After looking at the free agent class of setup men, last weekend, I thought that “the ideal solution is for the guys already on the roster…to step up and take the late innings.” I based that conclusion mainly on the strength of the middle relievers on the market. The only attractive name is Rafael Betancourt, who will command a multi-year contract. Signing this type of pitcher just doesn’t seem to be the Yankees M.O. While I still stand by the guys already in the system, there is one aspect of the argument I left out, and which should solidify the Yankees position as non-buyers of free agent relievers: draft pick compensation.
To acquire Betancourt, the Yankees would not only have to offer a multi-year contract, but they’d have to forfeit their first round draft pick to the Rockies. That pick, No. 30, certainly has value to the Yankees. There’s an outside chance they can recover a first round pick if they offer arbitration to Johnny Damon and he signs elsewhere, but an arbitration offer in this case is no guarantee. Even if the Yankees did offer him arbitration and he declined, the market for his services would be depressed, because a team signing him would then have to forfeit their first round pick to the Yankees.
Of course, if Betancourt is worth more to the Yankees than the value of that first round pick, they’d consider signing him. But what is the value of that pick? It’s very difficult to say, because at this point we haven’t a clue who will fall to the No. 30 spot. After that, we have no idea if this draftee will pan out. Still, Sky Andrecheck examines the value of a first round pick.
The value depends on exactly where the pick lies. Since compensation rules protect the first 15 picks of the draft, the Cubs, at No. 16, have the most valuable pick, valued at $4 million. The Brewers, who pick 15th, would lose their second round pick by signing a Type A free agent, which would be somewhere around the 60th overall, depending on the size of the supplemental round. That pick is worth an estimated $2.5 million. The Yankees’ No. 30 pick would be valued somewhere between $3 and $3.5 million.
For deals like Mark Teixeira’s eight-year, $180 million, the value of the compensation pick isn’t much of a concern. It’s just the cost of doing business. CC Sabathia’s and A.J. Burnett’s contracts cost even less, as they cost the Yankees their second and third round picks, valued far, far less than the first round pick. Even if those deals would have cost a first round pick, it shouldn’t have deterred the Yankees. This becomes a concern, however, when signing a player to a lesser contract.
The problem isn’t just with Betancourt. The Elias rankings simply label too many middle relievers as Type A. Andrecheck explains:
The reason is that players are ranked within various positional groups, and relief pitchers have their own group. The problem with this, of course, is that unlike, say, shortstops or first basemen, most relief pitchers have relatively low value. Of relievers, only a small fraction are high-impact players such as stud closers. Therefore, when Elias rates the top 20 percent of relievers as Type A free agents, it ends up including some very mediocre pitchers. As a result, 10 out of the 23 Type A free agents are relievers, including immortals such as Oliver and Hawkins. Such players have no business being classified in the same category as Holliday or Bay, and the fact that they’re overrated by the rankings can really hurt them.
Last season we saw Juan Cruz, who pitched well in 2008, go through the winter months with few teams interested in him. Because he was a Type A free agent and had declined the Diamondbacks’ offer of arbitration, few teams were willing to pay both with money and with a draft pick. The situation got so desperate for Cruz that in late February, the Diamondbacks and Twins discussed an unprecedented sign and trade deal. Thankfully, that never came true.
I doubt many free agent relievers want to go through this again over the winter. Therefore, if Type A free agents like Darren Oliver, Kevin Gregg, Jose Valverde, and Betancourt receive arbitration offers, they might just accept. Oliver accepted last year, making his Angels return quick and painless. Still, teams like the Astros might not be so inclined to take back Valverde at an arbitration salary, and therefore might decline to offer him arbitration. That changes the landscape of the free agent setup man/closer class.
Situations like this highlight the absurdity of the free agent compensation system. It’s an anachronism, and the players would do well to get it out of the CBA in the next round of labor negotiations. I totally agree with Tango: “t doesn’t exist in other sports for ‘free’ agents, and it would not exist in MLB if we started from scratch.” I also agree to glove slap Tommy for the pointer.