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The value of letting them walk: How the Red Sox have done by letting free agents leave

by: Alex Speier on Thu, 11/24/2011 - 12:41pm

At first glance, it seemed uncertain whether the Red Sox would offer salary arbitration to free agents David Ortiz and Dan Wheeler on Wednesday. After all, the pair represented examples of exactly the types of players who can receive greater rewards through salary arbitration than free agency.

Both have accumulated solid career numbers. Meanwhile, the market for both will be less than robust. Ortiz will be talking only with teams that have an opening for a DH. And, with Ortiz having just turned 36, the number of teams clamoring to offer him a multi-year deal -- even coming off a tremendous 2011 campaign -- will be few.

Wheeler likewise struggled in 2011, enduring significant stints on the sidelines for the first time in his career and experiencing uneven results on the mound. Yet his career performance suggests that he could well be in line for a raise if his 2011 salary is determined by arbitration; at the least, the $2.4 million minimum that he would get through arbitration (he could do no worse than make 20 percent less than the $3 million he made in 2011) likely exceeds the sort of contracts that he might see on the open market.

Yet based on how the Sox approach their own free agents, it came as virtually no surprise that the team offered arbitration to both players. The potential draft picks that both could yield were too significant an opportunity to pass up. The risk of overpaying a player for one year has limited downside for an organization; the impact of the draft picks that the Sox could net if either player leaves the organization is huge.

That, at least, is the precept that has guided the Sox’ decisions to offer arbitration to their own free agents ever since Theo Epstein took over as general manager in 2002. It is an approach that now appears to be continuing under Epstein’s successor, Ben Cherington.

At its heart is a belief by the Red Sox that offering free agents arbitration (and, more often than not -- albeit with some notable exceptions -- letting them walk) is a necessary part of building a team for the long haul.

The most valuable commodity in baseball is not the established All-Star who achieves wealth through his great performance over the years. It is not the free agent star.

While there are noteworthy exceptions, for the most part, once players reach free agency, their peak years are behind them, and so are their cheap seasons. The contracts that they get reward past performance, with diminishing future returns likely (albeit with some remarkable exceptions).

There once was a sense that a team had to trade or re-sign a prospective free agent, or else be left with “only draft picks” in their wake. That logic has been turned on its head in baseball, where those picks -- for the top free agents each year, one as compensation from another team, one from Major League Baseball in a sandwich round -- are now treated as gold, sometimes serving as a guiding force in team decisions about whether to sign a free agent or let him walk.

The Sox have long coveted the compensation picks that they can acquire by letting free agents walk. It has been a factor in the fact that the team has seen a number of its stars walk via free agency, and certainly, it had long been a part of the team’s assessment about how to proceed with closer Jonathan Papelbon.

Indeed, the team is willing to risk what it considers “overpaying” a star in hopes of capturing picks when he departs. For instance, a year ago, some members of the Sox were convinced that Papelbon would receive more through an arbitration offer than they would have had to pay a closer if they had not tendered him a contract (thus putting him on the open market) and dipped into free agency, where a number of game-ending pitchers signed for contracts of roughly $7 million to $8 million per year.

But the Sox tendered Papelbon a contract and paid him $12 million last year, figuring that the value of the draft picks if and when he would walk was too great to simply cut ties to their closer. And so, the team will claim a pair of draft picks for Papelbon in the wake of his four-year, $50 million deal.

An even more dramatic example occurred after the 2008 season, when the Sox offered Type A free agent Jason Varitek arbitration. The Sox would have been on the hook for more than $10 million had Varitek accepted the offer; but the team was willing to roll the dice and risk a massive overpay for the possibility of getting picks. (Varitek declined the arbitration offer and signed a two-year, $8 million deal with the Sox.)

That is why there seemed little question that the Sox would offer arbitration to Type A free agent Ortiz and Type B free agent Wheeler.

With Ortiz, the Sox want him back and the slugger wants to come back. That outcome can only be aided by the Sox’ offer of arbitration.

If Ortiz accepts, then just as was the case in 2011, when the Sox exercised their option on the slugger, he might receive more than the open market would offer (perhaps $13 million to $15 million), but the team’s risk will be minimized thanks to a one-year deal.

If he declines arbitration, however, it will further dampen the market demand for his services, since teams might be reluctant to give up a draft pick for him and sign him to the sort of multi-year deal that it would take to convince Ortiz to leave Boston. That being the case, potential suitors might turn to other alternatives in free agency -- Josh Willingham, Michael Cuddyer, Carlos Beltran -- who do not require the sacrifice of a top draft pick.

And, of course, if he does leave, then the Sox will have two relatively high picks in next year’s draft.

In the case of Wheeler, the Sox declined their $3 million option on the right-hander and, if he accepts arbitration, they risk having him come back for close to or even slightly more than that figure. Even so, if Wheeler accepts, the Sox would have a roster spot for him, and he wouldn’t be a terrible overpay.

More likely, Wheeler will decline the offer of arbitration -- just as he did last winter, when he was a free agent after several years with the Rays. As a Type B free agent, Wheeler would net the Sox one compensation pick in the sandwich round (between the first and second rounds of the draft), but that would not come at the expense of the team that signs him.

In all likelihood, Wheeler and Papelbon will net the Sox three bonus picks in the coming season’s draft. That is the sort of yield that allows the Sox to trade prospects to address more pressing needs -- at least in theory.

But in practice, how does it play out? How does the value of compensation draft picks measure up against the performance of the free agents who left Boston? Here is a year-by-year look at what happened in that regard for the Sox under Epstein.

2010-11

Victor Martinez to the Tigers: +2.9 WAR (1st year of 4-year deal); Netted draft picks: Matt Barnes (No. 19), Henry Owens (No. 36)

Adrian Beltre to the Rangers: +5.7 WAR (1st year of 5-year deal); Netted draft picks: Blake Swihart (No. 26), Jackie Bradley (No. 40)

ANALYSIS: Both Beltre and Martinez were centerpieces on clubs that advanced deep into the postseason in 2011, Martinez serving as a middle-of-the-lineup cohort with Miguel Cabrera on the Tigers and Beltre serving as a game-changing offensive and defensive player for the Rangers. The Sox have high hopes for both Barnes and Owens as potential mid- to front-of-the-rotation pitchers, and on Swihart and Bradley as potentially dynamic up-the-middle contributors.

But time will tell. With those four players having combined to log 10 pro games (all by Bradley), it’s impossible to conclude what the Sox got in return for the departures of a pair of All-Stars. Beltre, in particular, had a spectacular year despite being having his playing time limited by injuries.

It is worth noting, however, that the Tigers have committed to Martinez as a full-time DH going forward. That, in turn, will limit his value over the life of his contract, as his bat was a far greater asset from the catching position (which almost always yields, on average, offensive numbers well below those of any other non-pitching position) than it is as a DH.

2009-10

Billy Wagner to the Braves: +2.2 WAR in one season; Netted draft picks: Kolbrin Vitek (No. 20), Bryce Brentz (No. 36)

ANALYSIS: Wagner was tremendous for the Braves, with a 1.43 ERA and 104 strikeouts in just 69 1/3 innings. It was one of four seasons in big league history in which a pitcher struck out as many as 100 batters while throwing 70 innings or fewer.

The 2010 Sox would have benefited tremendously had they retained Wagner, as their bullpen was a year-long disaster. Still, Wagner wasn’t going to re-sign for a year to set up for Jonathan Papelbon, and even if he had done so, one can make a strong case that the Sox are likely to receive far more value from the combination of Vitek (a first-rounder with impressive bat speed and hand-eye coordination, but whose first full pro year was solid yet something short of outrageous) and Brentz.

Brentz, in particular, took an impressive first professional step in 2011 as a potential middle-of-the-order bat. He is arguably the biggest power-hitting prospect in the Sox system, and he managed to hit 31 homers in just 115 games in 2011. In other words, he projects as the kind of player who could easily be worth at least two wins for several years once he reaches the majors.

Jason Bay to the Mets: +2.2 WAR (1st two years of 4-year deal); Netted draft picks: Anthony Ranaudo (No. 39), Brandon Workman (No. 57)

ANALYSIS: Fascinating subject for the consideration of revisionist historians: Had the Red Sox re-signed Bay to the four-year, $60 million deal to which both sides had agreed before Sox medical concerns torpedoed it, they wouldn’t have signed Carl Crawford. Bay’s career and the shape of the Red Sox might have been altered dramatically.

That said, Bay’s time in New York has been injury-filled and disappointing. The Sox have gotten terrible production in left field, first in 2010 (when injuries to Mike Cameron and Jacoby Ellsbury left the team very short-handed), then again last year (when Carl Crawford struggled mightily in his first Sox season).

Simply from the perspective of Bay in comparison to the comp picks, the value of Ranaudo -- arguably the top pitching prospect in the Sox system given the combination of probability and ceiling -- to the Sox appears likely to eclipse the value of Bay to New York. That said, the Mets had a protected first-round pick that year, so they only had to part with a second-rounder (ultimately, Workman) to sign Bay. Workman most likely projects as a big league reliever, but he is being developed as a starter, and spent all of last year in Single-A Greenville. 

2008-09

None

2007-08

Eric Gagne to the Brewers: -1.1 WAR in one season; Netted draft picks: Bryan Price (No. 45)

ANALYSIS: When the Sox traded for Gagne in the middle of the 2007 season, they expected him to produce a pair of draft picks as a Type A free agent. But he performed so poorly that he dropped to a Type B, meaning the Sox got only one compensation pick.

That became Price, who offered the Sox some value as the third prospect (along with Justin Masterson and Nick Hagadone) in the trade for Victor Martinez at the 2009 trade deadline. Price missed a couple chunks of 2011 due to injury; while he had a solid 2.79 ERA in Akron last year, his strikeout numbers tumbled to the point where one wonders if the 25-year-old will have a meaningful big league career as a reliever.

Still, Price’s limited value as a throw-in exceeded what Gagne did in Milwaukee. He was brutal, with a 5.44 ERA, and between injuries and poor performance, he quickly lost his job as closer.

2006-07

Alex Gonzalez to the Reds: +3.1 WAR in three seasons; Netted draft picks: Nick Hagadone (No. 55)

ANALYSIS: The Sox let Gonzalez go, signed Julio Lugo, and drafted Nick Hagadone with the lost pick. Gonzalez was much better than Lugo in 2007 (+2.8 WAR), but the Sox won the World Series. Despite missing all of the 2008 season, Gonzalez was probably better than Lugo in that season as well, but the Sox enjoyed solid production at shortstop that year from Jed Lowrie and Alex Cora, and Lugo missed all of the second half of that year with a hamstring injury.

Then, in 2009, with Cora gone, Lugo was injured and then terrible and then released. Lowrie and utilityman Nick Green were both injured. And so, the Sox traded light-hitting utility man Kris Negron to reacquire Gonzalez, who helped the Sox reach the playoffs.

So: The Sox won the World Series despite Gonzalez’ departure, had fine production from the position when they came within a game of the World Series in 2008, and had Gonzalez again when they made the playoffs in 2009.

Hagadone -- now a full-time reliever who made his big league debut this year -- had more value to the Sox than either Gonzalez or Negron would have. He and Masterson were the key chips in getting the deal for Victor Martinez done in 2009.

Keith Foulke to Indians: 0.0 WAR; Netted draft picks: Ryan Dent (No. 62)

ANALYSIS: Foulke retired before ever throwing a pitch for the Indians. Though he returned one year later with the A’s, he had no major league value to the team that signed him. To date, however, Dent has yet to translate his toolsy potential into the sort of production to make him a prospect, though his up-the-middle defense, versatility and speed could position him as a big league bench player or at least a valuable organizational depth option who can cover a team in case of injuries at a number of positions.

2005-06

Johnny Damon to the Yankees: +13.2 WAR in four seasons; Netted draft picks: Daniel Bard (No. 28), Kris Johnson (No. 40)

ANALYSIS: Johnson showed glimpses of promise and at one point the Sox were convinced he could be a back-of-the-rotation starter. But his promise never materialized and he was released early this year.

Still, Bard has offered a solid return for the Sox thus far. In parts of three big league seasons, he has a +4.2 WAR – not quite up to par with Damon, but very good for a reliever. Moreover, he remains under Red Sox control for four more years. He is a central part of the Sox’ long range pitching plans, whether as a late-innings setup force, a potential closer or even (though not, apparently, in 2012) a starter.

Bill Mueller to the Dodgers (-0.2 WAR); Netted draft picks: Caleb Clay (No. 44), Aaron Bates (No. 83)

ANALYSIS: Mueller played just 32 games for the Dodgers after signing a two-year, $9.5 million deal with Los Angeles. Yet aside from saving money on his contract and, more importantly, clearing a lineup spot at third base (thus paving the way for Mike Lowell), the Sox have yet to reap much benefit from Mueller’s departure.

Bates never proved able to translate what appeared to be significant raw power to the upper levels of the minors or the majors. He is no longer in the Sox’ system. Clay was moved into the bullpen this year for Double-A Portland. He struggled for the Sea Dogs (1-5, 7.47), but pitched well in the Arizona Fall League (1.26 ERA in 14 1/3 innings). He may reach the big leagues at some point, though if he does so, he does not project as a prospect who could make this a slam-dunk for the Sox.

2004-05

Orlando Cabrera to the Angels: +9.0 WAR in three seasons; Netted draft picks: Jacoby Ellsbury (No. 23), Jed Lowrie (No. 45)

ANALYSIS: The short-lived Edgar Renteria era is treated with considerable derision by Red Sox followers. Yet overlooked in that equation is the fact that the decision to sign Renteria and let Orlando Cabrera walk both improved the Sox’ first-round position and netted the Sox an extra pick.

Put another way: Would you trade three years of Orlando Cabrera (+9.0 WAR) for one year of Renteria (0.4 WAR), six years of Jacoby Ellsbury (+13.6 WAR through his first four-plus years), six years of Jed Lowrie (+3.8 WAR through his first three-plus seasons) and money?

Even without factoring in the Sox’ ability to turn Renteria into Coco Crisp (whose defense was a huge part of the 2007 World Series), Ellsbury alone means that the ledger is a clear net positive for the Sox.

Derek Lowe to the Dodgers; Netted draft picks Craig Hansen (No. 26) and Michael Bowden (No. 47)

ANALYSIS: One of the most negative tradeoffs that the Sox have had when letting a free agent depart for draft picks. Hansen (-2.2 WAR) had a singularly disappointing big league career, though the Sox were able to salvage some value for him by using him as something of a throw-in for Jason Bay. Bowden (0.0 WAR) has spent the last few years being shuttled between Pawtucket and Boston, and though still young (he turned 25 in September), he has yet to make a major league impact for the Sox.

Lowe, meanwhile, was one of the most consistent pitchers in the majors for the Dodgers, turning in four straight years of at least 32 starts, 199 innings and sub-4.00 ERAs. He had a +12.7 WAR over the course of his four-year, $36 million deal with the Dodgers. The Sox spent most of the time that he was in Los Angeles scrambling for starters to round out their rotation -- though, of course, it is worth noting that Lowe’s ERA went from a 2.58 ERA in 2002 to a 4.47 mark in 2003 to a 5.42 ERA in 2004, his final pre-free agent deal.

Pedro Martinez to the Mets (+9.3 WAR in four years with the Mets); Netted draft picks Clay Buchholz (No. 42) and Jon Egan (No. 57)

ANALYSIS: Martinez was great for one year with the Mets (2005), but injuries limited him to just 48 starts in his final three years in New York. He was missed in 2005 by the Sox, but realistically, he wasn’t healthy enough to have been of much help to the team after that. 

Sox officials describe Egan as one of the worst picks they’ve made. They were mesmerized by his potential to become the catcher of the future. Instead, after three pro seasons, he retired.

Buchholz, however, has already tipped this decision to let a free agent walk in favor of the Sox, even with his injury-marred 2011 campaign. He has a +7.8 WAR, and he’s made next to nothing thus far in Boston. He is signed to a long-term deal that runs through 2015 with team options for two more years.

2003-04

None

2002-03

Cliff Floyd to the Mets (+7.6 WAR); Netted draft picks Matt Murton (No. 32) and Abe Alvarez (No. 49)

ANALYSIS: This was the first indication of how the Sox planned to operate with regards to draft pick compensation. The team traded for Floyd in the middle of the 2002 season, at a time when Epstein was Assistant GM, recognizing that the team was likely going to be able to recoup the value of the prospects whom they were giving up (the singularly underwhelming Seung Song and Sun-Woo Kim) by letting Floyd walk and getting two draft picks for him.

Floyd had one healthy season with the Mets; otherwise, he was an oft-injured player who was a fine hitter when on the field, but he was hardly missed by Boston, which signed a few hitters on the cheap that offseason, most notably, David Ortiz.

The returns were somewhat limited on the two draft picks whom the Sox acquired. In retrospect, Alvarez was probably a wasted pick, an excellent college performer with good command but without a single plus pitch. He was hit around in four big league appearances and was out of affiliated baseball by the time the Sox released him in 2008.

Murton’s career got off to a promising start with the Cubs, for whom he looked like an everyday left fielder after making his big league debut in 2005. But after producing a +5.9 WAR from 2005-07 with Chicago, his career stalled out in the majors. However, he went to Japan in 2010 and became a record-setting offensive player, breaking Ichiro’s record for the most hits in a season.

Meanwhile, Murton’s most notable impact with the Sox was as a piece of the four-team trade that resulted in Nomar Garciaparra heading to the Cubs at the 2004 trade deadline, with Cabrera and Doug Mientkiewicz coming back to Boston.