Lowe seeking a contract

We've seen mixed approaches to signing players this offseason. The Mets were able to acquire Francisco Rodriguez at a reasonable amount for a reasonable length of time. The Yankees however bid against themselves for CC Sabathia, blew competition out of the water for Burnett, and stayed with competition for Teixeira. Many players remain on the market and are expected to take lower salaries than was originally anticipated.
Derek Lowe was originally thought to be looking for 5 years $90 million. After seeing a slowing market the Mets made an initial offer of 3/$36. Two very disparate numbers. Scott Boras and Derek Lowe countered by saying Lowe is looking to other suitors for $16 mil per.

Let's use CHONE's projections to formulate the present value of Lowe's worth to a team. We will use a present value formulated from a discount rate based on current bond models. Using a combination of Citigroup's Discount Rate Curve, Moody's Discount Rate, and a portfolio of high rated corporate bonds, a reasonable discount rate is 6.75%. Furthermore, let's assume a middle of year payment for each year of Lowe's valued worth. CHONE projects Lowe's worth at:
2009: $15.5 mil
2010: $14.8
2011: $14.2
2012: $13.4
That gives us a present value of $51.14 mil.
Now, it is important to note that these discount rates do factor in current economic conditions. While we may be tempted to adjust the discount rate going forward, it is really unreasonable to do so given the current economic turbulence.
So now any team wanting to match the value of Lowe's worth, but not wanting to give Lowe 4 years guaranteed could backload some of the dollars of both the guaranteed portion of the contract as well as a fourth year vesting option.
Based on the Mets' three year offer a fourth year vesting option seems highly likely. To make the contract more appealing to Derek Lowe you need to make the vesting condition fairly easy to attain. Something that he has an 85%+ chance of attaining. Perhaps that would be pitching something like 170+ innings in 2011.
Suppose that a team offers Derek Lowe 3/$40, with a payment schedule of 2009 - $12 mil, 2010 - $13, 2011 - $15. In order to match the present value of Lowe's worth, the 85% likely vesting option would have to be $22.18 million; a pretty hefty vesting option.
Now if instead a team makes a more reasonable offer of 3/$42 without backloading; the vesting option would only need to be $19.23 mil. This seems like the type of offer Lowe would be happy with. Either way, he's probably looking for a bit too much in $16 mil per and the Mets started off too low at 3/$36, even given the current economic situation.

RDB's MLB Rankings: 25 Aug - 31 Aug

Well here it is, the ultimate in MLB rankings by the numbers. We have developed a formula based upon standing, runs scored, runs allowed, and recent performance along with a very small input from ESPN's and CBS's rankings to determine the rankings of all MLB teams as of this point in the season. This week's rankings do not include commentary but we hope to include the insights that have been available to you in the past in future RDB rankings. Thanks for coming and enjoy the ultimate MLB rankings available!

1 Chicago Cubs W-L: 85 52 ExpW-L: 86 51 L10: 7 3 ESPN: 1 CBS: 1

2 Tampa Bay Rays W-L: 84 51 ExpW-L: 78 57 L10: 7 3 ESPN: 2 CBS: 2

3 Milwaukee Brewers W-L: 80 56 ExpW-L: 77 59 L10: 8 2 ESPN: 3 CBS: 4

4 Los Angeles Angels W-L: 83 52 ExpW-L: 74 61 L10: 6 4 ESPN: 7 CBS: 3

5 Chicago White Sox W-L: 77 59 ExpW-L: 77 59 L10: 5 5 ESPN: 4 CBS: 5

6 Boston Red Sox W-L: 79 57 ExpW-L: 81 55 L10: 6 4 ESPN: 5 CBS: 7

7 Minnesota Twins W-L: 76 60 ExpW-L: 75 61 L10: 4 6 ESPN: 10 CBS: 6

8 New York Mets W-L: 76 61 ExpW-L: 76 61 L10: 6 4 ESPN: 8 CBS: 9

9 Philadelphia Phillies W-L: 75 62 ExpW-L: 78 59 L10: 7 3 ESPN: 6 CBS: 10

10 St. Louis Cardinals W-L: 74 63 ExpW-L: 73 64 L10: 4 6 ESPN: 9 CBS: 8

11 New York Yankees W-L: 72 64 ExpW-L: 71 65 L10: 5 5 ESPN: 11 CBS: 12

12 Toronto Blue Jays W-L: 70 66 ExpW-L: 76 60 L10: 5 5 ESPN: 13 CBS: 11

13 Arizona Diamondbacks W-L: 69 66 ExpW-L: 71 64 L10: 4 6 ESPN: 14 CBS: 13

14 Cleveland Indians W-L: 65 70 ExpW-L: 70 65 L10: 7 3 ESPN: 12 CBS: 17

15 Houston Astros W-L: 71 66 ExpW-L: 65 72 L10: 7 3 ESPN: 15 CBS: 16

16 Florida Marlins W-L: 69 68 ExpW-L: 65 72 L10: 4 6 ESPN: 16 CBS: 15

17 Colorado Rockies W-L: 64 73 ExpW-L: 63 74 L10: 6 4 ESPN: 18 CBS: 18

18 Detroit Tigers W-L: 66 70 ExpW-L: 68 68 L10: 4 6 ESPN: 17 CBS: 19

19 Los Angeles Dodgers W-L: 66 70 ExpW-L: 68 68 L10: 2 8 ESPN: 23 CBS: 14

20 Texas Rangers W-L: 66 71 ExpW-L: 63 74 L10: 4 6 ESPN: 19 CBS: 21

21 Baltimore Orioles W-L: 63 73 ExpW-L: 66 70 L10: 2 8 ESPN: 22 CBS: 20

22 San Francisco Giants W-L: 59 77 ExpW-L: 56 80 L10: 5 5 ESPN: 20 CBS: 22

23 Oakland Athletics W-L: 63 73 ExpW-L: 65 71 L10: 6 4 ESPN: 21 CBS: 23

24 Atlanta Braves W-L: 59 78 ExpW-L: 65 72 L10: 3 7 ESPN: 24 CBS: 25

25 Cincinnati Reds W-L: 61 76 ExpW-L: 59 78 L10: 5 5 ESPN: 25 CBS: 26

26 Washington Nationals W-L: 52 85 ExpW-L: 53 84 L10: 8 2 ESPN: 27 CBS: 30

27 Seattle Mariners W-L: 53 83 ExpW-L: 57 79 L10: 7 3 ESPN: 26 CBS: 28

28 Kansas City Royals W-L: 57 79 ExpW-L: 55 81 L10: 2 8 ESPN: 30 CBS: 24

29 Pittsburgh Pirates W-L: 57 79 ExpW-L: 56 80 L10: 0 10 ESPN: 28 CBS: 27

30 San Diego Padres W-L: 52 83 ExpW-L: 56 79 L10: 4 6 ESPN: 29 CBS: 29

RDB's MLB Rankings: 30 June - 6 July

As we head toward the All-Star break the Rays and Twins continue to surprise and impress. The Yanks are on the ropes, and the Mets are in the midst of determining whether the rest of their season will matter or not. The Diamondbacks are doing everything thing they can to give the division lead away and may finally be finding a taker.

1. Tampa Bay Rays W-L: 55-32 ExpW-L: 52-35
There can be no doubt which team is the best team in the majors right now.

2. Chicago White Sox W-L: 51-37 ExpW-L: 53-35
Carlos Quentin is getting the recognition he deserves.

3. Chicago Cubs W-L: 53-36 ExpW-L: 54-35
The North-siders will be well represented at the all-star game.

4. Los Angeles Angels of Anaheim W-L: 53-35 ExpW-L: 46-42
John Lackey's last outing was a bit of a slip, but the Angels' staff is still one of the most fearsome in baseball.

5. Boston Red Sox W-L: 52-38 ExpW-L: 53-37
Manny Ramirez needs some rest, but the Red Sox can ill afford to sit him down.

6. Minnesota Twins W-L: 50-38 ExpW-L: 47-41
Delmon Young is starting to live up to the tremendously high standards he set for himself.

7. Milwaukee Brewers W-L: 49-39 ExpW-L: 45-43
With the organizational depth the make a trade deadline move the Brewers are right in the mix of things.

8. St. Louis Cardinals W-L: 50-40 ExpW-L: 47-43
With two pitchers returning from the DL, the Cards are primed for a second half surge.

9. Oakland Athletics W-L: 47-41 ExpW-L: 51-37
The A's will have to enter into one of their customary second half surges to stay in the middle of things.

10. New York Yankees W-L: 46-42 ExpW-L: 46-42
Mike Mussina is doing his part to keep the Yanks afloat.

11. Philadelphia Phillies W-L: 48-40 ExpW-L: 52-36
They have their foot on the throat of the Mets, it's time to put it down.

12. Texas Rangers W-L: 46-43 ExpW-L: 43-46
Will the Rangers ever have enough pitching to complement their amazing hitting?

13. Detroit Tigers W-L: 43-44 ExpW-L: 43-44
Their hot streak is slowing down, but they can't allow that to happen long.

14. Florida Marlins W-L: 45-43 ExpW-L: 42-46
Valued by position Hanley Ramirez is the NL MVP.

15. New York Mets W-L: 43-44 ExpW-L: 44-43
The Mets chance to get into the race is now.

16. Los Angeles Dodgers W-L: 43-45 ExpW-L: 45-43
If Garciaparra can make a difference the Dodgers might get into this, but Jones won't be doing a thing.

17. Arizona Diamondbacks W-L: 44-45 ExpW-L: 45-44
Even mediocre play could have helped them keep their significant lead.

18. Baltimore Orioles W-L: 44-43 ExpW-L: 44-43
Adam Jones is showing why the O's got the best of the Bedard deal.

19. Cincinnati Reds W-L: 43-47 ExpW-L: 40-50
Jay Bruce has been streaky, but when he locks in he'll be a perennial all-star.

20. Kansas City Royals W-L: 39-50 ExpW-L: 38-51
The Royals had a couple of players overlooked for all-star bids, certainly because the team continues to struggle to post wins.

21. Atlanta Braves W-L: 41-47 ExpW-L: 47-41
How far has Jeff Francoeur fallen?

22. Toronto Blue Jays W-L: 42-47 ExpW-L: 46-43
The pitching still has hiccups, but it is a very deep staff.

23. Houston Astros W-L: 41-47 ExpW-L: 40-48
Will the Astros become important sellers?

24. Pittsburgh Pirates W-L: 40-47 ExpW-L: 38-49
The key for the Bucs is selling the right parts, they may only be a couple of years away from contention.

25. Cleveland Indians W-L: 37-51 ExpW-L: 43-45
Will the Indians sell more than Sabathia?

26. San Francisco Giants W-L: 39-50 ExpW-L: 40-49
Outside of Zito the Giants' starters are quite solid.

27. Washington Nationals W-L: 34-56 ExpW-L: 32-58
A lot of close losses don't make the number of losses any less painful.

28. Seattle Mariners W-L: 35-52 ExpW-L: 38-49
A solid framework could make turning things around quick.

29. Colorado Rockies W-L: 37-52 ExpW-L: 38-51
They can slug it out, but pitchers are still few and far between.

30. San Diego Padres W-L: 35-54 ExpW-L: 35-54
How can the Padres be so bad when Gonzalez and Peavy can be so good?

RDB's MLB Rankings: 8 June - 14 June

We're heading into the heart of the summer with legitimate contenders starting to remind the up-and-comers that there is a lot more ball to be played. Many of the contenders aren't entirely healthy, but their reserves are picking up the slack admirably.

1. Los Angeles Angels of Anaheim W-L: 39-24 ExpW-L: 33-30
It's hitting on all cylinders right now.

2. Chicago Cubs W-L: 39-24 ExpW-L: 40-23
A .500 week slows down the NL's best, but just a bit.

3. Boston Red Sox W-L: 40-26 ExpW-L: 38-28
Is there any doubt who the most feared club in baseball is?

4. Philadelphia Phillies W-L: 39-26 ExpW-L: 40-25
Starting to pull away from in an unexpectedly weak NL East.

5. Chicago White Sox W-L: 36-26 ExpW-L: 38-24
When will this team start getting the national press it has earned.

6. Tampa Bay Rays W-L: 37-25 ExpW-L: 34-28
The Red Sox showed they were still the team to beat in the AL East, but the Rays are showing they are still a force to be reckoned with.

7. St. Louis Cardinals W-L: 38-27 ExpW-L: 35-30
We still expect the bubble to burst, but maybe not that badly.

8. Arizona Diamondbacks W-L: 34-29 ExpW-L: 35-28
What once looked like their division now looks like it will be a tight race.

9. Oakland Athletics W-L: 33-29 ExpW-L: 36-26
This team needs a more loyal fan base.

10. Toronto Blue Jays W-L: 33-32 ExpW-L: 35-30
Ricciardi's bold moves finally starting to pay off.

11. New York Yankees W-L: 32-31 ExpW-L: 31-32
Some of the sleeping giants have awaken, when these bats get going no one can stop them.

12. Milwaukee Brewers W-L: 33-30 ExpW-L: 31-32
Talent rich and the chemistry is there; can they compete in such a deep division?

13. Minnesota Twins W-L: 31-32 ExpW-L: 29-34
This team will probably slow down at some point, but who would have thought they'd be up on the Indians and Tigers at this point?

14. Los Angeles Dodgers W-L: 30-32 ExpW-L: 33-29
Finally starting to show some life, against the Cubs no less.

15. Florida Marlins W-L: 34-28 ExpW-L: 31-31
Who thought this would be the only team staying within range of the Phillies?

16. Texas Rangers W-L: 31-33 ExpW-L: 30-34
All-Stars continue to emerge from Arlington, but banners do not.

17. San Diego Padres W-L: 28-37 ExpW-L: 26-39
Starting to roll early enough to make a difference.

18. Atlanta Braves W-L: 32-32 ExpW-L: 37-27
Absolutely abysmal on the road (7-21) and their next ten are away from home.

19. Houston Astros W-L: 32-32 ExpW-L: 31-33
If they're still a second half team, they are positioned well.

20. Pittsburgh Pirates W-L: 30-33 ExpW-L: 29-34
Drafting without respect to big number rumors shows that ownership is ready to make necessary changes.

21. Detroit Tigers W-L: 26-36 ExpW-L: 29-33
The Indians seemed to bring some good out of this team.

22. Cleveland Indians W-L: 28-35 ExpW-L: 32-31
Injuries may derail this season for good.

23. Cincinnati Reds W-L: 30-34 ExpW-L: 30-34
All the big name prospects are there now and without pressure since Griffey's getting all of the attention; perfect timing for development.

24. Baltimore Orioles W-L: 31-31 ExpW-L: 30-32
Daniel Cabrera could be the most talented out-of-control pitcher in the majors (well along with Oliver Perez).

25. New York Mets W-L: 30-32 ExpW-L: 31-31
Did Omar Minaya and Mets' ownership think that everything magically got better after a meeting with Willie Randolph?

26. San Francisco Giants W-L: 28-35 ExpW-L: 28-35
Zito now has 2 wins on the season.

27. Colorado Rockies W-L: 24-39 ExpW-L: 25-38
Played extremely well against a hot Brewers team.

28. Washington Nationals W-L: 25-39 ExpW-L: 24-40
It's one step forward, two steps back for this perennial loser.

29. Kansas City Royals W-L: 24-39 ExpW-L: 24-39
See above.

30. Seattle Mariners W-L: 22-41 ExpW-L: 25-38
Who could've guessed this team would be so awful?