A letter to free agents

Dear [free agent],

I have been watching your progress this offseason and it’s come to my attention that few high-profile clubs have shown public interest in signing you. Those that showed interest during the winter meetings have since filled [position].

It might be time to try Plan B. I understand that you expected a lucrative, multi-year contract this offseason and it’s a shame that the market for your services did not turn out as expected. However, we may have an unexpected opportunity to help each other.

I’m not going to lie to you. We are not one player away from competing and we will not overpay you to join our sub-par team. What we will do is offer you playing time so long as you perform. We will offer you a market-rate, one-year contract so that you can cash in next offseason. Talk to Marco Scutaro, Edwin Jackson and Jonathan Broxton about that. Most importantly, we almost certainly will trade you to a playoff contender. Again, ask Marco Scutaro what that can do for your fortunes.

Come be the big fish in a small pond. Mentor our young players. Earn a reputation for intangibles. Be the best player on our team. This is an opportunity to improve your legacy.

Think of it another way. The best way for you to cash in next offseason is a strong playoff run. You can try to pick a contender in January and maybe get stuck as a role player for a team that falls apart (whatever happened to the Red Sox last year?). Or you can sign on with us as the main attraction. If you perform, we will trade you to contender in July. You’ll have your opportunity for late-season heroics.

Think it over. Maybe that multi-year offer will happen after all. If it doesn’t, we want to work with you.

Cheers,

The Houston Astros

But why?

The new collective bargaining agreement changes the optimal behavior for terrible clubs looking to improve. And yes, the Astros are a perfect example of a terrible club.

In the past, bad teams generally saved their money to spend in the draft and on international free agents. After all, why sign a three win, 32-year-old when you have a 69-win roster? Nate Silver’s win curve from the original BBtN clearly shows that it’s not responsible to pay the market price for a three-win player when he’s providing wins 70, 71 and 72. The figures simply don’t add up.

But now that spending on the draft and international free agents is capped, how should bad teams allocate their extra money to improve future rosters? The answer is to lure free agents who are dissatisfied with the current offers on the table.

Almost every free agent wants three things—not necessarily in this order.

{exp:list_maker}The largest contract offer possible
To play for a playoff contender
Assurance of consistent playing time {/exp:list_maker}

A bad team like the Houston Astros can never offer the second bullet and should never offer the first. However, they can offer a lot of playing time. And in the right market they can even offer a lot of visibility.

For free agents who should be well paid but missed the boat, the Astros can still offer a valuable one-year contract and the promise of a trade to a playoff contender midseason. The player gets a chance to build value and earn a big contract next offseason. The team gets the ability to trade that player for prospects midseason.

Some anecdotes for consideration.

The Phillies traded half a season of Shane Victorino for a decent pitching prospect (Ethan Martin) and a decent major league reliever (Josh Lindblom).

Adrian Beltre parlayed a one-year, $10 million contract with Boston into a five-year, $80 million deal with the Rangers.

Scutaro wasn’t a free agent last offseason, but he spent half a season with the Rockies before being traded to the Giants. He didn’t play particularly well in Colorado, but he caught fire in San Francisco and turned that into a three-year, $20 million contract.

Edwin Jackson signed a one-year, $11 million contract with the Nationals last offseason and now has a shiny four-year, $52 million deal with the Cubs.

From those anecdotes, we can infer a few things. Half a season of a good but not great player can return valuable, club-controlled talent. Additionally, this arrangement has reaped dividends for several players in recent years. A more statistically rigorous study is worth exploring.

Below are some of the remaining free agents who might pivot from multi-year demands to a one-year contract.

Michael Bourn*
Adam LaRoche*
Kelly Johnson
Kyle Lohse*
Shaun Marcum
Brett Myers
Francisco Rodriguez
Rafael Soriano*
Jose Valverde
Brian Wilson

*Costs a draft pick

Talent deficient clubs like the Astros could also look to take advantage of players tied to draft picks. The Astros would give up a substantially lesser pick to sign Michael Bourn than the Mariners. They might be (A) comfortable paying Bourn more and (B) interested in turning their second-round pick into immediate compensation.

None of these ideas are without risk, but it’s increasingly likely that they will be added to the bag of tricks bad teams can use to desperately claw toward future relevance.

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Comments

  1. rubesandbabes said...

    I don’t count Scott Boras out, yet. He has a great track record, like getting Matt Holliday the big $ when it didn’t seem to be there…

    I have to feel Bourn and Soriano were coached about the Adrian Beltre FA path possibility going in to the offseason.

    But it seems very cumbersome to offer up a draft pick for a 1-year free agent, then do the huge $$ qualifying offer thingy next year, let the guy walk and then (in Houston’s case)take a lower, farther in the future draft pick in return…

    ps. Mike Trout MVP partisans – they don’t love speed like you love speed, apparently.

  2. rubesandbabes said...

    Second comment:

    The other thing about this article is that it suggests that it is okay and possibly efficient for a MLB team to act as a developmental AAAA team, even if only for a hopefully fixed short-term period of years.

    Talking about the Phillies’ return for Victorino does not mitigate the A’s getting Stephen Drew on simple willingness to pay his salary. See Ramirez, Hanley, and then take it down to the Drew level.

  3. rubesandbabes said...

    Yes, the Victorino Return-in-Trade might have been worth more than a high draft pick, but what the A’s gave up for Drew wasn’t. (Until one looks at the $, not the talent.)

    Lots of short term negatives for the top FA guys now. (Don’t worry, they will eventually get millions, each and every one).

  4. hk said...

    Another benefit to the free agent of signing a “pillow contract” with a non-contender and being traded during the season is that the acquiring team will not be allowed to give a qualifying offer to the free agent.  Guys like Bourn, LaRoche, Lohse and Soriano, who may be unsigned right now because teams that finished in the top 20 are unwilling to squander their 1st round pick (and the accompanying slot money) for them, may find more suitors next off-season.  In fact, the Astros could even add a line in the letter (and add a clause to the contract that the player signs) stating that, if for some reason we do not trade you during the season, we promise not to make a qualifying offer to you next off-season.  This would be a risk on the Astros part in that it would force their hand at the trading deadline, but it might make their offer more enticing.

  5. Bob Rittner said...

    I think the same letter could be sent by a contending team with a small budget. Consider the benefits derived by Rafael Soriano, Benoit and now Keppinger after playing one season with the Rays.

    In the case of Soriano, the Rays were willing to take on a rather expensive contract (from their perspective) because it was only for one year. Both the Rays and Soriano benefited.

  6. hk said...

    Bob Rittner,

    I agree with you on those free agents who didn’t receive qualifying offers.  A team like the Phillies, who traded Vance Worley and have Kyle Kendrick and John Lannan slated to be their #4 and #5 starters, could pursue this.  Shawn Marcum, if he’d accept ~$9M / 1 year to push Kendrick into the long reliever / #6 starter role, would be a great fit.  I do not think the Phils should give up their 1st round pick and the slot money for Lohse on a 1 year deal.

  7. Brad Johnson said...

    I do think it is ok for a team to act as a AAAA team, but that’s just my opinion. However, the CBA should not incentivize that behavior if the MLB (or MLBPA) considers it unacceptable.

  8. rubesandbabes said...

    Yes, I don’t have an opinion about teams doing the AAAA thing, but long suffering fans of bad teams won’t like the sound of it.

    All the teams are required to spend at least like $50mil in salaries. A healthy rebuilding team doesn’t need that much $ in salaries, until they start buying up all the Jeremy Guthries, so there is $ there for bad teams to acquire some guys.

    But the AAAA A’s definitely failed playing the Matt Holliday game, surprisingly acquiring a star in the last year of his contract. Never mind that they gave up Carlos Gonzalez, Billy Beane just couldn’t turn Holliday into anything.

    And then the residue is that last year’s A’s FA signings Bartolo Colon and Coco Crisp were considered trade rumor mill fodder from like April 15th on…

  9. Brad Johnson said...

    That’s why I mentioned empirical study is worthwhile. What I suggest is kind of like playing the lottery twice. First, you’re gambling that the player you’ve invested in will have surplus value. Then you turn that surplus value into a prospect(s) with uncertain futures.

    If I did the analysis, I would expect to find that teams pay on average something like $8 million per future win using this strategy. The median/mode would likely be in the the $10+ mil range. The payoff would be every so often when a team nails it and pays less than $2 mil per future win.

  10. John Northey said...

    As a fan I’d prefer my team, when it is going through rebuilding, acts as a AAAA team for awhile. Let the kids develop in the minors and mix in the vets and see if the team can get lucky and do better or at least flip those guys mid-season for more kids so the next good team can be great.  Plus, often those vets can be fun to watch too – I remember enjoying Otis Nixon and the like and miss seeing some of the one-dimensional guys (all power, all speed, all whatever) who might get more of a shot if teams did more AAAA stuff.

    Of course, as a Jays fan we’re past that point now.

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