The San Diego Padres appear to be making it widely known that they plan to trade their ace Jake Peavy. Peavy is one of the most valuable pitchers in baseball. He pitches well, he pitches a lot, and he’s just entering his prime. For these reasons, the Padres signed Peavy to an extension less than a year ago. The new contract locks Peavy up for the next four seasons at a total price of $60 million ($15 million/year). There is also a $22 million team option for a fifth year.
My model estimates that he will be worth a total of $72 million ($18 million/year) over the next four seasons. His projected value for the optional fifth season is equal to the $22 million salary that would be owed to him. Thus, he will generate approximately $3 million more than he costs per year for the next four years. Also relevant is the fact that Peavy did spend some time on the DL this year with a “sore elbow.” Though an MRI revealed no problem, and he pitched fine after the DL stint, teams may be wary of a future injury. If we view Peavy as a financial asset, we can ponder what Peavy might bring in return on the trade market.
$3 million a year doesn’t buy a lot of major-league talent. That buys a decent reliever or a bench player. But it does buy is potential major-league talent with a high upside. For every Evan Longoria there are several Andy Martes. I suspect that the Padres are trading Peavy because they don’t see winning in the near future—though, strangely, the Padres are going to offer a contract to Trevor Hoffman—so I expect the Pads are looking for a prospect.
What kind of prospect can you get for $3 million a year for four years? That is a question that I am investigating right now. I am in the early stages of finding an answer, but from what I can tell from what I’ve done so far is that the expected value of even the best low-level prospects is low. Thus, I think Peavy’s contract will yield sufficient return to generate a top-tier prospect.
There has been much speculation about the possibility of Peavy landing with the Braves. However, I don’t think this will happen unless the Braves part with Jason Heyward, Tommy Hanson, or Jordan Schafer. And even one of these guys might not be enough. (For those of you who are high on Freddie Freeman, call me when he puts up some decent numbers above Low-A ball.) Frank Wren has stated that Hanson and Heyward are off limits. I don’t know what to think of Schafer, but apparently the Braves don’t have him on the public no-trade list.
Another possibility is Kelly Johnson. He has three more arbitration years left, which would give some value to the Padres. But, I don’t know enough about San Diego’s situation to know if they could use him. And then we have to wonder when the Padres think they’ll be competitive again and how much cash they want to free up. If they think they can contend in 2010 and just want a few more dollars to shore up some other areas of the team, then a Peavy-for-Johnson swap might work.
Anyway, I really don’t like to speculate about potential trades because there are too many unknowns involved. But, I think it is unlikely that the Braves get Peavy without giving up Heyward or Hanson. The main point of this post was to assess what Peavy is worth to the Padres, and I think his contract is good enough to net a top prospect.