All teams use some way to measure value. We here out in the public can use whats available at sites like BB-REF or FG , or BP, or use whatever stats and metrics we like to evaluate performance if we are so inclined.
Each team does it their own way, and for the most part, probably have in house metrics they use to assess value. It wasn't so long ago that most teams didn't have an analytics department, but might only have one guy doing this kind of work. Now almost every team has a department that handles this, and many if not most have developed in house metrics. We don't know what they are, (unless you are a good hacker) but they exist.
Below is an example of how two pitchers might be evaluated for potential contracts. This is rough and dirty, but gives you an idea of how teams may approach this and why some seemingly ridiculous contacts get handed out.
Here is what a contract might look like for our mythical player, lets say Zordan Jimmerman. Ages 30-35
<pre>
| Item | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | Ttl | Item |
| WAR | 3.5 | 3 | 2.5 | 2 | 1.5 | 1 | 13.5 | WAR |
| $ WAR | 8.0 | 8.6 | 9.2 | 9.8 | 10.5 | 11.2 | $ WAR | |
| Value | 28.0 | 25.7 | 22.9 | 19.6 | 15.7 | 11.2 | 123.1 | Value |
| Salary | 18 | 19 | 20 | 21 | 22 | 23 | 123.0 | Salary |
| Ovr/Und | 10.0 | 6.7 | 2.9 | -1.4 | -6.3 | -11.8 | 0.1 | Ovr/Und |
</pre>
What you see above is the following:
WAR: Simply a projection of value over the next 6 years. As the player ages, it decreases. Like I said above, it might not be WAR, but it has to be something. Whatever the team is using to affix performance levels to a pitcher
$WAR : This represents the estimated market value of that level of performance. It of course inflates. In this case I used 7%
Value: That is the value created, WAR x $ WAR
Salary: This is of course arbitrary estimate of what kind of salary would be required to make sense for such a pitcher
Ovr/Und: Self explanatory.
In this example, you have a pitcher projected to accumulate 13.5 WAR costing 123M over 6 years
Here is another example....say "Mr Price is Wrong" Ages 30-37
<pre>
| Item | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | Ttl | Item |
| WAR | 5 | 4.5 | 4 | 3.5 | 3 | 2 | 1 | 23.0 | WAR |
| $ WAR | 8.0 | 8.6 | 9.2 | 9.8 | 10.5 | 11.2 | 12.0 | $ WAR | |
| Value | 40.0 | 38.5 | 36.6 | 34.3 | 31.5 | 22.4 | 12.0 | 203.4 | Value |
| Salary | 28 | 29 | 30 | 31 | 32 | 33 | 34 | 217.0 | Salary |
| Ovr/Und | 12.0 | 9.5 | 6.6 | 3.3 | -0.5 | -10.6 | -22.0 | -13.6 | Ovr/Und |
</pre>
Here you have a guy that is starting out from a significantly higher level, but the contract is longer, and as it escalates, the last couple of years become a large negative drag as ultimately the performance would decrease as he ages. The team would end up negative, but perhaps not so much as to be a deterrent. Flags fly forever, right ?
