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.
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