly forego a lucrative revenue sharing check (which exceeds the money saved in a salary dump). Additionally, history seems somewhat favorable for the opening day payroll of teams with new ownership. However, equal tempering should be in place for Padres fans that believe the team will significantly add payroll. The favorable history for payroll under new ownership is only a small increase compared to the rest of the league and, on aggregate, cannot be expected to significantly alter the competitive edge at which the Padres operate.

Empiricism

One founding principle that this blog will attempt to focus upon is empiricism: employment of methods derived from observation or experiment.  In other words, I'll make a concerted effort to stress what actually happens rather than what should or should not happen.  Without an approach that heavily weighs the empirical results, the practice of accountability loses meaning.  And with a general decrease in accountability comes a general decrease in the role that extrinsic incentives play as catalysts to the success of individuals (which, in the discussion(s) to follow, will largely be members of sports management).

As an example: In January, I had the opportunity to meet face-to-face with the Padres CEO and team president, Tom Garfinkel.  While discussing the Padres' decision to trade (and therefore not retain) Adrian Gonzalez, Mr. Garfinkel reiterated ownership's position regarding high paid players:

“The reality is there’s a tipping point on the economics that will make it impractical to hold onto any player.  Can we afford a $20 million player? No.  Can we afford a $15 million a year player.  Eh, probably not.  Maybe.” - Jeff Moorad on the Darren Smith Show, 12/19/2009.

However, using ownership's statement of a payroll resting in the sixty to seventy million dollar range, empirical evidence exists to contradict the absolute notion that the Padres cannot afford a twenty million (per year) player.  The Florida Marlins won the World Series in recent history with a payroll of forty-two million dollars, which is equivalent to a team winning the World Series on a sixty-two million payroll where a twenty million (per year) player contributes absolutely nothing.

But, more importantly, the assumption of a sixty to seventy million payroll has been assumed without empirical evidence that a higher payroll (either marginally or significantly) has proven to be less desirable than a sixty to seventy million dollar payroll.  The highest opening day payroll the Padres have ever had was seventy-three million, in 2008, and eight million dollars worth of Jim Edmonds was released before the end of May.

A more accurate statement by Jeff Moorad would read:

"The reality is we don't know what the economic tipping point is for holding onto players.  Can we afford a $20 million player?  We don't know; we haven't tested enough payroll structures in San Diego to gather empirical evidence to support a specific salary structure.  I guess we'll have to find out."

Of course, we'll never hear that (for more than just the fact that the Moorad group dropped their bid to acquire a majority of the Padres after approval of the Moorad ownership group was rejected by Major League Baseball).  But, as a founding principle, empiricism will be highlighted here in the various posts to come. Hopefully, future readers hold me to this; empiricism demands nothing less.