Trade Deadline: Have your cake, eat it, and have more later

So, the trade deadline is upon us and opens up nearly infinite trade possibilities. But infinite isn’t particularly fun or challenging, so let’s construct some rules to give ourselves a challenge.

  1. We upgrade our 25-man roster
  2. We REDUCE the luxury tax payroll number to be under $237M.
  3. We don’t give up any significant prospects.

That’s a serious challenge! And note, I’m not saying any of these things are true (namely, that we have to respect the $237M number), but let’s pretend they are for now. How could you possibly accomplish all this?

The answer: leverage the one thing we don’t really care about: Cash.

Ok, sure, the owners must care about cash at some level, but not nearly as much as the luxury tax number. So how do we leverage cash? Back-loaded contracts, i.e. contracts where most/much of the money is in the final years. This means you have to pay the player a lot of money, but his AAV (Average Annual Value) that goes into the luxury tax is much smaller (the average over the entirety of the contract. Teams without a lot of cash do this often, for example Giancarlo Stanton. The Marlins backloaded that huge contract so they could have him for a couple years cheap and then trade him away to a richer team.

So, what we’re looking for is a team that (a) cares more about total actual cash than luxury tax number, (b) is out of contention, and (c) has a player with a backloaded contract that would be an upgrade for us.

Without scouring the whole league (that’s your homework), let me give an example that could work: Jedd Gyorko. He’s with the Cardinals who are considering themselves out of contention, willing to sell, and Gyorko is on a back loaded contract. Also, depending on your particular thoughts on Gyorko and Nunez, I’d argue that Gyorko is a fair upgrade for us at 2B and is a lefty masher (e.g. could platoon well with Holt).

But wait, how exactly does he help our payroll get under $237M? And how do we get him without any serious prospects involved? Well, Gyorko’s back-loaded contract calls for $13M in 2019, and a $1M buyout for 2020, but his AAV after San Diego already picked up part of the tab, is something around $5M per year (difficult to calculate exact number). Adding the prorated portion of that $5M would be ~$1.7M added to our luxury tax payroll number. But here’s the kicker: We trade Pomeranz and Nunez for him, which together reduce our luxury tax number by about ~$4.15M for the rest of the year. Add in Gyorko’s hit and the end story is we shave off ~$2.5M from our luxury tax number this year, which by my calculations could* keep us under the $237M number.

‘Now, wait a gosh darn minute’ you say, ‘why in the world would the Cardinals want Pomeranz an Nunez’? Well, they don’t. But this is where cash vs. AAV comes in. Long story short is the Cardinals would save about $11M in real world money in this hypothetical trade. The only effect to their team would be having Nunez as their backup infielder instead of Gyorko in 2019. Seems pretty fair to me. Heck, we could even throw in a low level prospect to make it happen and let them sell it as more than a cash saving move.

*Note that my own model projects the Sox payroll to finish the year (without any more moves) at about $0.8M over the $237M threshold. So shaving $2.5M could get us under. However, our payroll estimate is uncertain in that we don’t know how much we’ll use the DL for the rest of the year, how many September call ups we might need, and which (if any) bonuses get triggered (mainly Moreland’s). There’s also the "Player Benefits" number, which I’m blindly taking at the Cot’s Contracts number of $14.044M. I have no idea how accurate this number is or by how much it can vary.