Archive for Trade Value

It appears, once again, that Domonic Brown’s name is out there cooking up in the hot stove.  Dave and Jeff each touched on Brown when his name last came up in rumors last month when a Brown for Jose Bautista rumor was floated out of Philadelphia. Both pieces laid out the caveats of such a move in that Brown’s career is still immature enough that it could go in either direction. 2013 could as much be his baseline as much as it could be his peak.

Brown’s major league career has consisted of just 1032 plate appearances. Prior to 2013, Brown was on the Philly to Reading shuttle a number of times and also had to recover from a hamate injury, which sapped some of his power through the recovery process. The amount of plate appearances he received in parts of three seasons from 2010 to 2012 were nearly identical to the ones he received in his 2013 as a full-time player for the first time. Not only were the plate appearance totals nearly identical, so were the skills.
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In this, their long-overdue rebuilding year, the Chicago Cubs have redefined terrible on the North Side. They currently sport an Major League Baseball-low 24 wins and have a dreadful duo of punchless offense and impotent pitching.

But they are not without trade chips as they approach a dark second half. Bryan LaHair and Jeff Samardzija — who possess an attractive blend of affordability and upside — and Ryan Dempster, Geovany Soto and David DeJesus will all get a number of inquiries as the deadline approaches. But the team is particularly eager to sell one asset more quickly than the others. His name is Alfonso Soriano.

Signed to a double-albatross contract — awarding the 36-year-old an $18 million salary through 2012, 2013 and 2014 — Soriano has no hopes of playing at a value commensurate with his income. However, he’s not without his strengths, and for certain teams looking for a power-hitting righty, Soriano might be the right fit.
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Miguel Cabrera getting a first place MVP vote is pretty silly. That said, as a player, dude is awesome. He’s not Keith Hernandez with the glove or Willie Wilson on the basepaths, but in case you haven’t noticed, he’s pretty good at the whole “hitting” thing. From 2007 to 2009, Caberara generated 110.5 batting runs above average. During that period, he’s accumulated more Wins Above Replacement than fellow first basemen Lance Berkman, Adrian Gonzalez, Carlos Pena, and Ryan Howard. Cabrera will only be 27 next season. Rumor has it that he may be available in trade with the Tigers trying to clear salary. If so, what is his value?

To reiterate: Cabrera is an excellent (and still young) player. However, as fans, we’ve lately become more aware that a player’s value includes not only his (total) baseball skill, but, as Dave pointed out earlier in a different context, the player’s contract. Think about it this way: if someone gives you a house worth two million dollars, then you’ve gained two million dollars in assets. However, if someone “gives” you the same house conditional on you paying off the same two million dollars, you haven’t really added an asset, have you?

The valuation of baseball players is similar. Without getting into methods for calculating dollars per marginal win (see Colin Wyers’ excellent series at THT), this is perhaps the most important function of WAR. Teams spend money to add wins. WAR tells you how many wins a player adds above “freely available” talent. On its own, WAR tells us how much a player helps his team even if he’s below average. When WAR is connected with relative dollar value of marginal wins, we get a sense of how much a player exceeded or fell short of the value of his salary. Let’s apply this to Cabrera.

CHONE projects Cabrera as 37 runs above average per 150 games a hitter next season. Jeff Zimmerman projects him as a -1 defender at 1B. Looking at Cabrera’s baserunning numbers from the last few seasons, let’s call him -2. Prorated for 150 games, that’s: +37 hitting, -1 fielding, -11.5 position, -2 baserunning, +23 AL replacement level = about a 4.5 WAR player in 2010.

Following Tango, I’ll assume the current market value of a marginal win is $4.4 million. Again following Tango’s generic model, assume post-peak players decline by half-a-win per year. We need to build in annual salary inflation, (which I’ve set at 7%). With those assumptions in place, over the next six seasons (2010-2015) we’d expect a 4.5 WAR player like Cabrera to be worth about $102 million. Cabrera’s only 27, so the decline curve may be a bit harsh. If we add on a half-win a season to the original calculation, his estimated value from 2010 to 2015 is $118 million.

From 2010 to 2015 (six seasons), Cabrera is guaranteed $126 million. Think back to the house example — no matter how nice the house is, if you have to pay full price (or more) for it, you aren’t adding an asset. Cabrera is an excellent player, but he’s going to be being paid as much (or more) than he’s (likely) going to be worth.

Of course, the Tigers could pick up a chunk of Cabrera’s future salary and/or throw in cheap talent to add value from their side. However, straight up, given his estimated talent and large contract, Miguel Cabrera’s intrinsic trade value appears to be… nothing?

This is a bit of an extreme conclusion. Cabrera’s trade value is not “nothing.” He is one of the best hitters in the league and is young enough that he will probably remain so for at least the next few years. Having an efficient payroll is just a means to winning, not an end in itself, and players like Cabrera are rare indeed. Still, since Cabrera is being paid (at least) his likely market value over the life of the contract, he would only really help teams that can afford to pay market value on a regular basis — the Yankees, and perhaps the Red Sox (though probably not the Dodgers at the moment given their ownership situation). And the Yankees already have an expensive first baseman signed long-term in Mark Teixeira. Cabrera isn’t worth “nothing,” but his contract gives the Tigers much less leverage than one would expect given his age and skill.