Miguel Cabrera’s Trade Value

Miguel Cabrera getting a first place MVP vote is pretty silly. That said, as a player, dude is awesome. He’s not Keith Hernandez with the glove or Willie Wilson on the basepaths, but in case you haven’t noticed, he’s pretty good at the whole “hitting” thing. From 2007 to 2009, Caberara generated 110.5 batting runs above average. During that period, he’s accumulated more Wins Above Replacement than fellow first basemen Lance Berkman, Adrian Gonzalez, Carlos Pena, and Ryan Howard. Cabrera will only be 27 next season. Rumor has it that he may be available in trade with the Tigers trying to clear salary. If so, what is his value?

To reiterate: Cabrera is an excellent (and still young) player. However, as fans, we’ve lately become more aware that a player’s value includes not only his (total) baseball skill, but, as Dave pointed out earlier in a different context, the player’s contract. Think about it this way: if someone gives you a house worth two million dollars, then you’ve gained two million dollars in assets. However, if someone “gives” you the same house conditional on you paying off the same two million dollars, you haven’t really added an asset, have you?

The valuation of baseball players is similar. Without getting into methods for calculating dollars per marginal win (see Colin Wyers’ excellent series at THT), this is perhaps the most important function of WAR. Teams spend money to add wins. WAR tells you how many wins a player adds above “freely available” talent. On its own, WAR tells us how much a player helps his team even if he’s below average. When WAR is connected with relative dollar value of marginal wins, we get a sense of how much a player exceeded or fell short of the value of his salary. Let’s apply this to Cabrera.

CHONE projects Cabrera as 37 runs above average per 150 games a hitter next season. Jeff Zimmerman projects him as a -1 defender at 1B. Looking at Cabrera’s baserunning numbers from the last few seasons, let’s call him -2. Prorated for 150 games, that’s: +37 hitting, -1 fielding, -11.5 position, -2 baserunning, +23 AL replacement level = about a 4.5 WAR player in 2010.

Following Tango, I’ll assume the current market value of a marginal win is $4.4 million. Again following Tango’s generic model, assume post-peak players decline by half-a-win per year. We need to build in annual salary inflation, (which I’ve set at 7%). With those assumptions in place, over the next six seasons (2010-2015) we’d expect a 4.5 WAR player like Cabrera to be worth about $102 million. Cabrera’s only 27, so the decline curve may be a bit harsh. If we add on a half-win a season to the original calculation, his estimated value from 2010 to 2015 is $118 million.

From 2010 to 2015 (six seasons), Cabrera is guaranteed $126 million. Think back to the house example — no matter how nice the house is, if you have to pay full price (or more) for it, you aren’t adding an asset. Cabrera is an excellent player, but he’s going to be being paid as much (or more) than he’s (likely) going to be worth.

Of course, the Tigers could pick up a chunk of Cabrera’s future salary and/or throw in cheap talent to add value from their side. However, straight up, given his estimated talent and large contract, Miguel Cabrera’s intrinsic trade value appears to be… nothing?

This is a bit of an extreme conclusion. Cabrera’s trade value is not “nothing.” He is one of the best hitters in the league and is young enough that he will probably remain so for at least the next few years. Having an efficient payroll is just a means to winning, not an end in itself, and players like Cabrera are rare indeed. Still, since Cabrera is being paid (at least) his likely market value over the life of the contract, he would only really help teams that can afford to pay market value on a regular basis — the Yankees, and perhaps the Red Sox (though probably not the Dodgers at the moment given their ownership situation). And the Yankees already have an expensive first baseman signed long-term in Mark Teixeira. Cabrera isn’t worth “nothing,” but his contract gives the Tigers much less leverage than one would expect given his age and skill.