The Twins Make Two Savvy Little Trades

In the simulation baseball game called Hardball Dynasty in which Carson and I participate alongside other BBWAA writers (whose names have been redacted for privacy), international-free-agency dollars are a prized commodity.

International free agency, unlike the amateur draft, represents a market in which teams have access to elite talent regardless of their place in the standings. Carson and I and our 30 leaguemates are always waiting for the fake, digital Shohei Ohtani to be made available for our fake, digital dollars. Of course, there’s also a point at which international market budgets can become too greatly inflated, allowing for an opportunity to invest elsewhere.

Back in the real world — where there are real teams, real players, and real decisions being made — I applaud the Twins for what they did on Wednesday by trading in some of their international dollars for other prospect talent. It occurs at a time when international dollars should, theoretically, never be more valued.

When the Twins learned they were not one of the seven finalists for Ohtani despite possessing the most dollars available, they went searching for opportunity. After all, at that point, their $3.5 million in international pool money was more valuable to the seven finalists. Even though money appears not to be the primary motivator for Ohtani and even though the signing bonus he’s permitted to receive under the terms of the current CBA will be paltry relative to the endorsement opportunities he’s offered, bonus dollars have to rank somewhere on Ohtani’s priority list. At the very least, those pool dollars could be a sort of tiebreaker.

Not only are international dollars more valuable in general this year because of Ohtani, but an international dollar is also more valuable because there’s a cap of $153.5 million on them this year thanks to the aforementioned CBA. Teams spent $203 million on international bonuses last year.

So, in theory, international dollars have never been more valuable (at least to seven clubs): there’s a finite number of them and Ohtani is available.

For those clubs now omitted from the Ohtani race, however, this marks an opportunity to seek a trade for international dollars, with hopes of finding a better return than they could expect from signing a 16-year-old player. So on Wednesday, the Twins, being rather egalitarian, traded $1 million in pool money to Angels (an Ohntai finalist) and another $1 million to the Mariners (also an Ohtani finalist).

The Twins are not the only club to make such a deal. FanGraphs’ Stephen Loftus evaluated 26 trades involving pool money. But the Twins have been most aggressive since losing out on the Ohtani sweepstakes and leveraging their remaining pool dollars.

For $2 million in pool money, the Twins probably didnt’ pick up future franchise cornerstones. They received two 2017 draft picks in Jacob Pearson, an outfielder selected in the third round by the Angels last year, and David Banuelos, a catcher selected in the fifth round by the Mariners. Both prospects received 45 FV grades from MLB.com and have not yet been evaluated by FanGraphs prospect analysts.

Pearson rated as the Angels’ fifth-best prospect and Banuelos as the 10th-best Mariners prospect, according to MLB.com. They rank as the Twins’ 22nd- and 24th-best prospects, respectively.

The idea is good, but what how about the return? What is the value of a 45-grade prospect?

Building off of the work of Victor Wang, Kevin Creagh and Steve DiMiceli created a model to move the valuations to the future value scale. Writes Dave Cameron in the latter of the two posts linked here:

“[The model] attempts to quantify the expected future value of a prospect based on how similarly rated prospects have performed in the major leagues. The model looks at the level of expected performance and the expected cost of a player during the years before he reaches free agency, and then estimates a player’s value to his organization during that time.”

By the method utilized by Creagh and DiMiceli, a position-player prospect with a 45 FV grade is worth an estimated $11 million to his club. By this logic, the Twins traded $2 million in pool dollars, in unrealized spending power, for an estimated $22 million in future value.

That doesn’t represent the end of our calculus, however. To make an apples-to-apples comparison, what we need to know is how much the Twins could expect to buy for $2 million in international free agency or what a pair of $1 million signings could be expected to yield.

In 2016, the Astros signed Freud Nova to a $1.2 million bonus, according to Baseball America’s database. Eric Longenhagen placed a 40 FV grade on him. The Tigers signed Josue Guerrero to $1.1 million bonus. Longenhagen placed a 40 FV grade on Guerrerro last spring. The A’s signed Yerdel Vargas for $1.5 million and he also received a 40 FV grade. Jeisson Rosario was signed for $1.8 million by the Padres in 2016 and he didn’t place on Eric’s top 20 prospect list. His grade fell below 40FV. The Padres spent $4 million on Luis Almanzar and he received a 45 FV.

While those signings occurred in the soft-cap era of IFA pool spending, it appears as though landing a 45 FV player for just $1 million is rare. So the Twins probably doubled their expected FV return by flipping the $2 million for Banuelos and Pearson.

They’re small deals, but good deals. Make enough deals with positive returns and it adds up.

Moreover, as Twins MLB.com beat writer Rhett Bollinger noted, the Twins not only increased their future prospect value and depth, but they traded for a higher prospect floor.

The Twins decided it was best to use $2 million of it for two prospects who were both drafted in 2017 and are closer to the Majors and easier to evaluate than the 16-year-olds that are usually signed with international bonus money.

It’s a road map more teams ought to follow before Ohtani makes a decision.