Last week, I titled my post about the Curtis Granderson three way trade “The Big Deal”. That deal is now small potatoes compared to the three team blockbuster that Toronto, Philadelphia, and Seattle are poised to complete. After a day full of changing names, here’s the current belief on the final package.

Toronto gets: Kyle Drabek, Michael Taylor, Travis D’Arnaud
Philadelphia gets: Roy Halladay, Phillippe Aumont, Tyson Gillies, Juan Ramirez (he now goes by J.C.), $6 million in cash
Seattle gets: Cliff Lee

This is a true blockbuster. Halladay and Lee are both among the top five or six pitchers in the game. You rarely see two premium players of this quality moved in the same deal. And, it’s just a fun trade, not your normal big-market-buying-good-player-from-little-market deal.

So, let’s look at why each team made this deal.

Let’s start with the Blue Jays. They were obviously over a barrel with Halladay after the debacle of trying to trade him this summer. New GM Alex Anthopolous knew he needed to move his ace for the best package he could get, but also come away with enough young talent to sell this as more than an admission that they screwed up in July. In the trio of young players they’re getting from the Phillies, they were able to do just that.

Drabek, Taylor, and D’Arnaud are high quality prospects. For one year of Halladay (and $6 million in cash, which isn’t trivial but less useful to a Toronto team that won’t win in 2010), that’s a very strong return. Anthopolous did well to come away with that level of talent, given his leverage in the situation.

On Philly’s end, the motivation for this move seems clear – get a #1 starter locked up beyond 2010. They didn’t feel that was possible with Lee, so they were willing to take a downgrade in the farm system to swap out an ace for one that they could lock up. The theory is pretty sound, I think, especially given the rumored 3 year, $60 million price tag that came with Halladay’s extension. That’s a bargain for a guy as good as Doc, and the extension provides significant value to the Phillies.

Seattle’s aim is also pretty clear – win in 2010. Not content with adding Chone Figgins and making a few other small moves that would help them maintain their status as a .500ish club, the Mariners saw an opportunity to put themselves in the AL West race and took it. Lee is a huge upgrade for their pitching staff and a perfect fit for Safeco Field. The cost was fair to middling prospects, not premium guys who would help the team in 2010, and the Mariners saw this as a chance to add wins at a far below market price without sacrificing too much of their future.

For all three franchises, the thought behind the deal is sound. There are legitimate reasons for fans of all three teams to be happy about this deal. However, I think Toroto and Seattle fans can feel comfortable that this was the best their team could have done. Philly fans, I don’t think you can feel that same way.

The Cliff Lee to Seattle portion of this trade just seems very light in return for the Phillies. They’re getting two power arms with a lot of questions marks and a speedy center fielder without a lot of power. None of these guys are top tier prospects. This is the best Philadelphia could have gotten for Lee? Really? A pu-pu platter of interesting, high-risk guys not really close to the majors for a Cy Young-quality pitcher who is already well on his way to Type A free agency?

And, even if that’s true, why clear $8 million from the books by trading Lee? Surely, you could have moved Joe Blanton without eating any of his salary, even if you didn’t love the deals being offered. Or, how about this – don’t sign J.C. Romero, Brian Schneider, and Ross Gload, whose 2010 salaries are about equal to Lee’s. Replace those three reserves with league minimum guys and you’ve saved enough money to keep Lee around.

Halladay will help them, and the extension he signed is a great deal. But it just seems like they bent over backwards to make this particular deal, when there were so many other ways of going about it. It just seems to me that the Phillies could have had Halladay and Lee, and that reality would leave me pretty frustrated today if I were a Phillies fan.

This post is inspired by a question Sky Kalkman raised on twitter. Specifically, he wondered about the wisdom of the Rays paying $7 million for Rafael Soriano, when the franchise has proven time and again that they are capable of finding bargains for below-market rates, eschewing the going rate for wins and building a contender on a shoestring payroll.

I like the move and think it was a good one for Tampa Bay, even though it’s not an efficiency maximizing move from the perspective of the price of wins. They’re going to pay Soriano about $4 to $4.5 million per win for 2009, which is certainly not a discount, and is actually above the going rate that we have seen for most players signed this year. Additionally, the $7 million he will earn would represent nearly 11 percent of the total team payroll from 2009. That is a significant allocation of resources to give to a closer.

However, the Rays are not in a league average situation. Their position in expected outcomes is quite a bit different than most teams. They have the talent of a contender, but share a division with New York and Boston, which drives down their chances of making the playoffs. As such, they have to protect themselves from variance more than most clubs will, as a bullpen implosion (like they had in 2009) can essentially derail their chances of playing in October.

Soriano adds a win or two to the roster, which may not sound like much, but the win that he’s bringing is extremely valuable, given the precarious nature of the Rays playoff odds. By adding a premium relief ace, they’ve insured, to an extent, against a disaster. The security that he brings doesn’t offer the same reward for the dollar that you may find by taking a flyer on a young, unproven, power arm, but the Rays don’t need more upside as much as they need less downside.

We talked a bit about this a few weeks ago, but the composition of a team’s talent and their relation to their division opponents can have a pretty significant effect on their internal marginal value of a win. A win to the Rays is significantly more valuable than a win to the Astros because of the respective effect of that win on the odds of either team making the playoffs.

Because of where they stand, it makes sense for the Rays to pay the market rate for wins, because that price is lower than the value they’re getting from that win. It does not make sense for the Astros to pay the market price, because the return they will get on those additional wins is below the going rate. If Tampa Bay and Houston pay the same price for the same player, it will be a good deal for the Rays and a bad deal for the Astros.

We cannot use the price of wins in the market as the guide for what every team should be willing to pay for a win. It will never deviate too tremendously from the average (no one, not even the Yankees, should pay $10 million per win for a player), but teams do have their own internal marginal values of a win, and they won’t equal the going rate of wins in the market for all 30 teams.

Tampa Bay should be insuring against bad outcomes at the expense of the best one, which is what they did with Soriano. It was the right move, even if it doesn’t offer the opportunity to be a huge bargain.

I’m one of those people who doesn’t really enjoy Saturday Night Live sketches, because to me, the joke is made in the first 15 seconds and then just repeated over and over for the next several minutes. You drive a Dodge Stratus and you think that makes you important – okay. Not much funnier the 15th time you yell it. Not to me, anyway.

Ed Wade is the GM equivalent of a bad SNL sketch. The first time he overpaid a middle reliever, we figured out that he didn’t really know how to build a roster. Now, when he gives Brandon Lyon a 3 year, $15 million deal, we just shrug our shoulders and say, “Yeah, that’s Ed Wade for ya.”

Seriously, $5 million a year for the next three years for Brandon Lyon. We’re not talking about overpaying for a premium bullpen guy. Lyon is a generic middle reliever, the kind of guy who could be replaced by a minor league free agent or a Rule 5 draftee. His career FIP is 4.23, which is below average for a relief pitcher. He doesn’t even have magical FIP-beating properties – his career ERA is 4.20.

But, hey, he got hit lucky last year (.229 BABIP) and that allowed him to strand a bunch of runners (80.8% LOB%), so his 2009 ERA is a sparkly 2.86. To Wade, that matters, because he’s still analyzing like it’s 1999. Don’t worry about the fact that his career BABIP is .305 or that his career LOB% is 71.4%, and that the entirety of his low ERA in 2009 was luck – pay him like the best reliever on the market anyway.

What year does Wade think this is? The market for relief pitchers absolutely cratered a year ago, as teams stopped paying significant money for setup guys who could be effectively replaced by league-minimum earners. So far this year, we’ve seen a significant pullback from even that level of spending. The average dollar per win for the first crop of free agents signed this winter has been about $3 million per win. The Astros are paying about $10 million – ten million – per win for Lyon.

They don’t have any money to spend to fix the rest of their bad, old roster, but they can commit $5 million a year to Brandon Lyon through 2012. Moves like this are why the team isn’t good, and won’t be good any time soon. This move is just the latest act in a joke that’s gone on far too long.

Yet another year where Major League Baseball seduces its fan base with promises of an action packed winter meetings, only to produce nothing of interest for fans of 25 teams so far. After seeing how many bargains have been found late in the winter, many General Mangers are now content to let the market develop. The popularity of this strategy has led to an interminably long wait for deals to be struck.

I wonder, though, whether the late bargain market will actually develop this year. We’ve had about 10 free agent signings so far, and the price so far has come in around $3 million per win, significantly reduced from prior years. Essentially, the only players who have signed have been ones willing to take a discount. We’ve seen something of a reverse bidding war, where teams are telling players that they’ll sign the first guy from among a group of similar free agents to take a specific deal. Rather than teams competing over players, now players are fighting for roster spots, and it’s driven prices down.

However, I’m skeptical that this trend will last. It may be tempting to look at the signings so far and claim that teams are cutting back on spending, but I’d bet that we’re just seeing a selection bias. The guys who have signed so far are not a representative sample of the free agent population – they are mostly aging players on the decline, more interested in finding a landing spot than cashing in. These are the types of players who were waiting for contracts in February, and they have reacted by taking deals early and solidifying their place on a team.

To me, it looks like the free agent market has flipped. The guys willing to take a discount are signing early, while the guys who want to be paid are going to drag this process out through the winter. MLB’s revenues weren’t down that much in 2009 to where the numbers support a big pullback on spending this winter. There are teams with money to spend who just haven’t opened the wallets yet. When they do, I’d bet we’ll start to see some deals back over $4 million per win.

The late market might not be so full of bargains this year. The expectation of the market developing as it did last year may have changed the dynamics of how this thing plays out.

It wouldn’t be the winter meetings without a big three way trade. This one is pretty substantial.

As the reports stand, here’s who is trading places.

To New York Yankees: Curtis Granderson
To Detroit Tigers: Austin Jackson, Max Scherzer, Daniel Schlereth, Phil Coke
To Arizona Diamondbacks: Edwin Jackson, Ian Kennedy

From the Yankees perspective, this deal is almost too good to be true. Heading into his age 29 season, Granderson is a legitimate +4 win center fielder signed to a bargain contract for the next four years. I ranked him as the 22nd most valuable asset in terms of trade value in baseball over the summer, and the Yankees are getting him for a variety pack of role players. He instantly makes their team better, giving them a legitimate all-star center fielder who should thrive in Yankee Stadium. For as much as the Yankees have a payroll advantage, they continue to win because Brian Cashman targets the right players. Granderson is a fantastic acquisition for them.

From the Tigers perspective, this deal makes some sense, even though they’re giving up the premier player in the trade. Scherzer is a terrific arm, ranking 44th on my trade value series. He’s a quality pitcher who has five years left of team control, giving the Tigers a frontline starter on the cheap who will be in Detroit for the foreseeable future. Jackson should be a decent player, though not a star, and could hold down center field for the league minimum. Schlereth and Coke strengthen the bullpen.

The Tigers aren’t as good today as they were yesterday, but they did manage to shed some payroll and still have a premium young player under team control for significant years. I’d rather have Granderson than Scherzer, but considering the cost differences, this deal makes some sense for Detroit.

Arizona, though… what a mess. Jackson and Kennedy will shore up their rotation, but they aren’t worth a kid as good as Max Scherzer. Jackson’s a mid-rotation starter whose salaries are escalating in arbitration, while Kennedy is a back-end starter who missed most of 2009. They didn’t get better, they didn’t save money, and they didn’t get younger. This move is just not a good one for the D’Backs, unless there’s another impressive piece going to Arizona that hasn’t been reported.

A+ for the Yankees, who continue to show that they know what they’re doing. Not a bad deal for Detroit, who needed to save some cash. But man, I’m sorry for D’Backs fans, who just saw their team screw up.

Your three targets for the day are guys who were in the news yesterday: Rafael Soriano, Brad Penny, and Adam Everett.

Soriano accepted arbitration, as his Type A status made teams reluctant to give up a draft pick to sign him. Do you think he will play well enough to justify a team losing a high draft pick?

Penny is moving on to St. Louis, where he’ll join the Cardinals rotation on a one year deal. How well do you think he’ll do given a full year back in the NL?

Everett re-signed with the Tigers to maintain his shortstop job in Detroit. Will he continue to play enough defense to justify keeping his bat in the line-up?

Fill out the projections and let us know what you think.

After missing the better part of four seasons with injuries, Carl Pavano finally returned to the mound as a healthy pitcher in 2009, making 33 starts and providing good value for his teams. Going into the winter in a free agent market that was generally derided for a lack of talent, Pavano figured to be one of the more attractive arms available in free agency.

Apparently not. After finding lukewarm interest from other clubs, Pavano is set to accept the Twins offer of arbitration and will return to Minneapolis for 2010.

Despite the constant fear that he might break down again, this should turn out to be a massive bargain for the Twins. Pavano will now have his 2010 salary determined through an outdated system that will care little about his 4.00 FIP and +3.7 win value from 2009. Instead, he’ll have to build a case for his paycheck around a 5.10 ERA in his first healthy season since 2004. Those are not the kind of numbers that arbiters are going to be particularly impressed by.

So, in all likelihood, the Twins will end up paying Pavano something between $6 and $8 million next year. Even with a market that looks to be paying a depressed rate for wins, that’s still valuing him as a two win pitcher. Even with the health concerns, he’s got a good chance of besting that.

His command is among the best in the league, and he combines the ability to pound the strike zone with solid stuff that can miss bats and keep the ball in the park. He showed last year that he can still pitch at a high level. The question for him will always be health, but a one year deal mitigates a large portion of the risk that comes along with an injury prone arm like Pavano’s.

Having Pavano back at a reasonable salary, along with the acquisition of J.J. Hardy, will strengthen the Twins significantly next year. Without expending much money, they’ve made a couple of moves with legitimate upside and minimal risk. It’s been a good off-season for Twins fans so far.

With the winter meetings kicking off today, you’re going to see a ton of rumors fly the next few days. Some of them will have basis in the truth, while others make you question the sanity of the person reporting it as news. But all of them will rely on anonymous sourcing, as the only way for writers to get information from the teams is to agree to not reveal where the information came from. The need to hide the identity of the source while simultaneously giving the reader enough reason to believe it is credible has led to the birth of a new language, which can be confusing for people not familiar with the lingo. So, to help you get through all the rumors, I present a handy english translation of baseball rumor related terms.

A Person Familiar With The Negotiations – Someone who has refreshed MLBTradeRumors.com constantly.

Major League Source – Charlie Sheen.

A Source With Knowledge Of The Player’s Thoughts – The player’s agent.

A Baseball Official – An engineer at Rawlings.

Guy Who Gave Jon Heyman His Information – Scott Boras.

Try to keep these relationships in mind when you’re reading that “a major league source” has indicated that the Indians are considering sending Grady Sizemore to Washington for Cristian Guzman and a player to be named later.

Kidding aside, though, there are some good reporters out there – Ken Rosenthal rarely gets stuff wrong, for instance. But this time of year, there’s always misinformation flowing, and you have to be careful about getting too worked over any certain rumor. Don’t take any one report too seriously. If there’s something to it, it will get confirmed fairly quickly.

Recently, there’s been some misunderstanding over the application of how to use the dollar valuation we place on players here on the site. I take the confusion as a sign that we haven’t adequately explained what the valuation means, so that’s what I’m going to do this afternoon.

The biggest misconception about the dollar valuation seems to revolve around its purpose. It is not a salary predictor, or in way a projection of what a player is going to get when he becomes a free agent. It is a backward looking value statistic that quantifies the replacement cost of a certain level of production based upon the market price for that value. In terms of function, it is much more of a price than a value. In other words, the best description of the question that the valuation is answering is “how much would you expect to have to pay to replace this performance in free agency if you knew that you were going to get this level of value exactly?”

Once a performance is in the past, there is no uncertainty related to it. We know what happened. When a player signs a contract, of course, that performance is not known. Uncertainty adds risk, and risk drives down price, so we would not expect a team to actually pay a salary equal to the value listed on the players page. This is one of the main reasons why the value is not a predictor of what a player will earn in his next contract.

So, if that’s how you’re using the metric, you will undoubtedly be frustrated by the numbers, and probably conclude that they are worthless. They’re just not attempting to answer the question that you are asking, however.

Here is an example of how you should use the valuation. We have Chone Figgins’ 2009 value at $27.4 million, based on his +6.1 win season. No one is going to pay Figgins that much this winter, of course, nor should they. However, we can say that if the Angels wanted to replace what Figgins gave them last season, they should expect it to cost them about $27 million in free agent spending. Figgins produced at a very high level in 2009, creating a large surplus value for the Angels. The dollar to win valuation quantifies that surplus value, showing how much that performance would have cost if they could have expected to receive it and had to pay the going market rate for that performance.

That’s why we write that he was “worth” $27 million. It does not mean that we think the Angels should have paid him $27 million, or that they should pay him $27 million now, but he produced at a level equal to what you would expect if you had spent $27 million in free agency a year ago.

Obviously, most players are going to earn significantly less than their market value, because only a fraction of the population become free agents in any given season. Players with less than six years of service time have their contracts held down by the nature of the CBA, and none of those players should earn their fair market wage, given the structure of the system. Because the presence of these players who produce at a wage below their market rate, the overal value of a win is less than the market price – in general, it’s about $2.5 million per win, significantly less than the going rate for wins in free agency. However, a large portion of these players are generally not available, so they don’t affect the cost of a win, since they are not in the supply of available talent when teams go shopping. To use an example, the price of John Lackey is not affected by the presence of Zach Greinke, since the teams trying to sign Lackey do not have the option to alternately trade for Greinke, as KC would simply hang up the phone.

Hopefully this is somewhat helpful. There are a lot more issues surrounding the dollar to win conversion that we’ll get into, but the most important point in understanding the metric is to get what it is trying to quantify.

We have over 100 position players already with 30+ projections, but the pitchers are lagging behind. So, with that in mind, today’s targets are: Aaron Harang, Scott Feldman, and John Lannan.

Looking at yesterday’s targets, you guys think Gregg Zaun will regress a bit but still remain a quality player, Dan Uggla will bounce back with a better season than last year, and that Rich Harden will stay relatively healthy and pitch quite well. If the consensus is correct on those three, then the acquiring teams should be quite satisfied with the results they get in 2010.