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slant.gif (102 bytes) From the Desk of the Commish

Commish

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June, 2008

Revisiting Glander's Law

Recently, our own Matt Clemm had this to say on the BDBL forum, regarding the recent John Smoltz trade:

"I do have to say that, having experienced it last year, teams are not all that willing to part with the farm for 2-3 months of a stud player.... so I believe Scott took the best offer he could have gotten..."

"The best offer he could have gotten."  Those seven words have been the source of more animosity, more heated debate and more rule changes than any other seven words in the English language (except for maybe: "Now pitching for the Zoots, Clay Condrey.")

Regardless of how many new rules we introduce to discourage teams from dumping all their star players, this practice will never (and should never) end.  Eventually, all teams come to a point in their franchise's history when they will NEED to dump their most marketable talent in order to stockpile cheap young players to build for the future.  And the temptation to begin dumping sooner, rather than later, is far too great for even the most patient GMs to bear.

For the GM doing the dumping, there is no downside.  Usually, the player being dumped will be lost to free agency at the end of the season.  So even if the team acquires a crappy middle reliever or fifth outfielder in exchange for that player, at least it's better than nothing.  Even if the team acquires nothing of value, still nothing has been lost except perhaps a few hundred thousand in penalties and a lower draft slot.

For the team receiving that star impact player, the upside is substantial, as it could mean moving ahead in a tight pennant race, building a bigger lead in the race, or becoming a stronger playoff team.  And the downside is minimal, as it usually doesn't cost anything of immediate value, and very little that can't be easily replaced within the next year or two.

The only ones who truly lose in a dump trade are the teams competing against the team that just received that star player.  And that's where all the fighting, bickering and rule changes come into play.

So the ultimate question is: what is an appropriate return on investment for a star-caliber impact player?  How can a rebuilding team know when they're getting a fair deal when there are so many "x-factors" involved?  And how can competitive teams be comforted, knowing their main competition has paid a fair market value for the superstars he just acquired?

And thus was written "Glander's Law."

Although I first came up with Glander's Law in the early 90's, I didn't introduce it to the league until 2006.  The basic premise is this:

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."

Since that 2006 article, I've made one little tweak to the GL formula.  Because predicting the future is impossible, players who have only "future" value should be appropriately devalued to reflect the risk involved in any fortune-telling exercise.

So, when looking at future value, we'll take the best-case scenario and then multiply that by the odds of that best-case scenario actually happening.  For example, if a player's best-case scenario is earning $20 million in market value, but he only has a 50% chance of reaching that level of performance, we'll assign him a market value of $10M.  Granted, we're still guessing, but at least it's an educated guess.  And it's a bit more accurate, given the risk and uncertainty involved.

Let's take Glander's Law 2.0 for a test drive by using the recent Marlboro/Los Altos trade as an example.

The trade: Marlboro sent Shaun Marcum and Mike Moustakas to Los Altos for Jeremy Bonderman, Nick Adenhart, Adam Miller, Chris Marrero and Bryan Anderson.

This is a VERY difficult trade for Glander's Law to interpret, due to the fact that so many prospects are involved, and because none of the players involved are free agents-to-be.  But it's not an impossible task.

Let's start by assessing what Marlboro gave up in this deal.  To do this, we'll have to determine the present-day market value of Marcum, and prorate it to four chapters (three regular season, plus the post-season.)  Then, we'll factor in the future market values of Marcum and Moustakas to get a total overall value received by the Undertakers.

Marcum's MLB '07 VORP is very close to Jon Garland's and Greg Maddux's in MLB '06.  Garland earned $6.5M in the auction that winter, while Maddux earned $12.5M.  If you factor in Marcum's age (24) and the fact that he posted his numbers in a drastic hitter's park, you have to think his value on the open market would be closer to $12.5M.  Prorated over four chapters, that's a market value of $8.3 million remaining this season.

As I type, Marcum is currently ranked #7 in VORP in MLB '08.  If he can maintain this pace, he'll be in elite company.  Over the past two years, pitchers ranked among the top ten in VORP have earned anywhere from $15 million to $21 million in our free agent auction.

Because Marcum is still in his option year, we also have to factor in the next several years.  For the sake of this exercise, we'll assume he is signed to a six-year contract, which would take him right through his prime at age 29.  There's no reason to believe he'll improve or decline over those years, but we'll factor in an extra 10% depreciation each year, just to be as conservative as possible.

Given all of that, Marcum's career with the Undertakers may look something like this:

2008: $8.3M
2009: $16M - $100K = $15.9M
2010: $16M * 90% = $14.4M - $1.6M = $12.8M
2011: $16M * 80% = $12.8M - $3.1M = $9.7M
2012: $16M * 70% = $11.2M - $4.6M = $6.6M
2013: $16M * 60% = $11.2M - $6.1M = $3.5M
2014: $16M * 50% = $8.0M - $7.6M = $0.4M

Remember, in any future years, we are not counting market value, but market savings.  And as you can see, even by this conservative estimate, Marcum's current market value, plus future savings, is a whopping $57.2 million.

Moustakas is obviously going to be much tougher to project, as he's still only 19 years old, and kicking around Low-A ball.  In another past FTDOTC article, I showed that players chosen in the top ten picks of the MLB amateur draft return an average VORP of 19.9, 15.9, 28.6, 26.5 and 33.1 over the following five years, and maximum VORP of 38.5, 52.3, 81.9, 61.7 and 97.8.  And in yet another article, I showed that top-20 hitting prospects become all-star-caliber players 63% of the time, and MVP candidates 30% of the time.  Since Moustakas fits into both categories, we'll give him an upside potential of having a 60% chance of becoming an all-star/MVP-caliber player.

Of course, we don't know what Moustakas will do over the next ten years.  We don't know what ANY player will do next week -- never mind ten years from now.  But with the information we have at hand, we can make a pretty good guess that his future may look something like this:

2011: $1.0M * 90% = $0.9M - $100K = $0.8M
2012: $3.0M * 90% = $2.7M - $100K = $2.6M
2013: $5.0M * 80% = $4.0M - $1.6M = $2.4M
2014: $7.0M * 70% = $4.9M - $3.1M = $1.8M
2015: $10.0M * 60% = $6.0M - $4.6M = $1.4M
2016: $12.0M * 60% = $7.2M - $6.1M = $1.1M
2017: $12.0M * 60% = $7.2M - $7.6M = -$0.4M
2018: $14.0M * 60% = $8.4M - $9.1M = -$0.7M

By this estimate, then, Moustakas has $9 million in future savings ahead of him.

In total, then, Los Altos added a mind-numbing $66.2 MILLION in present and future value with this one trade.  So, in order for this trade to "work" under the parameters of Glander's Law, the Hammerheads should have received more than $66.2 million in future value in return.

Jeremy Bonderman is currently projected to throw 198 innings in MLB this season, with a BB/K ratio of 101/123, an ERA of 4.29 in a drastic pitcher's park, and splits of 774/763.  He's shown great promise in the past, and a year ago at this time I believed he would soon be a perennial Cy Young candidate.  But he stumbled badly in the second half of MLB '07, and he's yet to recover.  Either he has forgotten how to pitch or he's hiding an injury.

On the plus side, he is still just 25 years old, and has shown great skill in the past.  So there is a chance he could bounce back in the second half.  For the sake of argument, then, let's say he bounces back to become a $10M pitcher again, but the odds of that happening are only about 50%.  If the season ended today, he'd be a $5M pitcher on the free agent market, so this seems like a reasonable estimate.

2009: $10M * 50% = $5M - $6.1M = -$1.1M
2010: $10M * 50% = $5M - $7.6M = -$2.6M

Unless Bonderman turns it around quickly and becomes a $6-$7M pitcher over the next two years, he will actually COST the Hammerheads $3.7 million in market value.

Despite lofty scouting reports earlier in his career, Adenhart has developed into a "pitch-to-contact" sort of pitcher.  He owns a 25/33 BB/K ratio in 53+ innings this season, and in 2007, he allowed 158 hits and 65 walks in 153 innings, with only 116 strikeouts.  At best, we're talking about a mid-rotation starter unless something unexpected happens and he discovers a new pitch (or untapped super powers.)  That puts him in the $5-$6M range at his peak.

2009: $0 - $100K = -$0.1M
2010: $5M * 50% = $2.5M - $100K = $2.4M
2011: $5M * 60% = $3.0M - $100K = $2.9M
2012: $5M * 70% = $3.5M - $1.6M = $1.9M
2013: $6M * 80% = $4.8M - $3.1M = $1.7M
2014: $6M * 90% = $5.4M - $4.6M = $0.8M
2015: $6M * 100% = $6.0M - $6.1M = -$0.1M

All told, Adenhart's future value rests at $9.5 million -- at least, until he proves something against advanced competition.

Adam Miller's future is completely unpredictable.  At 24 years old, he's thrown just 94 innings during the past season and a half, and just 490 innings in his entire six-year minor league career.  He will also miss the rest of the current season after surgery on the middle finger of his right hand.  IF he's healthy, he could be an ace.  But it's such a huge "IF" at this point that he's equally as likely never to see the major leagues as he is to be an ace.

Again, though, choosing the best-case scenario, here are his numbers:

2010: $5M * 50% = $2.5M - $100K = $2.4M
2011: $5M * 50% = $2.5M - $100K = $2.4M
2012: $6M * 50% = $3.0M - $1.6M = $1.4M
2013: $7M * 50% = $3.5M - $3.1M = $0.4M
2014: $8M * 50% = $4.0M - $4.6M = -$0.4M
2015: $10M * 50% = $5.0M - $6.1M = -$1.1M
2016: $12M * 50% = $6.0M - $7.6M = -$1.6M
2017: $15M * 50% = $7.0M - $9.1M = -$2.1M

You see where this is going, right?  The problem is that assigning a likelihood of over 50% just seems ridiculous at this point in time.  But what if he is completely healthy?  How much would he earn then?  If you increase all the odds above to 100%, that would give him a total of $35.7 million in future value.  So, he'll be worth anywhere from $1.4M to $35.7M.  That's one helluva range, eh?  That's what we call a "flier."

Finally, we come to Marrero and Anderson.  Again, the future for both players is anybody's guess at this point.  Marrero is currently hitting .232/.316/.419 in High-A, with a 22/42 BB/K ratio in 198 at-bats, so he's still very much a work in progress.

TIME OUT: "But, Mike!," you say, "Moustakas is only hitting .237/.293/.396 in Low-A, and you didn't call him a 'work in progress!'  What gives?"

The difference is that Marrero was not a top-5 draft pick, nor has he ever been considered to be a top-20 hitting prospect.  Moustakas only has 53 games under his belt at this point, so it's probably premature to compare him to Marrero performance-wise.  Marrero has played 201 professional games, so we can be a little more confident in our assessment of his skills at this point.  It's possible that Moustakas just got off to a slow start (as most high school hitters do when facing pros for the first time.)  And indeed, if you look at his splits, his OPS jumped 356 points from April to May.  A month or two from now, there may be little resemblance between Moustakas' stats and Marrero's.

Okay, TIME IN: Anderson is currently tearing the cover off the ball (.370/.410/.494), but has done so in two of the biggest hitter's leagues (the Texas League and PCL) in minor league baseball.  He was ranked #91 on our annual BDBL Farm Report this year, so he's not exactly a "top prospect" -- at least, not in the eyes of any major publication.  And while his performance over the past two years speaks for itself, catchers often post outstanding numbers in the minors but fail miserably once they reach the show (Chris Iannetta, anyone?)

Marrero is just about impossible to project.  So for now, we'll leave him out of this formula and simply call him a "flier" (which is basically what he is.)  Let's try to project Anderson's Hammerheads career:

2010: $2M * 100% = $2M - $100K = $1.9M
2011: $3M * 90% = $2.7M - $100K = $2.6M
2012: $5M * 80% = $4.0M - $1.1M = $2.9M
2013: $5M * 80% = $4.0M - $2.1M = $1.9M
2014: $7M * 80% = $5.6M - $3.1M = $2.5M

I've only given him a four-year contract in this hypothetical situation, as catchers tend to get shorter contracts due to the hazards of their job.  The total above represents $11.8 million in savings.

Okay, let's tally it all up and see where we stand:

Los Altos Total value Marlboro Total value
Marcum $57.2M Bonderman -$3.7M
Moustakas $9.0M Adenhart $9.5M
    Miller $1.4M
    Marrero ??
    Anderson $11.8M
Total $66.2M Total $19.0M

This is not even close -- at least, not by my estimates.  But maybe my estimates are WAY off.  What would have to change for this trade to work in Marlboro's favor?

  • Miller must be 100% healthy -- AND become an ace pitcher.  If that happens, we can add $34.3 million to Marlboro's side of the ledger.
  • Adenhart must develop into something more than a #4/#5 starter/inning-eater.  If that happens, we could add another $26.2M to Marlboro's side.

If those two things happen -- or if Marcum and/or Moustakas don't fulfill their potential -- then the "winning" side of this trade shifts to Marlboro.  I personally don't feel as though the odds of that happening are great -- but hey, that's just my opinion, and I've certainly been wrong before.

And what about that big Smoltz trade?  How does that stack up to Glander's Law?  I'll spare you all the math and just cut right to the chase:

New Hope Total value Great Lakes Total value
Smoltz $10.7M Blanton $7.8M
Cuddyer $3.3M Lannan $10.6M
Germano $4.7M Robertson $8.5M
    Happ $4.2M
Total $18.7M Total $31.1M

I took some MAJOR leaps of faith here with Lannan, Robertson and Happ to get to those figures above.  How much value is there in a pitcher who will post a 5.00+ ERA in over 200 innings?  There is some value in that, no doubt about it -- but how much would you pay for such a pitcher on the open market?  I'm estimating such a pitcher would fetch $5-$7M, but I think that estimate may be high.  This is their absolute best-case scenario, and in my opinion these pitchers will never reach this level of market value/savings.  But if this deal works out as mapped above, then Great Lakes did, indeed, get good value for their three impact players, hard as that may be to believe.