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Economics and Baseball Pt. 1

With the past two weeks trades I figured I may as well post this 'article' if you will that I wrote about the mindset of trades. It's all Rays-related and it's after the jump.

The Trading Game

One of the easiest economic principals to understand is tradeoffs, largely because of the how well they translate to games, sports, and life itself. Humans trade on a day to day basis, kids trade lunches for dollars, dollars for coins, coins for tokens, tokens for toys, at the end of the day the kid has a new toy and in return an empty belly until dinner.  That in effect is a tradeoff; to get something you must give up something, in this case temporary hunger for temporary enjoyment.  In baseball, trades are used to improve teams for the present and future; a reallocation of talent so to speak.

Since November 2005 when the new Rays' management took over the team has made 20 trades, overseen by the Executive Vice President of Baseball Operations, Andrew Friedman, the Senior Vice President of Baseball Operations, Gerry Hunsicker, and team President Matthew Silverman; the triumvirate form as the Rays' version of the so called outdated general manager position with each bringing a different viewpoint into management side of the game.

Friedman isn't too far removed from his playing days at the University of Tulane where his career ended with an injury to his shoulder.  Hunsicker is responsible for the Houston Astros from the mid 1990's on and brings a plethora of prior knowledge to the group - a reference guide if you will. Silverman has been called smarter than a tree-full of owls and brings a keen business sense to transactions along with being the top day-to-day official.

The team they inhabited possessed strength in the outfield despite centerfielder Rocco Baldelli missing the entire previous season after tearing his anterior cruciate ligament - otherwise known as the ACL - and injuring his elbow which required the now routine Tommy John surgery. Joey Gathright, Damon Hollins, Jonny Gomes, and Russell Branyan were slotted to rotate between center and right while superstar Carl Crawford manned left field.

Failure was likely imminent as Gomes and Branyan provided negative defensive value and neither Gathright or Hollins provided much offense, this even lead to cameos in right by the likes of infielders Nick Green, Ty Wigginton, and even Tomas Perez; a trio that should not be allowed to roam outside of the infield dirt.

The patchwork platoon would be expected to hold down the fort through June when Baldelli was set to make his long awaited return, and through April the group did exactly that.  Gomes would be the team's designated hitter due to his aforementioned Ichabod Crane syndrome in the outfield and get off to a hot start, hitting .305 through April with 11 homeruns and a .732 slugging percentage. Hollins would provide some added pop, and while Gathright couldn't hit for average he would draw some walks and flash speed, Branyan would start on the snide and wouldn't get off until being moved in August to the San Diego Padres.

Gomes would suffer an undetected shoulder injury and fall off the map early into May, Hollins began his descent back to being himself, and Gathright still didn't show understanding that he could reach first base by means other than walking. Needless to say the team welcomed Baldelli back with open arms on June 7th but not before sending Gathright packing down to Durham.

On June 20th the Rays would trade the car jumping Gathright to the Kansas City Royals along with a future defensive substitute Fernando Cortez for starter J.P. Howell. Seemingly the trade was made to fill a position need (ready starting pitching) from an area of strength (outfield help) as well as an excess piece with no foreseeable role on the club. However Howell was sent to Durham rather than joining the big league club - presenting neither gain nor loss for the only club that truly matters in the end.

Estimating the Cost

The Rays, like any team making an acquisition, evaluated the costs - either in terms talent and or monetary value - and decided the benefit was greater than the cost.  Very much like when a company decides between producing more of its product to make more money along with higher production costs the team had to take the present as well as the future into account.

Without either the Rays or Royals being playoff contenders the focus was on the future making it a battle of projections and scouting reports while considering the fiscal values of each player involved.

Gathright was 25 and had played in 150 games for the Rays. In 2005 he received 203 at-bats and hit .276/.316/.340 with 20 steals and 10 extra base hits, showing some of the potential that he showcased in Durham that same season: .305/.388/.407 with 31 steals in 58 games. Perhaps that's why 2006 was such a disappointment and the team was so willing to move him for rotation help.

Financially Gathright wouldn't be arbitration eligible until 2009 and not able to claim free agency until 2011 - in other words he was playing at the league minimum for his service time.
The other Rays' player involved in the trade, Cortez, was in the same salary situation but as a left handed utility infielder had no bat and couldn't play adequate shortstop, making him a third baseman / second baseman without the bat to make him valuable. In an eight game stint in 2005 he went 1 for 13 with a walk and three strikeouts, even in Durham he didn't hit much, .222/.265/.271, by tossing Cortez in the Rays satisfied the Royals enough to make the deal intriguing enough to accept the terms.

J.P. Howell was the prize, a soft tossing left hander from the University of Texas Howell had broke Roger Clemens' strikeout records as a Longhorn and was struggling in AAA Omaha; 36 innings, 39 hits, 14 walks, 33 strikeouts, and a 4.75 ERA - making it appear that after 15 starts for the Royals in 2005 with dim results he would never garner success above the lower ranks. Again money was really never an issue with Howell, although it was highly probable that he would be "Super Two" eligible in 2009, giving him an extra year of arbitration status, but still leaving 2012 as his first year of free agency - one year later than Gathright.

Howell's - or any acquisition's - cost is really only what the team desiring possession makes it - in this case the Rays were willing to give up a speedy outfielder with high potential and a very replaceable organizational infielder for a pitcher who could possibly bust at any level above AA. This law of trade also explains why some teams seem to buy more than others - aggression can deceive the senses of logic when it comes to making transactions, the Rays know about this side of the transactions game as well.

Marginal Cost and Marginal Benefit

When the Rays made the trade they believed that their benefit - Howell's services through 2012 - would outweigh their costs - Gathright and Cortez' services through 2011 otherwise the trade would not - should not rather - have been made. Going back to our early metaphor about the child's choice of the toy over lunch, if the child won't be receiving another meal later that day it has to change the decision, otherwise you call into question the decision making of the kid and whether or not he understands how his body works in terms of survival.

Let's take that same situation and apply it to another trade the Rays made, this time in July of 2004. Assuming the toy is old and worn and that the partner in the deal wants the first child's lunch for today and the rest of the month you question if the first kid is getting a good deal to begin with, especially if he announced that his lunch for the month were up for discussion he could very well get a toy in better shape - if not an entirely new toy. Now let's say the first child's father is a craftsmen and can repair most things including in the past his son's broken action figures and such, the kid asks his dad that night if he could fix any toy in the world if it broke and his father tells him "In 15 minutes tops."  Full of confidence the kid makes the deal the next day; his month's worth of lunch for the aged toy.

Less than three weeks later the toy's arm falls off, meanwhile the lunch's value goes up as the school district reaches a new deal with the local pizza place. The boy takes his armless toy to his father to fix and after examining it determines that he has no idea how to repair it after all.
Now let's end that extended metaphor and discuss the real trade but only the important part (I'm looking at you Jose Diaz and Bartolome Fortunato) the Rays traded Victor Zambrano for Scott Kazmir. Zambrano made two starts before having arm issues and was never the "final piece" that the Mets hoped he was, Kazmir meanwhile has became one of the top young pitchers in the league for the Rays and a perennial Cy Young contender.  Performance and projections weren't the only part of this deal; Zambrano was about to enter arbitration and get expensive (okay, not really expensive, only 2.1 million) and the Mets had concerns about Kazmir's lifestyle which included rumors of heavy marijuana smoking and concluded with him crashing teammate Justin Huber's car.

In this situation we saw additional reasons for both teams come into play. The Mets feeling a pricier yet safer option was better the cheaper potential that could've been zapped by non-baseball activities option, and hence why they made the move; of course if the Mets just auction Kazmir off it's almost a moot point that they would've gotten something better than Zambrano, but they didn't in either case.