The unfortunate has become reality as the Boston Red Sox decided to offer Billy Wagner arbitration. Wagner qualifies as a Type-A free agent, which qualifies Boston for a generous compensation if their late season rental signs elsewhere. In the Rays case, signing Wagner would be the equivalent of trading their 2010 first round pick, not the compensatory pick but the actual 2010 pick, for Wagner. Ignoring the state of the bullpen and the rest of the roster and let's examine this as we would any trade.
Wagner is 38-years-old, left-handed, and split 17 games between Boston and the Mets this season. He still throws hard, albeit not the missiles launched back in his heyday. He missed most of the year with an arm injury, but threw 47 innings in 2008 and 68 in 2007. Since 2007, his FIP have been 3.09, 2.66, and 2.33; meanwhile his WAR during the same time period are 1.4, 1.2, and 0.4. In order to project Wagner normally we'd weigh his numbers 5-3-2 (this is the recommended weighing for pitchers only, hitters are still 5-4-3) and then apply corrections based on league, park, and age. Of course, in this case, weighing 15 innings too heavily isn't ideal in the least. Rather than skew the numbers and make a mockery of the projection, I went with a 5-4-3 scale.
Ah, but we also have to regress towards the mean. So we'll add a "2" to our weighing, with this accounting for the league average FIP of relievers. The average NL relief run average the past three years has been around 4.3. Now, it's not perfect to weigh Wagner against all NL relievers, but this it's a quick and dirty way. So all told Wagner's weighed average comes out to be 2.87. That's without age/league/park adjustments and completely ignoring his injury history. 2.87 is comparable with Mariano Rivera's 2009. Assuming Wagner would throw similar innings and leverage, he would be worth about 2 WAR - or $9M. Let's label that outcome "ridiculously optimistic".
Thanks to Victor Wang's outstanding research - outlined here - we know that a late first round pick is worth $5.2M. The Rays are picking closer to the middle than the end, but we'll use that value anyways. What this allows us to do is figure out the salary in which Wagner, on a one-year-deal, would make sense for the Rays to sign him at. Or, in fewer words: the break-even point.
In equation form: $9M - Wagner's salary must be greater than or equal to $5.2M in order for the deal to make sense.
The maximum price the Rays should be willing to pay for Wagner in this scenario is $3.8M. That is the break-even point. They won't gain or lose any surplus value if this comes to fruition. Here's the problem: we noted Wagner's performance as "ridiculously optimistic". He has a non-zero chance of reaching such heights. The Rays can't rely on a 5-10% chance though, not when it comes to trading with the Red Sox.
Wagner would have to come extremely cheap if his signing makes sense on the Rays part. Boston has the arbitration offer on the table. The difference in salary between the two sides isn't a few hundred thousand, but many millions. Unless Wagner cares more about saves than money, he's not going to end up in a Rays uniform.