September, 2006

Introducing: Glander's Law

So you find yourself ten games back in the middle of June, and you just know deep down inside that there's no way you're ever going to dig yourself out of this hole.  The competition is just too good, the random number generator isn't treating you kindly, and you just don't have enough trade bait down on the farm to add all the ingredients you need to make a run at it.  So you shamefully unfurl the white flag, and begin waving it over your head, hoping that someone notices.  Within minutes, the vultures are circling overhead, dangling their most disposable young prospects in exchange for your superstars.

Your primary concern, of course, is getting fair value for your superstar free-agents-to-be.  But what on earth is "fair value?"  How do you put a price tag on a #1 starter or MVP-caliber hitter?  How can you even begin to compare that player to a pimply-faced 19-year-old kicking around the Sally League?  What if there are only two chapters remaining in the season, and you're going to lose that superstar either way?  How can you possibly avoid wrath of the message board media and the embarrassment of having your name stamped on the "Trade Announcements" forum for months on end?

Fear not, white-flag-waving-wussy.  I've got a formula just for you.  I first devised this ingenious formula way back in the mid-to-late 90's, while I was a member of a highly-competitive rotisserie league (where I would frequently bitch and moan about lopsided dump trades on a web page much like this one.)  Its beauty lies in its simplicity:

Glander's Law: "The player(s) you receive in a dump trade should SAVE you as much money as the player(s) you have traded will EARN for your trading partner."

Beautiful, isn't it?  While this formula was designed for rotisserie baseball, I think it works in a league like this just as well.  There are, of course, a few questions we need to answer before we can apply this formula to this league:

Question #1: How do we determine a player's present-day "value?"

The "easy" way is to use the handy-dandy Doyle Formula™ to determine market value.  But since no one except me has access to that formula, you just have to make your best guess.  (Though I would be willing to share the secret formula for a small fee.)

To make an educated guess, just ask yourself, "What would I be willing to bid for this player if he were a free agent?"  Or better yet, compare the player in question to similar free agents of the past.  Then, once you have that number in mind, just prorate it based on the number of games remaining in the season.  For example, if a $10 million player is acquired at the all-star break, he has $5m in market value remaining.

If the team you're trading with looks to be a shoo-in for the playoffs, add another chapter, just to be safe.  A $10m salary equates to roughly $1.7m per chapter.  So, in the example above, adding $1.7m to $5m results in a $6.7m market value.

With me so far?

Question #2: How do we determine a player's future "value?"

Here, of course, is the tricky part.  After all, one man's future superstar is another man's future WORS.  Here are a few good rules-of-thumb:

• The earlier a trade is made, the less 50/50 hindsight we have to use to our advantage, so the more we should rely upon pre-season forecasts.
• For pure farm prospects, the further away the prospect is from the major leagues, the more conservative the forecast should be.
• See above, but especially if that prospect is a pitcher!

For major leaguers, the pre-season forecasts made by "experts" like Baseball Prospectus, Ron Shandler, DMB and Bill James provide a reasonable foundation, as these forecasts are generally very conservative in nature.  Remember: the goal here is to be as conservative and realistic as possible.

For prospects, you could use PECOTA's future estimates (which are usually overly-conservative), or you could look for players in big league history with similar minor league profiles, and see what their BDBL market values would have been in the first four years of their careers.

Remember, we're not looking for an EXACT answer here.  We're just looking for a ballpark estimate to determine whether a trade proposal is fair or not.

Question #3: What if the contending team receives a player with future as well as present-day value?

All future value should be added into the equation in terms of SAVINGS.  If that player's market value is less than his salary, then that figure should be subtracted from the total.

Question #4: I'm really interested in this fresh-faced 19-year-old prospect kicking around in the Sally League.  What is fair market value for a player like that?

This is the toughest call of all.  Some 19-year-olds have tremendous upsides and can prove to be quite valuable, while some may never dine on major league meal money.  And it's almost impossible to predict when a young prospect will become a full-time major leaguer.  (Ex: B.J. Upton was supposed to be my starting shortstop two years ago.)  You could make an educated guess, but that guess could turn out to be laughably wrong.

With all that in mind, it is almost better not to apply Glander's Law at all.  Instead, just ask yourself how much money you'd be willing to risk, assuming this prospect never pans out.

If you trade a $1-$3m reliever for an A-ball prospect, that's usually an acceptable risk to take.  (See the Sizemore/Karsay trade of 2002 as an example.)  But if you're dealing a $10m superstar for an incredibly risky prospect or two (see the Valdez/Sosa trade of 2004), that trade is guaranteed to incite a riot or two.

Now, let's put Glander's Law to the test by applying it to some controversial trades made this season.

Trade #1: In Chapter Two, Ravenswood traded Johan Santana, Placido Polanco, Ugueth Urbina and Matt Stairs to Allentown for Edwin Encarnacion, Felipe Lopez, Trot Nixon, Jae Seo, Scott Olsen, George Kottaras and Richie Robnett.

First, let's tackle the easy part, by tallying the market values of the players Allentown received in this deal.  This trade was made in Chapter Two, so normally we'd take 5/6ths of each player's market value.  However, since Allentown is very much a playoff contender, we'll add a chapter, which then brings us back to the full DFV:

There are asterisks next to Urbina's and Stairs' DFVs because their VORPs were too low for the Doyle Formula.  (Remember: the Doyle Formula only works for free agents in the top 50 in VORP.)  I guestimated Urbina's and Stairs' market values based on what players with similar stats have fetched on the open market in the past.  Remember: We're not looking for accuracy to the penny.  We're only looking for a ballpark estimate.

As you can see, Allentown received a whopping $20.7 million in 2006 value with this deal.  And since all four players are free agents at the end of the season, there is no future savings to add or subtract from this number.

Now, let's try to figure out how much Ravenswood "saved" in future value with this trade.  If that figure is higher than $20.7 million, then it was a good trade for the Infidels.

At the time the trade was made (February 28th), the MLB 2006 Opening Day was still a month away.  So, the "future value" portion of this trade was nothing but guesswork.

Let's take the players Ravenswood received one at a time.  PECOTA (.275/.344/.485) and Ron Shandler (.275/.335/.457) each predicted an OPS of around 800 for Edwin Encarnacion in the 2006 MLB season.  Even though Encarnacion's role with the team was still up in the air at the time, it would have been reasonable to assume that he'd post an OPS around 800 in full-time (500+ AB's) duty.

What is a third baseman with an 800 OPS worth on the open market?  Well, this past winter, both Shea Hillenbrand (792 OPS) and Bill Mueller (799) earned $5.5 million in the auction, and Melvin Mora (822) got $6.5m.  So a reasonable estimate for Encarnacion's 2007 BDBL market value -- at the time of the trade -- would have been $5.5 million.

As he is not under contract, you then have to consider future value as well.  Again, we need to be more conservative in our estimates the further we look into the future.  Encarnacion is just entering his prime, and has been relatively injury-free, so by and large he's a pretty safe risk.  At his peak, Encarnacion could be a $10m superstar, similar to Eric Chavez.  Or he could be a bust like Adrian Beltre (in any year of his career except 2004.)  For the sake of this exercise, let's assume Encarnacion maintains his $5.5m market value for the next five years.  That would give us something like this:

That's a total savings of $21 million for Encarnacion alone.  Already, even without including any other players in the trade, the requirements of Glander's Law have been met.  Trading those four players for Encarnacion alone would have been a fair trade for Ravenswood.

Just for grins, let's continue by looking at Olsen.  His pre-season PECOTA forecast was a 4.47 ERA in 129 innings, while Shandler forecasted a 4.33 ERA in 160 innings.  Looking back through BDBL history, have there been any similar pitchers on the free agent market?  Not really.  So let's just ask ourselves: "How much would I pay for a pitcher with those stats?"  Personally, I would pay as much as $3-$4 million.  So let's give him a 2007 market value of $3.5 million.

Looking forward, pitchers are much, much tougher to predict than hitters.  Olsen could injure himself and be worthless.  He could hone his stuff or develop another pitch and become a dominant ace.  Hitters could figure him out his second time through the league, and he could struggle for years.  He could begin tipping his pitches.  He could get unlucky on balls in play or fly balls going over the fence.  He could have nagging injuries that hinder his performance, but pitch through them and post decent, but unspectacular, numbers.  You just don't know.  Not even Olsen himself knows what's in store for him over the next four years.

So let's take the ultra-conservative route and predict that Olsen's 2008-2011 value is the same as his 2007 value.  That way, no matter what happens, we're not off by too much.  Let's also give him a four-year contract as well, just to maximize future savings and give us a "best-case" scenario:

That's another $11 million in savings.  I won't even bother with Nixon, Seo or the others.  By now, it's obvious that this was a good trade for Ravenswood.

Of course, there are two ways to look at every trade: how it looks at the time, and how it looks in retrospect.  In retrospect, we now know that instead of posting an OPS of 800 in 500 at-bats, Encarnacion is more likely to post an OPS of 900, but in only 400 at-bats.  So instead of being a $5.5m player in '07, maybe he's "only" a $4m player.  That's still a savings of $3.9 million in '07 alone.  We also know that Olsen's pre-season projections were nearly spot-on.  So if we add his $3.4m in projected savings, we're at $7.3 million in total savings for those two players in 2007 alone.  Factor in the projected savings for the 2008-2011 seasons, and the Infidels still come out way ahead.

Trade #2: In Chapter Two, Bear Country traded Mike Piazza and Russ Springer to Salem for Edinson Volquez and Pat Borders.

Here, Piazza's actual market value (i.e. the price actually paid for him on the open market) of $3.5m is lower than his DFV of $4.6m.  So which figure do we use?  Remember, we're trying to gauge actual 2006 impact here, so the DFV is more accurate, since it is based on MLB '05 performance.  So, Salem earned a prorated $3.8m with Piazza, plus maybe $500k from Springer, for a total of $4.3m.

Since Volquez was a Double-A pitcher at the time, his future value was nothing but pure speculation.  And as I mentioned in Question #4 above, if the value you are receiving is nothing but pure speculation, then you have to ask yourself how much you would pay for such a gamble.  Is $4.3 million too much to gamble on a pitching prospect with Volquez's upside?

To help us answer that question, we first need to determine how good Volquez would have to be in order to save $4.3 million going forward.  Assuming that he pitched a fair number of innings in MLB '06 and began his option year in BDBL '07 (as was speculated at the time of the trade), and that he would be signed to a three year contract at the beginning of the '08 season (which was a reasonable assumption at the time), Volquez would have to earn something like this over the next four years:

Is that projection too optimistic?  That's a matter of opinion.  Only time will tell for sure.  Was it a reasonable gamble to take for a team destined to finish with the worst record in the BDBL for the second year in a row?  Probably, yes.

Of course, this trade looks quite a bit different today than it did several months ago.  At the time of the trade, no one suspected that Piazza might end up being a keeper at the end of the season.  As of this writing, Piazza is on pace for a 2007 DFV of $5.9m.  Add that $2.4 million in 2007 savings to the $4.3 million in 2006 value that Salem received in this deal, and you get $6.7m in total value.  That means that Volquez would have to save $6.7 million over the life of his contract for the Jamboree to adhere to Glander's Law.  Basically, he'll need to become a $5 million pitcher a year earlier than the projection above.  That is an optimistic projection, indeed.

Trade #3: This past chapter, Sylmar traded Mariano Rivera, Bobby Crosby and Jeremy Affeldt to Villanova for Garrett Atkins, Jason Bartlett and Chris Iannetta.

First, let's look at what Villanova gained in 2006:

* Note: This includes two chapters of the regular season, plus an additional chapter for the post-season.

That's a total of $5.1 million in market value.  Because this trade was made so late in the season, we don't have to speculate as much about the 2007 market values of the players Sylmar received.  As of this writing, both Atkins and Bartlett are on pace for a 2007 DFV of $5.9 million.  That's $11.8 million in total 2007 market value, minus $600k in salary, for a total savings of $11.2 million.

Hmm.

And that doesn't even count the savings going forward.

Hmm.

Perhaps it's time to remove John's name from the Trading forum.  (Either that, or it's time to scrap this formula!)

Before we do that, though, we also must consider Rivera and Crosby's future value.  Rivera will likely be signed to a one-year contract at year's end, and his 2007 DFV is roughly the same as it was last year ($6.7m.)  Since he has a $7m salary, that's a loss of $300k.

Affeldt has already been released, with a penalty of $1.6 million.  And Crosby's 2007 DFV is probably zero.  So that's another $1.1m in losses.  In total, then, Villanova lost $3 million in 2007 value with this trade.

Going forward, even if we assume that Crosby returns to his 2004-05 form, that would make him a $3.4 million player.  Which means he would save a total of only $1.6 million -- which is probably less than what Atkins, Bartlett and Iannetta will save for Sylmar.

I think a few of us owe John Duel an apology.

Trade #4: This past chapter, Atlanta traded Bobby Abreu to Corona for Wily Aybar and Jeff Niemann.

Abreu's DFV this season is $9 million.  Cut that in half (two chapters remaining, plus the playoffs), and that's $4.5 million in present-day value.

Aybar's VORP is too low for the Doyle Formula, so we have to ask ourselves how much we would pay for a utility player with 300 AB's and a .254/.345/.376 batting line.  Probably not much.  Maybe $1 million, max?  (That's how much I paid for Yuniesky Betancourt this past winter.)  So, at most, that's a 2007 savings of $500k.

Going forward, PECOTA isn't very optimistic about Aybar, with predicted VORP's of 8.6, 12.0, 14.8 and 16.4 over the next four years.  Maybe he saves $500k in 2008, but by 2009, he'll be hard-pressed to be worth his $1 million salary -- at least, that's the way it looks as of this writing.  He's still very young, and anything can happen.

Both Gene Patterson and Ed McGowan claim to be big believers in Aybar, and have stated that he can be a "very good" major league ballplayer.  The question is: How good would Aybar have to be to reach the $4.5 million mark in total savings?  Something like this:

Does Aybar have the potential to be a consistent $3-$4 million player in the BDBL over the next four years?  Again, that's a matter of opinion.  By all accounts, this would be a VERY optimistic projection.  Would you wager $4.5 million that Aybar will reach this potential?

Of course, the Fire Ants didn't actually wager $4.5 million.  They simply traded a player they were going to lose to free agency four months from now, and took a gamble on a player with a $500k salary.  At worst, if Aybar doesn't pan out, all they've lost is $500k.

However, because this trade doesn't really fit under "Glander's Law," the Fire Ants have to expect to be pummeled by the "BDBL media."  Whether the pummeling was worth the gamble is something only Gene Patterson can answer.

Trade #5: In Chapter Three, New Milford traded Jason Bay, Brandon Erbe, Bobby Madritsch and Hong-Chi Kuo to Nashville for Bartolo Colon, Ken Griffey, Jr. and Franklin German.

Up to this point, we've examined trades where the team doing the dumping must consider whether or not they are getting enough fair value in return for their superstars.  Here is an example of a trade where the team that is benefiting from the trade dump must consider whether they are giving up too much.  (Assuming this team actually cares about its future.)  First, let's look at the 2006 market values of the players in question:

* One extra chapter added for Colon and Griffey, but not for Bay.

New Milford received $15.9 million in 2006 market value, and traded $10.7 million, for a difference of $5.2 million.

Next, let's look at what New Milford "saved" going forward:

The market values above are just estimates, based on the stats and outlook of each player at the time of the trade.  This trade will cost New Milford a whopping $20 million over the next three years.  If New Milford chooses to release Griffey, that number falls to "just" $18 million.  Even if you assume that Colon bounces back completely from injury and becomes an $11.8 million pitcher again, New Milford still loses money with those two.  ($8.6m in savings in '08 and '09, minus $11 million in losses in '07.)  So, for $5.2 million in 2006 production, the Blazers pissed away around $20 million in future salary.  That alone makes this a really bad trade for New Milford.

Now, what did Nashville gain with this trade?  We need only look at Bay alone:

The '08 - '10 numbers are based on PECOTA's projections, which are clearly VERY pessimistic.  Even given that, Bay saves Nashville a whopping $14.4 million over the next four years.  Add the value that Nashville received for the '06 season, and Bay alone is worth $25.1 million.

Years from now, when we look back on the worst trades in BDBL history, we'll have to remember to include this one.