Grading Trades II: Surplus

Khris Davis, Mike Fiers, and Jean Segura provided approximately 9.7 WARP for near $4 million in salary in 2016, a rate of pay and performance that perfectly frames the challenge of forming realistic trade grades. Given the common assumption that 1.0 WARP is worth approximately $7 million on the market, on the surface Brewers fans and analysts could rest easy that the $40-to-$60 million in payroll savings for the 2016 Brewers was not the difference between contending and a losing season; that rate of return would commonly be cited as creating another 79-to-82 win club, a boring repetition after the 2012-2015 failures to defend the 2011 NL Central Championship. Yet, WARP are not always to be had for $7 million a pop, as these three controllable roster depth, solid starting players show: they alone provided nearly $68 million in free market production for the price tag of $4 million. Plugging that number into the Brewers’ payroll surplus improves the expected win total to 87 wins; had GM David Stearns audaciously moved Segura to second while starting Jonathan Villar at shortstop, the club could have optimized Segura’s best prospect scouting report grades (which came as a 2B, not a shortstop) and optimized their middle infield value (nearly 11 WARP for little over $3 million).

That’s the ideal opportunity cost for trading Davis, Fiers, and Segura, and as an abstraction it hardly helps the club’s identity. First, and foremost, that this trio of players had worked on a couple of the failing Brewers clubs that were working to contend and consistently fell short. Second, that a player like Segura received numerous mechanical instructions and development opportunities in Milwaukee, and simply did not build on his 5.6 WARP 2013 campaign within the Brewers organization. Keon Broxton and Jonathan Villar should provide credence to the saying that sometimes a player just needs a change in order to succeed. In the complicated reality of player development, there is no guarantee that Segura would have been a 6+ WARP player, or even a 4+ WARP player, had he played 2016 in Milwaukee. That’s not to take away from Segura’s great season in Arizona, but simply to recognize that the future is never concrete in player development.


These three players demonstrate the difficulty of judging a trade; even a superstar veteran like Carlos Gomez supports this type of empirical drain between expected reality and the messy world than actually happens. Judging the package of Segura and RHP Tyler Wagner for RHP Chase Anderson, prospect Isan Diaz, and IF Aaron Hill at the time of the trade, Milwaukee was surrendering MLB-ready rotational depth and a struggling (even declining) shortstop for an under-the-radar “prospect industry’s prospect,” established MLB rotational depth, and a veteran value gamble. Even an ideal depreciation analysis would suggest that Jean Segura might be worth 8 WARP over three years in Arizona, and for all his strengths Wagner would get lost among the newly arrived rotational prospects from Doug Melvin’s rebuilding trades. Landing a hype-ready, breakout-ready 50-to-60 grade middle infielder, alongside some instant MLB roster depth for a transitional year, seemed quite a solid return for Segura and Wagner.

The opposite narrative plays for Gomez. At the time, pairing Mike Fiers with Gomez was a magic key that yielded significant prospect value for a 1.33 year superstar rental and four years of rotation depth. A conservative estimate might place the duo at 7 WARP value to Houston, which again makes a set of gambles on big tools (Domingo Santana’s power, Josh Hader’s fastball) and high floor advanced minors prospects (Adrian Houser, Brett Phillips) quite a solid return. One could squint at the best case scenarios among these prospects and even see the deal as better-than-expected; reality has since intervened to show why prospects are prospects, or how varying elements of risk can play out. Of course, the most shocking development is Gomez’s 0.1 WARP performance in Houston. How does one use that metric to judge the trade? Again, this exercise should show the difficulties of balancing the progression of potential realities with hindsight’s clear lens in evaluating trades.


In assessing trades for this installment of this series, I am going to use a “non-ideal depreciation” assumption about future projection. This is a non-ideal system because it judges a player on the basis of a 10 percent annual depreciation from their 3-year performance preceding a trade. So, taking a 15 WARP player like Jonathan Lucroy, one might expect the ups-and-downs of professional baseball to drain that performance to approximately 10.5 WARP. Obviously, this model is abstract in the sense that a player could suffer injuries, aging issues, or mechanical / approach issues to completely bottom out, and they could also make adjustments or develop to ascend beyond that depreciation outlook. Not every baseball player will depreciate uniformly, but it is worth using this type of assumption in judging a trade return because one can judge how an opposing team might be attempt to squeeze value from the parent club; as much as the Texas Rangers would like Lucroy to produce, say, 7 WARP over 1.3 years, it is not realistic or prudent for them to use that price in trade talks (this would basically be the equivalent of talking up one’s own system to immediately surrender the best possible prospect).

Here’s how this assumption works with the Brewers players traded by Doug Melvin and David Stearns. For fun, I’ve ranked the players by their actual post-trade performance:

Player WARP at trade 3Yr WARP Depreciation Post-Trade Expectation Actual
Jean Segura 1.8 11.20 7.84 7.84 (3yrs) 6.20 (thus far)
Mike Fiers 1.68 1.70 1.19 1.72 (4.3yrs) 2.43 (thus far)
Khris Davis 1.5 5.4 3.78 5.04 (4yrs) 1.9 (thus far)
Jonathan Lucroy 4.0 15.0 10.50 4.67 (1.3yrs) 1.3 (thus far)
Francisco Rodriguez 1.3 3.6 2.52 1.68 (2yrs) 0.9
Jonathan Broxton 0.39 1.6 1.12 0.50 (1.3yrs) 0.77
Will Smith 0.31 3.4 2.38 1.85 (2.3yrs) 0.33 (thus far)
Carlos Gomez 1.4 14.1 9.87 4.39 (1.3yrs) 0.1 (HOU)
Jeremy Jeffress 0.48 1.8 1.26 1.40 (3.3yrs) 0.1 (thus far)
Aramis Ramirez 0.8 5.1 3.57 0.40 (0.3yrs) -0.2
Gerardo Parra 2.3 6.7 4.69 0.52 (0.3yrs) -0.4
Aaron Hill 1.9 2.7 1.89 0.11 (0.3yrs) -0.4
Adam Lind 1.9 6.2 4.34 1.45 (1yr) -0.8

This model has immediate, at-a-glance advantages: first, WARP can be “monetized” into payroll dollars. This allows one to judge a player’s expected decline against their actual contract. Furthermore, one can take the abstract “surplus” between a player’s expected depreciating performance and their actual contract. One might reasonably assume that this matches the “Theory of Value” driving MLB transactions: since baseball players offer tools of scarcity, and therefore scarce production, and are actually priced in terms of payroll, one can form a full valuation by [“production” + “scarcity” = value]. This is extremely basic, but it should be intuitive — an MLB player is valuable where they produce at a certain level that outpaces their own contract (which basically means that they outplay either their service class, their previous performance (which drives contract value to some extent), or some combination).

One can work from this assumption to revise the theoretical depreciation values (assembled pre-trade), in order to present a comprehensive view on value. What this chart should intuitively capture is opportunity cost — what the Brewers surrendered when they traded these players was the potential for their production in Milwaukee at a specific fixed cost. Not surprisingly, the surplus for a player like Jean Segura is off-the-charts, and it should be: (1) Segura’s future contract value is not yet fixed, (2) He produced on a relatively deflated arbitration contract, and (3) He produced the best season of his career. That’s the opportunity cost for trading Segura, which basically says this is what Milwaukee lost in 2016, in terms of 3-year outlook, by not having Segura on the roster:

Player Expectation Value / Cost Actual Value Adjusted Depreciation (Value) Surplus
Jean Segura 7.84 $55.0M / $2.6M+2arb 6.20 $43.4M 11.43 ($80.0M) $77.4M
Khris Davis 5.04 $35.3M / $0.5M+3arb 1.9 $13.3M 5.68 ($39.8M) $39.4M
Jonathan Lucroy 4.67 $32.7M /$1.33M+opt 1.3 $9.1M 4.8 ($33.6) $32.0M*
Mike Fiers 1.72 $12.0M / $0.5M+3arb 2.43 $17.0M 3.62 ($25.3M) $24.8M
Will Smith 1.85 $12.95M / $1.475M+2arb 0.33 $0.5M 1.92 ($13.4M) $11.9
Jeremy Jeffress 1.4 $9.8M / $0.5M+3arb 0.1 $0.5M n/a $9.4M
Francisco Rodriguez 1.68 $11.8M / $7.5M+opt 0.9 $6.3M 1.74 ($12.2M) $2.7M*
Jonathan Broxton 0.5 $0.5M / $5.0M 0.77 $5.4M n/a $0.4M
Aaron Hill 0.11 $0.5M / $1.83M -0.4 $0.5M n/a -$1.3M
Gerardo Parra 0.52 $0.5M / $2.1M -0.4 $0.5M n/a -$1.6M
Aramis Ramirez 0.4 $0.5M/ $4.7M -0.2 $0.5M n/a -$4.2M
Adam Lind 1.45 $10.2M / $8M -0.8 $0.5M n/a -$7.5M
Carlos Gomez 4.39 $30.7M / $11.7M 0.1 $0.5M n/a -$11.2M
*buyout included

Of course, opportunity cost alone cannot motivate a club to either trade or not trade; the Brewers cannot necessarily be held to a standard that says “Jean Segura will produce $80 million in surplus value, so he should categorically not be traded.” In fact, Milwaukee properly gambled on an up-and-coming prospect that has morphed Overall Future Potential grades, and easily entered the Top 50 prospects in terms of actual grades. A cursory glance at BaseballProspectus’s Top 10 lists entering 2016 found one 80 OFP, ten 70 OFP, one 65 OFP, and thirty-nine 60 OFP. These 51 players comprise the top 0.7 percent of all minor league players. The difficulty in judging this value is that it is quite abstract — there is a sense in which one can judge the risk and probability of Isan Diaz producing, say, 11 WARP in his career, and there is also a sense in which one can judge the probability of the Brewers trading Diaz for an elite MLB player (since Diaz is now the type of prospect that could very soon serve that type of role).

This chart should capture the “Total Value” (scarcity + production) involved in each trade, as well as the current MLB and minor league roster assets that could potentially meet (or surpass) that opportunity cost. Notably, the Brewers have already met the value (arguably) for five of their July 2015-present trades, meaning that those roster assets are now fully “sunk” within the Brewers organization: they can be assessed on their own transactional potential, production value, etc., completely outside of the scope of their respective trades. I included assets external to some of the trades because a baseball organization is a system, and there is no need to hold an unrealistic standard where “only Aaron Hill, Isan Diaz, and Chase Anderson” can recover Segura’s value; that’s unrealistic, of course, because freeing Segura opened spots for both Orlando Arcia and Jonathan Villar, which raises a completely new roster question outside of Segura’s gaudy surplus value.

Player Value Needed (WARP) Surplus Adjusted Depreciation Value Needed From (WARP or pre-2016 OFP)
Jean Segura $157.4M (22.5) $77.4M $80.0M 2016: J. Villar / O. Arcia; C. Anderson (-0.5) / I. Diaz 60 (minors); A. Hill (1.9)
Lucroy & Jeffress $84.8M (12.1) $41.4M $43.4M A. Susac / T. Thornburg / (Minors: L. Ortiz 60 / L. Brinson 60 / R. Cordell)
Khris Davis $79.2M (11.3) $39.4M $39.8M D. Santana / (Minors: J. Nottingham 55 / B. Derby)
Gomez & Fiers $39.4 (5.6) $13.6M $25.8M D. Santana / C. Anderson / A. Houser / (Minors: B. Phillips 55 / J. Hader)
Will Smith $25.3M (3.6) $11.9M $13.4M C. Knebel / A. Susac / P. Bickford 45 (minors)
Jonathan Broxton $5.8M (0.8) $0.4M $5.4M J. Barnes / J. Marinez / R. Scahill / M. Collymore (minors)
Francisco Rodriguez $14.9M (2.1) $2.7M $12.2M Value Met: 2016 Thornburg / Jeffress; M. Pina / J. Betancourt (minors)
Aaron Hill -$0.8M -$1.3M $0.5M Value Met: W. Rijo / A. Wilkerson
Gerardo Parra -$1.1M -$1.6M $0.5M Value Met: Zach Davies
Aramis Ramirez -$3.7M -$4.2M $0.5M Value Met: Y. Barrios
Adam Lind -$7M -$7.5M $0.5M Value Met: C. Herrera / D. Missaki / F. Peralta

EDIT: To assess why this model is valuable, consider a case like Ryan Braun. Braun’s 3-Year WARP of 8.4 depreciates to 5.9 WARP, which projects to approximately 7.8 WARP over the remaining life of the contract ($55.1 million). However, since Braun requires $76 million in direct payroll and option buyouts over the life of this deal, his surplus is -$20.9 million. This greatly reduces his trade value, since someone will receive $55.1 million of production, but diminished by approximately $21 million (for a total value of $34.2 million). Intriguingly, this prices Braun’s trade value at approximately the level of Gomez-Fiers. 

Ultimately, these trades will be works in progress. Players like Adrian Houser can recover from injury and become organizational depth assets; Domingo Santana will have at least one more shot to prove himself as a starting RF; and the Brewers can gain production or transactional value from their handful of 55-60 OFP prospects that have infiltrated the system since July 2015. Milwaukee indeed has completely remade their MLB roster and minor league system, so in a sense it is unfair to simply hold extreme surplus value numbers from previous Brewers over the club’s head. What one can truly begin to hope is that the players acquired in these trades will form a better contender than the 2012-2015 efforts, and that this type of trade approach will create a sustainable process to continually reform the Milwaukee system.

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