Baseball’s business season got underway immediately after the Washington Nationals won the World Series last week, and perhaps no player will be the subject of more speculation than newly minted champion and free agent third baseman Anthony Rendon.
Rendon is coming off a dream season, the best of his seven-year career. He set career highs in home runs (34), batting average (.319), on-base percentage (.412) and slugging percentage (.598), creating runs at a rate that was 54 percent higher than average after taking into account league and park effects. Only the Houston Astros’ Alex Bregman was better (68 percent higher than average) among third basemen who qualified for the batting title.
Rendon was also clutch in the playoffs. He went 20 for 61 (.328) with three home runs during the championship run and helped his team score eight more runs than expected given the men on base and outs left in the inning of each of his postseason plate appearances. His performance in the seventh inning or later in the Nationals’ five elimination games was sensational: walk, double, home run, double, home run, double and home run, the last contribution a solo shot off Zack Greinke in the seventh inning of Game 7, the Nationals’ first sign of life in that contest.
There won’t be many free agent third basemen on the market. Beyond Rendon, the only other free agent with enough plate appearances to qualify for the batting title is Josh Donaldson. Martín Prado, Todd Frazier and Ryan Flaherty also will hit the market, though it was reported Wednesday that Prado is considering retirement. According to Dan Szymborski’s 2020 ZiPS projections, not only is Rendon expected to be the best-performing player from this group, he is expected to be the best-performing free agent available among all position players.
The Nationals offered the 29-year-old a seven-year contract in the range of $210 million to $215 million in September, but that deal included deferral payments to be paid seven years after the contract expires. If that is the case, this offer is significantly below market value for two reasons.
The first is any deferred payments, no matter the time frame, lower the present-day value of the contract. If we use a simple discount rate of 2.2 percent, the expected rate of inflation from 2020 to 2024, and split the money evenly over a 14-year period (and only discount the second half of the 14 years, not the first), the present-day value of Washington’s offer to Rendon is approximately $192 million, a sizable difference from the high end of the raw total reportedly offered.
The second reason is the eight-year, $260 million contract extension that the Colorado Rockies and their all-star third baseman, Nolan Arenado, agreed to in February. Since 2013, the year Rendon and Arenado made their major league debuts, Rendon has been as productive as Arenado, with Rendon worth more than one win above replacement more than Arenado over that span. Arenado has racked up more hardware — this week, he beat out Rendon for his seventh straight Gold Glove.
|Nolan Arenado||2013 to 2019||22 to 28||.295||.897||31.3|
|Anthony Rendon||2013 to 2019||23 to 29||.290||.859||32.7|
It doesn’t take a mathematician to know a career year followed by postseason success and a World Series ring is going to add up to a huge payday for Rendon. The only question: What is fair value for Rendon on a multiyear deal?
As The Washington Post’s Jesse Dougherty reported this weekend: “Arenado’s average annual value [is] $32.5 million. The Nationals’ latest offer put Rendon right around $30 million. If Washington bumps that up to $35 million, a person with knowledge of negotiations believes a deal could get done.”
Figuring out the future worth of any player isn’t an exact science, but we can get a ballpark estimate. The first step is using a modified version of Marcels, a simple forecasting system created by baseball analyst Tom Tango called WARcels, which only uses a player’s three-year weighted average of wins above replacement as its gauge of performance. That, in turn, is regressed to the mean and adjusted for age, giving us an approximation for a player over any length of time in the future.
The second step is to assign a dollar value to each win above replacement. It was calculated in 2013 that one marginal win is worth $7 million, and FanGraphs assigns approximately $8 million per win above replacement in today’s environment. This is our starting point. Because nothing costs the same as it did 10 years ago, we are going to increase the cost of a win in free agency by 3 percent each year, which is a little more than the annual rise we saw from 2013 to 2018 (2.7 percent). I used a 5 percent inflation factor in the past, but recent market conditions point to 3 percent as preferable.
By this method, Rendon’s value over the next seven years is estimated to total 28.9 FanGraphs WAR, per WARcels. Using the cost and inflation approach above pegs that at a $248 million price tag over the next seven years.
|Year||Projected wins above replacement||Projected fair value|
|Total||28.9 fWAR||$248.0 million|
"He was a key player this year. He’s been a key part of this ballclub, this franchise, this community,” General Manager Mike Rizzo said of Rendon after Game 7. “We love him, he’s near and dear to my heart, and we’d like to keep him.”
We’re about to find how much the Nationals are willing to spend to do so.