23 October 2014

On Nick Markakis and Why the Orioles Should Pick Up His Option

The World Series is still being played, but teams have started to put their offseason plans in motion.  In fact, just earlier this week, the Philadelphia Phillies decided to jump the market and aggressively sign Jerome Williams (cue the “final piece of a championship team” joke).  The Orioles are no different.  They didn’t even wait for their season to end before signing J.J. Hardy to a contract extension, and that’s just the first item on the team’s offseason “to-do list.” They have a number of decisions to make regarding arbitration cases, free agents, potential free agents in 2016, and contract options.  One of the contract options deals with long-time right fielder Nick Markakis.
Nick Markakis (photo via Keith Allison)

Following Baltimore’s ALCS loss to the Kansas City Royals, Markakis finished the guaranteed portion of the six-year, $66 million contract he signed prior to the 2009 season.  The Orioles hold a club option on him for $17.5 million in 2015, or they can buy him out for $2 million*.  If the Orioles decide to decline the option, they’ll need to determine whether to give him a qualifying offer.  Because of the buyout (Markakis gets that $2 million regardless of what the team decides), Baltimore essentially has to determine if they are willing to pay Markakis $15.5 million next year.  Coincidentally, the value of the qualifying offer in 2015 is $15.3 million.

*Technically it’s a mutual option.  According to Cot’s Contracts, Markakis has the opportunity to void the club option and forfeit his buyout.

Recently, the popular opinion regarding the Markakis option is that the team will decline it.  It’s been reported by Jon Heyman of CBS Sports and Roch Kubatko of MASN.  If that’s the case, whether the team decides to give Markakis a qualifying offer remains less certain.  A qualifying offer makes sense, as it gives Baltimore a draft pick should Markakis sign elsewhere.  However, I’m not sure that’s the route they’d want to take considering his standing within the organization.  So while the Internet thinks that Markakis’ option is likely to be declined, I believe that the Orioles should exercise it.

When deciding whether or not to pick up his option, the Orioles must estimate what kind of production they expect from Markakis in 2015, and if that production will be worth $15.5 million.  Jon wrote about this back in June and presented what he believed to be acceptable contract scenarios for different versions of Markakis going forward.  Deciding which version of Markakis you get as Jon explains, isn’t an easy task considering the peaks and valleys he’s experienced during his career.  For example, offensively Markakis’ has ranged from 138 wRC+ to 88 wRC+, while defensively (according to UZR/150), he’s been as high as 11.0 and as low as -13.2.  However, it’s important to remember that both his best offensive and defensive performance occurred in 2008 and he hasn’t been more than a 2.5 win player (according to Fangraphs) in any year since then.

Looking back at 2014, Markakis graded out as a 2.5 win player according to Fangraphs and a 2.1 win player according to Baseball-Reference.  Based on the relative agreement between those two statistics, I think it’s safe to say that Markakis was worth anywhere between 2 and 2.5 wins.  Considering major league teams paid roughly $6 million per win during the offseason, and the fact that Markakis earned $15 million, he was paid almost exactly what he was “worth” in 2014.  Given that the cost of a win generally increases by 5% a year, we can estimate that a win will cost about $6.3 million in 2015 (though it could be higher).  Another 2-2.5 win season puts Markakis’ value on the free agent market in the $12.6 - $15.75 range, with his $15.5 million option (less the buyout) sitting comfortably on the high end of the range.

While I don’t think Markakis is going to be worth that much money in 2015 (nor should the team necessarily pay him that much), the Orioles don’t have much of a choice to not retain Markakis.  Not only will Nelson Cruz and Delmon Young be free agents as well, but Baltimore doesn’t have any outfielders in the minor league system that will be ready to replace Markakis should he leave (please don’t suggest Henry Urrutia or Dariel Alvarez).  If all three outfielders sign somewhere else, Baltimore’s looking at a 2015 starting outfield of Adam Jones, David Lough, and Alejandro De Aza (if he’s even tendered a contract), provided they don’t sign any free agents.

And that’s the other problem.  The list of available outfield free agents is…how do I put this…not very inspiring.  Here they are (not all of them, just “the best”):

Out of the potential free agent outfielders (as of right now), there appear to be two potential upgrades in Baltimore’s own Nelson Cruz and Toronto’s Melky Cabrera.  Baltimore will not only be competing with other teams for these player’s services, but they may not be willing to spend what Cruz and Cabrera will command on the open market (nor should they).  Additionally, several other teams have been rumored to have interest in Markakis, so it’s not a given he’d resign with Baltimore after testing the free agent waters, which could leave Baltimore with a depleted outfield and not many options to improve it.

While Nick Markakis certainly has his flaws (such as the potential need for a platoon partner), he’s a decent player whose team option (if exercised) would pay him slightly more than he’ll likely be worth in 2015.  However, considering the lack of upgrades both inside and outside the organization, the Orioles would be wise to pick up the option, if for nothing else than to prevent themselves from ending up without a viable right field option at the end of the offseason, especially with the expected return of Matt Wieters, Manny Machado, and Chris Davis in 2015.  However, if the Orioles are working with Markakis this offseason to sign a reasonable extension (maybe two-three years, for $20-36 million), then this all becomes moot.


Matt Perez said...

That's a bold post. Why do you feel that Steve Pearce won't play in the outfield? At the moment I would think that our outfield is Pearce in left, Jones in center and De Aza in right with Lough as the backup.

Anonymous said...

I think you're making a mistake by discounting Dariel Alvarez so quickly. In an interview at the end of the season, one of the minor league managers, possibly Ron Johnson, said that Alvarez might have the best arm in the Orioles organization. Wow. Better than Jones, Markakis, Cruz, etc. He played o.k center field defense in the minors, but much better corner outfield defense. I think that was a huge issue with Urrutia but not with Alvarez. Secondly, in this interview the Orioles official expressed that Dariel Alvarez could be a .285 - .300 hitter at the major league level with 15-25 home runs. I think it is erroneous to write him off so quickly, especially since Markakis is hardly a top-tier player (I really wish I could find the interview on Steve or Rochs blog that Im drawing from but youll have to trust me, I promise Im not making this up)

Unknown said...

that was a brain fart, so thanks for pointing that out. I should have included Pearce as a starting outfield option if everyone leaves.

I don't think it changes my position though, since if everyone does leave, they'll need a DH as well, which could be filled from within by Pearce/Davis/etc. Pearce had a GREAT season, but I'm not expecting a repeat. Defensive metrics like Pearce in LF in a small sample and I'm not sure De Aza's arm is a good fit in RF (although he hasn't played there much in his career).

Bottom line is I think Markakis' option is a lot of money for him. But for 1 year, I'd take the chance on him.

Anonymous said...

http://www.masnsports.com/steve-melewski/2014/08/jeff-manto-talks-about-christian-walker-and-dariel-alvarez.html Here is is, Jeff Manto the hitting coordinator actually. "You don't know what you are going to get with this, (and) I mean that in a positive way. He could hit .320 and hit you 15 or hit .280 and get you 35. I just don't know. He has some pop, I'm telling you."

Unknown said...

Matt - previous comment was for you.

Anon - I'm not completely writing Alvarez off, I just don't think he'll be anything more than a backup because of his issues controlling the strikezone. He'll play next year at 26 years old, and had walk rates in AA/AAA of 3.4% and 4.4%, respectively. The Orioles already have several players that depend on batting average to get on base and you don't want too many of that type of player in your lineup.

Anonymous said...

Fair enough, but let me pose a different question. By picking up his option I see that as the Orioles basically closing the door on Cruz. Wouldnt you rather have Cruz than Markakis? I think we could sign Cruz for 3yrs 42 million with an option. With the ridiculous line-up protection that the Orioles could offer next years (Jones, Cruz, Davis would probably the premier power combination in baseball, 208 Home Runs between the 3 over the last 2 seasons, that is an average of about 35 a year) Cruz would be tougher to pitch to and as a result either get more pitches to hit (depending on who was hottest) or more walks which could fill the obp void with the loss of Markakis. Im kind of just digressing at this point, but basically wouldnt you rather have Cruz? I think many of us are getting lost in Markakis nostalgia and cheery feelings

Matt Kremnitzer said...

Apparently Cruz is seeking five years, or at least four. I'm not sure why he'd settle for a three-year deal at this point. Perhaps Markakis would be more interested in that type of deal to stay in Baltimore, but perhaps not. But Cruz is probably positioned for the larger payday.

It will be a bonus if Dariel Alvarez becomes even a fourth outfielder. Expecting him to be anything more than that seems like a mistake. At the very least, the O's shouldn't be counting on him for anything in 2015.

I think Pearce should absolutely be included as an outfield option; if they bring Davis back, which they should, Pearce can split time between DH, corner outfield, and first base.

Matt Perez said...

It's possible Cruz would be willing to accept three years guaranteed with a player option for the fourth year. Seems like a reasonable compromise between four and five years. If he does well after three years then he opts out and gets two or three years afterwords.

But I think you're looking at 4 and 60 to sign him. And I'm not sure that a Cruz, Jones, Pearce outfield will be successful. You can't put Cruz in right field, can you?

Matt Kremnitzer said...

You could, but it's probably not wise. Cruz as the full-time left or right fielder would be a bad idea. The defensive metrics have not always been high on Jones, and Cruz likely can't play right field any better than Markakis -- and the metrics have been up and down on him throughout his career as well.

Cruz is the better hitter, but he's also three years older and is the more likely player to miss time because of injury. It's a tough call.

Anonymous said...
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Erik said...

It seems to me that the Orioles should reach multi-year closure this year. The best way to do that is to turn down the option, and give Markakis a qualifying offer.

That way, they are paying two million to find out whether Markakis will negotiate a reasonable 3-year extension. Exercising the option kicks the can down the road a year on an ageing player. If a reasonable extension cannot be reached, the Orioles can hope for a first round draft pick.

Otherwise, they are faced with the same scenario next year after having already spent 15 million dollars. Yes, they may have to move on in the outfield, but they may have to do so next year anyway. There is no point in stretching out the decision point.

Anonymous said...

So Markakis makes more than Jones, all the pitchers...I'd caution this.
Sign him to a 4 year 50m contract with bonuses.

Anonymous said...

I have just as much confidence in David Lough being a 2 win player in full time play next year as I do Nick Markakis. He costs 550k.

Anonymous said...

No thanks. I have as much confidence in David Lough to be a 2 win player next year as I do Markakis. He costs 550k.