Talking Contracts: Miguel Olivo

Though the same won't be true later today, we currently do not know whether or not the Rockies will pick up their club option for Miguel Olivo's services in 2011. The multi-talented Olivo hit .269/.315/.449 in 427 PA's and, according to Total Zone, played acceptable defense for the Rockies in 2010, making him more than worth the $2 million salary he received. Though the club option only calls for a $2.5 million salary, the Rockies may elect to buy it out for $500,00 and make Olivo available to the most attractive bidder on the free agent market.

Should they?

Regardless of their ultimate decision on Olivo's option, it's unlikely Olivo returns to the Rockies in 2011. With Chris Iannetta under contract through the 2012 season the Rockies have already committed to a better and younger right-handed hitting catcher, making Olivo's presence redundant and inefficient. It's hard to argue with the decision to commit to Chris Iannetta as the starting catcher, and giving another right-handed catcher $2.5 million to make 35 starts is a rather un-savvy allocation of resources. It isn't hard to see why the Rockies have no intention of bringing Miguel Olivo back.

This doesn't make the decision to decline the club option automatic. Whether a club has use for it or not, an asset is an asset and should be treated as such. Throwing away assets that other clubs could use before the maximum amount of value is extrapolated is always a mistake. Therefore, the appropriate question is, "how much trade value will Miguel Olivo have if he's under contract for 1 year and $2.5 million?"

Olivo was something like a 3-win player in 2010, but he's unlikely to repeat that type of performance in the future. In his career he's mostly hovered around the 1.2-win mark. Last offseason, both CHONE and the fans pegged him as a 1-win player. This time around, that's likely to increase, and using a 2/3 2010's projections and 1/3 2010 performance rubric we get a rough 2011 projection of 1.7 wins. What kind of trade value does a 1.7-win player making $2.5 million have?

A good bit. The Rockies could conceivably receive a $4.9 million asset in return for Olivo under a 1-year, $2.5 million contract. Add in the fact that they'll save $500,000 on his buy-out, picking up the option seems like a great idea. Even though if they don't intend for him to grace the 2011 roster, the Rockies would be better off exercising the option and trading Olivo for an asset than paying $500,000 for him to hit free agency.

Perhaps if the Rockies know something we do not (maybe Miguel Olivo has nothing left to contribute to a major league baseball team) they'd be better served to decline the option and avoid being stuck with a pricey and presumably incompetent reserve.  But if the Rockies believe his true talent level is simply below-average rather than sub-replacement level, they'd do well to exercise their option on Olivo. At the very worst, Olivo will be around long enough to entertain them with a few of these: