The Recent History of Free-Agent Pricing
This is Matt Swartz’ second piece as part of his July residency at FanGraphs. A former contributor to FanGraphs and the Hardball Times — and current contributor to MLB Trade Rumors — Swartz also works as consultant to a Major League team. You can find him on Twitter here. Read the work of all our residents here.
I first began estimating the average cost per WAR on the free-agent market after the 2009 season, but have not done so since my three–part series at the end of the 2013 season, leaving three extra seasons during which the market for free agents has evolved. In the first piece of my residency, I discussed the labor implications of using this framework. Many of my subsequent pieces in this series will look for which types of players are undervalued or overvalued by the free-agent market.
But first this piece will explain how I actually calculate average value — the reference point for whether players are undervalued or overvalued. It is also the appropriate reference point when considering the opportunity cost of any other number of baseball moves. For example, when a team is considering the value of acquiring a young player who will produce a large volume of team-controlled WAR, the reference point for valuing him is the cost of acquiring that amount of WAR on the free-agent market. This is an important concept for team construction.

