The Padres Paid a Bunch for a Draft Pick

This past weekend, the San Diego Padres completed a trade, sending Janigson Villalobos to the Minnesota Twins in exchange for Phil Hughes.

The precise players involved aren’t of particular significance. The Padres’ prospect list contained 75 names and Villalobos was not among them. As for Hughes, he had recently been designated for assignment after pitching poorly over the last three seasons. Much of that subpar performance was due to injury and included thoracic outlet surgery. As Jay Jaffe recently chronicled, few pitchers return to prominence after TOS.

By designating Hughes for assignment, the Twins appeared willing to eat the roughly $22 million remaining on his contract through next season. The Padres are taking on some of that obligation in exchange for a competitive balance draft pick, so the functional part of the trade looks like this.

Padres get:

• 74th pick in 2018 draft and $812,200 in bonus pool money that goes with it.

Twins get:

• $7.6 million, with $7.25 million paid next season, per Jon Heyman.

Most draft picks are not allowed to move between teams, but the competitive balance draft picks that come after the first and second rounds and which are awarded to small-market and lower-revenue teams can be traded. The Twins received a pick this year after the second round, and they decided they would rather have $7.25 million next season than the 74th pick this year. The Twins are not the first team to make such a trade. I attempted to compile previous trades in the table below. The picks that were essentially sold are highlighted. (Click on the bold text to see the full table.)

A few explanatory notes:

• The Marlins and Tigers swapped picks in their trade, making the inclusion of the draft picks a very minor part of the deal.
• The Red Sox forfeited the pick they received from the A’s in the Cespedes/Lester deal when they signed Hanley Ramirez and Pablo Sandoval, so the pick was never actually made. It still had value, though, as the team would have lost a different pick otherwise.
• It’s not entirely clear if the Trevor Cahill Diamondbacks/Braves deal is one transaction that includes only Victor Reyes for the pick, as they occurred on separate days, but there is reason to believe they were all part of one deal.
• The Mat Latos deal included the Dodgers, who were the ones who received both Latos (whom they wanted) and Morse (whom they didn’t). Hector Olivera moved from the Dodgers to the Braves and Alex Wood head to Los Angeles in the 13-player deal.

The Mat Latos deal is highlighted as a cash-for-pick trade, but the dollar figure is somewhat nebulous, as Jeff Sullivan noted at the time. The Marlins removed around $14 million from their books, but Latos presumably had some positive trade value, making the value of the pick something less than the roughly $10 million owed to Morse. The other two cash deals are easier to determine, as Matusz and Webb were both owed around $3 million. After the Matusz trade, Dave Cameron — currently a member of the Padres front office — had this to say about the logic of the deal:

This is exactly how a rebuilding team should be spending its money during non-winning seasons. The Braves have taken a lot of heat for not putting a quality product on the field this year, but the organization is better off long-term if they spend $3 million to buy a better quality prospect in the upcoming draft than if they had spent $3 million to have a slightly better placeholder in their rotation this year. The return on investment is simply higher by spending on the draft, and this trade helps the Braves take some of their current payroll space and turn it into value that could produce when the team is ready to win, or at least provide some currency to acquire future pieces that could help the team down the road.

At that time, it appeared that a draft pick in the same range as the one San Diego has just received cost about $3 million. In this deal, the Padres are paying more than double that amount. We might place some value on the potential of Hughes recovering successfully from injury and providing some adequate level of pitching over the next two seasons. Given recent history, however, the probable value of that is low. It’s been a couple years since the last time a pick was sold, and it is pretty likely teams like the Marlins and Orioles didn’t value the picks like they should have, opting shortsightedly to save draft bonus money despite its large potential future value. If teams are smarter, the ability to acquire a pick is more difficult. It’s also possible that $7 million is pretty close to the actual value of the pick if you look at this study or play around with the calculator over at Baseball Prospectus. The Twins likely weren’t a hugely motivated seller and could probably have found a number of teams willing to pay some amount for the pick, which would also drive up the price.

It’s also possible the Padres have something specific in mind. In the last mock draft here, there was some mention of going under slot with the Padres’ first pick to spend elsewhere. In his last mock draft, Keith Law mentioned the team has been linked to two-sport athlete Kyler Murray, who will have a potentially difficult decision to make. The Padres’ second pick at No. 38 overall has a slot value of roughly $1.8 million. That might not be enough to entice Murray to drop football, but using a good portion of the slot money from the 74th pick they just acquired might get the job done. Getting the 21st-best player on our Draft Board at pick 38 might justify the extra cost of buying the pick. It doesn’t have to be Kyler Murray, as added money should net the Padres a better player than they would have otherwise been able to draft, either at pick 38, or a slot pick at no. 74, or a player with signability issues past the 10th round.

The Padres don’t have a lot of options to spend $7 million now and meaningfully change their chances of a playoff spot this season, but adding a pick for that amount might provide considerable help in the future. As for the Twins, there is a certain dollar threshold at which the payroll flexibility for next season became more important than the 74th pick. As a team expected to be in contention, that money could come in handy as early as this year’s trading deadline, but more likely this winter. The team has around $30 million committed in salaries next season and Brian Dozier will be a free agent. While trading a draft pick away for cash isn’t a great look for a small-market team wanting to rely on homegrown players, the cost they extracted from the Padres is higher than we’ve ever seen before.