Thursday, July 21, 2011

Donovan Moore: What is Jeremy Guthrie’s True Trade Value?

Thanks to Donovan Moore for another guest post!

With the trade deadline coming in just a matter of weeks, talks between potential trade partners will almost certainly heat up quite soon. The Orioles have already pulled the trigger on one small deal. With Hardy newly locked up through 2014, and Luke Scott fatally wounded, it would seem as though the Orioles’ only viable trade chips for 2011 are pitchers. Personally, I am a fan of having a fire sale that would have every Oriole that wouldn’t be a part of the next winning team up on the block. The problem with that however is that the MacPhail regime seemingly isn’t ready to go into full rebuilding mode. Andy’s contract expires at the end of the 2011 season, and it doesn’t bode well for his chances of contract renewal if he admits defeat right at the end of his first tenure.

The Orioles are not having a fire sale in 2011. The Orioles will very likely just make a few low risk/low reward swaps such as the one where they parted with dear old Nick Green (who?) for some guy who throws baseballs with his left hand. With that being said however, let’s take a look at just exactly how much the Orioles should be asking in return if they were to wise up and deal Jeremy Guthrie.

Unless Jeremy Guthrie suddenly turns into a 3-4 WAR pitcher (career average of ~2.2 WAR/year), he will never be more valuable than he is right now. He was more valuable yesterday than he is today, and even more so the day before that—but his arbitration years are almost over. Using a trade value calculator put together by Sky Kalkman of Beyond the Box Score, I have effectively estimated exactly how much value Guthrie has as of today.

The 2011 numbers have obviously been halved, seeing that the 2011 season is roughly halfway through. I estimated that Guthrie will post 1.2 WAR in the second half—because he posted 1.2 WAR in the first half. I used a going rate of $4.8M/WAR for 2011, and given the figures, estimated that Guthrie will have an excess value of ~$2.9M for the remainder of 2011. 2012 is Guthrie’s last arb year, meaning that he should command a raise to roughly 80% of his WAR value. For 2012, I used a going rate of $5.0M/WAR, and used Guthrie’s career WAR average (2.2) to estimate a 2012 salary of $8.8M. Given the going rate of $5.0M/WAR, in 2012 I have estimated that Guthrie will generate ~$2.2M of excess value. Add in the fact that I have estimated that Guthrie will be a Type B free agent (+$2.5M in draft compensation value), and his grand total of excess value through 2012 is ~$7.6M.

Notice the number of times I used the word “estimate” in the preceding paragraph. Without owning a crystal ball, it is not possible to know with any sort of certainty what Guthrie’s true value will be through the 2012 season, but $7.6M is very likely a fairly accurate estimation.

So… what type(s) of prospect(s) would come back in a trade where the excess value on one side is $7.6M? With much thanks to Victor Wang’s extensive research on prospect values it is possible to put a dollar amount on the worth of different types of prospects:

Obviously the only way to truly know the value of a prospect is to see whether he pans out or not…but that defeats the whole purpose of obtaining a player while he is still a prospect. The hope is that you have bought cheap and that you will be rewarded handsomely when the prospect pans out—but not every prospect does, and for that reason, Wang’s research has incorporated the possibility of any given type of prospect busting. The dollar amount put to any given type of prospect is an average of future values of all of the prospects in that category.

So in order to break even any potential trade for Guthrie, the Orioles would need to get back a Grade B hitter ($5.5M) + a Grade C pitcher 22 or younger ($2.1M). Given MacPhail’s affinity for pitching prospects, maybe he would look to get back a Grade B pitcher ($7.3M) + a Grade C hitter 23 or older ($0.5). These would be instances where the Orioles set themselves up to break even on a deal for Guthrie—but if offered anything more than these examples, they should definitely jump right on it.


Matt P said...

Two questions.

Why are you presuming Guts will receive a raise to 8.8 million(basing his contract value on his fWAR value) considering that Guts has always been underpaid?

He is currently making 5.75 million despite the fact that based on fWAR he should be making 6.6(11*.6) million.

In 2010, he made 3 million despite the fact that based on fWAR he should have made 4.4 (11*.4) million.

Don't forget that in 2010, he had a bounceback year. In 2011, if he remains an Oriole, he could lose twenty games. If he loses twenty, it will be hard to see him getting a huge raise for the 2012 season.

Seems to me that it would make more sense to estimate his contract value based on his current contract. Doing this would place his value at roughly 7.5 million.

This would give him an excess value of 8.8 million.

I'm also wondering why you ignored that while Guts only averages 2.2 fWAR, he averages roughly 3.5 brWAR per year? Considering that Guts always puts up a low BABIP, I would think brWAR does a better job of assessing his performance.

If you use brWAR to determine Guts value, then he has excess value of 15 million or so.

Seems to me that 7.5 million is the low end of an accurate estimation.

Donovan said...

In estimating the excess value of any player, it's always better to estimate on the low side of things. I thought I was doing this, until I saw Dan at Camden Crazies speculate that it was hard to see a scenario where Guthrie even ends up generating more than $2M in excess value.

Yes, it is possible that Guthrie ends up generating closer to $15M, but that is also very likely towards the limit of what he could generate.

If one were to estimate every player's excess value at the very height of what is possible, then collectively it would very likely be a vast over-estimation. Estimating somewhere in the middle is the safer route, where over time one is far more likely to be accurate given the fact that some players will underperform, and some will overperform.