Signing Dallas Keuchel could cost the Yankees both more and less than any team in MLB

Through two months of the season, a pair of last winter’s premier free agent pitchers, Dallas Keuchel and Craig Kimbrel, remain unsigned. With the Yankees’ rotation continually taking on water, as CC Sabathia hits the injured list and James Paxton, Luis Severino, and Jonathan Loaisiga linger on the IL, they could use another arm immediately. Of course, with the MLB Draft just a week away, it’s likely both free agents will sit on the sidelines until they can market their services without the looming specter of draft penalties.

With the draft nearing, FanGraphs’ Craig Edwards performed an insightful analysis into what exactly each team stood to lose if they took the plunge and signed either free agent right now. The current CBA’s rules with regard to draft pick compensation are fairly arcane, with different penalties in place depending on whether a team paid the competitive balance tax, or how many qualified free agents that team signed. Edwards’ piece handles all the minutiae to calculate just how much Keuchel and Kimbrel would cost every MLB organization.

I encourage you to read his piece, as it thoroughly incorporates FanGraphs’ previous analysis into the value of draft picks and international money. The upshot, though, is that the Yankees, both in terms of raw dollars and in terms of the value of the assets they would forgo in signing a qualified free agent before the draft, stand to pay as much as any team in the league.

If the Yankees signed Kimbrel or Keuchel, they would forfeit the 38th selection in the draft, the second-highest possible draft pick penalty, behind only Arizona, who would theoretically forfeit the 33rd pick. FanGraphs estimates that the present value of the 38th pick in the average draft is about $8.1 million. The Yankees would also stand to lose $0.5 million worth of international slot money, which FanGraphs estimates is worth $2.5 million in present value.

Together, that means the Yankees would incur a cost of $10.6 million in present value in terms of picks and international money in order to sign a premier free agent, the highest in the game. Contrast that with, say, the rival Rays, who are rumored to have interest in Keuchel. Tampa Bay would give up the 40th pick, but no international money, for a total cost of $7.6 million in present value.

The Yankees’ current CBT payroll sits at $226.7 million, third-highest in MLB, so they would have to pay CBT overages in the event of a signing as well. If they signed Keuchel, for example, to a contract that paid him $12.3 million through the remainder of the season, for a prorated annual rate about equal to that of the qualifying offer, they would incur about $4 million in additional penalties.

Overall, the Yankees, in this hypothetical scenario in which Keuchel accepts just a one-year offer at a relatively low rate, would stand to fork over some $27 million, combining the actual cost in pure dollars of signing Keuchel, and the value of the picks and international money. That’s a hefty sum for roughly a half-season of a good but declining player, one that fits a need.

From this view, looking purely at the monetary value the team would surrender in order to sign Keuchel, the Yankees would pay more than virtually any team in baseball. Yet conversely, if we examine the actual nature of the assets the Yankees would yield, they perhaps stand to lose as little as any club in the game.

For one, we can dispense of the pure financial cost fairly easily. At the risk of dredging up seemingly endless discussion of the team’s finances (spoiler: the Yankees have absurd amounts of money to spend), even paying luxury tax penalties in signing Keuchel would be just a drop in the bucket to the Bombers. Paying $17 million, or $20 million, or even $25 million would hardly register. Plus, signing Keuchel to any prorated deal that pays him under $18 million for the rest of the season wouldn’t even push the Yankees over the dreaded final luxury tax threshold of $246 million.

Moreover, while the Yankees would be hit harder than any other club in terms of overall value of picks in the international bonuses, the value those assets represents might mean less to the Yankees than all of the league’s other 29 teams. Consider that $8.1 million figure FanGraphs assigns to the 38th pick. FanGraphs also estimates that prospects with a FV (future value) grade of 45 are worth around $6 million to $8 million. Basically, forfeiting the 38th pick means the Yankees lose a chance to pick a prospect that on average will turn out to be about a 45 FV.

The Yankees’ system, while depressed in terms of star-level prospects, is loaded with the shakier lottery ticket prospects those 45 FV’s represent. FanGraphs’ own Yankees prospect list pegs 11 farmhands at 45-50 FV, with nearly two dozen more knocking on the door at 40 FV. The kind of prospect that a late-30’s pick typically yields is the exactly the kind of prospect the Yankees simply have in spades right now.

In all likelihood, the Yankees will not have to surrender much extra value if they want to sign a big free agent. Keuchel and Kimbrel appear ready to wait out until after the draft, which would render much of this analysis obsolete. Right now, though, in spite of the fact that the Yankees would incur a greater cost than any other team, there might not be a single team for whom that cost would appear so meaningless. At the end of the day, what’s another lottery draft pick and some profits in the face of a baseball player that can help a team win baseball games?