Trade Values: Shaping Up to Be a Seller’s Market
Throughout the 2011 trade season, I’ve been reviewing the trade values of players. As I mentioned earlier in the month, the trade values are meant to represent the baseline value, and it’s possible for other teams to affect the price, especially if more than one team is willing to offer the same value for a player. In the last few days we’ve seen two major trades, and one minor trade which involved established players for prospects. I had been using a $5 M per win scale in the previous trade value articles, but wanted to see if that value was accurate on the current trade market.
I looked at the recent trades (Carlos Beltran to San Francisco, Hunter Pence to Philadelphia, and Kosuke Fukudome to Cleveland), and tried to reverse them to figure out what type of value teams were giving up on the trade market. Maybe it’s not a surprise, but they all ended up in the same range.
The Chicago Cubs traded Fukudome to the Indians, along with $3.9 M in cash (covering most of the $4.67 M remaining on his 2011 salary) in exchange for a Grade C pitcher and a Grade C hitter. The value of the two prospects equals $2 M. I put Fukudome at a 1.0 WAR, which is higher than his production this year, but lower than his performances over the last three seasons.
From there, I tried to match Fukudome’s trade value to the $2 M in prospects, using the three things I had: his remaining salary, his WAR, and how much Chicago was throwing in to the deal. After raising the cost per win up to $7.9 M, I got an overall value of $2.0 M for Fukudome.
The New York Mets got a huge return for Carlos Beltran, when they received top pitching prospect Zack Wheeler from the San Francisco Giants. The Mets sent $4 M along with Beltran in order to get the big return, and passed up on other deals that would have given them multiple prospects. Beltran was making $18.5 M this year, and was owed $6.4 M for the remainder of the year. I put his value at a 6.0 WAR, which was basically the pace of his current year’s WAR, assuming he continues to play this well (and I think San Francisco would go with the same approach, considering what they gave up).
Wheeler has a value of $15.9 M as a top 50 pitching prospect. Again, I took what I knew about Beltran (6.0 WAR, $18.5 M salary, $4 M paid), and adjusted the price per win until it reached the value of Wheeler. After adjusting each win to a value of $8.8 M, I got a total value of $15.9 M for two months of Beltran.
Unlike Beltran and Fukudome, Pence was a bit trickier, since he’s under control for multiple seasons. The Houston Astros traded him last night to the Philadelphia Phillies, getting Jonathan Singleton and Jarred Cosart, a top 50 hitter and top 50 pitcher respectively. The Astros also got Josh Zeid, a Grade C pitcher, and a player to be named later. Houston gave up $1 M in the deal, and Pence profiles as a Type A free agent. Between the prospect values, the $1 M, and the $5 M in draft pick compensation, I figured the total package for Pence was $42.3 M.
There has been a lot of talk that Pence could receive $25 M over the next two years in arbitration, so I went with that figure for his 2012 and 2013 salaries. I also listed him as a 3.5 WAR player, which is a little lower than his pace this year, but more in line with his overall numbers. When you reverse his value, it takes $7.7 M per win to get Pence to $42.2 M.
However, here is the hard part. Pence profiles as a Type A free agent, giving him $5 M extra in value for the eventual compensation picks. Those picks aren’t necessarily guaranteed, since the compensation system could be totally different, or even removed, by the 2014 draft. If you don’t count the compensation value, the value of Pence moves up to $8.3 M per win, which gives him an overall value of $42.1 M.
Three examples is a small sample size, so we can’t really establish a hard value here. However, we can conclude that it will cost more than $5 M per win to acquire players on the trade market this year. Putting that in to perspective, it cost $5 M per win on the free agent market this past off-season, and that amount was high, up from the normal $4 M. Based on the examples above, the trade market this year looks like it will cost at least $8 M per win around the deadline.
A price of $8 M per win means that someone like Jason Kubel, who the Pirates have a strong interest in, would cost $6.4 M in prospects, rather than $4.3 M under a $5 M per win scale. That’s an extra Grade C pitching prospect. It means someone like Josh Willingham will cost $2.1 M, rather than $0.6 M. That goes from a player to be named later to a Grade C pitching prospect.
This is definitely a seller’s market, which raises a question: should the Pirates consider selling one of their key pieces? I’ve suggested in the past that the Pirates can be both buyers and sellers at the deadline. At this point the relief pitching market is flooded, so I wouldn’t deal Joel Hanrahan. But what about Paul Maholm? At $8 M per win, and with the way Maholm is playing this year, the Pirates could get $23 M in value for him. To put that in perspective, that’s a top 11-50 hitting prospect. Under a $5 M per win scale, Maholm would only be worth $10.1 M, which means this market is adding $13 M in value.
Trading Maholm might make some Pirates fans uneasy, especially with a few of the starters seemingly coming back to earth (Kevin Correia, Charlie Morton). However, the Pirates would have an immediate replacement. They’ve got Ross Ohlendorf rehabbing in AAA. Ohlendorf made a nice start last night, allowing one run in five innings, and needing 73 pitches to get through the outing. They also have Brad Lincoln putting up nice numbers in AAA. Rudy Owens has also been strong lately, with a 2.83 ERA in 28.2 innings in the month of July, with a 24:10 K/BB ratio. That provides some nice depth to the rotation, and solves the problem of what to do with Ross Ohlendorf when he returns from the disabled list.
That’s not saying that the Pirates shouldn’t go find help. I just think there’s a possibility that they could deal Maholm, replace him with one of Ohlendorf, Lincoln, or Owens, get a top hitting prospects, and see very little drop off in production. Trading a guy like Maholm also doesn’t prevent them from being buyers for a bat in the short term. It’s definitely something they should consider, as this is shaping up to be a seller’s marker, and a Maholm deal could really give the farm system a boost.
As for the buying side of the equation, the fact that this is a seller’s market only enforces my feeling that the Pirates should pursue the lower-key players who can be acquired for a cheaper price in prospects, in exchange for salary relief. Thinking long term, I would much rather see the Pirates give up cash rather than prospects in order to find a short term upgrade. That’s a much better alterative than going for a coveted guy like B.J. Upton and paying a ton in prospects, which is what it would take in this market.