One
of the hottest commodities on the potential trade market these days is the
Tampa Bay Rays’ ace lefty David Price, and fans of many a franchise are
understandably salivating at the prospect of seeing him don their team’s
uniform. It’s not every season that a player of Price’s caliber becomes
available while still in his salary arbitration years, which Price will be for
the next two seasons. Trade speculation is obviously a favourite off-season
pastime of fans everywhere, so there has been rampant speculation in all
corners of the media and internet about where Price might end up and what it
might take to get him there.
With
the winter meetings now concluded without having provided much excitement for
Jays fans, I wanted to do a bit of a pivot off some of the analysis I’ve seen
recently that is either directly related to the Blue Jays’ quest for starting
pitching, or at least very closely related to it. Much of the analysis
regarding trades these days has to do with the notion of surplus value, which
is calculated by finding a player’s value in $/WAR terms and subtracting their
salary ( WAR * $/WAR – Salary ). The difference between the player’s on-field
value and their salary is their surplus value. This is significant for obvious
reasons. The less you pay for wins from one player, the more money you have to
allocate to buying wins from other players. Trades can be analyzed by comparing
the projected surplus values of the pieces involved to see which team ended up
“winning” the deal from a value perspective. As mentioned, surplus value is at
the heart of most transaction analysis, and for good reason.
It’s
important to consider surplus value when considering trading close to the
majors prospects and their six affordable years of team control for established
major leaguers, even very good ones like David Price. For example, in a recent FanGraphs piece, Dave Cameron shows how six years
of a top prospect like the Pirates’ Gregory Polanco, projected to provide six
years of league average-ish production starting in 2014, provides about $120
million in surplus value against just $30 million in surplus value from Price
over his final two arbitration-eligible years for a difference of about $90
million. You can quibble with any of the projections and $/WAR figures, but no
matter how you slice it, a prospect like Polanco is likely to contribute far
more surplus value over the remainder of his team-controlled years than Price
is. Cameron concludes that even in a one-for-one swap, a prospect like Polanco
who is ready to step in and contribute for league minimum salary is an overpay
for David Price.
That's
certainly one way of looking at a trade, but the market doesn't always behave
in such a coldly logical manner. In a vacuum, a transaction analysis based
strictly on projected surplus value makes perfect sense, but as we know, teams
don't operate in a vacuum. Teams have a tendency to overpay in long-term
surplus value for players they believe can help them in the short-term, usually
when they consider themselves right on the verge of playoff contention.
Intuitively, we know this to be true, even without the numbers to back it up.
This is where I feel that a lot of transaction analysis based on a comparison
of surplus value falls short, in that it compares players as if their values
exist in a vacuum. It's a great analytical method, but doesn't necessarily
paint the full picture. A team's perception of its own situation, its needs,
and the supply of players to fill those needs in any given year all affect a
player's value on the trade market in ways that aren't necessarily well
accounted for by a strict surplus value analysis.
