What Kind of Trade Value Does Hanrahan Have?

Over the weekend, we learned that the Texas Rangers have inquired on Joel Hanrahan, making this the second instance that the Rangers have been connected to Hanrahan.  The Pittsburgh closer currently has a 1.66 ERA and is 13-for-13 with save opportunities, along with a 16:5 K/BB ratio in 21.2 innings.

Normally when a trade rumor is brought up, especially a “Team A is interested in Player B” rumor, it leads to the inevitable “Who are the top prospects on Team A, and which one(s) can we get for Player B” talk.  Usually, these talks end up over-valuing the home team player, and expecting too much.  Go to any forum right now, and you’re going to see the names “Martin Perez”, “Jurickson Profar” and more being mentioned in a potential trade return, and often they are mentioned in the same return.  Or, maybe you’ll see a “maybe we can get Michael Young” brought up.  In either case, Hanrahan is being over-valued.

The reason people are over-valuing Hanrahan in this case is beyond the normal home-team bias.  Hanrahan is having a great season, and the Pirates are two games under .500 in late May.  The bullpen looks great, although that’s mostly because it’s anchored by Hanrahan.  Evan Meek and Chris Resop have both struggled at times this year.  Jose Veras is having a great year, but no one would be comfortable just giving him the closer’s role.

The idea of trading Hanrahan for the right return makes a lot of sense, even if it does put the current bullpen in question.  However, the “how will this affect the bullpen” aspect can only go so far in terms of adding value to a trade.  That’s not going to be enough to get you an extra top 100 prospect thrown in to the deal.

So what is Hanrahan worth, just based on his performance, and not considering the Pirates’ situation? Using projected values (calculated as [(WAR*$5 M) – Salary]) and Victor Wang’s research on prospect values, we can figure out some estimates.  Note that I’m using $5 M because that was the reported value on the open market this past off-season for one win above-replacement level.

(If you want to skip the details and get right to the value, don’t read the next four paragraphs.)

First of all, Hanrahan’s value is extremely subjective.  Last year he put up a 1.4 WAR, and I think an optimistic projection for this year would be 2.0.  Closers tend to be over-valued by fans, although the actual values are much lower than expected.  Jonathan Papelbon, in his best years, was around a 3.0.  In Mariano Rivera’s years as a closer, he was only above 2.6 on three occasions, and never above 3.3.  Hanrahan is good, but I wouldn’t say he’s one of the best in the game, which is why I’d put him at 2.0.

So for starters, we will list Hanrahan’s WAR at 2.0 for the 2011, 2012, and 2013 seasons (the years he is under control for).  The next step in figuring out his value would be to figure out his salary.  We know his salary this year ($1.4 M).  What we don’t know is how much he would make going forward.  If we use his 2.0 WAR as a guideline, we can figure out some estimates.  In year two of arbitration, the general rule of thumb is that a player’s salary is 60% of his value.  In year three it is 80%.  Using a 2.0 WAR, we can estimate that Hanrahan’s salaries would be $5.6 M and $7.5 M in his final two arbitration years.

Those would be huge jumps from his current level, although if he does have success in the closer role, the arbitration process could be very friendly to him.  The higher salaries actually work well for the purposes of figuring out his value, as they provide a conservative estimate.  Hanrahan’s value, with a 2.0 WAR, would be around $10 M a year.  If you deduct his salary, you get the net value.  Obviously, the higher the salary is, the lower his end value would be.

The final step is estimating whether Hanrahan would be a Type A or Type B free agent.  We also have to consider whether there would actually be a compensation system by the time Hanrahan is eligible for free agency, which would be after the 2013 season, affecting the 2014 draft.  With a 2.0 WAR, I think we could assume Type A status.  However, because there is uncertainty surrounding the compensation system, I’d bump that down to Type B, which is valued at $2.5 M.

So what is Hanrahan worth?  Let’s add it up:

Two notes: (1) I adjusted the 2011 figures to represent 70% of the season, and (2) the $15.9 figure includes the $2.5 M Type B status.

With Hanrahan’s value estimated at $15.9 M, we can start to get an idea as to what he would fetch in a trade return.  Looking at Victor Wang’s prospect values, the $15.9 M would fetch a top 50 pitching prospect, or a 51-100 hitting prospect and maybe another player.  Baseball America rated Martin Perez, a left handed starter, as the 24th best prospect in baseball prior to the season.  They rated Jurickson Profar, a shortstop in A-ball, as the 74th best prospect in the league, prior to the season.

Even if you go with lower salaries for Hanrahan in 2012 and 2013 (such as $3.5 M and $5.5 M), he’s not going to have enough value to fetch both prospects.  However, because he’s a strong closing option, and because he has a few years of control remaining, he could fetch one of the two prospects.

Either player would be a tremendous return for Hanrahan.  Perez is a potential top of the rotation pitcher who currently has a 2.31 ERA in 46.2 innings at the AA level, along with a 48:23 K/BB ratio.  Profar is only 18 years old, and is in full season A-ball, currently with a .269/.389/.513 line in 119 at-bats.  He has the ability to stick at shortstop, and be productive there for the long term, so while he’s far from the majors, he would provide some value to the Pirates in the long run.

Of course you have to consider the old “it takes two to make a deal” saying.  First of all, do the Rangers share the same value of Hanrahan as I listed above?  Second, would the Rangers even consider parting with Perez, a 20 year old left hander in AA who can touch 95 MPH with his fastball, or Profar, an 18 year old shortstop in full season ball?  Perez and Profar were the top two prospects in the Texas system.  Either one would be a lot to give up for a set up man, which is the role Hanrahan would play in Texas.  The value might be fair, but if Texas doesn’t want to trade those players, the value is irrelevant.

There’s also the Michael Young talk.  Young is easier to match up to Hanrahan, since he has a major league salary, and has a track record for his WAR.  He’s been around 3.0 the last few years, so we’ll go with that figure.  However, Young has 10-and-5 rights, meaning he could veto a trade anywhere.  It’s unlikely that he would accept a deal to Pittsburgh.  Even if he would, the Rangers would have to pick up salary, since his 3.0 WAR and $16.0 M a year salary project to even value.  In short, that means that if the Pirates picked up all of his salary, they could also add Profar to the deal to get a match value-wise.

We now know what Hanrahan is worth.  Any talk about how a deal needs to include both Perez and Profar is an extreme over-valuation.  One of those two players would be reasonable, although it’s unlikely that you’re going to get anyone else in the deal.  We also have to consider the fact that maybe Texas wouldn’t want to deal either player, making any talk of a deal irrelevant.  That would also mean that any deal would require the Pirates to take on three lesser players, rather than one stud prospect.  An example of a “lesser deal” would be something like left handed pitcher Robbie Erlin (rated 4th in the system), third baseman Mike Olt (rated 7th in the system), and possibly even shortstop Luis Sardinas (rated 8th in the system).  That wouldn’t be a bad return, talent-wise, although Erlin and Olt are currently in high-A, and Sardinas will be in short season ball this year at the age of 18.

Looking at it from the other side, the Pirates don’t have to do a deal.  It wouldn’t hurt them at all to keep Hanrahan.  I’ve mentioned that the Rangers might not want to trade Perez or Profar.  The Pirates have the same rights with Hanrahan, which means that either one side has to budge, or no deal will be completed.  Considering the Rangers are reported to have a low interest, I’d lean towards the latter happening.

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