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.

Salary Cap Musings

There is a cry for fairness resonating from the mouths of many baseball fans, owners, and employees. The cry is hushed when a team such as San Francisco spends an exorbitant sum on second rate talent. But when the almighty Yankees decide to spend unbelievable amounts on decidedly better talent the cries become loud and distinct.
There is no good reason for a salary cap in any sport. Major league baseball works in an extremely proficient manner with regards to player financials. The competitive balance of the league not only exists but is flourishing. For every Kansas City or Pittsburgh you can point to two Tampa Bays and Floridas. Believe it or not but the system governs itself. Even the Yankees have their limits, albeit much higher than any other team. When those limits are met, or their talent needs are met, they no longer spend. Teams such as Oakland and Minnesota are forced to find other ways to compete, but certainly not inferior ways.
The Yankees don't win the World Series every year, not even every other year. Over the past 8 seasons the Yankees have not won the World Series. They have appeared twice. Over those same eight seasons the Yankees have had the largest payroll as well.
The competitive balance is governed in part by how much a team spends, but it is even more directly governed by the aptitude of its management.
Take a look at the breakdown by the market* of teams with World Series' appearances in the past 8 seasons:

Large Market:(8)
Yankees (2)
Red Sox (2)
Tigers
Phillies
Angels
White Sox

Mid Market:(3)
Cardinals (2)
Giants

Small Market:(5)
Rockies
Rays
Diamondbacks
Marlins
Astros

*By "market" we are pointing to how much a team spends, rather than the size of the actual market they appeal to. A more appropriate base given the discussion. So whereas Miami is a fairly large market, the Marlins are decidedly a small spender. Similarly, Detroit is not a large market per se, but the Tigers had a fairly large payroll in 2006.

This is actually quite an even distribution. An argument could be made to move some of the "large" market teams to the mid-market based on their respective payrolls of the seasons in question.
Furthermore, the presence of a salary cap is one the major marketing tools for potential future talent. When a young man is determining whether to spend his time developing his athletic ability, money will most certainly be a factor as it ought to be. With the ease by which basketball talent can be fostered and the readily available structure of football programs this is an increasingly important concern for baseball scouts and fans alike.
A salary cap not only changes the market, it changes the nature of the business. While you might be sour that the Yankees gobbled up 3 of the 4 top free agents avaialable this year, it is that same system that may provide your team with talent such as Hanley Ramirez for a star that might not be able to be used to win in the immediate future.

For further reading please go to Beyond the Box Score:
http://www.beyondtheboxscore.com/2008/12/29/704629/a-short-diatribe-on-salary

Remarkable Win Totals

In major league history there have been 6 occasions when a pitcher started 15 or more games and won at least as many games as they had started. Quite a remarkable feat.

Player -------------- Year -- GS -- Wins

Walter Johnson ------ 1913 --- 36 --- 36

Chief Bender --------- 1913 --- 21 --- 21

Lefty Grove ---------- 1931 --- 30 --- 31

Sal Maglie ------------ 1950 --- 16 --- 18

Bob Grim ------------ 1954 --- 20 --- 20

Tom Gordon --------- 1989 --- 16 --- 17

The three who made more than 20 starts are among the greatest pitchers of all-time. Walter Johnson's 1913 season and Lefty Grove's 1931 season rank among the 20 greatest single seasons in major league history.

Historic Rewind: 40/40 Seasons

40/40 seasons are fairly well documented. The first 40/40 season was accomplished by Jose Canseco in 1988, Barry Bonds followed in 1996, Alex Rodriguez in 1998, and Alfonso Soriano in 2006. Following is a comparison of each of these seasons, and a list of those who just missed the feat.

Canseco: 42 HR, 40 SB, 120 R, 187 H, 34 2B, 0 3B, 124 RBI, 78 BB, .307/.391/.569, MVP, AL Ch

Bonds: 42 HR, 40 SB, 122 R, 159 H, 27 2B, 3 3B, 129 RBI, 151 BB, .308/.461/.615

Rodriguez: 42 HR, 46 SB, 123 R, 213 H, 35 2B, 5 3B, 124 RBI, 45 BB, .310/.360/.560

Soriano: 46 HR, 41 SB, 119 R, 179 H, 41 2B, 2 3B, 95 RBI, 67 BB, .277/.351/.560

Here are some near misses that still rank among the most extraordinary seasons of all-time:

Bobby Bonds (1973): 39 HR, 43 SB, 131 R, 182 H, 34 2B, 4 3B, 96 RBI, 87 BB, .283/.370/.530

Alfonso Soriano (2002): 39 HR, 41 SB, 128 R, 209 H, 51 2B, 2 3B, 102 RBI, 23 BB, .300/.332/.547

Vladimir Guerrero (2002): 39 HR, 40 SB, 106 R, 206 H, 37 2B, 2 3B, 111 RBI, 84 BB, .336/.417/.593

Carlos Beltran (2004): 38 HR, 42 SB, 121 R, 160 H, 36 2B, 9 3B, 104 RBI, 92 BB, .267/.367/.548

As you can see, these four near misses rank among the elite individual seasons of all-time as well. Remarkably, among the eight seasons listed, only Jose Canseco garnered an MVP award. Barry Bonds season stands out as the greatest all-around feat with a breath-taking 1.076 OPS. Both of Soriano's seasons include remarkable amounts of doubles along with the home run counts, picking up 41 doubles in his 40/40 season and 51 (!) doubles in his near miss. Some oddities among these seasons include Rodriguez and Soriano's low walk totals. In 1998 A-Rod only walked 45 times, and in 2002, in his near miss season, Soriano walked a meager 23 times.

In the three playoff appearances among these seasons, Jose Canseco performed extremely well in the ALCS, but struggled in the Fall Classic. Canseco put up 3 homers in 4 games against the Red Sox, batting .313/.353/.938 with 1 steal in 2 attempts. In the World Series he hit only 1 home run, completed his only steal attempt and batted .053/.182/.211. Alfonso Soriano in his near miss season, didn't have many playoff games to utilize his skills. He hit 1 home run and converted his only steal attempt in 4 games against the Angels, while batting .118/.211/.353. Carlos Beltran had an extra round of playoffs to work with and took full advantage. Beltran hit 4 homers in 5 games against the Braves, converted both of his steal attempts, and batted .455/.500/1.091. In the NLCS, Beltran's bat was still hot. He hit 4 home runs in 7 games against the Cardinals, converted all 4 of his steal attempts, and batted .417/.563/.958.

Historic Rewind: The Bambino, Double X, and Hack

Through the steroids' era and the modern era of band boxes, many of the all-time great statistical seasons have fallen, dwarfed by cartoonish numbers. But a few of the truly outstanding historic seasons still stand out as unattainable, even by steroids' era measurements.

Only three players in the history of baseball have reached 100+ runs scored, 200+ hits, 50+ HRs, and 100+ BBs. The first to accomplish the feat was Babe Ruth in 1921 with 177 runs, 204 hits, 59 homers, and 145 walks. Quite possibly the greatest offensive season in the history of the game. The others to accomplish the feat were Hack Wilson in his record breaking 1930 season and Jimmie Foxx in 1932. Wilson accumulated 146 runs, 208 hits, 56 home runs, and 105 walks. Foxx put up 151 runs, 213 hits, 58 homers, and 116 bases on balls.
While those of the steroids' era tracked down many of the great records, these seasons still stand alone as unique and astounding feats.