23 October 2014

On Nick Markakis and Why the Orioles Should Pick Up His Option

The World Series is still being played, but teams have started to put their offseason plans in motion.  In fact, just earlier this week, the Philadelphia Phillies decided to jump the market and aggressively sign Jerome Williams (cue the “final piece of a championship team” joke).  The Orioles are no different.  They didn’t even wait for their season to end before signing J.J. Hardy to a contract extension, and that’s just the first item on the team’s offseason “to-do list.” They have a number of decisions to make regarding arbitration cases, free agents, potential free agents in 2016, and contract options.  One of the contract options deals with long-time right fielder Nick Markakis.
Nick Markakis (photo via Keith Allison)

Following Baltimore’s ALCS loss to the Kansas City Royals, Markakis finished the guaranteed portion of the six-year, $66 million contract he signed prior to the 2009 season.  The Orioles hold a club option on him for $17.5 million in 2015, or they can buy him out for $2 million*.  If the Orioles decide to decline the option, they’ll need to determine whether to give him a qualifying offer.  Because of the buyout (Markakis gets that $2 million regardless of what the team decides), Baltimore essentially has to determine if they are willing to pay Markakis $15.5 million next year.  Coincidentally, the value of the qualifying offer in 2015 is $15.3 million.

*Technically it’s a mutual option.  According to Cot’s Contracts, Markakis has the opportunity to void the club option and forfeit his buyout.

Recently, the popular opinion regarding the Markakis option is that the team will decline it.  It’s been reported by Jon Heyman of CBS Sports and Roch Kubatko of MASN.  If that’s the case, whether the team decides to give Markakis a qualifying offer remains less certain.  A qualifying offer makes sense, as it gives Baltimore a draft pick should Markakis sign elsewhere.  However, I’m not sure that’s the route they’d want to take considering his standing within the organization.  So while the Internet thinks that Markakis’ option is likely to be declined, I believe that the Orioles should exercise it.

When deciding whether or not to pick up his option, the Orioles must estimate what kind of production they expect from Markakis in 2015, and if that production will be worth $15.5 million.  Jon wrote about this back in June and presented what he believed to be acceptable contract scenarios for different versions of Markakis going forward.  Deciding which version of Markakis you get as Jon explains, isn’t an easy task considering the peaks and valleys he’s experienced during his career.  For example, offensively Markakis’ has ranged from 138 wRC+ to 88 wRC+, while defensively (according to UZR/150), he’s been as high as 11.0 and as low as -13.2.  However, it’s important to remember that both his best offensive and defensive performance occurred in 2008 and he hasn’t been more than a 2.5 win player (according to Fangraphs) in any year since then.

Looking back at 2014, Markakis graded out as a 2.5 win player according to Fangraphs and a 2.1 win player according to Baseball-Reference.  Based on the relative agreement between those two statistics, I think it’s safe to say that Markakis was worth anywhere between 2 and 2.5 wins.  Considering major league teams paid roughly $6 million per win during the offseason, and the fact that Markakis earned $15 million, he was paid almost exactly what he was “worth” in 2014.  Given that the cost of a win generally increases by 5% a year, we can estimate that a win will cost about $6.3 million in 2015 (though it could be higher).  Another 2-2.5 win season puts Markakis’ value on the free agent market in the $12.6 - $15.75 range, with his $15.5 million option (less the buyout) sitting comfortably on the high end of the range.

While I don’t think Markakis is going to be worth that much money in 2015 (nor should the team necessarily pay him that much), the Orioles don’t have much of a choice to not retain Markakis.  Not only will Nelson Cruz and Delmon Young be free agents as well, but Baltimore doesn’t have any outfielders in the minor league system that will be ready to replace Markakis should he leave (please don’t suggest Henry Urrutia or Dariel Alvarez).  If all three outfielders sign somewhere else, Baltimore’s looking at a 2015 starting outfield of Adam Jones, David Lough, and Alejandro De Aza (if he’s even tendered a contract), provided they don’t sign any free agents.

And that’s the other problem.  The list of available outfield free agents is…how do I put this…not very inspiring.  Here they are (not all of them, just “the best”):

Out of the potential free agent outfielders (as of right now), there appear to be two potential upgrades in Baltimore’s own Nelson Cruz and Toronto’s Melky Cabrera.  Baltimore will not only be competing with other teams for these player’s services, but they may not be willing to spend what Cruz and Cabrera will command on the open market (nor should they).  Additionally, several other teams have been rumored to have interest in Markakis, so it’s not a given he’d resign with Baltimore after testing the free agent waters, which could leave Baltimore with a depleted outfield and not many options to improve it.

While Nick Markakis certainly has his flaws (such as the potential need for a platoon partner), he’s a decent player whose team option (if exercised) would pay him slightly more than he’ll likely be worth in 2015.  However, considering the lack of upgrades both inside and outside the organization, the Orioles would be wise to pick up the option, if for nothing else than to prevent themselves from ending up without a viable right field option at the end of the offseason, especially with the expected return of Matt Wieters, Manny Machado, and Chris Davis in 2015.  However, if the Orioles are working with Markakis this offseason to sign a reasonable extension (maybe two-three years, for $20-36 million), then this all becomes moot.