What is particularly interesting about the Brewers’ overall franchise valuation leap, which sees the club crack the $1 billion mark, is that Forbes viewed the club as one of the most dramatic one-year franchise value changes in MLB:

The progression of estimated operating income over the last four years appears to be consistent with Forbes‘ assessment of the Brewers as one of the largest growing franchises in the MLB:

Additionally, Rob Mains scrutinized the Forbes analysis at Baseball Prospectus, adding long-term analytics such as Compound Average Growth Rate. In Mains’s estimation, the Brewers leap from their standing as a bottom third organization (in terms of overall franchise value) into the solid middle tier of the league in terms of their consistent annual return. Mains estimates that Attanasio’s group could have spent approximately $16 million in additional revenue each year of ownership and still maintained an 8 percent return on investment. Coming from a 1,055-1,064 (.498) tenure as owner one wonders whether $224 million could have found a useful place in Brewers blue.

Rebuilding as Capital Expansion
While most Brewers fans view the rebuilding efforts of the club as a baseball operation, leaving debates to the details of whether or not the club should have “tanked” or whether they went far enough in stripping down the MLB roster, the rebuilding efforts can also be viewed as a capital expansion for the club. Witness the Miller Park renovations entering 2017, the 2017 purchase of the Carolina Mudcats (and alleged rumors about further minor league ownership talks), and the upgrade of their Arizona facilities as three key examples of capital expansion for the ownership group. What is most interesting about these purchases and renovations is that they need not represent uses of the operating revenue listed above; through the magic of debt finance, the Brewers can leverage their position of financial strength and arrange partnerships or loans (or both) that allow them to continue their stream of fantastic revenue flows and increase those flows (by adding minor league teams, improved facilities, and better concessions at Miller Park).

It is worth questioning how Forbes considered these elements of the club in assessing franchise value. Given the Brewers’ control of the Carolina Mudcats (and presumably more routes to depreciation and other financial benefits) and additional streams of revenue in Arizona and Milwaukee alike, the growth figures already exhibited by the club could be on the “low end” of the club’s valuation. Would anyone be surprised if Mark Attanasio and his ownership group sold the Brewers for $1.3 billion or more? The Miami Marlins were able to fetch a 28 percent increase over their Forbes valuation in an awful financial situation, which leaves one wonder whether even a $1.3 billion price is low for the Brewers.

The rebuild is an unmitigated success for Mark Attanasio’s ownership group. Since GM David Stearns did go quite far in stripping the club’s roster, the Brewers have opened a five year contention window with precious few guaranteed contracts on the books. According to Cot’s Contracts, the highest collection of guaranteed contracts that Milwaukee is obligated to pay from 2019-2023 is around $66 million (entering next season). Granted, a set of contract extensions (10 years / $200 million for Orlando Arcia, please!) signed during the 2018 season could increase the long-term contractual burden for Milwaukee, but the point is, it is not a necessity. Stearns has shown an ability to shrewdly acquire low cost talent (Manny Pina, Jonathan Villar, Keon Broxton, Oliver Drake, Junior Guerra, even [arguably] Chase Anderson), and a preference for turning “big” money into smaller money even when it’s not necessary to improve the club (witness the Jett Bandy for Martin Maldonado trade). It would be interesting to know the extent to which Attanasio and Stearns discuss the financials of the team; one wonders whether Stearns is an explicit member of the Attanasio ownership expansion efforts, or an unwitting participant (in which case I certainly hope Stearns asks for his fair cut, soon). Perhaps the former case explains why Stearns’s contract details were never released.

Where does Attanasio go from here? It is difficult to argue that Attanasio needs to spend simply for the sake of spending. For one, even in this offseason’s depressed market, there were some highly praised players that signed poor contracts (see Lance Lynn, whose $19 million three-year surplus value turned into a one-year, $12 million contract, or Alex Cobb, who spun $14 million surplus value into a $57 million contract). It is difficult to argue that either pitcher would have markedly improved the Brewers for their given prices. Contrary to popular belief, both are bad contracts. In terms of the big contracts handed to Yu Darvish and Jake Arrieta, one can question their strengths, but it cannot be argued that the Brewers did not have room to sign either ace; Milwaukee’s opening day payroll of $91 million is currently operating at approximately 75 percent of their realistic payroll ceiling. Of course, the Brewers ownership group has no mandate to spend money on the field, certainly not under the Manfred regime.

Additionally, there’s a legitimate sense that so long as the MLB operates without true revenue sharing across markets (a la the National Football League), a club like Milwaukee is arguably better off with a flexible payroll. Given that even the Brewers’ strongest realistic 2018 payroll was two or three elite contracts below the MLB luxury tax threshold, there is no way that Milwaukee can seriously maintain a set of high roller commitments like their closest division rival to the south. In fact, if the Brewers maxed out their realistic payroll between $115 to $120 million in 2018, twenty MLB teams would still have higher opening day payrolls; adding in MLB Advanced Media Revenue and assuming a wild $140 to $150 million figure would barely crack the top ten. The reality is that anyone complaining that Brewers ownership is uncommitted to winning because of their low payroll would have the same material facts even if the Brewers paid their highest realistic payroll entering the season.

In a strange way, $91 million feels just right for this club, and not simply because that figure represents a 15 percent increase over the 2017 year-end payroll.

The Brewers are stuck in a strange place as an organization. Financially, Milwaukee is as solvent and successful as ever, positioning the team as a true “grower” within the MLB. Yet, even given the robust MLB revenue landscape, the Brewers are working with relative scraps. Still, it is difficult to see the club undergo a rebuilding process and endure losing seasons while racking up fantastic operating revenue positions, expanding capital spending, and continuing to spend below their most realistic payroll ceiling. There is no happy middle ground here for the Brewers: they scrapped an MLB roster to shift labor costs away from the big league roster and toward the minor league rosters, which also effectively drained revenue from the players and tilted it toward ownership. But, that’s what ownership does, and even within this environment, Attanasio cannot claim to have a *rich* club. One can only hope that this swirling set of circumstances for the small-but-growing franchise corresponds with winning on the field.

Photo Credit: Benny Sieu, USA Today Sports Images

• (1) The front of the rotation is improved with a true, proven pitcher. (Although “aces” do not exist, if an ace were to exist, Darvish is about as close to an “ace” as it gets).

• (2) The competition in Chicago is slightly downgraded by “subtraction” (ex., if the Brewers and Cubs both were courting Darvish, the Brewers’ signing results in an abstract “loss of runs prevented” for the Cubs. This is a good thing).

• (3) Milwaukee is established as a free agent destination by virtue of their proximity to contending (this is another excellent thing).

There is nothing that is not exciting about a player like Darvish coming to Milwaukee. One of the most common fears expressed by Brewers fans and analysts is that the club could not afford Darvish’s contract, or that Darvish would divert resources in crucial roster crunch years. However, it is worth noting that this is not the case; in fact, if the Brewers were truly looking to compete with their southern rivals, the front office could be justified in adding another impact free agent (aside from Darvish) this offseason. This strategy would basically concede that the team cannot afford the elite class of 2019 free agents (which is probably true), since big markets are loudly sitting out this free agency round in order to land elite, expensive talents in 2019. That’s fine; should the Brewers land Jake Arrieta and Darvish, or Lorenzo Cain and Darvish, those are quite grand improvements for this roster.

It is worth visualizing just how strong the Brewers’ current financial standing is, in order to support multiple signings. First, a look at Forbes surveys from 2016 shows that even during the rebuilding year, the Brewers were increasing revenue, approaching the $240 million mark as a club. Given the club’s low payroll, this produced a substantial operating profit, which one can reasonably assume carried over to the 2017 scenario as well (due to the club’s low payroll in 2017, as well). Extrapolating the Forbes revenue trend, and setting aside negotiations for a new television deal after 2019, and using Cot’s Contracts figures, here is the Brewers’ five year payroll and revenue outlook:

Edit (9:00 AM): This analysis ignores future playoff revenue, since it is an unknown, as well as future MLB Advanced Media revenue, since it is unclear whether these payments will be annual or “one-off” based on MLBAM contracts.  A playoff run into the National League Division Series would likely increase annual revenue by [at least] 10 to 15 percent.

This is a team that is operating significantly in the black, or leveraging this robust financial health to purchase additional capital assets (such as the Carolina Mudcats, Spring Training upgrade, and Miller Park concessions renovations). I will not treat the normative argument about whether ownership should be investing in capital expenditures at this point, at the dearth of investing in labor. Using an “ideal” and “realistic” labor revenue allocation, as well as scenarios in which the forthcoming MLB Advanced Media payment and 2016-2017 profits are redistributed to payroll (either through debt or cash), here is the estimated “payroll ceiling” for the Brewers over the next five years:

Assessing guaranteed contracts alone, and averaging the various revenue scenarios, here’s one likely payroll space estimation for the Brewers:

This team is absolutely swimming in cash, and thanks to the relatively swift and severe rebuilding efforts by Doug Melvin and David Stearns, the club owes almost nothing in guaranteed contracts. Signing two elite free agents in this offseason, even to five year deals, will still allow the Brewers to meet these upcoming arbitration requirements by impact players (with tougher questions for players like Corey Knebel and Jimmy Nelson, who will be deep into arbitration):

Of course, even grouping these players together is not necessarily an adequate way to express the club’s actual future arbitration demands. For example, in 2021, if Domingo Santana, Lewis Brinson, and Brett Phillips are each in arbitration, Santana will be likely entering his final year of arbitration, while Phillips and Brinson will likely be entering their first years. Yet, if each of these players demopnstrate an ability to start at the MLB level, it will be interesting to see whether Milwaukee maintains their extremely deep outfield with this trio and Ryan Braun, or trades from this depth (which would free up more actual revenue for payroll).

The long and short of it is, the Brewers are a club with fantastic revenue trends, current profit potential, payroll space, and current and future contract demands. Should the club wish to take advantage of this slow free agency market, they absolutely have the resources and future outlook to make such a spending spree possible and worthwhile.

Related Reading:
Do the Brewers Need to Trade?
Roster Surplus and Depth Questions

In fact, one potential demonstration of a 40-man roster entering 2019 offseason shows how prospects can be accommodated and protected from the Rule 5 draft. In this scenario, I left someone like RHP Carlos Herrera unprotected under the assumption that the young prospect will still be in A-ball (likely Carolina) for 2019, making his scenario a potential repeat of the Miguel Diaz non-protect by Stearns. Players like RHP Corbin Burnes and 2B Keston Hiura do not make an appearance on this roster because they do not need to be protected after the 2018 season, and I am not making any assumptions about MLB ascension; this is an exercise in organizational necessity as connected to prospect protection.

On the face of it, this is not a bad roster. However, once one views this strategy of protecting prospects, and valuing their protection over potential trades, another set of questions arise. Most importantly, is this type of roster actually moving the club forward? Should this club enter 2019, there would be many question marks about the development of players from Orlando Arcia and Josh Hader to Lewis Brinson and Brandon Woodruff. This type of roster would absolutely heighten the “role risk” faced by each developing player. Additionally, one could challenge whether or not this type of roster strategy adequately capitalizes on the great steps forward in 2017, as the added focus on rostering Monte Harrison, Josh Pennington, and Luis Ortiz, among others, behind the likes of Brinson, Hader, and Woodruff undoubtedly pushes the Brewers’ likely competitive window into the 2020s. If players like Brinson or Brett Phillips will need a couple of years to develop at the MLB level, the same may be said for the next line of prospects as well. This puts a premium on developing players at the MLB level, which raises questions about whether the Brewers can consistently sustain a develop-and-compete strategy. One could argue that the club adequately demonstrated this ability in 2017, although it bears repeating that the front office failed to maximize resources to reach the playoffs in that case (even though the development aspect of the roster was largely a success).

Moreover, after 2018, rostering another set of prospects heightens the role risk of that group of players. Below, here is an example of some of the risks one can expect from this group of players:

The trouble with the current Brewers farm system is that even if there are potential impact roles under club control (such as Monte Harrison’s star centerfielder potential, or Luis Ortiz’s mid-rotation+ potential), there is considerable risk for reaching these roles at the MLB level (Harrison remains a raw prospect who has the same type of hit tool questions of Lewis Brinson; Ortiz has significant workload risk that impacts the quality rotation ceiling). Remaining arms in the system also exhibit rotation risk, from Nathan Kirby’s injury history to repertoire concerns from Cody Ponce and Freddy Peralta to Josh Pennington and Trey Supak.

In many cases, the roles that Brewers fans are dreaming on will indeed be impeded by risk. So the question becomes not whether the Brewers must trade these players (they don’t have to), either to win-now or to avoid a roster crunch, but whether the 40-man roster can bear the level of risk presented by these prospects. The risks associated with developing these players from advanced minors roles to MLB roles must be heavily weighed against the risks associated with trading these prospects. I do not believe that this conversation occurs in earnest among Brewers fans and analysts. The assumption is always that if the Brewers trade Brinson or Harrison, they are trading a star centerfielder; but, should the Brewers trade these types of players, they are also trading the risks associated with developing those roles at the MLB level (including adjustments necessary to address those risks).

Drawn from this particular 40-man roster, and the acceleration of potential roles and risks associated with those roles from the minor league to MLB scale, one must understand that relying on internal prospects to develop the next Brewers contender is as “all-in” a strategy as trading away prospects to acquire MLB contracts. A middle ground includes some of these prospects on the big league club, say one of Brinson or Harrison, and a trade involving the other; the same can be said of Corbin Burnes and Freddy Peralta, Josh Pennington and Trey Supak, and so on down the minor league ladder. The ability of the Brewers front office to develop the next contending club will rest with their diversification of risk throughout the MLB club and 40-man roster: there is no silver bullet for winning, not even one that involves hanging on to each and every high ceiling prospect in the system. Will David Stearns learn from midseason 2017, and become shrewd enough to find the proper balance of risk types and roster roles?

The Milwaukee Brewers failed to spend approximately half of their typical payroll, estimated by inflation-adjusted payrolls of $107.7M (opening day 2015) and $113.9M (season close 2014; both expressed in 2017 U.S. Dollars), and did not touch anything close to a Top 15 prospect to bolster their roster via trade or spending throughout the season. That the club finished one game from the playoffs means that these facts ought to be scrutinized, as does each decision in the process.

Assessed by revenue, the Brewers 2017 payroll likely represented 25-to-26 percent of the franchise’s overall revenue, if industry trends reported by Forbes remained similar; this should lead to yet another season of solid income for the ownership group, following 2016’s $58.2M mark (which doubled income from 2015).

The Brewers subsequently missed the playoffs by one game, but at least they have their prospects and another stunning round of income due to the ownership group following the amazing austerity performance in 2016.

Related Reading:
Milwaukee Brewers: Looking Back on Tomorrow
Organizational Logic and Playoff Trades
Austerity and Collusion

Beyond questioning the front office’s risk aversion to dealing prospects (in the hopes of achieving either immediate MLB gains, or sustained MLB roster value in the case of a Jose Quintana or Sonny Gray type player), or the ownership group’s motivations (whether the group is more concerned about increasing income in order to expand capital expenditures at the expense of labor, or reaching the playoffs), Brewers fans and analysts can also spend the offseason assessing the field management and front office’s “bullpen starter day” strategy. One of the common arguments in favor of keeping prospects, instead of trading for Gray or Quintana, was that the Brewers’ starting pitching was not the club’s problem; instead, the club needed help in the batting order, or perhaps even the bullpen, before even considering an additional rotational option.

This argument was promulgated as though MLB pitchers never get injured, or that ineffectiveness may not riddle newly developed rookie starters down the stretch; no, the Brewers were to enter the stretch with some combination of Jimmy Nelson, Chase Anderson, Zach Davies, Matt Garza, Brent Suter, and Brandon Woodruff. That’s at least how the common narrative went, nevermind that Garza’s Deserved Runs Average (DRA) suggested that his performance was not as it appeared on the surface, or that Woodruff was a middle-to-back rotation prospect facing a pennant run for his first stretch of MLB starts, or that even the admirable swingman Suter….well, there’s not much bad that anyone can say about Suter!

It is as though the Brewers front office could not have possibly found a long-term or short-term benefit, even in dealing top prospect Lewis Brinson, not through reaching the playoffs in 2017 (either through a division title or a Wild Card spot), not through additional revenue returned from the playoffs, and not through several years of club control for either of the top trade returns of the deadline, let alone a rotation spot for Gray or Quintana or anybody else for that matter. The club was destined to move into the stretch run of the season with a gang of pitchers that easily could have been expected to regress, or a fifth rotation spot that posted a median-at-best 5.88 runs average (RA9), and that was before any potential consideration of injury or ineffectiveness. When Jimmy Nelson went down in Chicago, ultimately requiring shoulder surgery that will probably result in lengthy absence during 2018 for the righty, the Brewers front office received the kiss of death for their fateful trade deadline decision.

What is troubling is that the spectre of the future is cited in favor of 2017’s risk averse strategy, as though the Brewers front office will not need to make this type of tactical move over and over again, from the 2017-2018 offseason to July 2018, from the 2018-2019 offseason to July 2019, and so on and so forth. At some point, reserved contracts, cash, and future value must be cashed into MLB wins. Thus far the club has failed to effectively use their resources.

Manager Craig Counsell, hands tied by the front office, administered a valiant “bullpen day” strategy to fill Nelson’s spot the remainder of the way. The Brewers were already a club that would require significant innings from Suter and Woodruff in the final month of the season, as Matt Garza (predictably) fell off his 3.68 ERA pace with a disastrous six start, 24.0 IP, 32 run month. Say what you like about Suter and Woodruff, both of whom arguably did their respective jobs to the very best of their abilities, not even Milwaukee’s veteran pitcher, a pitcher with a 3.48 ERA in 31.0 playoff innings, could answer the bell for the stretch call and one last chance at leading playoff glory. Suter, of course, was limited at the beginning of September due to a strained left rotator cuff injury that lost quality back rotation innings for the Brewers. I attended his glorious bullpen day against the Washington Nationals, and at the beginning of the month the strategy seemed so simple: string together a few Johnny Wholestaffs, and drive this club into the playoffs.

The strategy went south: Matt Garza was lit up one final time, the rookie Woodruff faded late, and that rough-and-tough gang of Johnny Wholestaffs expanded as both stamina-shortened Suter starts and “bullpen days” were frequently occurring within three days of one another. Along with Suter’s first bullpen day, Suter, Jeremy Jeffress, Aaron Wilkerson, and Junior Guerra worked 28.0 innings in eight starts. These short starts (3.5 IP/GS) were amplified by Woodruff’s last two efforts, ensuring that in half of the club’s last 16 games the Brewers bullpen would need to cover at least four innings, with four of those extended bullpen outings requiring at least six innings of work after the starter exited.

Thankfully, the offense picked up in the last month of the season. While the bats remained below average, producing approximately 4.35 runs scored per game, that mark represented significant improvement over August’s 3.81 RS/G mark. That the offense helped bail out the pitching in September explains why the Brewers fifth starters, replacements, and “bullpen days” were able to post a 7-7 mark in September. In fact, that September mark of 7-7 in back-end days was an improvement over late July short starts (Michael Blazek and Guerra) and August’s back rotation work (largely featuring Garza’s descent). One might be able to view this number as a success, and call into question the necessity of the club to seek additional starting pitching help at the July trade deadline (or even the waiver trade deadline at the end of August).

The Brewers spat on the market in July and August, instead resting their playoff fates on Junior Guerra (2 GS), Michael Blazek (1 GS), Matt Garza (6 GS), Brent Suter (8 GS), Brandon Woodruff (8 GS), Jeremy Jeffress (1 GS), and Aaron Wilkerson (2 GS, including his season closing gem in St. Louis, which was not a “bullpen day” as it turns out). The most unfortunate aspect of this series of roster making and game decisions is that the remaining Brewers rotation was phenomenal, helping to cover significant ground by picking up the entire squad, even through injury (Chase Anderson and Zach Davies after Jimmy Nelson’s injury, and Nelson and Davies during Anderson’s injury).

So the Brewers front office and ownership group determined that the best position for a talented club hanging in the playoff race was to gamble on the in-house talent, and then produce a game strategy that resulted in 120.3 innings over 28 starts, with 91 runs allowed (a performance that was approximately 28 runs below average). These figures do not include an attempt to assess the cumulative impact of adjacent “bullpen days” on Brewers relievers during a wicked stretch of close games, which resulted in a series of crushing bullpen losses on September 20, 21, and 22 (who can blame them, having worked more than a dozen innings leading into Knebel’s loss on September 20?); the crushing season-ending loss on September 30 was again preceded by nearly a dozen additional relief innings entering into Junior Guerra’s short start. Given that the same general gang of pitchers faced nine games within 2-runs, and another two within 3-runs, in the fifteen games leading into the playoff-ending loss, the bullpen workload was doubly compounded.

The Milwaukee Brewers front office put the field management staff in a position to run the arms into the ground, and start a less-than-stellar set of options for eating innings while producing quality innings, during a playoff run. It is a wonder that the club lasted this long, and that fact alone is attributable to the resilience of the team and generally exceptional performances by the relievers down the stretch.

What is stunning about the Brewers front office decision making process is that club faced injuries for both trade deadlines. The club was already piecing together starts for the injured Chase Anderson when the July deadline passed, and the August deadline passed after the club worked with injuries to Brandon Woodruff and Brent Suter (not to mention Matt Garza’s ineffectiveness). It is unconscionable that the front office lacks a scenario planning model robust enough to expect pitching injuries, or to expect a need for quality pitching depth, during a stretch run. Instead, the club stubbornly and unnecessarily charged into the playoff race undermanned and with a piecemeal strategy destined to shred the quality relievers that the front office worked to put in place in the bullpen. Needless to say, the front office has their work cut out after 2017, both in terms of expanding their imagination (as to what a contending club looks like) and improving their planning (in terms of assessing exogenous factors and risk pricing to build a contending roster).

If one can say that this unexpected gang of Brewers developing stars, prospects, minor league veterans, and other never-building nobodies stuck in the pennant race until the very end and will hopefully emerge from its lessons improved, one can say the exact same thing for the inexperienced front office staff for the Brewers: the lovingly-christened Slingin’ Stearns went cold when it mattered, went risk averse when the prices were right for winning now and in the future (from 2018-2020 in some cases), and managed to cover his transactional miscalculations by diving into a strategy doomed to overwork his entire pitching staff during the most important games of the season. If Mark Attanasio and the ownership group will likely have at least $50 million reasons to feel great about 2017, David Stearns will hopefully have as many opportunities to repeat and replay these decisions, step for step, until his risk aversion and scenario planning improve in time to appear a battle-tested veteran in 2018. The GM owes as much to his ownership group, regardless of their views of profiting versus winning, and most importantly to his players, which he allegedly so carefully procured without any forethought about finishing the deal.

Photo Credit: Mark J. Rebilas, USAToday Sports Images

U.S. Department of Labor, Bureau of Labor Statistics. Consumer Price Index: All Urban Consumers (Current Series), 1947-2017. CUSR0000SA0. Retrieved September 23, 2017, from Bureau of Labor Statistics [Data Tool].

Related Reading:
Austerity and Collusion
Grading the System

Revisiting the motivation for rebuilding, one can state that the Brewers are ostensibly trading wins now for hopefully winning later (whether or not the Brewers will win more at a later date but for rebuilding is an open question). If one assumes that this is a legitimate strategy for improving the franchise, instead of a simple and easy way to sit on cash and transfer labor costs to poverty-level minor leaguers, one can use Overall Future Potential for prospects, WARP and contracts for MLB assets, and a variation of Benefit-Cost Analysis to assess the solvency of this strategy. I’ve spent much of the offseason working on pricing mechanisms, and the back-of-the-envelope approach that appears to work best (for the time being) includes two assumptions:

(1) MLB surplus value can be calculated by depreciating WARP against a player’s contractual status (I depreciate a player’s WARP to 70 percent of its three-year production range, and then judge that against control years and contract [if that player has a guaranteed contract]. Non-guaranteed contracts are assumed to be cost-free for MLB clubs because a reserved or arbitration-level player can be released at no cost).

Of course, there is reason to believe that actual MLB teams do not always work to equilibrium in trade, and that MLB teams may assess players at their current (or higher) value instead of a depreciated value. This example should show why something as seemingly straightforward as trading Ryan Braun would be so difficult; the veteran is worth anywhere from one 55 OFP or two 50 OFP prospects to one 65-75 OFP prospect or two 55 OFP prospects; that’s like the difference between trading for Cody Bellinger and Jose de Leon or trading for Brian Reynolds and Ty Blach. Or even why trading for someone like Yasiel Puig is not a clearly defined value play whatsoever.

(2) Minor league surplus value can be calculated by judging the full range of Wins Above Replacement produced in all of MLB history, and then depreciating that level of production by the odds that a player will make the MLB. For my purposes, I do not use individual risk assessments, but rather depreciated historical OFP categories to 20 percent of their monetary value (on the assumption that roughly 20 percent of minor league players will reach the MLB). Obviously, more complex models could be designed where individual risk could be assessed based on a player’s body type, mechanical approach, tools, draft class, minor league level, and bonus cost to the parent club (among other potential measurements).

With these assumptions in mind, here are the Brewers’ major transactions from July 2015 onward, ranked by surplus value added. In this model, all figures appear as the players would have been assessed (roughly) on the day of the trade:

In this scenario, the Brewers rebuild is well behind the cash savings, which suggests that the rebuild has been either poorly executed or that rebuilding itself is simply not as valuable as cash (the Chicago Cubs, Los Angeles Dodgers, New York Yankees, St. Louis Cardinals, and San Francisco Giants would be among the teams that agree with this latter statement).

Based on the day-of-trade, the Brewers rebuild is approximately $20 million to $60 million behind the club’s cash savings. One could conceivably combine these figures to suggest that the minor league assets and stored up cash are worth roughly 52 future WARP. But this is an entirely meaningless figure; for, when will that WARP be cashed out? Will the cash actually be spent on the MLB club? If the current minor league surplus value is not effectively developed by David Stearns and the Brewers organization, and Mark Attanasio and the Ownership Board pocket the cash, the rebuilding will be worth considerably fewer WARP.

Of course, one problem with the first model is that these trades did not appear in a vacuum, but instead occurred within the context of a league in which players can be developed, re-signed, and traded. Looking at how the Brewers players traded performed, and how development shifted for Brewers prospects, the Brewers rebuild has produced a much greater surplus total.

This chart should resonate with several areas Brewers fan intuition. Milwaukee’s trade of Khris Davis looked great on the day of the trade, but after a fantastic year by Khrush and a year in which Jacob Nottingham’s prospect status was downgraded, the trade has significantly cost the Brewers. Of course, this is not the be-all, end-all of the trade; if Davis performs below his 2016 level, and Nottingham takes a step forward in 2017, the trade could swing in favor of Milwaukee. The same must be said of the currently fantastic looking trades atop this list: if Luis Ortiz, Lewis Brinson, Brett Phillips, and/or Josh Hader either fail to reach the MLB or reach the MLB closer to their floor than their respective ceilings, the value of these trades will plummet. Finally, Jonathan Villar was a steal on the day of that trade, and the flexible power/speed/discipline infielder’s surplus added shows why an extension of $20 million is laughable from the MLB front office; if the Brewers split their surplus value with Villar, a reasonable extension offer starts at $38 million (and I gather that anyone who suggests that Villar simply spit on that and take the $20 million has never produced nearly $80 million in value for an organization).

It should go without saying that Jonathan Villar is by far the most valuable player in the Brewers system, the certain MVP of the rebuild, and obviously any extension offer should reflect that.

Extracting the Brewers’ trade returns from the context of moves that were out of the club’s control (such as the Diamondbacks’ decision to trade Jean Segura, or the Cardinals’ decision to extend Jonathan Broxton), here are the major shifts in value from the Brewers rebuild:

The good news is, thus far the players that Milwaukee returned in these trades have appreciated in value for the club. For losing Rymer Liriano, Hader and Brinson both improved their respective prospect assessments while in Milwaukee’s organization; Nottingham does not rank as highly as he did when he was traded, but he’s still worth between three-and-six wins for Milwaukee (in terms of surplus value). The Will Smith trade appears to be the only true blemish on David Stearns’s trade record thus far, as the trade lost value for Milwaukee on the day it happened and the players returned have yet to appreciate in value. However, with a catcher’s job wide open in 2017, perhaps Andrew Susac can prove that assessment wrong. At the top of the list, the Jason Rogers trade is probably the most likely to decline in value as the Brewers determine whether Keon Broxton will have a starting job or a bench job, and the prospects returned in the Carlos Gomez / Mike Fiers deal are quite risky for all their surplus value. At this point, perhaps the most intriguing value play are the righties returned for Adam Lind, who are entering their range of potential breakout seasons as they advance in the Brewers system.

Adding in approximately $35 million in unchanged surplus value from the Thornburg, Maldonado+, Broxton, and Hill trades, the Brewers turned roughly $270.3 million in organizational assets into $433.7 million in organizational assets. This progression must be weighed against the players traded away; in the chart that tracks shifts in value above, it is worth mentioning that the players involved in those ten trades now provide at least $231.4 million in surplus, which is quite solid given that several reserve / arbitration players lost a year of control (which significantly eats into value). It must be emphasized that 2017 production from Davis, Fiers, Jeffress, Lucroy, Smith, etc., could significantly increase any valuation of these trades. Ultimately, the Brewers trades look quite solid, as a relatively stable set of Brewers organizational assets turned into $163.4 million in surplus value and another $80-to-$120 million in cash; together, there are as many as 75 WARP in this combination of cash and ballplayers. In terms of value, Jonathan Villar crushes all comers, as the infielder is worth nearly 18percent of the organization’s surplus value acquired in these trades; Lewis Brinson is next, claiming 15 percent of the organization’s surplus value from these trades.

This progression of analysis should show the volatility of rebuilding, and also show that the statement “the Brewers must cash out these prospects’ surplus value at exactly the right time” is not a mundane truism but rather a crucial truth. Given that player surplus value can fluctuate wildly from season to season, failing to execute a win-now trade at the right time, failing to promote a prospect to an MLB at the right time, and failing to develop potentially valuable but risky prospects loom as serious challenges for a rebuilding club. Thus the rebuild is indeed over in Milwaukee, and it is certainly true that the merits of the club’s rebuild will now be assessed on the ability of the front office to either develop or trade these prospects.

Related Reading:
Grading Trades I
Grading Trades II

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?

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.

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.

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.