19 March 2014

J.J. Hardy Will Walk and Orioles Should Probably Let Him Go

Hardy with the Call | Photo by Keith Allison
This offseason, Dave Cameron of FanGraphs came up with a very simple tool to project contract years and money for a free agent.  The simple tool was built around one data input: projected WAR.  From there he multiplied that number by 5 MM (the value of a win on the free agent market last year) to determine the annual average value.  He determined the number of years by using a specific multiplier in a batch system.  He explains it here.

The model performs rather well.  Standard deviations for years and annual average value are 1.0 years and 2.8 MM, respectively.  If you only look at the signed players with qualifying offers, then the standard deviations are 0.8 years and 1.5 MM, respectively.  Roughly looking at those figures, it seems that teams losing first round picks tend to view a first round draft pick being worth around 5 MM.  It also appears that yielding a second round pick is dealt as being of generally no consequence.

I decided to plug in a variety of Orioles into the suggested equation, but with one tweak.  I upped the 5 MM per win mark to 6 MM per win mark because I expect salary inflation.  The projected WAR below is from Steamer for 2014 and is reduced by 10% for aging as Cameron did in his own piece.  I also included several players who will not be free agents at the end of the year in order to think about potential extension discussions.  The players are Chris Davis, Matt Wieters, and Bud Norris.  I also included the upper standard deviation limit in case a specific player is one considered to be greatly desired by other organizations.


WAR Years Total (MM) AAV Hi Year Hi Total
Nick Markakis 1.0 1 6 6 2 18
J.J. Hardy 2.8 4 67 17 5 100
Wei-Yin Chen 2.0 3 36 12 4 60
Chris Davis 3.1 6 112 19 7 154
Nelson Cruz 1.0 1 6 6 2 18
Matt Wieters 3.0 6 108 18 7 147
Bud Norris 1.2 1 7 7 2 20

The table above may answer some questions.  For instance, the option on Wei-Yin Chen should be picked up without question.  To acquire a similar pitcher on the open market may cost the team an additional 8 MM a year.  Bud Norris has a slim outside chance to be a non-tender candidate at a projected market value of 7 MM because that actually equates what we would likely expect him to earn through arbitration.  However, if he winds up costing what he is worth, then he should almost certainly be retained.

Matt Wieters may have numbers that you may find surprising.  Those numbers would make Wieters the highest paid catcher in baseball.  That might be surprising because most do not consider him to be the best catcher in the game.  Those near Baltimore still remember the specter of PECOTA's Switch Hitting Jesus and will often find themselves fully engaged in belittling his value.  This very simple model though thinks he is going to challenge some numbers.  An extension would look something like 6 years for 100 million (his first season would be his final arbitration, which would probably peg him for 10 MM).  At that figure he would fall about 300k per year behind McCann.

Davis with a 100+ MM deal is not surprising based on initial leaks from extension talks.  That said, I am at a loss to think of a single contract handed to an elite level 29 year old or older first baseman that has actually worked out.  The first couple years tend to work out fine, but the offense tends to collapse and leaves the team with a poor hitting, poor fielding player on the roster who has to start.  Adrian Gonzalez, Mark Teixeira, Albert Pujols, Prince Fielder, and Ryan Howard are all on current big money deals signed on the back end of their peaks.  None of them look like good deals.  Does a team like the Orioles really need to invest 15-20% of their payroll into something like that?

Both Hardy and Cruz are scheduled to be free agents after this season.  Nick Markakis also stands a decent chance in having his last year bought out by the club for 2 MM.  These are the three real potential qualifying offer free agents.  Off the bat, Nelson Cruz looks like a very poor player to offer a contract.  He may or may not have learned from this past offseason, but he does not appear to be highly valued.  Last season, he showed plus plus power over 100 games with a solid contact rate.  He barely got a sniff and signed a deal well, well below his initial expectation.

Markakis is an interesting case because of how the numbers work out.  If the Orioles pick up his option, he will earn 17.5 MM in 2015.  However, they can buy him out for 2 MM.  The qualifying offer is expected to be a shade over 15.5 MM in 2015, which puts him right where he was.  The projection model thinks though that he is worth a paltry 6 MM.  With that in mind, the Orioles could go through the motions of buying him out and then offering him a deal.  If the team really does not want him and wishes to put that money to other uses, it could be a major bet.  How much does Nick believe he is worth?  That really is what it will boil down to.  It might be smart for the team to engage in extension talks with him simply to see how he and his agent view his value.

How about Hardy?  Would he accept a qualifying offer of 15.5 MM?  Intially, I thought that he would, but that was before Cameron's toy.  I also decided to put together a little thought experiment.  Basically, it is working with the assumption that the player is worth that 16 MM and then applies an aging deficit of 20% each year (a poor case, not worst case scenario).  If the Cameron projections beat this framework, then the player should refuse the qualifying offer.

Years Total (MM)
1 16
2 29
3 39
4 47
5 54
6 59

Now, let's apply it to the players mentioned above.


Years Total (MM) Tipping Point Accept
Nick Markakis 1 6 16 Yes
J.J. Hardy 4 67 47 No
Wei-Yin Chen 3 36 39 Yes
Chris Davis 6 112 59 No
Nelson Cruz 1 6 16 Yes
Matt Wieters 6 108 59 No
Bud Norris 1 7 16 Yes

Based on this (again, very simple) model, it appears that the only players who should refuse the qualifying offer are those who are regarded as first division starters.  Hardy, Davis, and Wieters all tend to fall into that top third for their positions.  Below that mark, the players involved seem likely to make as much or more if they accept the offer.

As it stands, I find it doubtful that Hardy will be an Orioles past this season.  If he continues to perform at a high level, he is bound to be earning himself a massive pay day.  The questions surrounding him from his Brewers and Twins days have largely dissipated.  This contrasts with Stephen Drew who many teams still have questions about his current and future worth.  To me, this means that Hardy is likely to get a nice pay day after the season concludes.  Much of this value is associated with his ability to play shortstop.

This loss probably does not mean much for the Orioles because they likely have a suitable replacement for Hardy.  One who is much cheaper: Manny Machado.  If Hardy truly is valued at 17 MM a year, then this could be a massive windfall for the club.  One where that money could be distributed toward a player or players who are on the better side of 30 and possess a bat more potent than what one finds stellar at shortstop.  This switching position game could result in a bright prospect like Jonathan Schoop proving his worth at either second or third, which also gives the Orioles some flexibility.  At this moment though, the third base market looks very interesting with Chase Headley, Hanley Ramirez, and Pablo Sandoval all without extensions currently.

Perhaps the waiting game will work for the Orioles next off season as it did this year, potentially, with Ubaldo Jimenez and Nelson Cruz.  Of course, the waiting game means that you need enough holes in your roster to be able to take advantage of what position player falls.  In this situation, it would be nice if more interesting second basemen or even a left fielder was available.  It does not appear than any are at the moment.

13 comments:

Bonzi said...

This is interesting analysis, but one thing that needs to be mentioned is that NOBODY has ever accepted the qualifying offer. The jarring results of this off-season could obviously change that, but until there's evidence of that, it seems problematic to project that 4 of 7 potential candidates would accept a QO.

Jon Shepherd said...

Well...isn't that a product of teams knowing which players are likely to accept? If teams were more free in their placement of qualifying offers then you would likely see it accepted more often in the past. I think the most notable acceptance of arbitration was when Kevin Millwood did it.

Anonymous said...

J.J. Hardy is specifically going to be a Yankee. Shortstop with right handed power. Talk about a fit!

Chris Davis and Matt Wieters are not as predictable.

All of this was crystal clear last season, so why haven't we traded them for prospects?

Jon Shepherd said...

I imagine it is because the team thinks it is competitive.

Michael Wallace said...

i definitely agree. id rather they keep machado happy and move him to SS especially since JJ allegedly wants a contract clause to keep him at SS for the duration of the extension. save the money, move manny to short, then sign sandoval or someone for 3rd. then you have more money to maybe get davis back. id say wieters is 2% he comes back davis maybe %15-20

Anonymous said...

Adios, JJ Hardy. Too much money. Move Machado to SS and let Schoop and Flaherty fight it out for 2nd and 3rd. Of course Schoop has to prove his worth this year and Flaherty has to hit this year. If Flaherty can hit 275 he will prove his worth due to his versatility. He can play 7 positions. Hard to put a dollar figure on that.

Maniac

Anonymous said...

you just throw stuff out there and have a vague conception to what's going on

Jon Shepherd said...

That is actually a pretty solid assessment of our whole industry.

That said, I nailed Markakis' deal long while back and have been pretty close on others. It is interesting how well empirical evidence can lead us near the reality of the situation.

Anonymous said...

Machado has more value at 3B and projects better there with his size and durability. So keeping Hardy who has a good 4-5 years of high level play left, is smart both on a team fit and what you'll get from him offensively. Even if it costs a few million extra it's worth it imo.

Jon Shepherd said...

Michael's defense projects better at third but his bat looks much better at short. Coming across the bag from the left is less of a concern for me with his knee. Regarding Hardy...not too many players go into their mid to later 30 providing a high level of play. I am not sure I agree with your assumptions.

Jon Shepherd said...

Autocorrect kills me.

Liam said...

"I imagine it is because the team thinks it is competitive."

Jon, I respect the work you do here a lot but I think over the past couple years you've gone a little too far out of your way not to be a homer. After winning 85 games in 2013 and improving in the off season, the club has every reason to expect to be competitive in 2014. The best team projection systems have standard deviations around 10, so while they're cool to play around with you can't live and die with them.

Implying the team should trade Wieters and/or Davis for prospects because they're not close enough to being competitive, is ridiculous. The team is young and most of the players are approaching, not retreating from their prime. This squad deserves the chance to play for a championship, and after 14 losing seasons the fans deserve a reason to hope, even if the projection systems don't think they have a great change of making the playoffs.

Jon Shepherd said...

I think you read way too much into that sentence.