Red Sox probably overpaid for Lackey

With the free-agent market wrapping up for the winter -- pitcher Joel Pineiro has agreed to a two-year, $16 million contract with the Los Angeles Angels -- it's worth revisiting the contract the Red Sox bestowed upon John Lackey in December.

The Red Sox will pay Lackey $82.5 million over the next five seasons, including a team-high $18 million in 2010. They'll pay Lackey more per season than the Angels will pay Piniero for the entire two years of his contract. They probably overpaid.

General manager Theo Epstein cited A.J. Burnett's contract with the New York Yankees in justifying the length of the commitment he made to the former ace of the Los Angeles Angels. He wasn't pressed, however, on exactly why he felt obligated to bid $16.5 million per year even for a pitcher the caliber of Lackey.

Especially in this economic climate -- Johnny Damon, for example, still is waiting for someone to offer him more than $2 or $3 million a year -- it appears Epstein overvalued the pitcher and probably spent money he didn't have to spend.

How can we tell? Consider the other pitchers who have signed multiyear deals this winter:

* Jason Marquis signed a two-year, $15 million contract with Washington, an average annual value of $7.5 million per season. Marquis was worth 3.8 wins above replacement (WAR) last season and 1.8 the season before that, an average of 2.8. The Nationals, looking at it that way, spent $2.68 million per win.
* Piniero has signed a contract worth $8 million per season. Piniero was worth 4.8 wins above replacement (WAR) last season and 0.9 the season before that, an average of 2.85. The Mets, looking at it that way, would spend $2.81 million per win.
* Randy Wolf signed a three-year, $29.75 million contract with Milwaukee, an average annual value of close to $10 million per season. Wolf was worth 3.0 wins above replacement (WAR) last season and 2.5 the season before that, an average of 2.75. The Brewers, looking at it that way, spent $3.64 million per win.

(If you need a refresher on WAR -- the calculated worth of a player, measured in wins added in the standings as compared to an off-the-street replacement -- click here or here.)

Lackey will earn an average of $16.5 million over the five years of his contract. He was worth 3.9 wins above replacement (WAR) last season and 2.0 the season before that.

The Red Sox therefore spent $5.59 million per win -- or slightly less than the Nationals and Brewers spent for Marquis and Wolf combined. If you look only at his 3.9 WAR season of a year ago, the Red Sox still spent $4.23 million per win, well above what the Nationals and Brewers spent.

(Side note: The idea for every team is to pay for future performance, not past performance. Free agency, however, tends to reward past performance at least as much as future performance, and that's why two previous years' worth of WAR numbers are at least as valuable to this exercise as what teams did get or will get out of their free agents. Particularly for veterans like Lackey, the immediate past can be as predictive as anything else available.)

If Lackey is going to be worth $16.5 million a season, he's probably going to need to post a WAR closer to 5.0 or 6.0 -- an accomplishment of which he's more than capable, with his outstanding 2007 season as the most recent evidence -- than 3.9. The market this winter bears that out. The market last winter bears that out, too.

Consider the six pitchers who signed free-agent contracts a winter ago, another winter in wich the market tended to be depressed:

* Jamie Moyer, Philadelphia: $3.02 million per win
* CC Sabathia, New York Yankees: $3.15 million per win
(Don't be shocked: Sabathia had been a seven-win improvement over the average pitcher, and that made his $23 million salary just about right. Even in his first season in New York, Sabathia was a six-win improvement over a replacement pitcher, meaning the Yankees still paid less than $4 million per win.)
* Derek Lowe, Atlanta: $3.66 million per win
* A.J. Burnett, New York Yankees: $4.07 million per win
* Ryan Dempster, Chicago: $4.81 million per win
* Oliver Perez, New York Mets: $6.86 million per win

Only one of those contracts makes Lackey look like a bargain -- and that contract looked like a bad idea even before it was signed.

Even J.D. Drew's much-discussed $70 million contract looks far more reasonable than that of Lackey when viewed through the prism of his production. Drew posted a WAR of 4.3 in his final season in Los Angeles and a WAR of 2.9 the season before that, an average of 3.6. His $14 million average annual salary results in a dollars-per-win of $3.89 million -- still well below what the Red Sox spent for Lackey.

FanGraphs.com, based on an extensive study, has posited that each win-above-replacement was worth $4.5 million on last year's free-agent market -- but those numbers seem a little bit high when you consider that FanGraphs had Drew being worth $21.1 million last season and Jon Lester being worth $28.1 million.

It's probably more reasonable to assume, based on the precedent set last offseason, that teams value wins above replacement at somewhere between $3.5 and $4 million apiece.

Lackey is capable of posting a WAR of 5.0, the type of WAR that would make his $16.5 million annual salary worthwhile. He is, however, 31 years old, and he hasn't posted a WAR of even 4.0 in either of the last two seasons.

Epstein, for his part, can afford to overspend for players. His budget dwarfs that of most of the teams in the major leagues. But when a luxury-tax hit of $2 million becomes so much of an issue that the Red Sox tradedaway a 26-year-old first baseman with an elite defensive glove, it shows that the resources aren't endless.

Unless Lackey pitches like a Cy Young Award candidate throughout the length of his contract, Epstein and the Red Sox probably overpaid.