"It does have an impact, you start thinking about what's most important," Daniels said Thursday during a team workout at Rogers Centre ahead of a weekend series against the Blue Jays.
"If we were where we normally are and hope to be, in a pennant race, he could be active right now. The leg is structurally sound, just the muscles around it aren't quite as strong as they will be eventually."
Holland, who's rehabbing in Arizona and under contract through 2016 with club options in '17 and '18, is, however, expected to return before the end of the season.
"He has worked out so hard to come back. I think there is some benefit to him from a mental standpoint to see the light at the end of the tunnel," Daniels said. "The medical staff feels like the leg is at a point where he can start to build up. If he has any issues or setbacks, we will shut him down. But if there aren't any setbacks, I would expect to see him pitch late in the season for us.
"He's out in Arizona to build up with the expectation that he could be ready to start in the big leagues toward the end of August."
Holland hasn't pitched at any level this season after setting career bests in strikeouts (189), innings (213) and ERA (3.42) in 2013.
Though the Rangers have taken a cautious approach with Holland, Daniels believes the lefty remains susceptible to injury and that it's not worth rushing him back based on the team's 38-57 record.
"Playing at the big leagues, just the speed of the game, defending his position, bunt plays, quick movements, there is some thought that there could be some risk involved," Daniels said. "That's why we've taken it more slowly."
Holland is just one of many Rangers on the shelf in what has been an extremely disappointing season for the perennial powerhouse. Fellow left-handed starters Martin Perez and Matt Harrison are among those on the disabled list and are both gone for the year, as is slugger Prince Fielder, one of the club's major offseason acquisitions.
The injuries, which played a large part in an uncharacteristic first half for Texas, have pushed the Rangers out of the playoff picture. Texas begins the second half on an eight-game losing streak and with the worst record in baseball after winning 90-plus games in four consecutive seasons.
"We, obviously, have been hurt by the injuries, that much is clear," Daniels said. "If we had stayed healthy, I believe this club could have contended. That being said, it's more than just the injuries. The group that we have is capable of playing better than we have been, and I think they will. I think we are capable of playing a better brand of baseball."
With the Rangers sitting in the AL West basement, teams have made inquiries about some of the club's players, but Daniels wouldn't tip his hand as to whether any deals were in the works.
Daniels did make a trade earlier this week, however, sending right-hander Jason Frasor to the Royals for Minor League pitcher Spencer Patton.
"I've learned not to handicap these things," he said. "We don't have many guys who are going to be free agents at the end of the year -- the traditional rental situation. We have some other guys who may have another year or so on their contracts and we've been hit on a little bit."