Figuring Out Jose Fernandez’s Trade Value

by
December 8, 2015

Jose Fernandez is available!

Jose Fernandez is not available!

Jose Fernandez is maybe still available!

There has been a lot of conflicting information about the Marlins’ willingness to move their ace over the last few days, though Hill’s assertion that they aren’t shopping him is mostly meaningless; you can effectively let everyone know a player is potentially available by entertaining offers and giving the impression that there is a level at which the team would agree to a deal. Rather than Hill saying Fernandez “isn’t available,” it’s maybe more realistic to suggest that Jose Fernandez is available, but only for asking prices that make him effectively unavailable, though the Marlins are at least willing to let teams pay an absurd price if they want to.

Of course, Fernandez is probably worth a price that might appear on the surface. When he’s been on the mound during his career, he’s been the best non-Kershaw pitcher in baseball, putting up an absurd 64/69/75 ERA-/FIP-/xFIP- line through the 289 inning innings he’s pitched in the big leagues. For comparison, David Price is at 78/73/78 over the last three years, while Zack Greinke is at 64/79/82. Both of them landed deals north of $200 million for the seasons that cover their mid-30s, while Fernandez is 23. Certainly, Fernandez is a significant health risk, but the performance and youth would almost certainly have made him the most coveted free agent on the market this winter if he were available for bidding.

How high would the price have gone, assuming Fernandez restricted the contract terms to just three years, the same number of years of control a team would be getting in trade? The shorter term and his age would almost certainly push the AAV past Greinke’s record $34 million total. In fact, if you give him some small innings increases over the next couple of years as he gets further away from Tommy John surgery, even $40 million per year might end up being a bargain.

Jose Fernandez’s Contract Estimate — 3 yr / $132.6 M
Year Age WAR $/WAR Est. Value
2016 23 5.0 $8.0 M $40.0 M
2017 24 5.3 $8.4 M $44.1 M
2018 25 5.5 $8.8 M $48.5 M
Totals 15.8 $132.6 M
Assumptions
Value: $8M/WAR with 5.0% inflation
Aging Curve: +0.25 WAR/yr (18-27), 0 WAR/yr (28-30),-0.5 WAR/yr (31-37),-0.75 WAR/yr (> 37)

I’m not sure teams would get to that $133 million figure, but anything in the $110 to $130 million range wouldn’t surprise me. Let’s call it $120 million just for fun, which also doesn’t account for any extra value to be gained from getting a chance to sign him to another deal in a few years, or potentially receive draft pick compensation if that’s still a thing in the next CBA. If you factored in the potential value of exclusive negotiating rights or expected to get some compensation when he left in three years, you might push to that $133 million level, but that seems like something of a ceiling to me. Regardless of the exact number, though, the conclusion is pretty obvious: Jose Fernandez is worth a lot.

And because of his limited innings totals to this point, he’s not going to be paid a lot of money in arbitration. MLB Trade Rumors projects him for a $2.2 million salary in 2016, and then even if you give him aggressively large raises in his next two arbitration trips to account for high-quality expected performances, you’re probably looking at something like $8 million next year and $15 million the year after. So, over the three years that the Marlins still own his rights, he’ll be paid something like $25 million. That puts roughly a $100 million difference between market value and expected salary for Fernandez during his team control years.

So yeah, when you have a $100 million asset, you ask for the moon, and maybe a couple of dwarf planets to be named later. But even that might seem light relative to what the Marlins have reportedly asked for.

By pretty much any account, Urias and Seager are both top five prospects in MLB right now, with Seager often ranking #1 on such lists. Both are nearly major league ready, with Steamer projecting Seager for +2.8 WAR in 2016, and Urias for +2.5 WAR if he threw 200 innings in the majors as a 19-year-old. Two near-ready elite talents of this level is a pretty clear no for the Dodgers, but it’s not unexpected for the Marlins to at least ask for Seager or Urias as the primary piece in return.

But Seager should probably be a flat no.

The last big test of the market’s valuation of a quality prospect put Yoan Moncada at $63 million — the $31.5 million Boston gave him in a signing bonus, and the 100% tax on that amount — along with some international signing restrictions that hurt the team’s ability to acquire talent in the next few years. Overall, the cost of signing Moncada was probably something in the $70 million range for the Red Sox, though Moncada wasn’t at Seager’s level as a prospect, plus came with additional risk as a player without a track record in the U.S. And that money was paid up front, and the Red Sox will still have to pay Moncada his salaries when he gets to the big leagues, so he’ll cost significantly more than that figure over the six or seven years of big league performance they get from him. Comparing a signing bonus to the market value of a big league contract is apples to oranges.

So how much more would a team pay for Seager’s rights for the next six years? Well, here’s what the contract estimation tool spits out for a 22-year-old shortstop already projected as nearly as +3 WAR player in 2016.

Corey Seager’s Contract Estimate — 6 yr / $188.3 M
Year Age WAR $/WAR Est. Value
2016 21 2.8 $8.0 M $22.4 M
2017 22 3.0 $8.4 M $25.6 M
2018 23 3.3 $8.8 M $29.1 M
2019 24 3.5 $9.3 M $32.9 M
2020 25 3.8 $9.7 M $37.0 M
2021 26 4.0 $10.2 M $41.4 M
Totals 20.6 $188.3 M
Assumptions
Value: $8M/WAR with 5.0% inflation
Aging Curve: +0.25 WAR/yr (18-27), 0 WAR/yr (28-30),-0.5 WAR/yr (31-37),-0.75 WAR/yr (> 37)

And, believe it or not, that may very well be too low. After all, when I included Corey Seager on this summer’s trade value list, Dan Szymborski was nice enough to run five year ZIPS projections for him, and his forecasts had Seager at +20 WAR over that stretch, and then you probably add another +5 WAR for the sixth year of team control in that projection, so ZIPS had Seager as something like a +25 WAR player over the next six years. At that level, the contract estimator spits out a value of $232 million, putting Seager in the same range of expected value as what the Red Sox just paid for David Price.

Even with aggressive estimations for arbitration, Seager probably won’t make more than $45 or $50 million during the next six years of his career. Depending on how aggressive a projection you’d use for his aging curve, Seager might have something like $130 to $180 million in value above and beyond his expected contract. Now, a lot of that value is tied into years down the line, and it’s worth discounting that value relative to a guy like Fernandez, who would likely provide more value over the next three years. But Seager is so valuable that it would probably be difficult for the Dodgers to part with him for a guy with just three years of team control remaining, especially one with Fernandez’s health risks.

Urias, though? That’s not crazy at all. Because of the lower innings totals he’ll likely be asked to throw over the next few years, the Dodgers can’t count on capturing the full value of his +2.5 WAR/200 inning projection, so six years of Urias is probably worth something closer to the $100 million figure that we’ve eyeballed for Fernandez. Like Fernandez, there’s health risk with Urias, simply because he’s a 19-year-old pitcher, so the Marlins would almost certainly demand more than just one elite pitching prospect for their one elite pitcher. But as a primary piece in the deal, with some lesser stuff included to round out the package, Urias actually makes sense.

For other teams in the mix, that $100 million range is probably the baseline, and that’s just what a fair offer would look for. The Marlins almost certainly aren’t moving Fernandez for a fair offer, so it’s probably going to take something more like $125 to $150 million in value to pry him out of Miami. Should a team give up those kinds of talents in order to get three years of a guy who has made just 19 starts over the last two seasons? Probably not. But if Fernandez proves healthy in the first half of the year, he might actually cost more in July than he would now. He’s a boom or bust acquisition, in that you’re either going to look like an idiot or a genius for giving up the farm to get him. But if you’re a team like the Dodgers or the Astros, and you have win-now aspirations and a strong farm system, the gamble just might be too enticing to pass up. That’s what the Marlins seem to be betting on, anyway.





 

Dave is the Managing Editor of FanGraphs.

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Nick
8 years ago

I believe you’re starting Fernandez’s projections at 180 IP (Steamer).
Is that a realistic number considering he’s coming off only 90 IP in 2015 and only 50 in 2014?

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