Manny Happy Returns

Our long dreadlocked drama is over. and ESPN report that after more than four months of arduous negotiations and more spin than the 2008 presidential election, Manny Ramirez has returned to the fold. From MLB’s Ken Gurnick and Barry Bloom:

The deal was closed, pending a physical, at a meeting in Los Angeles attended by Ramirez, his agents Scott Boras and Mike Fiore, Dodgers owner Frank McCourt, general manager Ned Colletti and manager Joe Torre, the latter duo both flying from Spring Training camp on Tuesday night for the session.

Torre and Colletti were already winging their way back to Phoenix this morning and are expected to arrive in time for Wednesday’s Cactus League game between the Dodgers and Giants at Camelback Ranch.

The manager was summoned back to Los Angeles along with Colletti for what turned out to be the final negotiating session in a 4 1/2-month effort to get the free agent to return to the Dodgers.

Ramirez accepted the same deal the Dodgers offered last Wednesday — two years, $45 million ($25 million in 2009, $20 million in 2010), payment deferred over five years without interest, with an opt-out clause after one season paid at $10 million each for the first four years and $5 million for the fifth.

But both sides indicated Tuesday night that the deal could not be completed until all primary parties met face-to-face in Los Angeles Wednesday. Ramirez flew in from Florida Tuesday night for the meeting.

Considering Manny and Boras went into the offseason seeking a four- or five-year deal at rates comparable to Alex Rodriguez ($27.5 million per year), this is a pretty huge win for the Dodgers, particularly on the emotional level; they get a great hitter, the best free agent of the offseason, they get him while screwing ├╝beragent Scott Boras fairly hard relative to those lofty initial expectations, and — if the deferral info is accurate — they get him at a dollar amount that’s less than one of their recent, previous offers. Arguably, Manny bought himself the opt-out with that money, which doesn’t bother me as much as it will some people. It’s the cost of doing business, in this case.

On a baseball level, this is a great move even at that dollar amount. Lengthwise, it’s tough to screw up too badly on a two-year deal, though the Dodgers do have the Andruw Jones deal as the exception that proves the rule (how often does a player who was on track for the Hall of Fame suddenly hit .158 with three homers in half a season?). As a win-now move it’s even better. Baseball Prospectus’ current, PECOTA-based projections have the Dodgers at 84 wins, five behind the Diamondbacks. That’s with Juan Pierre as their regular left fielder. The difference in projected WARP values between the two (4.3 to 1.7) more than cuts that margin in half, and that’s if you buy that Manny is worth -13 runs in the field, which is, to say the least, extreme; his historic defensive numbers have always been distorted by Fenway’s Green Monster, while his numbers with the Dodgers last year were around average. Still, as a low-end estimate, that will stand. Figuring totally on projected VORP, the difference increases to 43.6 runs (49.0 to 5.4) — more than four wins — but even that doesn’t get it right, since Pierre’s VORP is based on his being a center fielder, where the offensive replacement level is theoretically lower than in left field. Marginal Lineup Value Rate (MLVr) numbers put Manny as worth .245 runs per game above an average hitter, whereas they put Pierre -.124 below, a difference of 59.8 runs, about SIX wins. Now, that’s assuming the Dodgers can just bury Pierre in a ditch without him getting any playing time, which unfortunately isn’t going to happen, and we’ve avoided the thorny issue of defense, but as a back-of-the-envelope calculation, we can call that the high-end estimate.

So, we can estimate this move as worth between 2.6 and 6.0 wins. Considering the fact that the Dodgers are in the sweet spot where, as Nate Silver showed in Baseball Between the Numbers the marginal dollar values per win rise sharply, peaking around $4.5 million per win for the 90th win, this is essentially the point where the big-dollar incremental gains start to pay for themselves. Particularly so in this instance, given that this was 2005 dollars that Nate was figuring when he did that study, and that the bar for the current NL West is lower than your typical division. After all, 84 wins brought home the flag for Manny and the Dodgers last year.

As for Ramirez and Boras, it’s tough to say they came out ahead given their efforts. As Paul SF at YanksFanSoxFan did some figuring himself:

Assuming Ramirez were to exercise the 2010 player option for $20 million (I think he will because anyone who thinks the teams will be in any position to pay players more money next offseason is kidding themselves), he will have received a whopping $5 million more than he would have gotten if he had simply stayed in Boston and put up his big numbers (thereby assuring that the Red Sox would have picked up their two options on him).

Except he changed agents, and Boras now gets a commission for whatever deal Ramirez accepts. Everything I’ve read assumes Boras gets a 5 percent commission (though no one actually quotes Boras or a player saying this). Five percent of $45 million is $2.25 million — leaving Ramirez a net profit of less than $3 million over staying in Boston. If Boras’ commission is 10 percent, Manny would have agitated his way off the Red Sox for all of $500,000.

If the net present value of the contract is less than $45 mil, as it must be if those terms are right (my crash course in the Excel Net Present Value function yielded about $41.5 mil assuming a 3% discount rate), those gains are even smaller. As my financial guru over the lifespan it took to write this piece, Neil deMause, put it: “Basically you’re trying to figure out the cost of Manny giving the Dodgers a no-interest loan. You could argue that the Dodgers are a safer place to keep your money than a bank, or your mattress.”

Indeed. No chance of the Dodgers being nationalized anytime soon.

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