Trade Values in the Adrian Gonzalez Deal
by Mattsullivan on Dec 6, 2010 11:00 PM EST
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With Adrian Gonzalez finally a member of the Red Sox, I wanted to look at the trade values involved in the deal. At $5.5M for next year, Gonzalez is one of the best values in baseball for the 2011 season. His extension changes things, however. Though it has not yet been announced (and likely will not be announced soon) for our purposes, let’s take the rumored seven year, $156M deal as a starting point. Putting those numbers into our trade value calculator, we get the following:
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Adrian Gonzalez |
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Year |
Sal (M) |
WAR |
Val (M) |
Net (M) |
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2011 |
$5.5 |
5.5 |
$25.0 |
$19.5 |
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2012 |
$22.3 |
5.5 |
$25.2 |
$2.9 |
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2013 |
$22.3 |
5.5 |
$25.2 |
$2.9 |
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2014 |
$22.3 |
5.5 |
$25.2 |
$2.9 |
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2015 |
$22.3 |
5.0 |
$22.9 |
$0.6 |
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2016 |
$22.3 |
4.5 |
$20.7 |
-$1.7 |
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2017 |
$22.3 |
4.0 |
$18.4 |
-$3.9 |
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2018 |
$22.3 |
3.5 |
$16.2 |
-$6.2 |
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FA Picks |
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$5.0 |
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Total |
$156M |
39.0 |
$183.5 |
$21.9 |
As we saw with players like J.D. Drew, Josh Beckett and several other veterans, the Red Sox tend to pay an at-or-near market rate for players they sign as free agents (or extend to avoid free agency in this case). With conservative projections (and without adjusting for inflation) that puts Gonzalez as worth a total of $21.9M in surplus value. Almost all of that value comes from his reduced rate 2011 season. Should he decline rapidly, this deal has potential to really hurt
Of course, the 2011 through 2014 seasons are the important ones to focus on here. Kevin Youkilis, Jon Lester and Dustin Pedroia, the top values among Sox players, are all signed though that time. Jed Lowrie, Clay Buchholz and Jacoby Ellsbury should all be in their prime during that time. With Gonzalez at first and Youkilis at third, we have three infielders who can reasonably be projected to put up 5+ WAR during those seasons. Do you know how many teams had three 5+ WAR infielders in 2010? None. In fact, only the Reds had three 5+WAR position players. Both competitively and monetarily, the short term impact of acquiring Gonzalez balances out the length of the commitment.
All of that is fine and good. If Gonzalez was just a free agent signing, that would be the whole story. However, Gonzalez cost us three of our top 10 prospects in addition to that money. Based on my original prospect valuations that loss looks like this:
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Name |
BA/Sickels Rating |
Prospect Value |
Added Costs |
Total Value |
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Casey Kelly, rhp |
Top 10 Pitching |
12.5 |
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12.5 |
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Anthony Rizzo, 1b |
Top 50 Hitting Prospect |
23.4 |
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23.4 |
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Reymond Fuentes, of |
Top 100 Hitting Prospect |
9.8 |
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9.8 |
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TOTAL |
45.7 |
Now, as per the forums here, I feel it may be necessary to scale back the rankings on Rizzo and Fuentes, but even given these high-end estimates, the trade is a very reasonable exchange. Even if we take these values as absolute, the Red Sox are giving up only $23.8M in value, or just over one season worth of Adrian Gonzalez. These values are nowhere near absolute, however. One thing is almost certain; none of these players will impact their team in 2011. Only Kelly seems reasonably capable of contributing in 2012. Even if these three players defy the odds and all end up as star level players, their arrival will come in the final years of the current Red Sox team and their best seasons may be after Lester and Youkilis have reached free agency.
If we do scale back the prospect ratings as many of you have suggested, we get an even more balanced deal:
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Name |
BA/Sickels Rating |
Prospect Value |
Added Costs |
Total Value |
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Casey Kelly, rhp |
Top 10 Pitching |
$12.50 |
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$12.50 |
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Anthony Rizzo, 1b |
Top 100 Hitting Prospect |
$9.80 |
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$9.80 |
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Reymond Fuentes, of |
Grade B |
$7.30 |
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$7.30 |
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TOTAL |
$29.60 |
The estimated difference in value is now down to $7.7M. Regardless of which version you find more accurate, the Padres certainly did a good job of getting value out of moving their star. Rizzo may be the replacement for Gonzalez long term and Kelly will benefit from pitching in Petco when does arrive in the Majors. In Fuentes, they get a young player with a lot of raw athletic ability who may one day man center field. That is a good haul for one year of a superstar.
Both sides seem to have done exactly what they set out to do here.
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But, but, but the MFY fans on PSA said it was a terrible move
HAHAHA I love it. They are scared ****less.
Random MFY fan in a pub in New York
thinks that the Padres should have demanded Buchholtz, and I assume they meant the starter.
These are always nice to see
Not to get too financial but is there any discounting of any of these dollar values. The salary figures should at least be discounted with the inflation rate if not the value of replacement level (acting as risk free rate). Something similar for the player value to accurately weigh the fact that prospects are future value only.
I say this because I’m sure smart organizations have quants/investment bankers of their own to value all of these deals as if they were potential equity transfers.
Well no decline in the first 4 years is somewhat optimistic
and I simply think you can’t analyze an 8 year commitment without increases to the dollar per win. If we say the annual revenue growth is 5% (historically its been 9%) 4.5M / 1 WAR now should be 6.33M/ 1 WAR in 2018.
by German Red Sox Fan on Dec 7, 2010 6:11 AM EST reply actions
I agree with you
and BigRedDog42, you should factor in the inflation rate when looking at Gonzalez’s deal. Fangraphs’ Dave Cameron puts that at 5% and that is good enough for an estimate. The primary reason I did not do that was because, while it is a very straight forward process with A-Gon’s numbers, it is a hopelessly complex issue with the prospect values. We are already comparing apples and oranges a bit here. The projected prospect values will come across multiple seasons beyond 2012 for the most part and with an inflationary adjustment, when it occurred would really matter more then the overall “rule of thumb” number which is what I have presented here. If we look at this without the adjustment the two sets of numbers are far easier to compare.
If I do use a simple inflationary adjustment of 5%, it would bump Gonzalez’s total value up to $49.4M with these projections. While no decline in the first four years is maybe a bit bullish, Gonzalez’s skill set should age well and playing in the AL gives him some DH time to further protect him. I think it reasonable to see him maintaining an average of 5.5 WAR for the first four years and that is precisely why we wanted him some much.
- Matt Sullivan
"I would change policy, bring back natural grass and nickel beer. Baseball is the belly-button of our society. Straighten out baseball, and you straighten out the rest of the world." Bill "Spaceman" Lee
www.overthemonster.com
www.spacemanspancakes.wordpress.com
by Mattsullivan on Dec 7, 2010 10:00 AM EST up reply actions
*so much
- Matt Sullivan
"I would change policy, bring back natural grass and nickel beer. Baseball is the belly-button of our society. Straighten out baseball, and you straighten out the rest of the world." Bill "Spaceman" Lee
www.overthemonster.com
www.spacemanspancakes.wordpress.com
by Mattsullivan on Dec 7, 2010 10:00 AM EST up reply actions
Part of me thinks straight salary may not be the best way to evaluate
It may be better to look at Adrian Gonzalez as percentage of total payroll. That way, inflation becomes less of an issue while the analysis still reflects the changing effects of his salary. This also reflects the fact that a 20 million dollar player for the Red Sox is a far different beast than a 20 million dollar player for the Rays or Rockies.
I’m not sure what would be the best way to do such an analysis nor is this any complaint about the piece you wrote. I’m just spitballing some ideas for valuation.
Percentage of Payroll is an interesting idea
It could be very useful to align percentage of payroll to percentage of production. It seems overly complex for a ‘simple’ trade analysis context, but it would be very useful in appraising a team’s cost per marginal win and therefore their efficiency (more or less) or in giving a more appropriate valuation to a player based on how possible it is for other teams to take on his salary. I will definitely have to think about that some more.
- Matt Sullivan
"I would change policy, bring back natural grass and nickel beer. Baseball is the belly-button of our society. Straighten out baseball, and you straighten out the rest of the world." Bill "Spaceman" Lee
www.overthemonster.com
www.spacemanspancakes.wordpress.com
also, the value of 22.3 in 2010
isn’t the same value as 22.3 in 2018
so in essence his salary comes down, WAR value goes up and therefore his net value increases.
good thing
Jed Lowrie at the prime of his career?
That’s assuming he is going to have a prime.
by DrJgopatsgators on Dec 7, 2010 11:01 AM EST reply actions
Why wouldn't he?
"We are not normal, We are Legends. People will tell their kids about us." - Deon Butler before Ohio State Game 2008.
Prospects grow on trees
I contend that it’s far more difficult to land a superstar on your team than it is to find another top-10 prospect.
The odds that Kelly would be the 2nd coming of Pedro Martinez are slim, though he is projected to be very good. And remember when we were already penciling Lars Anderson into first base? He’s not such a sure thing any more, is he?
The Red Sox are loaded with draft picks this year, one that is purportedly stocked with talent. We can find and draft new top prospects to fill out the farm system.
Hindsight is 20/20, but this trade gets a “hell, yes” from me without a second thought. We’re not even trading major league guys who haven’t hit their ceiling, like Ellsbury and Lowrie.
"You know you're having a bad day when the fifth inning rolls around and they drag the warning track." - Mike Flanagan, Baltimore Orioles pitcher, 1992.
very cool article
i was going to write that before i saw that brogshan did, but, the right words are the right words.
good job matt, i like it
couple questions:
‘giving up only $23.8M in value’ what is that and where does it come from?
what and/or where does prospect value come from or mean? i know it’s assigned by the whiz’s but is this for the length of the prospect’s careers?
and also, the prospect value – how does say 12.5 compare to WAR?
thank you and again, very cool article.
The prospect valuations come from Victor Wang
who did an amazing bit of research when he was with the hardball times. It is linked in the Prospects Trade Value article I put together last week. Essentially he looked at past rankings data and determined the average value of players in certain Baseball America and John Sickel’s rating groups. The numbers used are based on that work. They represent the average surplus value a player at a certain ranking level produces in the time they are under team control (i.e. the first six years)
They are dollar values, so they correlate with WAR at a current rate of $4.5M-1 WAR. It is hard to correlate these numbers with year by year WAR though, because when a player will break into the big leagues is difficult to predict, as are arbitration salaries. Simplified, we can say, on average, a top 10 pitcher like Kelly will produce 3+WAR above his salary through his arbitration years. That average is useful to us for analysis like this, but also deceptive. It includes a high level of variation as many players bust entire while others (like Buchholz) can produce two or three times that value. With three players traded, the average is more relevant then it would be with just one. The total prospect value, $45.7M (in the more bullish version) minus Gonzalez’s surplus value gives us the $23.8M in value going to San Diego, a reasonable estimate in my mind.
I hope that clears things up.
- Matt Sullivan
"I would change policy, bring back natural grass and nickel beer. Baseball is the belly-button of our society. Straighten out baseball, and you straighten out the rest of the world." Bill "Spaceman" Lee
www.overthemonster.com
www.spacemanspancakes.wordpress.com
Has nothing to do with article but
Who the hell would offer Lee 7 yrs/20-25 mil per? I’m dying to know
he had apparently told his teammates on the rangers
that he’d sign with them if they’d offer him 6 years. So if they could, they’d probably jump on that, rather than offering 7.
I think Adrian's WAR goes up in Fenway
I think he feasts at home, and carries the Sox like Ortiz did
Any task BIG or small, Do it well or not at all
Supposedly
WAR is adjusted by park, his numbers in San Diego were changed to accommodate that large park. I’m not sure but that’s what I’ve heard anyway. So if that’s true, then his WAR shouldn’t really change in Fenway.
"We are not normal, We are Legends. People will tell their kids about us." - Deon Butler before Ohio State Game 2008.
it's a park adjustment, BUT
it’s just using a particular multiplier for each park. So if there is a player who swing seems exactly tailored to Fenway, his numbers will improve more because he is getting more of the advantages of Fenway than a normal player.
+1
Brett Anderson is the Truth. Brett Anderson is divine presence. Brett Anderson is eternal life. Brett Anderson is within you. Brett Anderson is here. Brett Anderson is Now.
by Frederick0220 on Dec 7, 2010 9:28 PM EST up reply actions
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