Indians Sign Joe Smith: A Bargain Deal for a Solid Arm

Tuesday was an extremely busy day for the Indians’ front office. With the deadline for players and teams to submit arbitration figures at noon EST, agents and executives across the league scrambled to reach agreements before the actual arbitration process started.

Of the five players the Indians re-signed Tuesday, Joe Smith might have the lowest profile—great as he was out of the bullpen this year, the 27-year-old right-hander is a relief pitcher, and not one who sees much action in high-leverage situations. But if for no other reason, that the two sides have agreed to a one-year, $1.75 million deal is noteworthy because it’s a huge bargain.

Smith was one of the best relievers in one of the best bullpens in baseball last year, posting a fantastic 2.01 ERA in 71 appearances for the Tribe. Also noteworthy were his 2.1 K/BB ratio and sterling 1.09 WHIP. He may have gotten a little bit lucky—he had a .258 BABIP and a 2 percent HR/FB rate, and his xFIP was 3.57—but he’s beaten his peripherals at least a little bit five years in a row, so perhaps DIPS numbers are not the best way to judge him.

Nor was this year a fluke; 2011 was by far the best season of Smith’s career, but he’s been a good pitcher for some time. He’s got a career ERA of 3.15—good for a 132 ERA+—and even in his worst season his ERA peaked at a still-solid 3.83. And of the more than 300 players to have thrown over 240 innings over the last five years, Smith’s 59-percent groundball rate ranks ninth.

Smith’s $1.75 million 2012 salary might seem like a lot compared to the mere $870,000 he took home last year, but it’s still a good deal for a pitcher of his caliber. As a rule of thumb, second-year arbitration players (like Smith) are supposed to earn about 60 percent of what they’d get on the open market. Thus, Smith’s implied worth as a free agent is $2.9 million.

With a true value of less than $3 million, the Indians are paying Smith as if he’s worth about half a win above replacement (assuming a conversion rate of $5 million per WAR). That seems like a short sell considering FanGraphs had him at 1.2 WAR in 2011—and that’s based on FIP, which given his history of outperforming his peripherals probably underestimates his talent.

Baseball-Reference put him at 2.1 WAR last year; a similar performance in 2012 would provide the Indians with about $11 million worth of production, or more than six times his just-agreed-upon salary. Talk about a solid return on investment.

I’m not saying Smith will repeat his 2011 season. The difference between his ERA and DIPS numbers was even greater than usual, suggesting that some fortuitous luck was in play, and no mortal can be expected to sustain a HR/FB rate of 2 percent. But even given the inherent volatility of bullpen arms, it’s quite reasonable to assume that he’ll be a quality pitcher again in 2012, and if he’s half the pitcher he was in 2011 he’ll still be a bargain.

Smith isn’t the kind of impact player who could lift the Indians into first place next year, and his contract isn’t as outrageously team-friendly as, say, Evan Longoria‘s or Matt Moore‘s. But $1.75 million is definitely a very good price for a pitcher like Smith.

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