The A’s, Royals, and Going For It

On Friday night, the A’s traded top prospect Addison Russell and some stuff for Jeff Samardzija and Jason Hammel. Mike Petriello did a great job of writing up the transaction, highlighting the pros and cons on both sides of things. Well, at least on the A’s side, because getting a prospect of Russell’s quality basically leaves this as a deal with no real cons for the Cubs. It might or might not work out — the nature of baseball makes this true of every decision ever made — but landing an elite young middle infielder in exchange for a player who has out-priced his own value and a rent-a-veteran is a huge win for the Cubs.

In fact, the inclusion of Russell in the deal led some pretty smart folks to compare this trade to one of the more controversial trades in recent history.

A year and a half ago, the Royals traded Wil Myers and stuff for James Shields and Wade Davis. At the time, Myers was generally rated as a top 10 prospect, with some even having him as high as top three. In exchange for Myers and Jake Odorizzi, the Royals acquired the rights to Shields for two seasons and Wade Davis for two seasons with three team options, so they acquired as many as seven years of team control of their new acquisitions. In exchange for Russell, the A’s acquired one-and-a-half years of Jeff Samardzija and half a year of Jason Hammel, so Oakland acquired a grand total of two seasons in exchange for their elite young talent. Just based on this fact alone, one could argue that the Samardzija trade might even be a worse return than the Shields trade.

And yet, when the deal was announced, this was my reaction.

I realize that some people see the disparate reactions to the two trades as evidence that I am biased in favor of some organizations and against others; in this case, for the A’s and against the Royals. After all, the trades have similarities, and the reactions are dramatically different. While I freely acknowledge we’ve said a lot more good things about Oakland’s moves than Kansas City’s moves over the past few years, I’m totally OK with that. The A’s are perhaps the best team in baseball, so if we weren’t saying more good things about their moves than every other team, we’d have been missing the boat.

Beyond that, however, I think there are two dramatic differences that support different conclusions for these two transaction.

1. The given playoff probabilities for the A’s and Royals at the time of the two trades.

2. The opportunity costs paid by the two teams.

Let’s deal with these two in order. As of today, our Playoff Odds model has the A’s with a 71% chance to win the division and a 28% chance to win a wild card spot; in other words, we’re giving the A’s a 99% chance to make the postseason this year, by far the highest mark of any team in baseball. Even factoring in the chance that the A’s might get passed by the Angels in the AL West and have to play in the Wild Card game, the model still gives the A’s an 86% chance of reaching the division series. Barring some kind of travel disaster that wipes out half the roster, the A’s are going to play in October, and they’re probably going to reach at least the division series. Jeff Samardzija is going to pitch meaningful baseball games for the A’s.

Compare that to where the Royals were when they made the Shields trade. Heading into both 2013 and 2014, our estimates gave the Royals roughly a 20% chance of winning either the division or a wild card spot, with the odds being more heavily tilted towards a less-valuable wild card berth, meaning that they would still have to play their way into the division series. The Royals made the Shields trade on the hope that it would make them a good team; the A’s are already a good team.

Giving up an elite young player on the hopes that it will help you get to October is not the same thing as giving up an elite young player knowing that you’re basically guaranteed at least one trip to the postseason. The dramatic rise in information that teams have about their own chances at reaching the playoffs is one of the primary reasons that we see teams pay higher prices at the trade deadline than they will over the winter, even though they’re acquiring roughly half of the value that they could have gained by making the move over the off-season. The increased information justifies moves in-season that are not justifiable without that information, and the A’s have a postseason near-certainty that the Royals have never possessed.

The wins that Samardzija will add to the A’s are simply more valuable than the wins that Shields added to the Royals, either last year or this year. Just as the number of runs an elite reliever prevents have a larger impact on a teams record than the equivalent number of runs allowed by a starting pitcher, a few wins for a team in the A’s position is more valuable than those same few wins for a team in the Royals position. We accept leverage index as a reality for in-game decision making, and we also should account for leverage in roster construction decisions.

But while the win-curve argument is the one most commonly made to support deals like this, it can be taken too far. There is a long history of teams making bad deadline trades because they overpaid for a short-term upgrade due to their spot on the win-curve. You can’t just make a blanket statement that any team that is a strong favorite to make the postseason should pay any cost to upgrade. The cost/benefit analysis still has to make sense. But that’s the other aspect of this deal that makes it unlike the Myers/Shields trade; the Royals paid a massive opportunity cost that the A’s are not paying.

As I wrote two weeks before the Royals traded Myers to Tampa Bay, Myers shouldn’t have really been considered a “prospect” for Kansas City; he should have been considered their starting right fielder. While Shields added a four win pitcher to their rotation, not using Myers to replace Jeff Francouer was something like a two win downgrade in the outfield, mitigating a large part of the advantage of acquiring Shields in the first place. The Royals got better in the short-term, but only marginally so, because they traded a piece off their Major League roster in order to make the trade. They robbed Peter to pay Paul, so the long-term cost only resulted in a minor short-term upgrade.

Addison Russell, as great as he might be someday, isn’t a big leaguer right now. He has 75 plate appearances above A-ball, and the Steamer rest-of-season projection suggests that he’d have hit like Eric Sogard if the A’s had promoted him down the stretch. Rather than swapping a two win player for a four win player, the A’s swapped a zero-win player for a three-win player. Russell’s value is entirely in the future, and when you’re making a go-for-it trade, you want to maximize your team’s present value. Trading Russell does not make the A’s any worse; trading Myers absolutely resulted in a downgrade for the Royals in right field.

And then there’s the money. One of the primary objections I had to the Myers/Shields trade was the Royals could have simply spent the $9 million they had to pay Shields on a two-win free agent pitcher and have been essentially just as good as they were with Shields and Francoeur. My favorite free agent starter of that winter was Scott Feldman, who signed with the Cubs for $6 million and put up +2 WAR over 182 innings of work. The Royals not only paid the opportunity cost of losing Myers as their right fielder, but they also took on $12 million in salary between Shields and Davis, so they lost the chance to spend that $12 million to upgrade the team without trading away young talent.

That opportunity cost is dramatically reduced in-season, because there are no free agents to go sign instead of making trades. During the winter, teams can essentially substitute from one market to another depending on the prices being asked for in trades and free agency; during the season, there is only the trade market, and if you decide not to pay the price being asked for in trades, then you’re deciding not to upgrade at all. The basic principle of supply and demand dictates that prices are higher when supply is reduced, and the non-existence of a free agent market in-season makes the $5 million in salary increase the A’s are taking on for 2014 basically a non-issue.

Samardzija’s price in 2015 will negate some of the value of controlling his rights for next season as well, so the A’s are still paying some opportunity cost to acquire him, as that’s $9 or $10 million in committed payroll they won’t have to spend that they otherwise would have. But the opportunity cost they are paying is dramatically lower than the one the Royals paid.

While it may be tempting to compare in-season trade prices with off-season trade prices, the circumstances surrounding those markets are not the same. In-season buyers have information that off-season buyers do not, but the tradeoff they make to gather that information is that they lack access to free agency as a trade-market alternative. Those two factors both conspire to make in-season trades more expensive, because buyers are gaining the value of leveraged information and sellers have less competition for available talent.

On the surface, trading Russell and Myers for short-term pitching upgrades might look similar, but these moves were made in very different circumstances, in different markets, and with different information. And Myers was capable of helping the Royals in the short-term in a way that Russell is not. These trades may be similar on the surface, but once you factor in the entire context of the deals, they are more different than alike.

That isn’t to say that this is some kind of great steal for the A’s. They paid a very high price, and this trade will likely hurt them in the long-term. But while the cost of both trades is high, the A’s are going to generate a benefit that the Royals were never likely to see. Trades are about balancing cost and benefit, not just about limiting costs. Both teams paid very high prices for their upgrades, but there are times when paying a high price does make sense. This is that time for the A’s.

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Dave is the Managing Editor of FanGraphs.