A Lesson in Playing the Market

The inimitable Colin Wyers of Baseball Prospectus summed up this off-season’s free agency in one sentence after news broke that the Boston Red Sox had acquired Andrew Bailey in a trade with the Oakland Athletics:

So the big losers this offseason are Madson and the Phillies, huh.

As you are no doubt aware, the Phillies acquired closer Jonathan Papelbon in November, agreeing to a four-year, $50 million contract with a fifth-year option. This was days after Madson and the Phillies reportedly agreed to a four-year, $44 million deal. For a still-unknown reason, the Madson deal fell through, allowing the Phillies to pursue Papelbon.

GM Ruben Amaro has always been aggressive in free agency, often to his own detriment. He attempted to act before the market settled when offering contracts to free agent Raul Ibanez (in December 2008) and soon-to-be free agent Ryan Howard (in April 2010). The Ibanez contract turned out to be a net loss and the Howard contract actually looks worse now than it did at the time of signing — as hard as that is to believe. Similarly, the Papelbon contract falls into that same group as it is by far the most expensive contract awarded to a reliever thus far. (The second-largest contract belongs to Heath Bell, who signed with the Miami Marlins on a three-year, $27 million deal.)

As it stands now, Madson figures to get significantly less than what was offered by the Phillies, both in terms of years and money. He and agent Scott Boras have to be feeling sour about sticking to their guns in search of a long-term contract like that of Papelbon. With the Red Sox having acquired Bailey, one of the few remaining suitors is off the board meaning that Madson’s leverage is significantly weakened, if not outright obsolete. Madson will likely have to settle for significantly less money and only two or three years — perhaps even less than what Bell got from the Marlins. This, despite the fact that he and Papelbon are comparable in many ways, including age (31) and defense-independent metrics.

When and if Madson signs, his contract will be completely dwarfed by that of Papelbon. It will be then that Amaro realizes his mistake in jumping the market yet again, and the Madson-Boras team will realize their mistake in being inflexible. The lesson, boys and girls, is patience. The losers of the off-season, as Wyers described them, respectively displayed a complete lack of patience, and entirely too much patience. The equilibrium is somewhere in between. Or just roll with a thrift store bullpen.