The Oddity of the Jeremy Hellickson Qualifying Offer
It seems like a yearly occurrence, but people are complaining about free agent prices again. Even though many items in a free market increase in price relative to inflation, the price of a win in baseball free agency climbs ever higher and higher; it’s crazy to think that as recently as 2004, a win was worth about $3.5 million on the free agent market. Today, there’s a good chance it eclipses $8 million.
The flip side to a thin free agent market is that fewer players are leaving major league rosters, so there are fewer holes to fill. This also means, though, that the available talent could force teams into the position of bidding wars, seemingly driving up the price of wins even when there isn’t much to bite at during the offseason.
Think about pitching, something that seems increasingly more scarce in modern baseball. Based on available pitching, the best pitchers available will be: Jeremy Hellickson, Ivan Nova, Rich Hill, and Jason Hammel. Nova was cast away by the Yankees for a pittance, Hammel’s option was declined without much fanfare, and Hill has a hand rife with blisters.
That brings us to Hellickson. Just a few days ago the Phillies extended Hellickson the qualifying offer, which this year is set at $17.2 million. That… is seemingly absurd. (The key word is seemingly). My first reaction would be shock to a number like that, based on the following facts: Hellickson has never pitched more than 200 innings in a season in his career. He has had seasons with respective ERA-‘s of 88, 76, 80, and 90, but he also has seasons of 134, 122, and 113 sprinkled in from 2013-2015.
What you’re paying for might be a pitcher a standard deviation better than average, or a standard deviation worse. A contending team might have to flip that coin. He has never had an average fastball velocity above 91.3 mph in a season, and he has never posted a strikeout rate above 7.63 per nine innings. He has posted a HR/9 rate above 1 in every season he has pitched in. Those are the facts.
What is also a fact, or what may seem like a fact given what we know about the market, is Hellickson likely to turn down that offer. Chris Cotillo of MLB Daily Dish seems to think so, and MLB Trade Rumors believes he will get a deal near four years and $60 million, likely the highest amount for a pitcher this offseason.
Again, this all seems crazy. But, think about last year. Ian Kennedy received five years and $70 million, Jeff Samardzija got five years and $90 million, and Wei-Yin Chen got five years and $80 million. This is normal.
We are currently in the fastest period of growth in baseball’s history; between new TV deals, new ad revenue in the online sphere, and the burgeoning MLB Advanced Media that is revolutionizing streaming across multiple sports and enterprises, baseball seems like it is on a trajectory for more wealth in the future.
This is a trap, of course. It never feels like a bubble until the bubble pops, and that is coming. What makes Hellickson such an oddity in my mind isn’t the fact that this isn’t a fair market rate, it’s that prices have risen to the point where the qualifying offer is starting to exceed what a maximum yearly deal was not too long ago. I’m not against this, obviously. As long as the sport is growing, I think it’s immensely important that labor takes a piece of the pie, but I don’t think we should forget there are warning signs. Viewing amongst younger audiences is shrinking, and baseball is cracking down on social sharing of their content. TV deals are becoming less and less desirable among—again–younger audiences who don’t want to pay for comprehensive cable packages.
Until baseball adjusts to what is a changing demographic—because let’s be honest, this is an older audience —this honeymoon doesn’t last forever. We may go another decade before salaries slump and revenues stagnate, but that day will eventually come. As long as prices continue to go up, buying wins in the present will end paying themselves off as a function of what those wins would cost in the future. It’s blatant market speculation, but it has been a business model for most of modern free agency.
Even if Hellickson accepts, the Phillies can afford this, and I don’t think it’s a bad bet. They don’t have any salary obligations, and he’ll likely fill a hair under 200 innings in 2017. But if Hellickson is a flare as to what the market is going to look like, then we’re in for a ride. The availability of talent is thin, and the prices will be pushed farther into the stratosphere. Good for the players in making their services valuable—and hopefully they will extend their gains in the new Collective Bargaining Agreement—and good on the owners for putting down cash when they need to; they’re just hoping that the good times roll.