Attempting to Rationalize the Shelby Miller Trade

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.





Craig Edwards can be found on twitter @craigjedwards.

106 Comments
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CBS Headline
6 years ago

Diamondbacks acquire another ace!

So… yeah, that’s a thing that some people might think, however mistakenly.

Keith
6 years ago
Reply to  CBS Headline

The analysis doesn’t make a lot of sense because it assumes the trade was in a vacuum. The Dbacks didn’t mortgage their future because they have about 8 solid pitching prospects projected to be middle of the rotation starters. So, they can afford to lose one. The also have three short stops prospects that are hitting the majors ahead of Swanson – two that they got from the Braves when they Braves supposed “stole” J Upton (Brandon Drury and Nick Ahmed) and Chris Owings. Swanson was blocked anyway. So, their future is set there. Plus, they have an abundance of outfielders and they all can’t play this year so they were likely going to trade one. Inciarte is a nice player but is real value is his defense not his power so he help the most at centerfield. Guess what – the Dbacks already have all-star in centerfield. What they didn’t have is another top of the rotation starter beyond Grienke and now they do. So spare me the “they mortgaged the future” nonnense. One of the middle infield prospects, outfielders and pitching prospects was going to be traded regardless. They offered the package to the Marlins who turned it down so it apparently is not a valuable as you all think. So, we know the market for a top of the rotation starter. Nobody got fleeced in this deal. It is good for both teams.

NickB
6 years ago
Reply to  Keith

lol, the d-backs didn’t get fleeced, they got taken outside and whooped. they lost this trade so hard that their mom’s woke up crying about it.

The hammer of justice
6 years ago
Reply to  NickB

The problem with the analysis done on trades like this is it starts from a flawed premise.
Baseball teams aren’t solely built with “surplus value” and while it is a good starting point to understand a deal, it leaves much out. Not only are many of these wrong (eg All Royals moves) but they don’t try to put the deal in perspective from each respective side. Dave stewart has a win today mandate, not a build slowly mandate. Given that, how does he address the holes in his current mlb roster – given he may not be the GM in four years. The “market” for cost controlled #2-3 starters is fairly thin and therefore inflated. He has to do something. So from his perspective he trades a marginal valued 4th outfielder who is replaceable, and two guys with actually ZERO value. In four years if Dave is successful and has won with this roster, no matter what happens with the trade it will have been a success. Its not a model for a tampa bay or A’s but it is a model that can work for his purposes.

I think a better model to analyze these trades is a bit of surplus value, a bit of risk analysis with the prospects (eg bust rate or WAR range by year) and a bit of why each side made the deal, taking into account strategic intent.

omar207member
6 years ago
Reply to  Keith

Your objections to the article have nothing to do with the author’s conclusion: Edwards is not saying [like the rest of the world] that the DBacks got fleeced–he’s saying that even if the Backs feel they won the trade, they got no where near what they could have for the resources they gave up; Edwards is saying that a more thorough internal examination of the deal very easily would have revealed that today’s market would have born more for what they received.

The underlying sentiment is that it’s fine if the DBacks like the deal, but it’s poor management because they quite obviously should have been able to get more for the players they gave up. It’s more a slap at the management than the deal itself.

Keith
6 years ago
Reply to  omar207

This article would only make sense if the Dbacks had not shopped their package around the league. However, they apparently did.They were linked to several different pitchers around the league. We know that the Dbacks offered the same trade to the Marlins for Jose Fernandez and the Marlins turned them down. The Marlins wanted Corbin and Drury in addition. In other words, the Dbacks could not have gotten more for the package than Shelby Miller despite the hypothetical value assigned to them in this article. The real values are determined by the market. I could appraise my home at some high price as well and when somebody makes me an offer that is lower, I could write an article explaining why the value of my house is much higher. But, unless someone actually offers me my asking price, it isn’t worth what I say it is. It is all about supply and demand.

Mark
6 years ago
Reply to  Keith

So the Diamondbacks offloaded a top-25 prospect in all of baseball for way less that he is worth simply because there are other prospects at his position that are ahead of him? That would be absolutely horrible logic from Arizona’s front office. It’s certainly not how any business in their right mind would value and trade their assets.
And such logic would be even more misplaced in the baseball world. Shortstops can play any position on the field besides pitcher and catcher. This idea that teams can have too many middle-infield prospects is beyond laughable.

Chill
6 years ago
Reply to  Mark

I think your grasp of basic economic principles is in serious question. Do businesses ever have sales to off load extra inventory, that would otherwise lose value over time? Does supply and demand not enter into economic considerations? With all due respect, your near total lack of understanding of economic realities seems to be the laughable factor here.

Keith
6 years ago
Reply to  Mark

Mark, you sound like a novice fantasy football owner trying to trade 3 wide receivers for a starting running back and can’t figure out why nobody will take your offer. “These wide receivers put up way more value than your one running back, I can’t believe you won’t do the deal.” This article is fantasy baseball. Real baseball is going on in the Winter Meetings. In real baseball, people don’t trade top shelf starting pitching. When other teams heard the Dbacks were offering Swanson, in your world, other teams would have all lined up to trade their pitching to the Dbacks. In the real world, the Marlins wanted a heck of a lot more.
Oh and shortstops can technically play any position in the field defensively but nobody in their right mind is going to play a short stop at the corners (1B, 3B, LF, RF) unless they have real power, which most shortstops don’t. So, SS are limited to short and 2nd where defense is a premium. If your logic made sense Gregerious would still be playing for the Dbacks instead of the Yankees.

Dl80
6 years ago
Reply to  Keith

Maybe you are right that the price of starting pitching is just much higher than we think.

But I’d have much rather they ask about a bunch of other better young pitchers first (Rodon, Secerino, Sale, Iglesias, Caarasco, Salazar) before going right from Fernandez to Miller.

I like all those guys better than Miller AND they might have been cheaper.

Rational Fan
6 years ago
Reply to  Dl80

Sale could have been cheaper? What?

He’s under control longer and for cheap.

White sox weren’t trading quintana/sale or rodon. Quintana was probably the best bet and I’m not sure the Sox do that deal for Quintana.

JKB
6 years ago
Reply to  CBS Headline

The Diamondback’s #1 priority was obviously bringing parity to he National League East at any cost. The Force Awakens in one week!