On the Craziness of the Relief Market

Last offseason, Aroldis Chapman, Kenley Jansen, and Mark Melancon signed contracts totaling $228 million. More money was guaranteed to that threesome than had ever been committed to all free-agent relievers in a single offseason. Nor did that represent the end of the spending: another seven relievers signed multi-year deals totaling more than $100 million. Overall, last winter’s $420 million outlay on relief pitching nearly doubled the high-water mark from previous seasons.

This offseason, there is no Chapman or Jansen type of reliever worthy of such a significant investment. Wade Davis is probably the equivalent of last year’s version of Melancon. Not surprisingly, he recently signed a Melancon-type contract. Even without the best closers in the game available, however, relievers seem poised to set another mark for free-agent bullpen spending.

There are still a few higher-end relievers available in Greg Holland and Addison Reed. After those two, there are also a handful of late-inning guys who seem likely to receive guaranteed deals for smaller amounts, even if they don’t get multi-year guarantees or eight-figure salaries. So while we aren’t yet done, it’s clear that the reliever market is a lot further along than the rest of the free-agent class, so we can get a good idea of how this year’s numbers compare to years past.

The graph below shows the number of multi-year free agent deals relievers have signed over the past seven offseasons, including this one.

Assuming Holland and Reed land contracts for more than a single season, this winter will have produced 18 multi-year deals for free-agent relievers. We’ve approached that figure before: there were 15 such deals after the 2013 season, for example, and 14 others following the 2015 season.

So it’s not entirely unprecedented, but it is unusual. Consider: 18 multi-year deals would represent a 50% increase over the average of the previous five offseasons. Where the real difference occurs has been the total guarantees to these players, as the graph below documents.

If Reed and Holland sign for $60 million total, then this year will exceed even last season’s outlay; however, that probably shouldn’t be the main takeaway from the graph above. Note the slow, steady rise from 2011 to 2015. During that period, reliever contracts grew at about 10% per year, perhaps a little higher than the general gains throughout baseball, but not outrageously so. With last year’s great class of closers, we saw a roughly 80% jump in multi-year guarantees despite fewer deals. This season, even without that star power, relievers have maintained those gains.

While the greater volume of committed dollars can be attributed, in part, to an uptick in multi-year deals — particularly this offseason — much of the growth over the past few years has been due to an increasing average annual value for reliever contracts. From 2012 through 2015, the AAV on a multi-year free agent deal for a reliever was $5.7 million. Last year, with Chapman and Jansen, the number was up over $10 million. This season, it is right around $8 million.

As for the quality of the pitchers signed, that’s also probably a consideration. Different offseasons offer different levels of talent. Trends in the game might play a role, as well. Clubs aren’t as beholden to saves as they once were and appear to be paying for quality relievers regardless of role. We can take a quick look at the projections for the relievers who are signing multi-year deals as well as their relative cost per win, as seen in the table below.

As we can see by the projected-WAR and dollars-per-WAR columns, teams are digging deeper into the reliever pool, but they aren’t quite getting the same level of quality out of it. There are a couple different theories to explain what is happening. The first is fairly simple: teams have witnessed the rise of the bullpen revolution, along with the diminished role of starters, and made the determination that relievers are more valuable. They are spending more on relievers for roughly the same quality in terms of innings.

The trend in spending lines up with the narrative. Here are the multi-year deals we’ve seen so far this season.

There are a lot of solid relievers up there signing solid contracts. Those players are likely to prove valuable to their teams and provide dependable run prevention in innings during which starters become less effective, paving the way for a closer. Teams are paying more for these types of players.

That’s one explanation for why all this money getting thrown around. But there’s another, as well, and it’s less satisfying so far as a narrative is concerned.

The last two years of reliever spending might just be a random blip. Last season, we had two of the game’s best closers available, and both of them signed for big money, driving up the total cost for relievers. This season, we see a large quantity of good relievers, and those good relievers are getting paid as they should. This runs slightly counter to the increase in dollars per WAR, and that’s where part of this theory needs help from outside the reliever outlook.

If you look at the last column in the last table, you see the FanGraphs free-agent rankings for this winter. Twelve of the 15 players above appeared in the top 50, and three more — Holland, Reed, and Watson — were also in the top 50. That’s 15 relievers among the top-50 free agents — as many, in other words, as the previous two offseasons combined.

It’s possible that there is just a greater number of more useful relievers available this season. It’s possible that there is more recognition for the value of relievers, and therefore a greater number of them appeared in the rankings. It’s also possible that this free-agent class as a whole isn’t all that good. (Last year’s class also wasn’t that good.) Relievers are relatively cheap in terms of annual value and years, and given the size of bullpens, every team can always use another one. Plus, they are easily benched compared to position players, where the next available option could be replacement level.

The truth probably lies somewhere in the middle. Perhaps teams are valuing relievers more highly due some revolution or another. Maybe there just isn’t a whole lot out there on which teams can spend their money. Some combination of the two seems likely. Revenues have soared and the free agent class of two years ago was a great one. The last two years have been rather lackluster, but teams have to spend their money somewhere. A lot of decent relievers are benefiting as the rest of winter remains on hold.