Friday, November 18, 2011

Matt Kemp, Rich Dude

The Dodgers signed Matt Kemp to an impressive contract this afternoon. Kemp will make $160M over 8 years. Is this a good deal for the Dodgers? I sure hope so. A lot can go wrong in 8 years. Some of the things that should worry Dodgers fans about this contract are Kemp regressing, defense in center field and of course the always unpredictable injury bug. As good as Matt Kemp is, he by no means is an 8.7 WAR player. His "true talent" level may be unknown but the most likely level is probably around 5.5 WAR. A sizeable chunk of Kemp's value comes from his ability to play a scarce position (center field). Kemp is likely an average to slightly above average center fielder. As he gets older he may be moved out of CF to one of the corner outfield positions where more will be expected out of his bat (if not, he gets docked). The injury bug hasn't been a problem for Kemp, so he gets a pass on this one, but of course fluke injuries can happen to the most healthiest of players. That is a risk you just can't mitigate and comes with every player.

In the table below, I take a look at how I value this contract. It of course is a swag but a fun exercise nevertheless. Please feel free to ad your opinion to the mix. In this exercise I am going to start Matt Kemp off as a 5.5 WAR player for 2012 and 2013 before I slowly drop his WAR value down in each of the subsuquent years. I am setting the initial $/WAR value at 4.5M per WAR and assuming a salary inflation rate of 4%.

Total 33.5169.71

Assuming my parameters are correct, Kemp's value comes in close to what he is getting paid. There is a total surplus of around $9.7M but a slight adjustment here and there to my input parameters can easily move that up or down another $10M or so. From the looks of things, this does look like a very fair deal to me.

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