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Pitchers' value

With all the discussion today about a proposed trade for Roy Oswalt I thought I'd take a look at what his actual value might be to the Cardinals as well as what the Cardinals ought to expect to give up in order to receive Oswalt.

As we know, Oswalt is signed through next season with a team option for 2012 at $16 million ($2 million buyout). He also has a full no-trade clause that, presumably, he would leverage in order to get the Cards (or whoever he's traded to) to pick up the 2012 option. (It was reported in today's p-d that he might be willing to "restructure his option" in order to facilitate a trade to St. Louis. I, for one, don't read "restructure his option" to mean "get rid of his option" as some do. Instead, I would expect that would mean he'd be willing to consider deferring some of the money, though I think the debate on this is much ado about nothing.)

So what's Roy worth to the Cards? Over the last 2+ years, Roy has been worth 3.6, 3.1, and 2.9 wins for the Astros, according to Fangraphs. He's in the midst of a resurgent season but he's been in decline since 2005. That said, he's still an above average starting pitcher. He'll also turn 33 next month. ZIPS has him projected for a 3.53 FIP for the rest of the season which would make him worth a little more than 1.5 wins over his final 13 starts. Initially, he'd be replacing either Hawksworth or Suppan in the rotation but might replace either Penny, Lohse, or Garcia (if his innings are limited by the organization) in September. Let's call it a 1.5 win upgrade which is valued in the neighborhood of $6 million. He's owed about $5 million over the rest of the season so the team stands to gain about $1 million over the rest of 2010 if he's acquired.

An additional 1.5 wins this year would make Oswalt worth 3.6, 3.1, and 4.4 wins over his previous 3 seasons entering next year. He'd have to be projected, entering his age 34 season, to be about a 3.5 win pitcher next year. At $4.4 million per win, that makes him worth $15.4 million next year, about half a million less than the team would owe him. If we assume a decline of another half a win in Oswalt's option year and a 10% inflation rate for free agent value, Oswalt's 3 wins in 2012 are worth $14.4 million. So trading for Oswalt gains the team $1 million this year and costs the team $2.2 million over 2011 and 2012. Simply put, acquiring Oswalt is worth MINUS $1.2 million.

Some have argued that the team could work this deal so that they could decline Oswalt's 2012 option. That helps the team a lot, right? Not so much. Declining the option would cost the team $2 million but assuming the option (as you see in the paragraph above) costs the team just $1.6 million. The team is better off picking up Oswalt's option, assuming he's still projected to be a 3 win player in 2012, than it is declining the option.

This analysis has left out the possibility that the Cards might receive compensation when Oswalt becomes a free agent. This assumes that the Cards would offer a 35 year old pitcher in decline arbitration when, if he accepted it, he'd be likely to receive more than $16 million. I think, therefore, that it's unlikely that the team would make that offer but, for our purposes, we'll assume that there's a 50% likelihood that the team offers and has the offer rejected. According to Sky Kalkman's research on free agent compensation, type A free agents are worth about $7.8 million in compensation. A 50/50 chance at that $7.8 million means Oswalt is worth, at most $2.7 million to the Cardinals.

So what's Shelby Miller worth? Almost every publication pegs Miller as a top-50 prospect and Victor Wang's research on prospect valuation has top-50 ranked pitchers as worth $15.9 million. Using this as a basis, Miller, by himself, is worth more than $13 million more than Oswalt is worth. Trading Shelby Miller for Roy Oswalt would be a huge win for the Astros whether or not the Cards pick up Oswalt's 2012 option.

Some are likely to say something to the effect of, "but Miller's not guaranteed to do anything. He might flame out. He might become Anthony Reyes." This is true, of course. Sometimes top-50 pitching prospects flame out. And sometimes they become Roy Halladay. Miller's valuation is an average of the value that top-50 pitching prospects have provided over time; it's not his peak value. Pitching prospects, as we all know, are inherently risky but so is counting on 33, 34, and 35 year old pitchers to be above average producers. Miller might fade away but he also might turn into a perennial All-Star. Right now, he's worth $13 million more than Roy Oswalt.

You could do similar analysis involving Dan Haren as well. Haren stands to make about $3 million over the rest of 2010, $12.75 million over 2011 and 2012, and there's a $15.5 million option w/ a $3.5 million buyout for 2013. Haren's considerably younger than Oswalt, turning 30 in September, and has been more than a 6 win pitcher over the last 2 years. He's having a bit of a down year this year, primarily due to some bad luck w/ regard to balls in play and balls flying out of the ballpark, and is projected to be about a 4 win pitcher this year. If we project him as a 4.5 win pitcher next year, declining by half a win over 2011 through 2013, he's worth about $17 million over the next 3 years. Haren's much more valuable over the length of his contract than Oswalt is. He's younger, cheaper, and better. I don't know that the team could fit Haren's salary into the team's budget, assuming it wants to resign Pujols but, if so, he would be worth Shelby Miller. Roy Oswalt simply isn't.

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