Attempting to Rationalize the Shelby Miller Trade by Craig Edwards December 9, 2015 With the title of this post, I have given myself an admittedly difficult task, given most comments about this trade since it went down. Arizona traded two top-100 prospects, including one player in the top 25 (at least), as well as a proven major league outfielder in exchange for a somewhat inconsistent pitcher, albeit one coming off a three-win season and with three more years of control. For the most part, everybody is beating up on the Diamondbacks — and for good reason: we don’t know the internal valuations the Diamondbacks possess on their own players and players outside their organization, but there is a general consensus that whatever those valuations are, they do not match up the rest of baseball. As a result, they have undersold their assets compared to the rest of the market. If we take out the external valuations of players like Dansby Swanson, Aaron Blair, and Ender Inciarte, can we make a case that, internally, the decision might have been sound? What I am trying to get at is this: the trade value on the open market for Dansby Swanson, Aaron Blair, and Ender Inciarte is much greater than one Shelby Miller, but if you are the Diamondbacks and presented one choice and one choice only, how do we get to a spot where you choose Shelby Miller over Dansby Swanson, Aaron Blair, and Ender Inciarte? One thing up front before we get to the player evaluations: Arizona is making money with these moves. San Diego fielded a mostly bad baseball team in 2015, but drew 265,000 more fans than they did the previous year after “winning” the offseason. The White Sox did the same and drew 100,000 more fans in 2015 than they did in the 2014 season. Signing Greinke and trading for Miller is very likely to bring more fans to the park just as the Diamondbacks $1.5 billion television deal begins. Ultimately, they will have to win to keep and expand those gains — as attendance increases for the Toronto Blue Jays, Kansas City Royals, and New York Mets all suggest — but these moves should help the short-term bottom line of the Diamondbacks. On the player side, we can start with a few simple evaluations to put dollar values on the players involved. You might have seen our contract tool used a few times at FanGraphs, and below it will show a few values based on current Steamer projections and the years of control for the major league players involved in the deal. Shelby MIller’s Contract Estimate — 3 yr / $49.4 M Year Age WAR $/WAR Est. Value 2016 25 1.7 $8.0 M $13.6 M 2017 26 1.9 $8.4 M $16.4 M 2018 27 2.2 $8.8 M $19.4 M Totals 5.8 $49.4 M Assumptions Value: $8M/WAR with 5.0% inflation Aging Curve: +0.25 WAR/yr (18-27), 0 WAR/yr (28-30),-0.5 WAR/yr (31-37),-0.75 WAR/yr (> 37) Ender Inciarte’s Contract Estimate — 5 yr / $55.8 M Year Age WAR $/WAR Est. Value 2016 25 0.9 $8.0 M $7.2 M 2017 26 1.1 $8.4 M $9.7 M 2018 27 1.4 $8.8 M $12.3 M 2019 28 1.4 $9.3 M $13.0 M 2020 29 1.4 $9.7 M $13.6 M Totals 6.3 $55.8 M Assumptions Value: $8M/WAR with 5.0% inflation Aging Curve: +0.25 WAR/yr (18-27), 0 WAR/yr (28-30),-0.5 WAR/yr (31-37),-0.75 WAR/yr (> 37) We can see why this trade was so problematic. Inciarte will get four years of arbitration versus Miller’s three, but their payouts in arbitration are likely to be similar as Inciarte is likely to receive less per year. Using the figures from above, the trade is even before we even get to the prospects. In my post comparing the cost of Zack Greinke and Cole Hamels, I used dollar figures for prospects based on recent studies that estimate production depending on prospect status. The values I used are reproduced in the chart below. Prospect Valuations: Adjusted from Creagh/DiMiceli Study Tier Number of Players Avg. WAR Surplus Value Hitters #1-10 53 15.6 $102.4 M Hitters #11-25 34 12.5 $81.7 M Hitters #26-50 86 6.8 $43.8 M Hitters #51-75 97 5.0 $31.8 M Hitters #76-100 96 4.1 $25.8 M Pitchers #1-10 18 13.1 $85.7 M Pitchers #11-25 47 8.1 $52.4 M Pitchers #26-50 77 6.3 $40.4 M Pitchers #51-75 94 3.4 $21.1 M Pitchers #76-100 105 3.5 $21.8 M SOURCE: http://www.thepointofpittsburgh.com/how-much-an-mlb-prospect-is-worth-updated-trade-surplus-values/ Dansby Swanson, last year’s top overall pick, is one of the best prospects in Major League Baseball. As Jeff Sullivan noted in his analysis of the trade, MLB.com has him currently at number 10, but for the purposes of this evaluation, we can use the ranking of Kiley McDaniel, now with the Braves organization, who put Swanson at number 24 in his mid-season list. Based on the chart above, that would place Swanson’s value at $81.7 million. Aaron Blair was number 59 on McDaniel’s list heading into the season, and given the many graduations last year, there is an argument to move him up the list. That said, his 2015 season wasn’t outstanding and MLB.com had him at number 61, so the preseason ranking should still hold. Adding another $21.1 million to Swanson’s number and Enciarte’s number, we have the Braves roughly $110 million ahead of the Diamondbacks. If we want to close that gap, the first thing to do is get a little more bullish on Shelby Miller. Steamer seems a little down on Miller after the latter posted a 3.4 WAR season, cutting that number in half, and calling for an increase in a home run rate that was suppressed last season. Miller could be much better next year, and Dan Szymborski ran ZiPS projections for Miller last night and found a three-win pitcher. If we get a tad optimistic, look at Miller’s age-24 season, and increase by 0.25 WAR like our contract tool does, we can start Miller at 3.7 and repeat the tool. Shelby Miller’s Contract Estimate — 3 yr / $99.8 M Year Age WAR $/WAR Est. Value 2016 25 3.7 $8.0 M $29.6 M 2017 26 4.0 $8.4 M $33.2 M 2018 27 4.2 $8.8 M $37.0 M Totals 11.9 $99.8 M Assumptions Value: $8M/WAR with 5.0% inflation Aging Curve: +0.25 WAR/yr (18-27), 0 WAR/yr (28-30),-0.5 WAR/yr (31-37),-0.75 WAR/yr (> 37) Miller now has some pretty tremendous value. It’s tough to apply and equal and opposite pessimism to Inciarte, given that he’s projected at roughly one win. So, leaving his value at the same spot, we have to adjust the prospects. While it’s possible that the Diamondbacks had soured a bit on Blair after he posted an 18.5% strikeout rate and 7.8% walk rate in the minors this season, it would be difficult to place him outside the top-100 prospects. As a result, we’ll leave his value the same. We can knock Swanson down to the 26-50 range, although it does seem a bit harsh. Adding those totals up, we can come to an internal calculation that still finds the Diamondbacks $20 million in the hole. We could chalk that up to the draft pick the Diamondbacks would receive, but if we are doing internal Diamondbacks calculations, we know that is not the case. For the Diamondbacks to have made a fair trade, we need to think less of Swanson and believe that Miller will produce 4.5 wins next year, moving up to five wins in the 2018 season. In the initial numbers at the beginning of this piece, Miller would need to be a six-win pitcher from day one, making the Braves haul fairly close in value to something that might have landed Jose Fernandez or Carlos Carrasco’s five years of control. The Diamondbacks are betting big on the success of Shelby Miller, and at the top of the Diamondbacks organization is Tony LaRussa, who once saw Miller’s potential as a minor leaguer while both were still in the Cardinals organization. It isn’t wrong to make big bets on the players a team acquires, but the problem lies in failing to compare internal evaluations with external values and then exploiting the differences between the two. The Diamondbacks might believe the package they sent for Shelby Miller was fair given their expectations for him and the players they gave up, but they are overpaying market prices. The team wants to contend now — not unlike the Tigers over the past decade. The Tigers farm system was never great, making it difficult to overpay in prospects, but they certainly used the prospects in trades the best they could and spent as much money as possible on the open market. The gambit more or less worked for the Tigers, as they have contended over the last decade. The Diamondbacks want to win, but do not yet have big money to spend, so they are limited to overpaying in prospects. This plan might work to get them to the playoffs, but long-term their failure to understand the market is costing them precious assets that could be used to build a sustainable winner.