Should the Orioles sacrifice the Draft for Free Agents?

In this off-season, the Orioles have been linked to various Free Agents that have had qualifying offers made to them by their team.  If a team were to sign these players, they would forfeit their first round draft pick as long as it is outside of the top 10.  Here are the Free Agents that have been linked to the Orioles:

• Josh Hamilton, Rangers – Angels Forfeited First Round Pick (22nd Overall)
• Adam LaRoche, Nationals
• Kyle Lohse, Cardinals

The Orioles currently hold the #23 pick, but also hold the #35 pick through the Competitive Balance Lottery.  In order to sign one of these free agents, the Orioles would have to give up their #23 pick and the other team would receive a draft pick in the upper 20’s to lower 30’s depending on other picks forfeited and received through qualifying offers.

The question is what value does the Orioles #23 pick have in comparison to these Free Agents.  Let’s examine the Free Agent Linked to the Orioles and use WAR (Wins Above Replacement) as a metric for measuring their to date and projected WAR values for their Career:

As perspective, here is a breakdown for WAR in terms of rankings:

There has been studies done in the past comparing draft pick selection to career and seasonal WAR.  One of these studies can be found at the following link : http://baseballanalysts.com/archives/2009/06/the_draft_and_w.php

The study breaks down historical WAR data for players drafted between and compared it to drafting done during the 1970’s (Orioles Farm System Magic) v. 2000 (Orioles Farm System Failure).  They come away with two formulas for use for both six-year WAR and career WAR:

Expected Career WAR = (21.67 + (-11.7 * pitcher) + (6.1 * college)) * selection ^ (-.54)
Expected First 6 Year WAR = (10.9 + (-5.1 * pitcher) + (3.1 * college)) * selection ^ (-.52)
where pitcher is equal to 1 if a player is a pitcher, college is equal to 1 if he is a college player, and selection is equal to the # overall selection in the draft.

Based on this information at the #23 pick the Orioles are looking if they pick the following

Career WAR:  
High School Position Player: 3.98
High School Pitcher: 1.84
College Position Player: 5.11
College Pitcher:  2.96

First 6 Year WAR: High School Position Player: 2.13
High School Pitcher: 1.14
College Position Player: 2.74
College Pitcher:  1.57

That being said, these are the averages for this position.  What if the Orioles get lucky?  Here’s how lucky they’d have to be:

High School Position Player Probability

The Orioles have approximately 20% chance this player will contribute at all in the first six years, an 8% chance this player will be a starter in his first six years, and a 3% chance this player will be a good player or all-star in his first six years.  These numbers shift a bit based on if the player is in high school or college or is a pitcher or position player.  But it certain appears that once you are outside the top 15, that your odds of making an impact on this team in terms of WAR go out the window. Other studies seem to confirm this information:  http://viewfromthebleachers.com/blog/2012/08/23/success-rate-of-mlb-draft-picks-by-slot/

So, should the Orioles be willing to sacrifice a draft picks for the given free agents?  This study truly indicates that the MLB draft is truly a lottery ticket.  The ability to save money by acquiring talent for multiple years through arbitration is much cheaper for an organization than offering high money for an immediate return in value.  In the end, it comes down to money for the Orioles at this draft pick and based off the Orioles quotes on budget we can fully expect the Orioles to not sign any of these free agents now or in the future.  In my opinion, it’d be worth opening the pocketbook for someone like a Josh Hamilton player.  However, the other players (LaRoche/Lohse) don’t offer enough rewards and have an age restriction as well moving forward with this franchise.