What makes a trade valuable? Is it simply a matter of both sides of the deal working out in some sort of WARP/monetized production equilibrium? Can players other than those involved in the trade be judged alongside the trade in order to determine its value to the team? What of the team properly assessing their situation and motive? Or making an entirely unexpected deal? How does a club’s financial outlook align with its trades?
Related Reading:
Grading Trades I
Grading Trades II
Normative Exercise: Organizational Revenue versus WARP
Consider the Andrew Miller trade involving Cleveland and the Yankees, for example. Monetizing WARP, Miller was worth 1.98 WARP at the time of the trade (on the Yankees roster), and his previous three season performance was worth 5.6 WARP. Depreciating that figure at 10 percent per season, and prorating it to Miller’s remaining 2.3 seasons (at the time of the trade), Cleveland might reasonably expect 3.05 WARP from Miller under a normal/pessimistic-scenario. That performance would be worth approximately $21.35 million in payroll, which conveniently matches the $21 million that Cleveland owes Miller during the course of his remaining contract. In this scenario, Cleveland’s sole benefit is the 3.05 WARP performance, making the price tag of OF Clint Frazier (50+ OFP entering 2016, and surging), LHP Justus Sheffield (50+ OFP), RHP Ben Heller (relief depth), and RHP J.P. Feyereisen (relief depth) appear rather high. Here, the trade is questionable.
Yet, looking at the trade from this vantage point leaves much to be desired. First, Cleveland was protecting a 4.5 game lead in the AL Central at the time of the trade, and Miller’s situational prowess could be exactly the type of tool that provides more value than WARP can capture. Moreover, Miller is the type of arm that arguably helps a club prepare for a deep playoff run, as well as regular season success. For a small-market team like Cleveland, who might land playoff revenue worth approximately one third of their 2016 payroll, that payoff potential is huge, arguably rendering a blockbuster trade more beneficial than for a club with larger coffers. One can now look back at Cleveland’s playoff run with the knowledge that the club will receive one of the largest playoff revenue shares of 2016. This revenue raises a difficult problem: Miller alone cannot be credited with the playoff success, but in the context of the organization, a huge revenue payoff helps to restock the farm system and absorb the shock of losing key prospects. Here, the trade is a smashing success.
I hope this example illustrates that there are several ways to judge a trade. First, one can absolutely use a narrow transactional focus to judge trades, which I accomplished last week during this series. Yet, these transactional values caused me to ask, “Should the Brewers have made trade X, Y, or Z?” What are the other contextual aspects that might justify these trades?
| Assumption | 2016 Grade |
|---|---|
| The Brewers are not going to be competitive / should trade for future success | A+ |
| Rebuilding should be aligned toward immediate financial profitability | A+ |
| Rebuilding trades should aim for future MLB success | C / incomplete |
Normative Assumption: The Brewers are not going to be competitive, therefore they should make trades that load a future roster for success.
Doesn’t working with playoff revenue sound much easier now? Judging a win-now trade is so much easier, because a team’s major goal can be assessed within a relatively short amount of time, and there are extremely concrete benefits to judge. Cleveland now has a Division Championship, an American League Pennant, and a shot at winning the Championship, plus all the revenue that comes with running this deep into the playoffs. Perhaps the only question is how one prices out the value of playoff merchandise to an MLB club, and what the professional prestige associated with playoff success is worth to a franchise brand.
| 2016 Cubs by Transaction | Approximate WARP | Major Performers (WARP) |
|---|---|---|
| Position Players (Draft/Intl) | 16.4 | Kris Bryant / Javier Baez (11.6) |
| Position Players (Traded) | 13.3 | Anthony Rizzo / Addison Russell (10.9) |
| Pitchers (Traded) | 11.9 | Kyle Hendricks / Jake Arrieta (7.4) |
| Position Players (Free Agency) | 10.4 | Ben Zobrist / Dexter Fowler (7.8) |
| Pitchers (Free Agency) | 10.0 | Jon Lester / John Lackey (8.3) |
| Pitchers (Rule 5 / Purchased) | 1.4 | Hector Rondon & Clayton Richard |
| Pitchers (Draft/Intl) | 0.4 | Rob Zastryzny & Felix Pena |
By contrast, it is extremely difficult to judge an effective rebuild. In one aspect, a rebuild is effective if a club eventually wins again, but the difficult aspect here is the “but for” clause: but for rebuilding, would a team have won? The Chicago Cubs are a great challenge here: their current roster features an 85 percent increase over their 2014 payroll, which was already relatively high ($92.677 million). Their top performers are littered with large free agency signings (including some surrendered compensatory draft picks), like Jon Lester ($155 million), John Lackey ($32 million), and other free agents (like Dexter Fowler) and trades. By spending big in 2015 and 2016, Chicago demonstrated that their rebuilding was merely a passing phase that they could end at any given time by flexing their market muscle, making it difficult to say “but for rebuilding, the 2016 Cubs would not have been contenders.” Yet, one could use WARP to suggest that key performers like Kyle Hendricks and Addison Russell would not have been possible Cubs without rebuilding.
The Brewers, on the other hand, can weather no such payroll spending spree, so there is arguably more cause for the “but for” clause in rebuilding the organization. In this case, an assumption about whether the Brewers should attempt to spend money or make aggressive trades to compete after a series of relatively noncompetitive seasons could justify outright a rebuilding effort. From this normative assumption, that the club were not going to be competitive in 2016, and therefore should realign the roster, nearly any trade shedding MLB payroll could be justified. But one must ask whether such trades necessarily require valuable returns in order to be justified.
Normative Assumption: Rebuilding trades should be aligned toward immediate financial profitability.
One could make a more interesting argument that a successful rebuild could be judged by its severity. In this case, Milwaukee’s austere shedding of contracts, near basement-bottom payroll almost fully devoid of guaranteed contracts, is quite successful in its own right (and also, complete). Yet, no one except an Accountant would label this measure a success: fans don’t necessarily cheer for their club’s ownership group to pocket between $40 million and $60 million in excess revenue while fielding an 89-loss club. So, even with this definition of contractual austerity, there is a desire to link rebuilding with on-field success. But I want to push back here and emphasize that from a front office perspective, a rebuilding measure is successful insofar as the club creates additional profit through cost-cutting measures; the Brewers have proven that their fanbase will accept noncompetitive measures with little promise of future success, under the guise of “reloading the roster,” which bodes well for future GMs.
| Elements to Win-Now or Rebuilding Trade Analysis | Normative Value | Difficulty (Execution & Foresight) |
|---|---|---|
| Immediate financial success (Playoff Revenue / Revenue Savings) | Most Important | Easiest |
| Definition of Clear Team Direction / Motivation | Most Important | Moderate |
| Successful On-field Team Outcome (Short or Long Term) | Secondary Importance | Moderate |
| Successful Performance by Traded Player | Secondary Importance | Moderate / Difficult |
| Equilibrium Between Players Traded and Players Received | Least Important | Most Difficult |
Should this rebuild fail, one can simply expect another rebuild; it’s a practice that builds its own brand once it is accepted within an industry (it might even be a chic source of industry gossip — “oh, did you hear the Brewers are rebuilding?” “I want my first professional job with a rebuilding club,” etc.) One should not be surprised that this process has gained so much acceptance within an economic environment fraught with gentrification and private equity austerity — devalorizing assets in order to maximize profits is hotter than ever, and it was only ever a matter of time before MLB clubs realized the money wouldn’t stop pouring in even if their league promoted noncompetitive practices.
I gather this is unsatisfactory for the baseball fan, however, who wishes to judge trades on the merit of their return to the field. No one is running a blog or Twitter in order to praise the amount of payroll shed and revenue hoarded in Milwaukee. So, in this regard one must realize that there is a strange uncertainty in how Milwaukee may organize their current assets for future success. Is a rebuilding effort successful when those rebuilding assets (minor league players) are traded away for elite MLB players once again? Or is it successful when those rebuilding assets are fully developed years later, sticking through the bumps and bruises of MLB development, in order to contend through systematic development? Even here, it is extremely difficult to understand what would make rebuilding trades “successful.”
Hence, the short term revenue gains for the front office function much like the promise of playoff revenue in a win-now trade. In this regard, win-now trades and rebuilding trades have exactly the same structure; indeed they are often perfect mirrors. There is an aspect of the trade that is performative, and there is an aspect of the trade that is financial. Just like the potential for being routed in terms of long-term performance can be wiped out by playoff revenue and awards for a win-now deal (for example, judge playoff revenue and professional prestige against the prospects in the Andrew Miller deal), so too can potential long-term losses in rebuilding trades be wiped out by immediate payroll relief and greater revenue returns to the front office (imagine, say, the “cost” of Jacob Nottingham and Brett Phillips busting, for instance, versus the $40-to-$60 million in revenue savings during the 2016 season). Rebuilding trades have their own mechanisms in place to ensure that losses are minimized for a front office, although the fans probably have different hopes for the gains being maximized.
Normative Assumptions: Rebuilding trades should aim toward future MLB success.
Is the Brewers rebuild a failure if the prospects in the current system do not pan out as stars for Milwaukee? This question has at least three answers, of course: (1) YES, if those prospects have not been traded prior to busting and the team fails to win, (2) NO, if the Brewers traded the prospects that will bust and kept the prospects that will succeed and the team wins, (3) NO, the rebuild can be successful whether or not the players or team are successful, and so on. I’ve already discussed (3), so let’s look at (1) and (2).
In terms of prospect grades, the Brewers have done quite well with their rebuilding efforts. Take Jacob Nottingham, for instance — in trading Khris Davis, the Brewers acquired the second-best catcher OFP behind Wilson Contreras entering 2016, and a prospect that easily graded among the Top Five catching prospects in the MLB entering 2016. This is precisely the type of move that grades favorably in terms of future improvement, as the Brewers moved a corner outfield position for middle-diamond impact potential. Adding in the wild card of RHP Bubba Derby’s potential, this is an example of what a risky rebuilding trade might look like, but it’s also what a successful trade might look like. Milwaukee needed to tread cautiously with Davis, given his sustained value, and the fact that they did not need to move the left fielder; yet, even that caveat does not necessarily take away from Nottingham.
Milwaukee also landed 60 OFP prospects in Luis Ortiz and Lewis Brinson, as well as a prospect that was soon-to-be 60 OFP in Isan Diaz. This set of moves, alongside Nottingham, completely realigns the top of the Brewers farm system for 2017. Comparing the Brewers to BaseballProspectus’s three best systems entering 2016, one finds that this group of 60 OFP prospects is quite strong, and that having three 60 OFPs headline a system is quite a large number (the Rockies had two, and Atlanta three, entering 2016). These are the types of prospects that can serve as the core of a future club, or yield elite MLB players via trade, which means that the Brewers have several paths to future success with their current farm system.
By contrast, there may be more questions to ask of other rebuilding trades. The Carlos Gomez / Mike Fiers trade looks great in terms of overall number of players received, and also in terms of the actual on-field performance received by the Astros thus far (following the trade). Yet, that the Astros did not receive elite performance from Gomez does not place a Pennant in Milwaukee in 2020. Domingo Santana has yielded 1.5 WARP thus far in Milwaukee, although one might raise questions about how the competing aspects of the right fielder’s approach will align to construct his future role and value. Adrian Houser will probably be out of commission for all of 2017, due to Tommy John surgery, moving the righty’s needle back toward “organizational depth.” Josh Hader remains as divisive as ever in terms of pure stuff versus future role, but even with the question marks it might not be surprising to see Hader emerge as the best player from this deal. Brett Phillips also had a divisive 2016, with surface stats and contextual stats telling completely different stories about the young outfielder. The problem with this trade is that it did not necessarily open too many avenues to assessing other future values, with the exception of opening a role for Keon Broxton (1.5 WARP). So, there’s a lot riding on the prospects in this trade, which makes it one of the toughest to judge within the rebuilding campaign. This is a great example about how almost everyone involved in a particular trade could have a mediocre or difficult to judge season following the trade; this line holds for everyone but Mike Fiers.
The Will Smith trade is a counterbuilding deal that is worth scrutinizing, because its value for the future is quite questionable. Yet, insofar as it is of questionable value, it is questionable for both the Giants and Brewers, as one could question the assumptions that Smith would remain an elite bullpen option for Milwaukee. As I argued last week, the question marks for both RHP Phil Bickford and C Andrew Susac make this trade anything but a clear cut future contention play. One can squint at Susac’s scouting and prospect reports and read between the lines in both positive and negative directions; as I’ve said before, this simply makes him the 2017 Jonathan Villar in terms of taking a chance to seize an MLB role. 2016 reports on Bickford are so far from the righty’s ideal that one could arguably invent a different prospect category for players like him; Bickford clearly needs to work out areas of his approach to either regain his fastball or improve his breaking ball, and both of these tasks make him a different type of prospect than, say, RHP Miguel Diaz or RHP Brandon Woodruff (both of whom are examples of up-and-coming prospects currently working with the best iterations of their stuff). This isn’t to say that Bickford is doomed not to work out, simply that he has his work cut out.
The uncertainties here are deafening: even in the positive cases of Isan Diaz, Nottingham, Ortiz, and Brinson, one can see that the Brewers might make a bad trade, or encounter a development misstep with one of these players, and that’s prior to encountering run-of-the-mill injuries, ineffectiveness, etc. Trades like the Gomez/Fiers or Smith deals are completely up in the air in terms of building a narrative for future success, even if their transaction values suggest only 9.2 WARP are needed from the Brewers to meet equilibrium. If prima facie definitions of rebuilding success are nearly impossible, then, it’s still worth working through these normative assumptions to inform our hindsight about the rebuild; can we stack the decks enough in 2016 to ensure that in 2019 or 2020 we will evenly judge the outcomes of rebuilding?
So, even where the severity of the Brewers rebuild has been successful thus far, one can work through different transactions, roster constructions, prospect reports, and development paths to understand the distance between rebuilding and success. Yet, on other normative assumptions, the rebuilding efforts have already been smashing successes, literally giving the organization a new look. Now it’s simply a matter of how Milwaukee chooses to align their new elements for success.
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