Roy Halladay’s Trade Value

Yesterday, Toronto GM J.P. Ricciardi created quite the stir when he told several reporters that he was going to start listening to offers for Blue Jays ace Roy Halladay. He talked with Halladay about potentially waiving his no-trade clause, and both have made public statements about this possibly being the right time for a deal. Certainly, Ricciardi knows how heavy the demand is for starting pitching right now, and with the lack of availability of premium arms, the bidding for Halladay could get fierce. That is what J.P. is counting on, I’m sure.

So, if you’re a contending team in need of a starting pitcher, and the best pitcher in the game just became available, how much should you offer? What is Roy Halladay worth?

First off, the basics. Halladay is under contract through 2010. He will make about $7 million over the remainder of 2009, and is due $15.75 million next year. He will then be eligible for free agency. We know he’s worth more than his current salary, of course. $23 million for nine months of Roy Halladay is a pretty big bargain, even in today’s economic market.

To figure out Halladay’s market value, we have to answer the question of what Halladay would get if he were declared a free agent tomorrow, but then only allowed to sign a deal taking him through 2010.

First off, let’s look at Halladay’s win values over the years. Since 2002, he’s been worth about 46 wins in 1,585 innings, or right around an average of six wins per year. He’s on pace for about a seven win season this year, and he shows no signs of slowing down. Going forward, ZIPS projects a 3.21 FIP and 106 innings in his remaining 15 starts this year, which would be worth another 3.5 wins. Halladay is a +6 to +7 win pitcher, easily the best in baseball.

The market value for wins took a tumble on the low end last year, but at the high end, teams were still willing to pay around $5 million per win for premium free agents. Based on that, we’d say that Halladay’s fair market value is something like $30 to $35 million per season. However, those $5 million per win contracts were all long term deals, which carry extra risk to the organization and therefore pull down the annual average value that teams are willing to pay. With only a 15 month commitment, the long term risk with Halladay is substantially lower, and teams should (and will) pay a premium for that risk avoidance.

So, for a Cy Young contender only under contract through 2010, $5.5 million per win is probably a more accurate number to use. That puts Halladay’s market value between $33 and $38 million per year.

If we settle on $35 million as a middle ground, which puts him around a +6.5 win pitcher, we then Halladay’s value through the end of his current contract is about $52 million – a full year of 2010 plus a half year of 2009. But, you can’t forget about the fact that he’s very likely to be a Type A free agent at the end of 2010, and the acquiring team would be able to recoup two quality draft choices if they didn’t re-sign him as a free agent. Thanks to some good work by Victor Wang, we can see that the value of Halladay’s Type A status is around $8 million or so.

$52 million for Halladay’s performance + $8 million for the draft picks = $60 million in total value. He will be paid $22 million over that time frame, so 60-22 = $38 million.

To acquire the Jays ace, teams should be expected to surrender something like $40 million in value.

What does $40 million in value look like? Something like three terrific prospects who are not that far from the majors. No one’s giving up players from the Matt Wieters/David Price mold, but it’s going to take several players from that second prospect tier, the top 25-50 type guys.

Phillies fans – that’s Dominic Brown, Kyle Drabek, and Carlos Carrasco. Mets fans? Fernando Martinez, Wilmer Flores, and Jenrry Mejia.

You get the idea. If the Blue Jays trade Roy Halladay, they’re going to ask for the moon. And they should. He’s worth it.




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Dave is a co-founder of USSMariner.com and contributes to the Wall Street Journal.


45 Responses to “Roy Halladay’s Trade Value”

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  1. Steven says:

    GM Roy Halladay is trading himself?

    I think you mean J.P. Ricciardi there.

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  2. Joel says:

    If this happens it’s going to make the Haren trade look pedestrian in comparison.

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  3. Brian says:

    I get the feeling that it would take more than 3 prospects. The Bedard trade was 5 players, and I think that would be fair.

    Say the Nats sign Strasburg. What would the deal look like if he was traded for Halladay? Would it be even money? Of course the Nats have no use for 1.5 years of Halladay but assume they’re contenders.

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  4. big baby says:

    why is halladay not demanding a massive extension from his new team?

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    • Davidceisen says:

      He gonna get it anyway, and probably can get more by trying to wait out the economy.

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    • Costa Galanis says:

      He probably doesn’t feel much pressure to nail one down. There isn’t a much more sure bet to continually excel than Halladay. He can afford to bide his time and up his leverage by getting closer and closer to hitting the open market.

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      • big baby says:

        that’s why santana demanded one?

        halladay is 32, he’ll be 34 when that deal is done. he’s had some injury history.

        i can’t imagine he wouldn’t be demanding a monster extension, like almost every other ace pitcher does.

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      • Davidceisen says:

        Santana was traded during the off season. Its difficult to sign those kind of contracts during the middle of the season, after operating budgets have been spent.

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    • Matt B, says:

      because he is Roy Halladay. For all you non Canadians, you just don’t understand the type of guy Roy truly is. The team that acquires him not only gets the best pitcher in the game but a true true gentlemen.

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    • Jonny Boy says:

      He doesnt care about money, hes classy, he loves toronto and wants to win. I would hate to ssee him go.

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  5. Chris says:

    “To figure out Halladay’s market value, we have to answer the question of what Halladay would get if he were declared a free agent tomorrow, but then only allowed to sign a deal taking him through 2010.”

    I think that’s the wrong approach to calculating his economic value. Certainly for next year, you would want to compare his $15.75m with what it would take to get 6.5 net wins from the free agent market ($35m) plus the value of his type A status at the end of next year. (Those values should be discounted back to the present, so they will be slightly less than $27.25m in today’s dollars.)

    However, using the free agent approach to calculate his value for the rest of this year makes no sense because there is no “mid-season free agent market” to speak of. If the Phillies want to get an extra 3.5 wins this year, their alternative to trading for Halladay is not signing one or more free agents. Their only alternative is a replacement-level pitcher and the +3.5 wins is presumably calculated relative to replacement.

    So, to figure out Halladay’s value for the remainder of this season to a team like the Phillies or Mets, you have to answer three questions: 1) How much would 3.5 extra wins increase the team’s probability of making the playoffs?, 2) How much extra revenue would the team get by making the playoffs?, and 3) How much extra revenue would the team get over the rest of the regular season by putting more butts in the seats w/ Halladay. Multiply the answer to (2) by the answer to (1) and add the answer to (3), then subtract the $7m owed this year to get his economic value for the rest of this year. I suspect that if you take that value and add it to (the discounted value of) $27.25m, you’ll get something well above $40m, particularly for big market clubs like the Phillies and Mets who are in tight races and who get a lot of extra revenue from the playoffs.

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  6. Will Moller says:

    He’ll likely end up with either the Phillies or the Mets. Why? Because either of them become prohibitive favorites to win that division if they add Halladay, and thus, they’ll be willing to offer the most, one to trump the other.

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    • KG says:

      While I don’t think too highly of the Philly system (just an amateur perspective, of course), I think the Mets have even less to offer, and could never put together a package to bring Halladay. Even with F-Mart.

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    • David says:

      Sad as it makes me to say, the Mets might be sunk this season. It’s possible they’ll stay with in a few games of the Phillies until August, and then it’s possible that their injuries will resolve themselves well and they’ll storm the division. I can only hope. But I wouldn’t bet on it.

      It would be foolish to go after Halladay. And given that the Mets won’t go after Halladay in this situation, I think the Phillies will elect to keep their prospects. I could see a bidding war in the off-season.

      On another note, how much do you think a half-season of Sheffield is worth on the trade market?

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  7. Davidceisen says:

    So should a team do it? If the Phillies traded for Halladay, they would have to be considered a serious threat this year. The signing of Ibanez seemed to suggest they were in a win now at all costs mode.

    Brown likely would replace Ibanez in a few years. Drabek has great stuff, but has all kinds of concerns. Carrasco could probably be pitching in the big leagues right now and be a decent back of the rotation guy with some upside.

    Halladay would likely destroy the NL, and 3.5 additional wins would give the Phillies some comfort in the NL East. And a playoff rotation containing both Halladay and Hamels is tough to turn down. Even if the Phillies only end up making a deep playoff run, they should be able to bring in some extra money and fans, which in turn could increase payroll. Further if the Phillies let the Mets get Halladay, they could loose the division. A Santana/Halladay 1a 1b is very scary.

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  8. big baby says:

    why are people still acting like the mets are a threat in the division?

    they aren’t getting any of their players back until august, at least.

    the phillies, even if they play .500 ball, will bury them by then.

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  9. Christopher Taylor says:

    I don’t know why this is a story other than the Jays were just in NY and JP gave the standard answer on Halladay that he’s given for the past two years, “We will listen but it’ll take a ton for us to move Halladay.” Roy also gave his standard, “I’ll do as I’m told and do my best whatever situation, I’m in.”

    All signs point to Roy being very happy in the community. He likes being out of the spotlight and is involved with many charities (especially the world class Sick Kids Hospital in Toronto). He’s a man of deep Christian faith and has said on many occasions money is not a motivation in his life. His wife Brandi (who probably knows him a little) has said, “He’s embarrassed to make as much a he does.”; she has also been quoted as saying she’s extremely happy to live in Toronto and is one of the most active player’s wife in the community.

    Roy has already taken one hometown discount to stay in Toronto. There’s no reason why he wouldn’t do so again. The Jays are part of a media empire that owns the stadium, a TV network and the team. Synergy. While I can see why trading Roy for 3 (or more) top level prospects might be good for the team for the long term, the baseball market in town is soft enough that it might hurt the team quite badly in the short term.

    Also, the team has lined up 2010 as a year to compete (with the current president saying last off season that extra money might be there for missing pieces). With much of their rotation injured 2009 was sold to the fans as a year to wait for their injured arms (McGowan and Marcum to come back). Trading Halladay goes against that plan.

    To reiterate: this is a non-story. JPs answer was the same as he’s given to the Toronto media time after time. The only difference is that this time he was asked about it in New York. July 31st will come and go and Halladay will still be with the Jays. In the off-season an extension will be signed. From a distance this story might look like a story, but anyone who follows the team closely will see that this is “fully of sound and fury signifying nothing”.

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    • cpebbles says:

      You are more optimistic about Halladay re-signing than your GM is. That’s a bad sign.

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    • tom s. says:

      there’s “no reason” he wouldn’t take a hometown discount again? really? i can think of a few.

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      • RollingWave says:

        like the Jays looking even more hopeless now than they did a few years back. when the Yankees were old and creaky and the Rays were garbage.

        What’s probably worse is that the Jays are locking 1/4-1/5 of their payroll in the next few years just on Vernon Wells. who is playing at a sub replacement level so far this year. and another 1/6 or so in Rios. who is only playing better relative to the Vernon Wells standard.

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  10. Chris says:

    I think you might even be underselling Halladay’s value some.

    His marginal value for 2009 is going to be even greater, because any team that acquires him is a contender with a half season’s worth of confidence with respect to their position. And as Nate Silver showed, incremental wins are more valuable, dollar-wise, for teams on the cusp of contention. Also, it’s extremely intuitive.

    If Halladay is, on paper, a $35 million pitcher, he may be worth upwards of $25 million for 2009 alone, so long as the team that gets him has any business doing so.

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  11. Detroit Michael says:

    I was about to make the same point that Chris just made.

    The team that values Halladay the most probably is quite confident over the next 1½ seasons that he substantially improves their chances of making the playoffs. In contrast, a team that signs a 5 year or longer contract can’t be very confident that the marginal player is crucial to their post-season chances throughout the whole contract.

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  12. Xeifrank says:

    What would a package from the Dodgers have to look like?
    vr, Xei

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    • Wrighteous says:

      if i were the jays id start by asking for kershaw, which puts the negotiations in an iffy situation from the getgo. sometimes it seems like teams with one standout prospect are actually at a disadvantage when it comes to deal for a big star, even if they could still put together a good package otherwise. a similar situation happened when johan was dealt and the yanks and sox refused to part w. hughes and lester respectively. couldnt either of those two teams topped the mets package even without giving up those lester or hughes? i mean really, carlos gomez and phil humber? that johan deal was a joke…

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  13. Nomah says:

    What type of packages would the Jays accept from Boston?

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    • Jonny Boy says:

      None, they would be stupid to trade him to a team inside the division, the only way i would want a Halladay trade is if he went to the NL and they got the perfect trade. No draft picks or stupid like that.

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      • Tom J says:

        @Jonny Boy,

        No offense, but one of my pet peeves is listening to call-in shows up here with callers talking about trading for draft picks. This is not hockey, football or basketball, this is baseball: you cannot trade for draft picks. Period. Sorry to unload on you. It’s my frustration with the daily ignorance I hear up here and unfortunately for you, you get to bear the brunt of it.

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  14. Doug says:

    Good analysis. But you also have to keep in mind the risk of injury. The team that acquires Halladay gets one player. The injury risk, while low, is all on that one player. The Jays would get 3-5 players, so the injury risk is spread across those players. I think this is worth, frankly, $10 M or so in the analysis. But that’s just a guess.

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    • Kevin S. says:

      But Halladay’s injury risk is only over a year and a half. Those 3-5 players each have six years of service time to get hurt in.

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  15. andy says:

    you said halladay was a 6-7 win pitcher, easily the best in baseball. i hope you mean a 6-7 win picher year in year out is going to be the best in baseball. because i would direct your attention to one tim lincecum a 7.5 win pitcher last year, and on pace for TEN wins this year. he’s been the best in baseball the last year and a half. and i don’t see any change coming.

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  16. Hejuk says:

    How do you get from $40 million to three terrific prospects? Does anyone have a link to the calculation of the market value of a given prospect? $40 million for three equals $13 million for one, which implies an expected return of ~3 wins above whatever you have to pay one of these prospects for the duration of team control. Has someone done the legwork on the history of these prospects to determine expected return, and then compared it with what they are currently slated to get paid (incl. arbitration years)?

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  17. Adam says:

    One rumor going around is that the Jays want to package Vernon Wells in the deal to shed his contract. I’d love to see this post revisited with Wells factored in to the package.

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  18. gnome says:

    Hmmm… for Vernon Wells and Roy Halladay? Seems like a Jocketty-era Cardinals deal pre-packaged. Thrown in Ryan Ludwick, Bryan Anderson, Jess Todd, Mitch Boggs, and Kyle McClellan and that could be a solid deal if the Cards pick up Wells’ contract.

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  19. cpebbles says:

    Halladay isn’t enough to get anyone to take the Wells contract. $108.5 million over 7 years for a sub-replacement level player makes it an absolute non-starter even if you fudge Halladay’s value as above. The Blue Jays need to hide him underground somewhere and find a lookalike willing to exercise the 2011 opt-out.

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  20. Blargh says:

    Wouldn’t a team like San Fran or Colorado have a shot at it. There are two teams in the wildcard race who have both have had recent playoff droughts. Much can be said tabout the positive finacial implications of making the playoffs. Both in obvious short-term play-offs revenue and indirect increases in revenues for the next few years. I read a book from Baseball Prospectus that a playoff appearence is worth around $25mill, if I remember correctly. With a proven commodity as Roy Halladay, I’d think it’d make financial success for a contending mid-low market team to go after Roy.
    A trade of Halladay would cripple fan support in Toronto unless they got back some players who could contribute immediately. Anything $$ they could save in adding Wells a deal would probably be countered with loss in fan revenues.

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  21. Eyin says:

    Jays get Mat Gamel, Manny Parra, Tim Dillard. Brewers get Halladay.

    Gamel is a premium bat. He needs a lot of work at 3B to stick there, but the Jays could send him to AAA for the rest of this year and then eventually replace Rolen with Gamel. Parra and Dillard are two young, talented arms that could be developed. If the price needed to be even higher, I’m sure the Brewers wouldn’t mind putting Corey Hart in the mix, although the Jays don’t really need another OF.

    I’m with Braun… the Brewers really need better pitching.

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    • Matt B, says:

      that’s a stretch. I think Roy would command a bit heftier fee than a good bat/terrible fielder in Gamel and two arms.

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      • Eyin says:

        I guess in all likelihood, Gamel would be moved to 1B or DH, but he’s still an elite left-handed hitter. Parra has been bad for most of this year, but he wasn’t bad last year, and he’s had a few solid starts since coming back from AAA. Who’s going to give them more than that? Surely no one is going to give them a better hitter.

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    • SmallBall says:

      Parra is 26 going on 27. He has been nothing short of disgusting so far. His trade value is right there with Vernon Wells.

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  22. Sky says:

    Good stuff as usual, Dave.

    One quibble is that while there’s less risk in shorter contracts, you’re also paying the current dollars-per-WAR rate. If we assume that number goes up 10% each year and it was at $5M pre-2009, that puts it at $8M per WAR in five off-seasons (pre-2014.) So $30M bought 6 WAR before this season, but it’ll only buy 3.75 WAR pre-2014. To over-generalize, the expected loss of player talent matches the increase in price-per-WAR.

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  23. RollingWave says:

    The Jays franchise is sunk until they get rid of Vernon Wells contract anyway. so this is a real lose lose situation for them. Unless they somehow get out of the Wells contract they’re not even contedners after these “prospects” are nearing free agency. as sad as that sounds.

    I think this is kind of the sticking point , the biggest value for the Jays would actually be if they could get rid of Wells, but it is absurd to trade a Roy Halladay just to get rid of a contract. and whats worse is that Wells contract is so bad. that even the Yankees / Red Sox would have a hard time accepting such a deal.

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