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Archives for March 2016
Article XX(B) Free Agents Update: Tuesday
Major League Baseball’s collective bargaining agreement contains a provision that allows certain free agents who are signed to minor league contracts to receive a $100K retention bonus if they are not on the team’s 25-man roster or the Major League disabled list five days prior to the season.
Free agents who qualify for this distinction are those who have at least six years of Major League service time and had a Major League contract expire at the end of the previous season, but signed a minor league deal ten or more days prior to Opening Day.
The deadline for teams to decide on these players is today at 11am central time. By the deadline, teams with these players in camp need to decide whether to:
- Add the player to their 25-man roster or Major League disabled list (or agree to do so in writing).
- Grant the player his outright release from the minor league contract so that he may pursue opportunities with other teams.
- Pay the player a $100K retention bonus to keep him in the organization beyond the deadline and send him to the minors.
Here’s the latest news from around the league on Article XX(B) signees and their roster statuses with their respective teams (newest updates on top):
- Matt Thornton has been told that he’ll break camp with the Padres, according to Dennis Lin of the San Diego Union-Tribune (via Twitter). The veteran southpaw signed fairly late in camp after failing to find a big league deal, ultimately reaching a minor league pact that will pay him $1.6MM at the MLB level. He can also take home up to $1.9MM in incentives depending upon how many appearances he makes.
Earlier Updates
- Outfielder Ryan Raburn will be added to the Rockies’ 40-man roster, Nick Groke of the Denver Post clarifies (Twitter links). He figures to play an important part-time role on the club, which features three left-handed outfielders in its regular lineup.
- The Braves have announced that outfielder Jeff Francoeur has made the Opening Day roster, with the team purchasing his contract. He’ll play a reserve role in his return to Atlanta, where he once featured as one of the most exciting young players in baseball.
- The Padres appear set to pay Brandon Morrow the $100K retention bonus to remain with the organization, Dennis Lin of the San Diego Union-Tribune tweets. Morrow, 31, still needs to stretch out after getting a late start this spring.
- The Nationals have officially added righty Matt Belisle to the club’s 40-man roster and will be active on Opening Day, the team announced. He represents a somewhat surprising victor in the pen battle, and his addition seemingly leaves the organization with just one open job to give to minor league free agent lefty Sean Burnett or optionable righties Trevor Gott and Blake Treinen.
- Veteran outfielder Matt Joyce has made the Pirates’ Opening Day roster and will be added to the 40-man, GM Neal Huntington told reporters including Bill Brink of the Pittsburgh Post-Gazette (via Twitter). He had a forgettable 2015, but put up strong numbers in camp.
- Likewise, the Indians announced yesterday that southpaw Tom Gorzelanny will remain in the organization in the minor league system. He’ll be due a $100K bonus for the privilege.
This post originally incorrectly listed Alex Torres as an Article XX(B) free agent.
Cubs Release, Re-Sign Victorino, Parra, Kawasaki
1:55pm: The team has indeed reached new contracts with all three players, ESPNChicago.com’s Jesse Rogers reports on Twitter.
10:43am: The Cubs have released Shane Victorino, Manny Parra, and Munenori Kawasaki, Mark Gonzales of the Chicago Tribune reports (Twitter links). Chicago has interest in reaching new deals with all three, but obviously wasn’t willing to add them to the active roster or pay the $100K roster bonuses that each would have commanded as an Article XX(B) free agent.
Victorino had already been told he wouldn’t make the active roster, and is reportedly taking an opportunity to rehab his injured calf before moving onto the Triple-A roster. The other two players also seemed like longshots to crack a deep Cubs roster coming into the spring. Parra, 33, has had his moments as a southpaw pen piece, but was looking up at Travis Wood and Clayton Richard in the organization’s pecking order. Things were even tougher for the defensive-minded Kawasaki, who was buried behind multiple infielders.
Minor MLB Transactions: 3/29/16
Here are the day’s minor moves:
- Padres righty Philip Humber has decided to retire after learning he wouldn’t make the club, A.J. Cassavell of MLB.com tweets. Now 33, Humber was once the third overall pick in the amateur draft, but never was able to consistently deliver results at the MLB level and will end his career with a 5.31 ERA in 371 innings. He last cracked the majors back in 2013 with the Astros. Of course, Humber also twirled an exceedingly rare perfect game for the White Sox in 2012, giving him quite a notable place in the history books.
- Shane Robinson has requested and been given his release by the Indians, Ryan Lewis of the Akron Beacon Journal reports on Twitter. Robinson had been on the fringes of the Cleveland outfield competition, but the club was set to go with other options and he exercised the opt-out clause that MLBTR recently reported. The 31-year-old is valued more for his glove than his bat; he owns a .237/.302/.313 batting line in 649 career plate appearances over parts of six seasons.
- As expected, Roberto Hernandez has officially exercised his opt-out clause and requested that he be released by the Blue Jays, Ben Nicholson-Smith of Sportsnet.ca tweets. The 35-year-old is hopeful of finding a major league opportunity elsewhere after Toronto decided not to add him to the active roster (and take on what would have been a $1.25MM salary). In 84 2/3 innings last year, Hernandez worked to a 4.36 ERA with 4.5 K/9 and 2.8 BB/9.
- Lefty Caleb Thielbar is headed to the indy league St. Paul Saints, Seth Stohs of TwinsDaily.com tweets. The former Twins southpaw, who’s just 29, played a bit role in Minnesota’s pen over 2013-14 but only got five innings in the majors last year. He had good run prevention numbers at Triple-A, but uninspiring peripherals may have tamped down interest from major league teams.
Will Smith To Attempt Knee Rehab; Out At Least 6 Weeks
Brewers reliever Will Smith will attempt to rehab his ailing right knee, as Tom Haudricourt of the Milwaukee Journal-Sentinel reports. The hope is that an approximately three-week layoff before throwing will allow the southpaw to avoid surgery for what has been diagnosed as a tear of his lateral collateral ligament.
Surgery, says Smith, likely would cost him most or all of the season. Given that he’d have plenty of time to rehab after the season even if the surgery is ultimately required, it certainly made sense to attempt the rehab route.
Even if the recovery process goes well, Smith figures to miss significant time. He’s a long-term piece of the team’s picture that will be handled with care. Surely, the Brewers will be cautious to ensure that he doesn’t further injure his knee or trigger an arm issue in compensating. Plus, he’ll need to ramp back up and make sure his arm is in shape before returning to major league action.
The knee issue will hit Smith’s wallet, especially if surgery is required. He’s due $1.48MM this year as a Super Two, and the possibility of racking up saves and holds promised a nice raise next winter. If he can make it back, that remains possible, but his innings will be limited and others — Jeremy Jeffress and Corey Knebel chief among them — may have a chance to lock up the 9th inning while Smith is out.
Rangers Release Drew Stubbs
The Rangers have released outfielder Drew Stubbs, per an announcement from club executive VP of communications John Blake.
He had exercised his opt-out provision, Jeff Wilson of the Forth Worth Star-Telegram reports (Twitter links). Texas would likely welcome a reunion on a new minors deal if Stubbs can’t find a gig elsewhere, Wilson adds.
There were several factors at play here for Texas in deciding not to add Stubbs to the 40-man. His most valuable assets are speed and defense up the middle, and Ian Desmond’s work at center in the spring may reduce their appeal of carrying a backup for Delino DeShields Jr. And, of course, there’s reason to believe that one or both of fellow right-handed-hitting outfield options Justin Ruggiano and Ryan Rua could provide more with the bat.
Stubbs, 31, has had a couple of solid seasons on offense, but on the whole carries a batting line that is about 10% below the league mean. He’s never graded as a standout defender, but has a solid glove. And while he hasn’t always maintained a sky-high stolen base total, Stubbs has rated as a truly elite baserunner.
Marlins Release Justin Maxwell, Don Kelly
The Marlins have released outfielder Justin Maxwell and infielder Don Kelly, as MLB.com’s Joe Frisaro reports (Twitter links). Both were in camp on minor league deals.
Mawell had exercised an opt-out clause, and obviously Miami was not willing to add him to the 40-man. His deal would have paid him $1.1MM at the major league level. The 32-year-old had an early-season renaissance with the Giants last year, but ultimately produced at just a .209/.275/.341 clip in his 274 plate appearances on the season.
Kelly, meanwhile, was an Article XX(B) free agent and thus would’ve been due a $100K roster bonus had he been kept in the minors. Now 36, Kelly took just one major league plate appearance last year, though he did make a big league showing for the seventh consecutive season. The glove-first infielder also only managed to suit up for a dozen minor league games with the Miami organization in 2015.
Blue Jays Release Steve Delabar, Randy Choate
The Blue Jays have released righty Steve Delabar, Brendan Kennedy of the Toronto Star reports on Twitter. Toronto also cut loose southpaw Randy Choate, Shi Davidi of Sportsnet.ca was among those to tweet.
Delabar, 32, had agreed to avoid arbitration for $835K, and the Jays will remain on the hook for about one fifth of that (45 days of salary). But he was out of options and obviously wasn’t destined to make the pen. Things haven’t gone well for the righty since his All-Star nod in 2013. In the last two seasons he owns a 5.07 ERA in 55 frames with 8.3 K/9 against 5.4 BB/9 in the major leagues, and he’s also had stints at Triple-A in both years.
As for the veteran Choate, Toronto skipper John Gibbons says that the club hopes to sign him to a new deal to remain in the organization. He was an Article XX(B) free agent and thus was eligible for a $100K retention bonus had he been kept in the minors. A 40-year-old LOOGY, Choate has continued his dominance against left-handed hitters over the past several years but is a very marginal option against righties.
NL East Notes: Kolek, Nats, Arroyo, Phils
Marlins prospect Tyler Kolek is heading for a medical check-up after suffering an elbow injury and experiencing continued discomfort, MiLB.com’s Michael Leboff reports. That’s a disappointing turn of events for the 20-year-old, who scuffled in his first full professional season last year and was hoping to make strides in 2016. It’s important to note that it’s not yet clear whether Kolek will need any kind of surgery. The righty is still working to harness his high-powered fastball, and is obviously a long-term asset, but as things stand it certainly stings that Miami bypassed the promising Carlos Rodon — who’s already entrenched in a major league rotation — to take a shot on Kolek.
Here’s more from the NL East:
- The Nationals made a variety of roster moves today, as Mark Zuckerman of MASNsports.com was among those to report. Top infield prospect Trea Turner was sent down, thus ending any speculation that he might crack the Opening Day roster. Likewise, a series of veterans were moved to minor league camp, including infielder Scott Sizemore and bullpen candidates Aaron Laffey and Nick Masset. As Zuckerman explains, that appears to clarify the remaining battles in those areas, though there are still multiple possibilities for the remaining bench and pen spots.
- Nationals righty Bronson Arroyo is planning to rehab his ailing shoulder and could return to the hill as soon as June, according to MLB.com’s Bill Ladson (via TwitLonger). That’s certainly a better outlook than once had been feared, and it seems possible that Arroyo could provide rotation depth down the line if he can get back to full health.
- The Phillies appear to have stopped their search for outfield depth after adding Will Venable, according to Jayson Stark of ESPN.com (Twitter link). Philadelphia had been inquiring about a number of possibilities, but rival executives tell Stark that the sense is those efforts have been halted.
- Meanwhile, the Phillies appear to be leaning toward keeping Rule 5 pick Daniel Stumpf in the major league pen, manager Pete Mackanin tells Stark (Twitter link). The newly-extended skipper adds that Edward Mujica is “still in the mix,” but seemingly did not commit to handing him an Opening Day roster spot.
Valuing 2016 Opt-Out Clauses
Back in January, I wrote an article in which I approximated the dollar value of the opt-out clauses in the contracts for David Price, Johnny Cueto, and Jason Heyward. Since then, five more contracts with opt-outs have been signed, so I have extended this analysis to put values on these opt-outs as well. These include contracts for Yoenis Cespedes, Justin Upton, Scott Kazmir, Ian Kennedy, and Wei-Yin Chen. Remember, these values are approximations of what these contracts would have cost without opt-outs. (Please reference the above-linked post for further explanation of the methodology.)
Too many people talk as though opt-outs are just bad decisions on the part of teams, without considering how much more expensive contracts would be without them. This logic would imply that no financial firm should ever sell a put—of course they should, but only at the right price.
The earlier three contracts were larger than almost all of the five more recent contracts. Other than Justin Upton, the other recent contracts were under $100 million, so the opt-out values are generally lower than the $17-22 million that I found for Price, Cueto, and Heyward. However, all five opt-out values all range between 10 and 15 percent of the full contract value, similar to the prior three deals.
The following table shows the assumptions surrounding the opt-outs, like the one in January’s article. (Mobile app users can click here to see it.)
Yoenis Cespedes received a three-year contract for $75 million, but it is really a $27.5 million one-year contract with a player option of a two-year, $47.5 million deal. Few players actually sign one-year deals for that much money, but as we saw a decade ago with Roger Clemens, one-year deals for superstars have an AAV much higher than the AAV superstars receive on longer deals. In this case, Cespedes would probably have been worth about $31.7 million on a one-year deal. At this stage, a reasonable estimate of Cespedes’ value for 2017-18 would be around $55.1 million. However, like with all of these deals, we know that it is very likely that Cespedes’ market value will change significantly by next year. Chances are that if he is good enough to opt-out, then he will have had a strong 2016 campaign, and his market value will be higher. I estimate this would be around $68.2 million for 2017-18 in that case. If he does not opt-out, then he probably has disappointed in 2016 and probably has lowered his two-year value for 2017-18 down to $36.9 million. With an estimated 60% chance of opting out, that puts Cespedes’ opt-out at about $11.8 million. In other words, a regular three-year deal for Cespedes would be for $86.8 million instead of $75 million.
Justin Upton’s contract six-year, $132.5 million contract with the Tigers amounts to a two-year, $44.25 million deal with a four-year, $85 million player option. As a relatively young free agent, Upton has the potential to remain very valuable by the time he reaches his opt-out, but as a unique talent he is a risk to regress to the mean significantly—there is more room for him to fall than mediocre players. I estimate that if he has opted out after 2017, he has played well enough over 2016-17 that his market value will be about $119.1 million over 2018-21, and if he has not opted out then it stands to reason he has played poorly enough that his market value for 2018-21 would be about $52.2 million. Further, I estimate that he has a 58 percent chance to opt out. As a result, Upton’s opt-out is worth about $19.7 million, meaning that his value in a six-year deal without an opt-out would be $152.2 million.
Scott Kazmir had a relatively small deal for one that included an opt-out. His deal amounts to a $16 million one-year deal with $32 million two-year player option. I estimate that if he has opted out after this year, then he must have played well enough in 2016 that his market value for 2017-18 probably reached around $44.1 million. On the other hand, if he has played poorly enough that he does not opt out, then I estimate his market value for 2017-18 must have fallen to around $21.7 million. I think there is a 46 percent chance he opts out. As a result, his opt-out value is only worth $5 million—so a regular three-year deal without an opt-out would probably have been for about $53 million.
Ian Kennedy’s $70 million five-year contract is actually a $27 million two-year deal with a three-year, $43 million player option. His contract values him significantly higher than his Steamer or especially his ZiPS projection on FanGraphs would suggest, making it challenging to estimate his value. However, it is safe to assume that the Royals are placing more value on him than the projection systems and that they probably expect that his 2016 value is higher. Furthermore, there must have been at least some pressure for another team (real or imagined) that caused the Royals to believe they had to offer as much as they did. So we need to estimate the equivalent value of a contract based on the what the Royals paid, rather than what ZiPS or Steamer (and up to 28 other teams potentially) seem to think. Based on this, if he has opted out after 2017, then there is a good chance that the Royals (and potentially the other team they imagined themselves outbidding) were right about him, but if he does not then there is a good chance the projection systems were right. I estimate that his value over 2018-20 would only be $15 million conditional on not opting out, while it would be about $57.7 million if he played well enough to justify opting out. I think the Royals estimate a 44 percent chance that he will opt out (again, another team bidding presumably thought something similar), making his opt-out value about $7.1 million. A five-year deal without an opt-out would probably be worth about $77.1 million.
Wei-Yin Chen has a tricky deal. Nominally he has a 5 year deal worth $80 million, but it is really a $28 million deal over two years, with a player option for $52 million over the following three years. However, if he does not opt out, then the team has an option for 2021 that will actually vest if he pitches a sufficient number of innings and is healthy. Putting a value on a vesting option that is conditional on having a low value after 2017 is tricky, but I believe I have come up with a reasonable estimate. I think that if he does opt out, his value for 2018-20 is probably about $60.4 million, while his conditional value if he plays poorly enough to not opt out would be $21.3 million over 2018-20. His vesting option at the end is essentially worth under $2 million to the team. I think that on a normal five-year contract for 2016-20, Chen would have gotten about $82 million, which means his opt-out value was about $12 million.
As these deals become more common, it becomes more important to properly value these put options. I estimate that these five deals would each have cost about 10 to 15 percent more for teams if they did not provide the players with opt-out clauses. Players with more years post opt-out and higher talent levels will generally have a larger value to opting out, while the inverse is true for players with fewer years post opt-out who are less talented. While these opt-outs are risky, they definitely provide an opportunity for teams to save money relative to mutually guaranteed longer contracts.
