Historical Examination: Trades Involving Starting Pitchers

So far in our creation of hypothetical David Price trades, we have relied primarily on basic guesswork to determine what the Rays should fetch in return for their prized ace.

While we have used the James Shields and R.A. Dickey trades as frameworks for a potential Price trade, no one to my knowledge has actually extensively explored the returns starting pitchers yield on the trade market. Considering that a Price trade may (should) be the highlight of the offseason in the Rays universe, I thought it worthwhile to take an investigative search into trades involving starting pitchers.

Before I disclose the actual findings, I want to take a moment to discuss surplus value.

The BusinessDictionary.com defines surplus value as the "difference between a worker's wages (exchange value) and the value of goods and services he or she produces (use value)."

Suffice to say, the concept is simple. In baseball, a player who produces more value than he is paid for has a positive surplus value, while a player who produces less than he is paid has a negative surplus value.

Thus, we can determine a baseball player's surplus value by finding the value they are projected to produce (WAR * $/WAR) and subtracting their salary. Because of its obvious value, surplus value is used frequently in baseball conversations, whether it is in discussing contracts or even the value of prospects.

(Unfortunately, surplus value is often mistaken for value, which is an error I will discuss more in depth later on...)

Starting Pitcher Trades

The often traded Zack Greinke -- Photo credit: Eric Hartline-US PRESSWIRE

In order to ascertain how starting pitching trades work, I looked at all trades involving starting pitchers from 11/01/2010 through 11/01/2013 -- a three year time period. Altogether, there were 53 such trades found through MLBTR's Transaction Tracker. From there, I determined the amount of surplus value the pitcher (and pieces sent alongside him, if that was the case) at the time of the trade, and determined how much surplus value came in the return.

For Major League players, I approximated surplus value based on the players' WAR during the past three years (using a 50-30-20 weight, with occasional adjustments), and how much they would make -- either with a contract or estimations using a 30-50-70 arbitration rate (in which players are paid 30%, 50%, and 70% of their value during arbitration).

For Minor League players, I approximated the surplus value based on my own prospect surplus values work and Victor Wang's research. All approximates were scaled on a dollar-per-WAR rate of $5 million for side by side comparisons.

Since there are other factors to consider in some of the trades (is the player injured, trending down, etc.), this is not an extremely precise measurement. There will be flaws, but I am confident that I have kept them to a manageable level.

Surplus Value

The unheralded Travis Wood -- Photo credit: Dennis Wierzbicki-USA TODAY Sports

Pitcher is the (main) pitcher involved in the trade. Sometimes pitchers are traded with additional pieces, and they are accounted for; very rarely is the starting pitcher not the main piece (the Josh Beckett, Carl Crawford, and Adrian Gonzalez trade is a rare exception).

Team is the acquiring team.

Difference is the total surplus value of the pitcher (along with the rest of the package, if that is the case) minus the surplus value of the return package. So the lower the number, the more surplus value given up to acquire a pitcher.

Pitcher	Team	Difference
Travis Wood	Cubs	24.83
Tommy Hunter	Orioles	23.15
Edison Volquez	Padres	19.63
Jake Arrieta	Cubs	8.69
Jason Hammel	Orioles	6.92
Ian Kennedy	Padres	6.76
Derek Lowe	Indians	5.65
Kevin Slowey	Rockies	5.20
Bud Norris	Orioles	3.64
Guillermo Moscoso	Rockies	3.13
A.J. Burnett	Pirates	2.30
Tommy Hanson	Angels	2.01
Jeremy Guthrie	Royals	1.82
Joe Saunders	Orioles	1.49
Francisco Liriano	White Sox	1.12
Doug Fister	Tigers	0.71
Chris Volstad	Cubs	0.55
Zach Duke	Diamondbacks	0.30
Joe Blanton	Dodgers	0.04
Armando Galarraga	Diamondbacks	0.00
Carlos Zambrano	Marlins	-0.55
Jonathan Sanchez	Royals	-1.30
Paul Maholm	Braves	-1.58
Jonathan Sanchez	Rockies	-1.82
Edwin Jackson	Blue Jays	-2.82
Aaron Harang	Mariners	-3.20
Jason Vargas	Angels	-4.30
Jason Marquis	Diamondbacks	-6.74
Jeremy Guthrie	Rockies	-6.92
Ricky Nolasco	Dodgers	-7.37
Scott Feldman	Orioles	-8.60
Ervin Santana	Royals	-8.70
Ryan Dempster	Rangers	-8.78
J.A. Happ	Blue Jays	-9.74
Wandy Rodriguez	Pirates	-9.81
Erik Bedard	Red Sox	-9.82
Jake Peavy	Red Sox	-11.48
Edwin Jackson	Cardinals	-14.96
Trevor Cahill	Diamondbacks	-18.40
Matt Garza	Rangers	-19.28
Mat Latos	Reds	-19.63
Anibel Sanchez	Tigers	-19.64
Shaun Marcum	Brewers	-19.78
Zack Greinke	Angels	-30.52
Matt Garza	Cubs	-36.38
Ubaldo Jimenez	Indians	-36.51
Gio Gonzalez	Nationals	-36.97
Josh Beckett	Dodgers	-37.27
R.A. Dickey	Blue Jays	-43.80
Zack Greinke	Brewers	-63.35
James Shields	Royals	-71.21
Josh Johnson	Blue Jays	-75.01
Mark Buerhle	Blue Jays	-75.01

A few things to think about...

• The average trade resulted in a difference of -11.39 million dollars in surplus value. In other words, the average team acquiring the starting pitcher needed to give up $11.39 million more in surplus value than they received in return.
• The average trade also resulted in a median of -$4.3 million dollars. This shows, and can be confirmed by the above chart, that cases of over-payment are both more frequent and extreme than cases of under-payment.
• The most under-paid starting pitchers tended to be young, cost-controlled, back or middle of the rotation starters.

The 2013 Blue Jays starting rotation: Dickey, Happ, Buerhle, and Johnson -- Photo credit: Tom Szczerbowski-USA TODAY Sports

The numbers presented above support the notion that teams are willing to overpay for starting pitchers. This isn't exactly a novel thought, but it is reassuring.

Just for a second, take a glance at the names of the pitchers at the bottom of the table. It should be immediately obvious that these are heralded and well-known names. Matt Garza, Zack Greinke, James Shields, R.A. Dickey, Gio Gonzalez, etc. are all top of the rotation starters. Next, look at the teams that acquired these players. For the most part, these were teams that saw themselves on the brink of competing, and wanted an extra push to help make the playoffs a reality.

What does this tell us? It shows that teams who need to add more quality starting pitching are willing to give up a significant amount of value in prospects and young players in order to tack on a few extra wins.

I believe the evidence presented above should cause us to view these trades in a whole new perspective. While surplus value isn't meaningless, it does not do very much to predict or judge a trade. It seems that when teams acquire very good players (including starting pitchers), they view these players in terms of how many wins they are bringing to the team instead of how much surplus value they have. Teams are willing to give up prospects and pay a high salary, perhaps one more than what the player is worth, in order to add the extra few wins.

Does it really matter if the player is costing them $10 million per win if they end up making the playoffs? Both the Dodgers' and Blue Jays' blockbuster trades during the past two years illustrate this point. When the Dodgers traded for Josh Beckett, Carl Crawford, and Adrian Gonzalez (the Nick Punto trade) in the summer of 2012, they added three prominent players who were collectively paid about $38 million in contracts more than they were actually worth, even when including the cash Boston sent. In addition, they gave up a few players of value (Ruby de la Rosa)!

The Dodgers added three players whose contracts gave them negative surplus value. Then, this year, we saw the Dodgers make the playoffs with Gonzalez and Crawford making solid contributions. From the Dodgers perspective, the dollars mattered far less than adding the wins.

In the Blue Jays case, Toronto received a package of players who were collectively a little more valuable than their contracts, but they gave up an enormous amount in surplus value (about $85 million, of which Yunel Escobar was part of). While they didn't make the playoffs this year due to a rash of injuries, they assembled a team that was favored to win the AL East.

The whole general point I am trying to get at is that we should probably change the way we evaluate trades involving good starting pitchers (or really just good players in general).

As fans of a team that is handicapped by a small budget, we become so obsessed with the idea of getting the highest win-per-dollar rate. What we often forget is that the goal for teams is not to win that race, but to gather the highest amount of wins.

For teams that have more money to spend and perhaps a smaller obvious window of opportunity, the need to add wins trumps the need to get the most out of their dollar -- the Yankees would gladly pay an extra $20 million for win #91 if that is the one that gets them into the playoffs -- but for the Rays, those two goals go hand in hand.

How This Relates To David Price

David Price, waiting for the next batter -- Photo credit: Kim Klement-USA TODAY Sports

Given the desire for many teams to acquire a top of the rotation starter, David Price should be a very attractive trade option this winter.

You may think that David Price is not so great of an option because he should get paid about $35 million over the next two years -- a surplus value of only about $25-30 million -- but remember, this isn't exactly what the most interested teams (such as the Dodgers) are looking at. When they see David Price, they see an extra 4-5 wins over their 5th starter and an ace who can help them in the playoffs. The question here is how much teams are willing to pay for those extra 4-5 wins.

For two years of James Shields (who was probably a slightly lesser pitcher than Price is today), the Royals were willing to give up about $85 million in surplus value.

For a couple of months of Matt Garza, the Rangers gave up about $25 million in surplus value.

The Blue Jays traded the Mets about $55 million in surplus value for R.A. Dickey. A combined package of Mark Buerle, Josh Johnson, Jose Reyes, John Buck, and Emilio Bonifacio also went to the Blue Jays in return for about $85 million in surplus value.

The Tigers paid the hefty sum of about $35 million in return for a few months of Anibel Sanchez while the going rate for three years of Gio Gonzalez was about $58 million.

A few of the others include Ubaldo Jimenez ($49 million for two and a half years), Matt Garza again ($60 million for three years, but Super 2), Zack Greinke ($95 million for two years), and Shaun Marcum ($34 million for two years).

Some people have used the James Shields return as the framework for a Price deal, and I think that is about right. Anywhere from about $75-100 million in return for two years of Price appears to be about the correct price.

For those curious about a Los Angeles Dodgers trade, Joc Pederson, Corey Seager, Zach Lee, Julio Urias, and Chris Reed is worth about $91 million in surplus value. If you would like me to estimate the surplus value of prospect packages, assemble one in the comments and I'll try my best.

Of course, it is important that we must realize not every team is willing to pay that mammoth price for Price, nor should they. For some teams, adding an extra four to five wins at that exuberant price just does not make sense.

The following four factors should help us give an idea of who will pay the price for Price:

1. The team must be at or near contention (or under the false pretense or illusion that they are either of the two).
2. The team must be rich enough that the amount paid to Price is not much of a factor.
3. The team must have some need for a pitcher (trading for Price doesn't make much sense if you have five quality starters under contract).
4. The team must have the pieces to acquire Price.

Out of all the teams we have discussed so far, the Dodgers strike me as the team that meets that criteria the most closely.

Final Conclusions

Wade Davis and James Shields, now Royals -- Photo credit: Leon Halip/Getty Images

To recap:

• Over the past three years, teams have given up more dollars in surplus value than they received in return for the starting pitcher.
• For a team acquiring a quality starting pitcher with only a few years of control left, the surplus value is less important than the amount of wins the pitcher provides.
• Based on comparable trades, David Price should net about $75-100 million of surplus value in return.
• For a team to sensibly pay that much for Price, they must be near or at contention, have somewhat deep pockets, have a need for a starting pitcher, and have the trade chips.

More from DRaysBay:

• Rule 5: Riefenhauser among four Rays added to 40 man roster
• 2013 Prospects in Review: Second Base
• SP Jeff Niemann elects free agency
• Rays sign RHRP Mark Lowe to Minor League contract
• Gauging Interest in David Price, Part 7