The Cubs are meeting with Jon Lester, who already has a contract offer from the Red Sox. He’ll probably take that contract offer, but we’ll see. It’s expected that the totals for Lester will be at minimum 6/$120MM, and is in all likelihood going to be way off. Just how much value does Lester have, though?
Lester is both an extremely valuable and an extremely durable pitcher. He’s thrown between 191.2 and 219.2 innings in each of the past 7 years, and his WAR over those years is 33.7, 4.8 WAR a year. Even better, his last year was his best year; he shaved his BB% to 5.4 from his previous low (last year, 7.4), and increased his K rate to 24.9% from 19.6%. His BABIP was .299 so you aren’t too worried about his gains being fluky, either. Lester, simply put, is an ace.
Steamer projects a really conservative 3.4 WAR for next year; it has him giving up roughly half of his realized gains from 2013 to 2014 (and all of his strand rate gains, which I admit is probably accurate). I feel like 3.4 is a really low projection for him (lower than any individual WAR he’s put up int he past 7 years with the exception of his fluke 2012 year), so I’m going to present 4 different tables. They will differentiate between 2 different depreciation schedules and 2 different starting points for where he might be in 2015.
| n+1=.85*n | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 6 year total | 7 year total |
| 3.4 WAR | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||
| fWAR | 3.4 | 2.9 | 2.5 | 2.1 | 1.8 | 1.5 | 1.3 | ||
| At $6, 5% | $20.4 | $18.2 | $16.2 | $14.5 | $12.9 | $11.6 | $10.3 | $93.9 | $104.2 |
| At $6.5, 5% | $22.1 | $19.7 | $17.6 | $15.7 | $14.0 | $12.5 | $11.2 | $101.7 | $112.8 |
| At $7, 5% | $23.8 | $21.2 | $19.0 | $16.9 | $15.1 | $13.5 | $12.0 | $109.5 | $121.5 |
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| n+1=n-.5 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 6 year total | 7 year total |
| 3.4 WAR | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||
| fWAR | 3.4 | 2.9 | 2.4 | 1.9 | 1.4 | 0.9 | 0.4 | ||
| At $6, 5% | $20.4 | $18.3 | $15.9 | $13.2 | $10.2 | $6.9 | $3.2 | $84.8 | $88.1 |
| At $6.5, 5% | $22.1 | $19.8 | $17.2 | $14.3 | $11.1 | $7.5 | $3.5 | $91.9 | $95.4 |
| At $7, 5% | $23.8 | $21.3 | $18.5 | $15.4 | $11.9 | $8.0 | $3.8 | $99.0 | $102.7 |
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| n+1=n*.85 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 6 year total | 7 year total |
| 4.5 WAR | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||
| fWAR | 4.5 | 3.8 | 3.3 | 2.8 | 2.3 | 2.0 | 1.7 | ||
| At $6, 5% | $27.0 | $24.1 | $21.5 | $19.2 | $17.1 | $15.3 | $13.6 | $124.2 | $137.9 |
| At $6.5, 5% | $29.3 | $26.1 | $23.3 | $20.8 | $18.6 | $16.6 | $14.8 | $134.6 | $149.4 |
| At $7, 5% | $31.5 | $28.1 | $25.1 | $22.4 | $20.0 | $17.8 | $15.9 | $144.9 | $160.8 |
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| n+1=n-.5 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 6 year total | 7 year total |
| 4.5 WAR | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | ||
| fWAR | 4.5 | 4.0 | 3.5 | 3.0 | 2.5 | 2.0 | 1.5 | ||
| At $6, 5% | $27.0 | $25.2 | $23.2 | $20.8 | $18.2 | $15.3 | $12.1 | $129.7 | $141.8 |
| At $6.5, 5% | $29.3 | $27.3 | $25.1 | $22.6 | $19.8 | $16.6 | $13.1 | $140.5 | $153.6 |
| At $7, 5% | $31.5 | $29.4 | $27.0 | $24.3 | $21.3 | $17.9 | $14.1 | $151.4 | $165.4 |
And to sum it all up, a 5th, clean table:
| All figures $6.5, 5%, millions | 6 years | 7 years |
| 3.4 WAR, 85% schedule | $101.7 | $112.8 |
| 3.4 WAR, 0.5 schedule | $91.9 | $95.4 |
| 4.5 WAR, 85% schedule | $134.6 | $149.4 |
| 4.5 WAR, 0.5 WAR schedule | $140.5 | $153.6 |
Clearly, the two starting points in WAR are the primary drivers here. At 3.4 WAR (as Steamer projects), Lester is a clear albatross. At 4.5 WAR (which is a back-of-the-napkin guess from me), he is perhaps worth $22-$23 million a year at 6 years and $21 million at 7!
Before we go further, I’d like to talk about multi-year discounts. I don’t think they exist anymore at the top of the market. Sure, there was a time when 5 year pacts had 10% cleaved from them due to the risk on the club. With a player with so many bidders and so few in-the-moment alternatives? I think it’s just baked into the overall price. In fact, at the very top of the market, I think you take the deal you think is reasonable, and just add a year at the same AAV as a FA penalty.
If you add the FA penalty to Lester (at 4.5 WAR starting point), you’d get 7 years at $22.5/year and pay $157.5 million. That’s a contract Lester probably signs, right?
It goes without saying, however, that this predicts a healthy Lester for the next 7 years. If you gave me 1:1 odds on any pitcher throwing 1435 innings in the next 7 years, I probably take the under every time. Let’s take the 4.5/85% table and add another column (force of mortality):
| n+1=n*.85 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 6 year total | 7 year total |
| 4.5 WAR | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Force of Mortality is the instantaneous rate of failure for a pitcher in that age group. I’ve spitballed FoM (mu) as 0.04 + 0.01x, where x is the contract year. | |
| fWAR | 4.5 | 3.8 | 3.3 | 2.8 | 2.3 | 2.0 | 1.7 | ||
| Force of Mortality | 5% | 6% | 7% | 8% | 9% | 10% | 11% | ||
| muWAR | 4.3 | 3.6 | 3.0 | 2.5 | 2.1 | 1.8 | 1.5 | ||
| At $6, 5% | $25.7 | $22.7 | $20.0 | $17.7 | $15.6 | $13.8 | $12.1 | $115.3 | $127.5 |
| At $6.5, 5% | $27.8 | $24.5 | $21.7 | $19.1 | $16.9 | $14.9 | $13.2 | $124.9 | $138.1 |
| At $7, 5% | $29.9 | $26.4 | $23.3 | $20.6 | $18.2 | $16.1 | $14.2 | $134.5 | $148.7 |
This gets you right to the contract that Boston offered: 6 years, $120 million. I’d like to think that’s in the actual ball park of Jon Lester’s value; anything the Cubs (or any other team) offer above that is simply the cost of doing business in the high-dollar free agent market.