What is a free agent worth? $8M AAV per WAR. That's what they all tell me. It never felt right because it never seems to work out that way, ESPECIALLY for the top end of the FA market.
It is based on this article ( https://blogs.fangraphs.com/the-cost-of-a-win-in-free-agency-in-2020/ ) as well as an older article that he reference a couple times
There are two problems here.
1) He is relying on future WAR projections, attempting to quantify the Qualifying Offer silliness (not his silliness... the system's silliness), as well as some other assumptions. All of these things might seem logical on their own but once you roll them all together things get messy and lack real world context.
2) That's not how people are using his work. They are looking at past WAR and saying "based on his 2.3 WAR average the last two seasons he's worth 20M in free agency." -- Spolier Alert: 2.3 WAR players are lucky to get half of that in free agency --. Even for the people that might claim that they are actually saying that player provided 20M in VALUE .... That's not true either. In 2021 MLB payrolls were about $4 Billion and Players provided about 650 positive WAR. So really in that context a "WAR" is worth $6M. ($4B/650), but that's not really what I'm after here. I'm after what is actually happening in free agency and how it correlates to past performance.
Here it is.
I looked at the top 20 free agents (according to MLB Trade Rumors) from two recent offseasons, looked at their free agent contract AAV, then looked up their WAR from the previous three seasons (fWAR in this case). I looked at it two similar ways. First was just their WAR from the season before free agency, and second I looked at it based on the average of their previous two seasons.
The average is right around $6.0M/WAR (There's that number again)
Almost nobody gets 8.0/WAR. If they do it's usually one of two special circumstances. a) They're a RP, or b) they missed a bunch of time which suppressed their WAR in a given season
The top end free agents definitely don't get $8/WAR. They are more around $5/WAR
Conclusion: We can project future value, make assumptions, and try to account for market factors all we want, but at the end of the day, the numbers are the numbers. We have baseball-wide economics telling us that the value of 1.0WAR is about $6M ($4B/650WAR) and we have front offices signing free agents at about $6M per WAR from previous seasons.
Maybe the number we should start using for projecting free agent AAV is $6M, not $8M