Note: This article was written before today's trade.
Chase Headley has a mystery offer of $65 million in front of him. Well, mysterious to the baseball world, but hopefully not to Headley himself. Nonetheless, the 30 year-old third baseman has a lot of money coming his way from some team. The question is whether that team should be the New York Yankees.
One way to evaluate a contract is to look at the cost of purchasing a win, given the current market. This method has been popularized by Dave Cameron over at FanGraphs. And depending on how you fine-tune the model, the cost of a win in recent markets has been around $7 million. This year, early into the free agent process, that value has inflated closer to $8-10 million per win, but will likely regress once more lower-level free agents find homes.
So when Yankees fans — who are used to their team extending contracts to superstars such as Giancarlo Stanton — see that Chase Headley could make $65 million over four years, they should consider his market value instead of reacting with shock and dismay. With Steamer projecting Headley at 3.9 wins next season, and assuming decline from a 30+ year-old player of about a half of a win per season over the following three years, he could be worth as much as 12.6 wins above replacement. At $7 million per win, and being conservative in assuming no inflation, that values out to $88.2 million. All of a sudden, $65 million looks like a bargain.
But here is the tricky part: WAR — wins above replacement — measures the value of a player compared to a replacement-level player. It doesn't take into account the actual replacement player that a team would plug into the roster in place of the player in question. The Yankees have options at third base if they don't sign Headley, which is why they can't simply look at the value of Headley's contract in a vacuum of the current free agent market, but should instead consider the value he brings over their own replacement players.
The Yankees have a few options at third base if they don't sign Headley. The Bleacher Creatures would enjoy (tongue-in-cheekly) making roll call to an old favorite, Alex Rodriguez, but that seems unlikely due to his health. The most obvious choice to man the hot corner would be Martin Prado, who is signed through the next two seasons at $11 million per year. Steamer projects the 31 year-old to produce 2.3 wins next season. That's pretty good value for Prado, and only 1.6 wins less than Headley's projection.
Of course, if Headley were resigned, Prado could man second base, which is the preferred spot for him. That means that by losing Headley, it is more about who plays second base, and for New York, the options there are pretty slim. The conversation is no longer about Headley's value compared to Prado's, it is about Headley's value compared to the likes of Robert Refsnyder and Jose Pirela.
As the table above outlines, using Steamer's projections in 2015, and adjusting for 2016, both Refsnyder and Pirela add about the same value, with either choice to play second base probably worth close to 1.5 wins over the next two seasons, while Headley and Prado are worth 7.3 and 4.1 wins, respectively.
In short, by signing Headley and playing Prado at second, the Yankees could expect about 11.4 wins in value between 2015 and 2016. By losing Headley, and playing Prado at the hot corner and one of the kids at second, they can expect about 5.6 wins in value.
The true "wins above replacement" for Headley on the Yankees would be 5.8 wins, which at a cost of $7 million per win, equates into $40.6 million in value, and that is just over the next two seasons. We can use average annual value of $16.25 million on a four-year $65 million contract to conclude that Headley's projected value compared to the Yankees' current alternatives in the first two years of that deal would be greater than his actual pay of $32.5 million. At that point, if age starts to catch up to him, as the aging curve suggests it would, any decline in his production in the back-end of a four-year deal could potentially be offset by the front two years.
These are the Yankees we are talking about, so it is hard to imagine that they would go two seasons with unknowns at second base. The equation changes if we consider the potential for them to add a stronger replacement level player than either Refsynder or Pirela to play second. And then, at that point, the cost of acquiring that improvement would have to be evaluated against the cost of just keeping Headley.
What we are finding is that Chase Headley is a relatively good deal, even at a sticker shocker price of $65 million, both in terms of his current market value when considering the price of a win, and also compared to who the Yankees have to replace him. It seems like New York will let him walk, but that probably isn't wise.
. . .
All statistics courtesy of FanGraphs.