To Trade, or Not to Trade (Within the Divison)

With the Phillies signing Cliff Lee late Monday night, much of the winter intrigue now shifts to Zack Greinke, the last ‘ace’ seemingly available this off-season. Reports have surfaced throughout the off-season suggesting that: a) Greinke is not happy in Kansas City and b) the Royals are ‘actively gauging’ the level of interest in the right-hander. Add in the fact that every team in baseball could use an ace starter (ok, maybe not the Phillies) and it’s hard to see Greinke wearing Royal blue come opening day.

One of the more interesting things about the Greinke rumors is how the Royals are treating the issue of whether to move the starter within the AL Central. First indications were that the Royals were opposed to trading Greinke within the division, but they seemed to have softened their stance of late. The issue is relevant not only because the Twins are rumored to have interest in the right-hander, but also because it provides an opportunity to discuss why I believe teams should look to trade within their own division.

The Royals receive their fair share of sabermetric criticism, but aversion to trading within a team’s division appears to be a league-wide phenomenon. In the last three years 36 players coming off a season in which they were worth three or more WAR have been traded. Only two of these players have been traded within the same division, Cliff Lee (from the Mariners to the Rangers) and Dan Uggla (from the Marlins to the Braves). Lee and Uggla were both veteran players in their free-agent years. Trading a 27-year-old ace with two team-friendly years left on his contract within the division in unheard of.

Even fairly ‘progressive’ general managers consider moving a player within the division only if the team in the division is offering the best return. But I believe there is a slight advantage for teams to trade within their own division. The reason stems from the relevant time-frames of the players involved.

When a star-level player is traded the typical return is prospects or major leaguers who have not yet become arbitration-eligible. The team trading the established star is effectively saying, I’ll give you a player who will help you compete in the next couple of years (wins now) in exchange for players who will help me in the future (wins later). When a team trades their star player outside of the division, they improve their farm system, thereby increasing their chances of fielding a competitive team in subsequent years, but no other teams in the division are directly affected.

When a team trades a star player within their own division, they still receive young players who increase their chance to compete in subsequent years, but they also take away young players from the rival team, thereby hurting the ability of the rival team to field a competitive team years down the road. The rival team obviously receives the star-level player, but by the time the first team is ready to compete, the star player has likely departed in free agency, signed a contract so lucrative that he does not provide any surplus value beyond what he is being paid, or aged to a point where he is no longer a star-level player.

The trade that sent Cliff Lee from the Mariners to the Rangers provides an excellent example. Texas received 1/2 a season of Lee (and two draft picks because he left in free agency) and Seattle received arguably Texas’ best prospect in Justin Smoak and three other players. Had Seattle elected to trade Lee to the Yankees, the Rangers would still have Smoak and the three other prospects. By trading within the division the Mariners not only increased their own chances of competing in the future, but also hurt the ability of one of their rivals to field a competitive team.

Even if Lee had signed with the Rangers, trading within the division would still have made sense, as the Rangers would be paying Lee market rate for his services. Plus, by the time the Mariners are likely ready to compete, the first few years of Lee’s new contract, which figure to provide the signing team with surplus value to make up for the likely deficit on the back-end, will have passed.

Admittedly, because Greinke will enter free agency at 29, he represents a different case than Lee. But the general premise still holds: If the Twins or another team in the AL Central were able are to acquire Greinke they would still have to pay him market rate to retain him once he hits free agency, something they could have done without acquiring him in an earlier trade. Furthermore, devoting significant resources to Greinke would limit the team’s ability to fill other holes, and with the prospects surrendered in the original deal, there is a greater chance there will be significant holes to fill.

This is not an exhaustive study, but I think it is worth at least reexamining how we view intra-division trades.