Undervalued and Overvalued Free Agents

Every team (except maybe the Marlins) heads into the off-season with the same goal: improve their team’s chances of winning games by increasing the talent level on the field. Teams will try to make these upgrades at the lowest possible cost in terms of total dollar value of contracts added. This is maximizing return on investment. Maximizing return on investment is important for every team, even the Yankees, because dollars paid to one player cannot be used for another player. No team has an endless pit of money to burn.

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The most common avenue to immediately improve a team’s outlook is through the free agent market. As in most free agent periods, there figures to be several players who are paid significantly less or significantly more than what they actually produce throughout the length of the contract. Dave Cameron of fangraphs takes an ex-ante look at some potential overpays and bargains for the 2014-15 free agent market. Let’s rundown the players and see if they relate to what the Yankees are trying to do this offseason.

Undervalued:

Three of the bargains are starting pitchers, which makes sense because these guys can get undervalued if they are oft-injured or have ERAs that don’t match up with the peripherals (BB, K, HR). Jason Hammel is one of the pitchers in this triumvirate as a disappointing post-Cubs run with the Athletics and injuries throughout his career (never 200 IP in a season) have likely depressed his market value. Except, as Cameron notes, he projects as just below a league average pitcher going forward which is valuable.

The next pitcher on Cameron’s list, Francisco Liriano, is very similar to Hammel. Cameron notes that both are what could be described as inconsistent and injured a fair amount of the time. The variance in Liriano’s production might scare some teams off and lower the winning bid for his services. Former Yankee Brandon McCarthy is the 3rd pitcher on this good value list. This, again, is due to the injuries he has sustained throughout his career that have limited his ability to stay on the field. Shoulder injuries are especially scary for a pitcher. McCarthy is great when he pitches. He generates a lot of ground balls (potentially bad if Yankees don’t improve infield defense) and never walks anyone.

All 3 pitchers come with injury risks, which isn’t great considering the team is already trying to hedge against current injury risks in the rotation. However, getting McCarthy and his familiarity with New York back at 3 years/$36 million as the fangraphs crowd predicts would be a great acquisition.

The next two bargains include a catcher and a third baseman. The catcher is former Yankee Russell Martin. Cameron notes that he could still be undervalued because of his excellent pitch-framing skills. Of course, Martin was signed to a 5 year contract by the Blue Jays and is no longer available. The third baseman, Cameron’s best value play on the list, is Chase Headley. Headley was acquired by the Yankees and played 58 games with them in 2014. He hit .262/.371/.398 with his usual good defense at the hot corner for them. Cameron thinks that he will still be undervalued on the open market because teams will focus on his heavily depressed numbers in cavernous Petco Park. However, his pull power will play well in most parks, especially Yankee stadium. Cameron even likens him to Adrian Beltre, an excellent defensive third baseman who became a monster at the plate after moving out of a pitchers’ park. Cameron pegs a potential contract for Headley at 4 years/$60 million and suggests that Headley at that price is more valuable than Pablo Sandoval and his likely $100+ million contract.

Resigning both McCarthy and Headley could represent acquiring players whose performance exceeds their salaries.

Overvalued:

Cameron’s list of potential “landmine” acquisitions includes 2 starting pitchers, 2 outfielders, and 1 designated hitter.The two starting pitchers have fairly disparate performance level. Max Scherzer, ace and former Cy Young winner, and Edinson Volquez, close to a replacement level starter by fWAR, both represent potential bad buys on the free agent market. Cameron thinks that Volquez will be overvalued because teams will buy into the artificially low ERA caused by aggressive shifting by the Pirates’ defense and luck on balls in play. His skill set hasn’t changed as he still loses the strike zone at times. Cameron expects Scherzer, on the other hand, to be a bad buy because he has one of the lowest HR/FB rates of the past few seasons and if that regresses then he won’ t be nearly as good as the contract pays him to be. Also, the expected 7 year contract creates significant risk for the team simply because Scherzer is a pitcher and pitchers break.

The two outfielders are Nelson Cruz and Nick Markakis. Cameron notes that Cruz is 34 years old and coming off his career year. It’s a bad bet to expect that to continue. He’s also not really an outfielder as his defense has never been good and is only getting worse. Cameron reports that Markakis is essentially a league average hitter and, despite winning a gold glove, a below average defender. For a corner outfielder, that is not worth the 4 years/$40 million being thrown around.

Finally, the DH is Victor Martinez who already resigned with the Tigers and is not available.

The Yankees don’t really have an opening in right field if Carlos Beltran will, in fact, play there. If Beltran has to DH regularly then Markakis and Cruz become options. When the offseason began, the Yankees said they wouldn’t pay for any of the 3 big name starting pitchers. Also, I couldn’t imagine the Yankees, who seem to look mostly at strikeout and walk rates for pitchers, to have any interest in Volquez at the reported prices. The Yankees have a chance to grab 2 of the potentially undervalued free agents while steering clear of a truly bad signing this offseason.

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