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Cain and Yelich: Renegotiating Surplus

The Brewers recently completed two of the biggest moves of the offseason by trading for left fielder Christian Yelich and signing free agent center fielder Lorenzo Cain. These moves are “big” not simply because of the glacial pace of the new MLB collusion, but by virtue of their structure and Milwaukee’s position in the league. Following a breakout season in which the club just fell short of the playoffs, GM David Stearns secured a five-year window for contention by acquiring Yelich with three of their top six Baseball Prospectus 2018 prospects and inking Cain to a five-year, $80 million deal. These deals were big because they included top prospect Lewis Brinson, a risky-potential-five-tool center fielder who has a high floor (he’s already in the MLB), as well as the largest free agency contract ever signed in Milwaukee. The Yelich trade also featured the best prospect package of the offseason (thus far), which further increased the magnitude of this series of deals for Milwaukee. If the Brewers were off of anyone’s radar last season, the club loudly announced themselves with these moves.


 

Lorenzo Cain
3-Year Surplus $71.5M
5-Year Surplus $119.2M
Contract 5 years / $80.0M
Value $39.2M

When I profiled free agents to begin the season, Lorenzo Cain graded as the best available position player free agent with a $71.5M three-year depreciated surplus. Given that the Brewers landed Cain for $80 million over five years, the Cain deal grades as close to an absolute steal. Cain’s surplus grades out to approximately $120.0M over five years, which means that at a $16.0M/year rate the Brewers basically received two free years on Cain’s deal. Basically, Cain should be able to deliver value on this contract in nearly every scenario short of catastrophic injury.

Contrary to the common line that the Brewers basically acquired Cain for market value, it is arguable that the club attained the center fielder’s services for quite a valuable deal.


 

What is thrilling about the Yelich deal is that it is not a steal. It is not a value move. The Brewers exhausted the full value of Yelich by trading three of their top six prospects. However, this is not problematic because Yelich’s surplus value is almost comical; he’s a young, budding superstar who has already proven a floor somewhere between 2.5 WARP and 5.0 WARP as he enters his prime age seasons. Tracking surplus value is important here because one can use the idea of organizational surplus value to assess when and how a team is extracting wins from their players.

Surplus Value Pricing
Refining WARP & OFP Pricing
Translating OFP
OFP and Minor League Pay
Revisiting the CC Sabathia Trade
Cashing Out OFP 2
Organizational Logic and Playoff Trades
Historical WARP and OFP

Had the Brewers kept Brinson, Monte Harrison, Isan Diaz, and Jordan Yamamoto, they would have indeed retained those prospects’ surplus value (defined here by their potential MLB ceilings, or Overall Future Potential (OFP), and their risk floor) while also carrying all of the risk of developing them year-to-year. This development risk was especially present with Harrison, Diaz, and Yamamoto, who are a couple of professional levels away from the MLB, but it was also somewhat present in Brinson’s profile should the center fielder never adjust his hit tool to MLB pitching. An elite fielding, speedy center fielder with some power but contact issues at the plate is not a bad MLB profile, but it’s not a superstar profile.

Surplus Value Production Value Contractual Value
Production + Contract WARP x $PerWARP x Contract Years Contract – $PerWARP

I began tracking Brewers surplus value during the club’s rebuild as a way to understand the success of a rebuild. What I found problematic about analyzing a rebuilding club was determining when and how a rebuilding team would achieve success. Since a rebuilding team is by definition “cashing out” its potential to win ballgames far down the road, there must be interim metrics used to judge a front office’s success. I use surplus value to assess MLB players by judging “production” (how well a player plays) and “scarcity” (how the player’s contract is structured) to express Wins Above Replacement Player (WARP) in monetary terms. Since risk can be priced, prospect OFP can be assessed in monetary terms as well, either by assessing the scarcity of certain grades and profiles or by historically analyzing production by prospect classes. By using these methods, MLB players and prospects can be evaluated on the same terms, which is a necessary task since MLB players are often traded for prospects; this method can also help one assess the success of a rebuild.

While there will be issues with designing any surplus value system for assessing MLB players and prospects, I maintain that working toward such a pricing system is necessary because MLB teams trade prospects for MLB players all the time.

Christian Yelich Contract Depreciated Surplus Maximum Surplus
Four Years $44.6M $104.2M $252.2M
Five Years $58.3M $127.9M $312.7M
Average n.a. $116.1M $282.5M

The trouble with a player like Christian Yelich is that because he is cost-controlled by a $50 million contract (plus an option), his top surplus grade is extremely high. Over the course of the remaining five-years, extrapolating Yelich’s best WARP (5.3) yields potential production value worth $185.5M; even harshly depreciating Yelich’s 2015-2017 production yields potential value worth $93.1M. The reason Yelich’s surplus value runs so high, however, is that Yelich can also be graded by the cost of his contract against his production value; with $58.3M remaining over five years (if the Brewers exercise Yelich’s option), Yelich’s contractual surplus is at least $34.8M, and could be as high as $127.2M should his superstar potential continue to materialize.

Simply stated, Yelich is an absurdly valuable MLB player; he’s about as valuable as it gets. What is fascinating about Yelich’s value is that one would expect that he is nearly untradeable because of his value. Basically, there is no single prospect who will ever be worth Yelich, and this is why the Marlins’ reported demand of Braves prospect Ronald Acuna (arguably the very top prospect in the game) was not ridiculous or even audacious. Thus, it should make sense that the Brewers traded three high-ceiling prospects and one intriguing pitching flyer for Yelich: where one prospect cannot exhaust the value of an MLB player, many prospects must be used to form a transaction worth completing.

Historical Surplus Value (OFP) Floor Ceiling Average
Lewis Brinson (60-70) $48.9M $100.0M $74.4M
Monte Harrison (55-70) $34.2M $100.0M $67.1M
Isan Diaz (50-55) $19.5M $34.2M $26.9M
Jordan Yamamoto (45) $1.4M $1.4M $1.4M
Total $104.0M $235.6M $169.8M

Using historical OFP pricing, one can see that a prospect package of Brinson, Harrison, Diaz, and Yamamoto very nearly exhausts Yelich’s highest surplus pricing. This is not necessarily a problem, given that Yelich is such a valuable player one should not have (reasonably) expected anything lower. For example, once the Miami Marlins reached their threshold to fund their 2018 payroll, they could demand pure talent in return for Yelich, rather than talent and payroll relief. The “lowest” possible deal for Yelich, which would have priced the left fielder at his depreciated value over four years, would have roughly required Brinson and Diaz in return; but once the Marlins were able to demand talent alone, that type of price would not have been attainable by Milwaukee. Given that the Brewers had a deep farm system, especially at center field, the Brewers front office correctly ascertained that the Marlins would be pricing out Yelich at his highest possible value. With both Yelich and Lorenzo Cain sliding into outfield slots for five years, many have noted that the actual prospect hit is lessened for Milwaukee.

Of course, it must be stated that a player’s MLB potential ceiling is a dynamic phenomenon, and OFP only measures a player at one static point in time. Take Isan Diaz, for example; the second base prospect attained a higher OFP ranking entering the 2017 season, and a rough injury-riddled year dented that a bit. Jordan Yamamoto is almost impossible to price, as scouts that like the righty have recognized potential areas for the youngster to succeed as a rotation arm, but his development profile still carries a high amount of risk to reach that level. It is plausible that the Marlins priced out Diaz at a range potentially higher than the OFP published above, simply because his full prospect profile suggests that Diaz can once again reach that higher ceiling should he mend a few weaknesses as he reaches the advanced minors.

From the Brewers’ perspective, the front office surrendered much potential starpower, but they transferred all of the development risk to the Marlins. It should not be assumed that any of these prospects will be the same player in both locations: perhaps Lewis Brinson receives advice on a mechanical adjustment in Miami that the Brewers Player Development would have overlooked; perhaps each of these prospects receives enough time to adjust at the MLB level in the pressure-free environment of Miami, whereas a contending Milwaukee club may have had less patience for shortcomings at the MLB level.


 

Additionally, trading Brinson and Diaz essentially “completes” the Jean Segura deal, and realigns the Jonathan Lucroy deal. When I last checked in, the Segura trade remained Stearns’s worst deal (in terms of assessing day-of and post hoc surplus value), while the Lucroy deal remained his best.

What Happened? (Traded) Total Surplus ($M) What Happened? (Received) Total Surplus ($M) Balance ($M)
Lucroy (-$6.4) & Jeffress (-$0.9) / Lucroy trade ($8.0) / Jeffress trade (-$2.9) -2.2 Brinson (-$1.1) & Swarzak ($8.4) / Brinson to 60-70 OFP / Ortiz (50-55) / Cordell trade $0.0 89.4 91.6
T. Thornburg (Injury) / 2Arb Control 4.2 T. Shaw 4.2 WARP / Dubon & Pennington no change / Y. Coco (40-45) 76.1 71.9
Sneed (no change) 1.4 J. Villar 5.5 WARP 69.3 67.9
J. Rogers DFA / Rogers -0.2 WARP 0.5 Broxton 2.3 WARP / Supak (40-50) 41.9 41.4
F. Rodriguez 0.6 WARP -5.1 Pina 1.7 WARP / Betancourt no change 24.3 29.4
Lind -0.8 WARP / free agent -7.5 Peralta (45-50) / Herrera (40-50); Missaki no change 17.8 25.3
W. Smith (Injury) / 2Arb Control 6.2 Susac & Bickford no change 2.3 -3.9
Maldonado 2.5 WARP / Maldonado 2018 / Gagnon no change 23.1 J. Bandy -0.4 WARP 0.5 -22.6
K. Davis 4.9 WARP / 2Arb Control 55.2 J. Nottingham solid 45 OFP OFP / B. Derby soliad 45 OFP 2.8 -52.4
Segura (8.1) & Wagner (0.2) / Segura extension ($91.9 surplus) / Segura trade & Wagner lost (-$3.2M) 146.8 C. Anderson (1.3) & A. Hill / A. Wilkerson (2.2) / Anderson extension (-$5.9 surplus) / I. Diaz 50-55 / A. Hill (Wilkerson / Rijo) 34.0 -112.8
222.6 358.4 135.8

Now these deals look like this:

What Happened? (Traded) Total Surplus ($M) What Happened? (Received) Total Surplus ($M) Balance ($M)
Lucroy (-$6.4) & Jeffress (-$0.9) / Lucroy trade ($8.0) / Jeffress trade (-$2.9) -2.2 Brinson (-$1.1) & Swarzak ($8.4) / Brinson traded in Yelich package ($30.0M average surplus)/ Ortiz (50-55) / Cordell trade $0.0 119.4 121.6
Segura (8.1) & Wagner (0.2) / Segura extension ($91.9 surplus) / Segura trade & Wagner lost (-$3.2M) 146.8 C. Anderson (1.3) & A. Hill / A. Wilkerson (2.2) / Anderson extension (-$5.9 surplus) / I. Diaz traded in Yelich package ($30.0M average surplus) / A. Hill (Wilkerson / Rijo) 64.0 -82.8

It is nearly impossible to effectively apportion surplus from a four-player trade package across two previous trades, but the basic story is that Stearns has improved his trading record. By extending Chase Anderson and trading away Isan Diaz and Aaron Hill, Stearns has basically completed the Segura deal. In terms of the original Lucroy deal, the remaining player development task is Luis Ortiz, although the young righty is also prime trade potential due to his current innings pitched ceiling and flyball profile (36 percent groundball rate in 2017).


Photo Credit: Jeff Curry, USAToday Sports Images

 

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