Trading for Aroldis Chapman

Sometime soon, Aroldis Chapman is going to get traded. But don’t just take my word for it:

#Reds Walt Jocketty said there’s ‘nothing close’ with Aroldis Chapman. Hopes to get something done by the Winter Meetings

— C. Trent Rosecrans (@ctrent) November 19, 2015

I mean, yeah, on the one hand, nothing close. But on the other hand, how often do front offices establish public timelines? The Reds want to trade Chapman, and they want to do it soon, and they want to get a certain type of package back:

@jaysonst Other teams say Reds are targeting big-league ready young players in any package they get back for Frazier or Aroldis Chapman — Jayson Stark (@jaysonst) November 16, 2015

That’s not surprising. Every team wants more big-league-ready young players. Those are some of the game’s most valuable assets. Nick Cafardo, meanwhile, offered something that raises the eyebrows:

The Reds listened to Boston’s pitch for Chapman but required more than the Red Sox offered for Kimbrel, and the Sox weren’t comfortable going the extra mile for a pitcher who can become a free agent after 2016.

That’s too much. It’s unconfirmed, but regardless, that’s too much. Still, it brings to mind the question: what’s the right price? If you’re looking to trade for Aroldis Chapman, how far should you go before things stop being reasonable?

Trade negotiations are complicated. All negotiations are complicated. Yet this can be simplified quite a bit. Aroldis Chapman has one remaining year of team control, then he’s eligible to become a free agent. According to MLB Trade Rumors, Chapman is projected to earn about $13 million next year. Let’s assume a team trading for Chapman won’t immediately work out an extension. Chapman will cost $13 million or so for one year. What would you pay him for that one year as a free agent?

That’s the key to this. That’s how you can start putting numbers to ideas and a name exchange. What would Chapman make on the open market on a one-year deal? If he does well enough, you can extend a qualifying offer at the end, to get a draft pick back. There’s certainly some value there. But the most important thing here is the salary.

The highest average annual value of any baseball contract ever is $31 million. The highest for a reliever ever is $15 million. Not that these are the best possible comps, since Chapman is unique and the hypothetical situation is unusual, but these are decent references. Take the first one. Now, the average salary is driven down by the length of the contract. The contract builds in an expected decline, which for one year of Chapman wouldn’t be a factor. But then, Chapman doesn’t impact a team in the way that Miguel Cabrera does, either. Chapman is a short-inning specialist. A high-leverage specialist, but a specialist nevertheless. Depending on how things go, Chapman might not ever appear in a given game. Cabrera plays every game if he’s healthy.

I’ll throw a number out there. $25 million. I don’t think it’s unreasonable to think a free-agent Chapman could sign for one year and $25 million. For the sake of example, let’s work with this. What’s the difference here? Take the $25 million, and subtract the expected $13-million arbitration reward. And then let’s add back in…$5 million, say, for the potential compensation pick. Then the difference between Chapman’s value and Chapman’s real salary comes out to about $17 million. Put in words others of you will recognize, you can think of that as surplus value. Perceived surplus value is what teams act on, even if they don’t think of it like that. I know the words make a few of you shudder, but remember, we’re just building an example.

Here are estimates of the surplus values of some prospect types. We’ve linked to this a bunch of times before. Everything is estimation, but the research is incredibly helpful. Some argue these estimates are actually a bit low. But sticking with what we have — $17 million — then, for one year of Chapman, you’d give up a non-elite pitching prospect, or a position-player prospect ranked around the middle of the top-100. Let’s now say, instead, you think Chapman could sign for $30 million, instead of $25 million. Then you just bump up the surplus value by $5 million. Position-player prospect a little north of No. 50. Good young pitcher, maybe with some warts.

That puts you in the ballpark. And what should be immediately clear is that the Reds can’t expect to receive an elite prospect for Chapman alone. At least, they shouldn’t; you never know how another human will act. The Reds might be holding out hope, but you figure there are reasons why Chapman hasn’t been traded yet. No one has met the ask, not in the last month, and not around the last deadline.

With surplus value, I know things feel theoretical. A problem with Chapman, of course, is it’s not easy to find comparable players. Kenley Jansen hasn’t been traded. Of note, though: Craig Kimbrel has. He was traded very recently! The situations aren’t alike, and they aren’t identical pitchers, but Kimbrel is at least near to being on Chapman’s level. The last three years, Kimbrel has allowed a .496 OPS, and Chapman has allowed a .500 OPS. People talk about how Kimbrel is declining, but his stuff hasn’t gotten any worse. He’s still almost impossible.

Kimbrel’s going to get paid either $25 million over two years or $37 million over three. That’s locked in. By prospect values, the Red Sox seemingly paid something like $55 – 60 million in surplus value. Putting it all together, the Red Sox apparently value Kimbrel north of $30 million a season. Perhaps even around $40 million the next two seasons.

And Chapman is probably a bit better than Kimbrel. Yet it’s worth remembering that one trade doesn’t set the market. Industry opinion is that the Red Sox overpaid. They paid more than the Padres paid to get Kimbrel from the Braves in the first place. There are alternatives to Chapman — a team could try to trade for Mark Melancon, or sign Darren O’Day, or what have you. The Tigers picked up Francisco Rodriguez. They’re not as good as Chapman, but it’s not like it has to be Chapman or bust. Other teams don’t need to meet the Red Sox’s Kimbrel price.

But just for fun, let’s say you put Chapman at $45 million in one year. Crazy, but, here we are. $5 million bonus for a potential compensation pick. But, also, $13 million in salary. So you’re around $37 million in upper-bound surplus value.

That would get you…a Manuel Margot. Maybe a pitching prospect somewhere around No. 10 – 15. You can add a low-level throw-in so it isn’t just a one-for-one, but that’s about the limit. And the realistic case is south of this. If the Reds were to get this kind of offer, they should pounce right away. They shouldn’t just hold out for a Kimbrel package, because the odds of that materializing are like a tenth of one percent.

It’s going to cost talent to get Aroldis Chapman. For a few teams, perhaps that means the guy at the top of the top-prospect list. But this shouldn’t become an elite-prospect blockbuster. Chapman’s just unlikely to stuff that much value into one season. I’d assume the rest of baseball knows that.