Finding a minimum acceptable return for Jose Quintana

Jose Quintana has not had a great 2017 so far, and it has many worried how it will impact his trade value. When a pitcher defined by stellar command and consistency takes an unprecedented big step back with both for a couple months, it’s hard to feel the same sense of security projecting him going forward. That’s unfortunate, given that the White Sox would ideally like to sell Quintana to another team in the next two months.

There’s a chance Quintana is going to be fine, though, and the question of what the White Sox should accept for him in trade is more interesting if he’s still the pitcher we know and love. Therefore, that’s the version of Quintana we’re going to consider in this thought exercise. What is “fair value” for Quintana in trade, and what is the minimum the White Sox should accept for him? Are those the same thing?

When discussing “fair value”, Quintana is not a baseball player, but an asset. The asset is defined by its potential to generate wins (i.e. talent), the length of team control of the asset, and the cost (salary) of the asset. Here’s a rough forecast for Quintana’s value as of the beginning of 2017. This is a personal estimate based on Quintana’s past performance, age, health, what I feel is a reasonable trajectory for decline, and a $7.5 million per WAR valuation. Obviously, the WAR estimates and the translation to dollars can be debated a little bit in either direction, and I understand that, but I feel that these are sufficient for this exercise.

By this forecast, Quintana has just shy of $80 million in surplus value remaining on his deal. By the time the trade deadline hits, a lot of that projected WAR for 2017 will technically have expired, but given the premium teams pay to acquire a key piece at the deadline, for trade value purposes, I’m crediting Quintana with the full amount. If this isn’t a plausible assumption, there wasn’t much reason for him to open 2017 with the team.

$80 million in surplus value can take on a lot of shapes and there’s value in concentrating projected WAR in four years of an established star player like Quintana rather than spreading it around to multiple unproven prospects and across more years of control than Quintana’s four. For this reason, I think we can say that “fair value” for Jose Quintana is a little north of $80 million in surplus value to account for the premium required to take on the risk and dispersion of the return.

However, let’s say proposed offers don’t match that price. Should the White Sox still be willing to deal Quintana? Should they accept anything less than “fair value”?

Surplus WAR (and therefore surplus value) is only useful to a team to the extent that such WAR contributes non-negligibly to the odds of making the playoffs. When the White Sox dealt away Chris Sale and Adam Eaton, thereby committing to a rebuild, the utility of short-term marginal wins depreciated to almost zero. Rick Hahn has publicly stated that this will be a multi-year process and all indications are that the White Sox will not consider investing more heavily in the team for a playoff push until the 2018-2019 offseason at the earliest. Therefore, the conclusions in the rest of this piece will rest upon the following assumption:

Quintana’s projected WAR for the 2017 and 2018 White Sox holds no value.

Despite some surprising early performances, it is not looking likely that the White Sox are going to contend in 2017 and with Melky Cabrera, Todd Frazier, Derek Holland, Anthony Swarzak, and Miguel Gonzalez set to leave via free agency (or trade) this year, there would be plenty of holes to fill before competing in 2018 would look feasible. The pitching departures could and should be filled internally, but the White Sox aren’t going to trade prospects for position-player help, so unless they unwisely speed up the rebuild (again) and use the freed up cash to make big investments, prospects of making the 2018 postseason look grim.

The value of Quintana to the White Sox should therefore be lower than his value to teams that have designs on competing over each of the next four years (e.g. the Yankees, Astros, Rockies, Cubs, Nationals, etc.). Due to the decision to rebuild, Jose Quintana’s value to specifically the White Sox tanked the second they decided to send Chris Sale packing for Boston. That materially changes the lowest price the White Sox should accept when dealing him away. When considering the minimum acceptable return, the concern is not whether the value is fair, but rather the answer to the following question:

“Does this trade improve the White Sox’ chances of winning future championships?”

From our core assumption, Quintana can only contribute to future White Sox championships in 2019 and 2020 under his current deal. According to the above chart, about 60% of Quintana’s surplus value will expire in 2017 and 2018. If he remains on the White Sox, that value will disappear fruitlessly. That means that the minimum offer they should accept for Quintana is about 40% of what a team theoretically should be willing to pay. Should Quintana stay put, his true worth will be merely his age 30-31 seasons at $10.5 million apiece. That thinking sets up our baseline for a minimum return:

The return for Jose Quintana must, at the beginning of the 2019 season, be projected to be at least as valuable as the option to retain Quintana for two years and $21 million.

Quintana is a strong asset at 2/$21M for his age 30-31 seasons, but at about $30 million in surplus value (by my 3.5 WAR/season estimate), he’s not a tremendous one. In fact, a league average position player making the league minimum would project to produce slightly more surplus value in 2019-2020 with the added benefit of additional years of cheap team control. The same could be said of an elite relief pitcher or a durable number-three starter. Prospects that at least meet those projections are all over the Top 100. In fact, if you look at FanGraphs’ prospect valuations, Quintana’s worth to the White Sox is approximated by any future value (FV) 55 hitter or any FV 60 pitcher. That’s any hitter in the top 70 and any pitcher in the top 20. These players carry much more risk than Quintana and spread their value over more seasons, but that can be offset by the inclusion of other, lesser players in the package that need not be on the Top 100 radar.

This threshold is much lower than the speculative trade proposals we’re used to seeing and more importantly, lower than any rational major league team with designs on competing in the near-term would value Quintana. It’s true that we don’t know specifics on what was offered over the winter, but there’s simply no way that the best offer Rick Hahn received represented less than 40% of Quintana’s fair value. Pretty much any non-rebuilding team would have been falling all over itself to get Quintana at that price. The offers may not have been good, but viewed through this lens, they ultimately would have met the minimum requirements.

Therefore, when evaluating Rick Hahn’s decision to not deal Quintana over the winter, the important question isn’t whether what was offered approximated fair value, because the White Sox don’t ultimately need fair value — or even close to it — to better themselves by striking a deal. Rather, we should judge that choice by whether the return was likely to go up or down over time. Clearly, the market price looked low enough to Rick Hahn that betting on Quintana’s performance, his durability, and an increase in market demand by July made sense to him.

We’ll likely never know the opportunity cost of that decision, so let’s instead look ahead to the trade deadline. Assuming a resurgent Quintana, Hahn will again need to decide whether to deal his ace or hold him for the future. If he again decides to wait around for something better, however, he won’t have the luxury of his asset value holding constant this time. Quintana’s trade value will depreciate heavily once August 1 hits because the 2017 component of the asset contract will effectively expire. Whatever offers are out there aren’t going to get any better after July 31 (barring irrational behavior), so the right play will probably be to sell him to the highest bidder.

That covers the scenario in which Quintana quells fears before the trade deadline and we’re still talking about a premium pitcher. Before we conclude, let’s briefly consider a few less-happy scenarios. How does the minimum return for a trade change if...

No. 1. Quintana continues to struggle, but the White Sox (let’s assume justifiably) believe in him being a well above-average pitcher in future years

In this scenario, we still believe in Quintana’s above forecast for 2019-2020 (about $30M in surplus value), so our standard for a minimum acceptable return remains the same as above and he should be dealt if there is an offer that exceeds it.

If his image becomes so tarnished that no team is willing to offer that minimum (which is unlikely), it’s doubtful a Quintana trade will ever make sense. There’s a chance Quintana could rebuild his market worth before the winter or the 2018 trade deadline, but once 2017 has elapsed, his fair value will drop and a greater percentage of his remaining surplus value will overlap with the White Sox’ competitive window. That means the lowest acceptable percent discount relative to Quintana’s new fair value will significantly increase. There’s obviously a gap between what the White Sox think Quintana is worth and what other teams think he is worth; that’ll only become a bigger obstacle to a trade once the White Sox will have a use for a greater percentage of his remaining years, even if Quintana’s stock rises.

No. 2. Quintana continues to struggle and the White Sox no longer think he projects as a well above-average starting pitcher for 2019-2020

I think this is only likely in the event of a Shieldsian performance over the next two months or legitimate concerns about Quintana’s health begin to surface. If this turns out to be the case, the White Sox should theoretically be willing to accept much less for Quintana. However, other teams probably won’t want to pay a premium at the deadline for a pitcher who looks awful, hurt, or both, so this scenario ultimately points to retaining him and hoping for a bounceback. Should Quintana later rediscover himself, the logic from scenario No. 1 would apply and the White Sox would probably wind up keeping him through 2020, having missed their window to improve their future from a trade.

No. 3. The White Sox think my WAR pattern in the above chart represents a too-generous forecast for decline

Obviously, if we think Quintana’s projection should dip by more than 0.5 WAR over the next few seasons, even more of his value is front-loaded to the years for which the White Sox don’t need him and our minimum acceptable return should be adjusted downward accordingly.

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There’s a school of thought out there that the White Sox should not accept anything less than fair value for their assets in trade. In many circumstances, that’s the right way to approach the trade market, but in this case, that strategy would be stubbornness to the point of self-defeat. We loathe the idea of selling such a popular star player for a discount, but deciding instead to hold onto Quintana through 2020 effectively slashes his worth by more than half as it is. In the event the market isn’t as robust as the White Sox would like, they would do well to avoid getting bogged down by the stigma of selling low. It’d be tough to read “White Sox Don’t Get Enough for Quintana” think pieces, but it’d be tougher to accept the White Sox failing to involve one of their three biggest trade chips in what’s supposed to be a thorough rebuild.