To Trade, or Not to Trade (Within the Divison)

With the Phillies signing Cliff Lee late Monday night, much of the winter intrigue now shifts to Zack Greinke, the last ‘ace’ seemingly available this off-season. Reports have surfaced throughout the off-season suggesting that: a) Greinke is not happy in Kansas City and b) the Royals are ‘actively gauging’ the level of interest in the right-hander. Add in the fact that every team in baseball could use an ace starter (ok, maybe not the Phillies) and it’s hard to see Greinke wearing Royal blue come opening day.

One of the more interesting things about the Greinke rumors is how the Royals are treating the issue of whether to move the starter within the AL Central. First indications were that the Royals were opposed to trading Greinke within the division, but they seemed to have softened their stance of late. The issue is relevant not only because the Twins are rumored to have interest in the right-hander, but also because it provides an opportunity to discuss why I believe teams should look to trade within their own division.

The Royals receive their fair share of sabermetric criticism, but aversion to trading within a team’s division appears to be a league-wide phenomenon. In the last three years 36 players coming off a season in which they were worth three or more WAR have been traded. Only two of these players have been traded within the same division, Cliff Lee (from the Mariners to the Rangers) and Dan Uggla (from the Marlins to the Braves). Lee and Uggla were both veteran players in their free-agent years. Trading a 27-year-old ace with two team-friendly years left on his contract within the division in unheard of.

Even fairly ‘progressive’ general managers consider moving a player within the division only if the team in the division is offering the best return. But I believe there is a slight advantage for teams to trade within their own division. The reason stems from the relevant time-frames of the players involved.

When a star-level player is traded the typical return is prospects or major leaguers who have not yet become arbitration-eligible. The team trading the established star is effectively saying, I’ll give you a player who will help you compete in the next couple of years (wins now) in exchange for players who will help me in the future (wins later). When a team trades their star player outside of the division, they improve their farm system, thereby increasing their chances of fielding a competitive team in subsequent years, but no other teams in the division are directly affected.

When a team trades a star player within their own division, they still receive young players who increase their chance to compete in subsequent years, but they also take away young players from the rival team, thereby hurting the ability of the rival team to field a competitive team years down the road. The rival team obviously receives the star-level player, but by the time the first team is ready to compete, the star player has likely departed in free agency, signed a contract so lucrative that he does not provide any surplus value beyond what he is being paid, or aged to a point where he is no longer a star-level player.

The trade that sent Cliff Lee from the Mariners to the Rangers provides an excellent example. Texas received 1/2 a season of Lee (and two draft picks because he left in free agency) and Seattle received arguably Texas’ best prospect in Justin Smoak and three other players. Had Seattle elected to trade Lee to the Yankees, the Rangers would still have Smoak and the three other prospects. By trading within the division the Mariners not only increased their own chances of competing in the future, but also hurt the ability of one of their rivals to field a competitive team.

Even if Lee had signed with the Rangers, trading within the division would still have made sense, as the Rangers would be paying Lee market rate for his services. Plus, by the time the Mariners are likely ready to compete, the first few years of Lee’s new contract, which figure to provide the signing team with surplus value to make up for the likely deficit on the back-end, will have passed.

Admittedly, because Greinke will enter free agency at 29, he represents a different case than Lee. But the general premise still holds: If the Twins or another team in the AL Central were able are to acquire Greinke they would still have to pay him market rate to retain him once he hits free agency, something they could have done without acquiring him in an earlier trade. Furthermore, devoting significant resources to Greinke would limit the team’s ability to fill other holes, and with the prospects surrendered in the original deal, there is a greater chance there will be significant holes to fill.

This is not an exhaustive study, but I think it is worth at least reexamining how we view intra-division trades.




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35 Responses to “To Trade, or Not to Trade (Within the Divison)”

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  1. JoeS says:

    I agree with you to an extent, but I believe it is different in different situations. A situations such as with Greinke, I wouldn’t trade him within the division because he’s still fairly young. The Twins have Mauer and Morneau and will be competitive for a while. Giving them Greinke would make them a serious contender for the next two years. If the Royals knew there was no way the Twins could re-sign Greinke, I’d say go for it.

    It’s an interesting situation though because the Twins really may be the only team that has what it takes to get Greinke at this point. Too bad for the Royals because they basically have to trade him and don’t have any leverage.

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    • The Ancient Mariner says:

      Actually, if the Mariners are interested (as some have suggested they are), they could make a Greinke deal work if they’re willing to move Michael Pineda in exchange. With a top-shelf pitching prospect like that in the deal, the rest is very doable.

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    • Carl says:

      The Royals still have plenty of leverage. First, they still don’t have to trade him. So what if he’s unhappy? He doesn’t have the ability, contractually, to demand a trade. Second, leverage is also created by the bidding of other teams. And that’s unaffected by what Greinke says or does.

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      • williams .482 says:

        replying to the second part, larger market teams are not going to bid because Greinkie has has anxiety issues and says he does not want to go to a large media market. so he does have some effect.
        I agree with the rest of your post, however.

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  2. chuckb says:

    Good post, Reed. I agree entirely as I think the “don’t trade within your division” meme is short-sighted and a product of groupthink from the media and baseball “old-schoolers.” If the Royals do trade Greinke to the White Sox or Twins, not only do they get their competitors’ best prospects, but by the time the Royals are able to compete, Greinke has moved on to someplace else through free agency. Even if he re-signs with the Twins or Sox, he takes up a huge portion of their competitors’ payrolls as he heads into his older, less productive years.

    At worst, the Royals trading within their division causes no harm but might enable them to ask for and expect a greater return than they would get from the Yankees, Rangers, or Nationals. Last season, the Astros refused to trade Roy Oswalt to the Cardinals, thus eliminating a competitor for his services and reducing the return they eventually got from the Phillies. That’s just dumb (but it’s also Drayton McLane and Ed Wade!). By the time the Astros are competitive again, Oswalt has either moved on or become much worse due to age. It’s very short-sighted.

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  3. Josh says:

    You make an interesting point but at the end of the day, teams are reluctant to trade within the division because the stakes are simply too high. Several GMs have lost their jobs over bad trades, and with any trade there is the risk that you will look silly later. Trading a bunch of good prospects to your rival for a guy who ends up flopping does serious long term damage to the teams future. Likewise, trading a star to a rival for a bunch of prospects that never reach their hype is doubly damaging since you’ve essentially given away a star for players that likely would not have helped your rival if the trade have never taken place. Your logic is sound if one could accurately predict the outcome of trades, but considering how unpredictable this game is, I think in division trades are likely to remain uncommon.

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    • Travis says:

      While I agree that job security affects how teams do trades, that’s in the interest of the GM, not the team. So while this explains the current status quo to some extent, it’s irrelevant when it comes to making the best move for the team.

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  4. Barkey Walker says:

    Great post!

    Quick question, sorry to show my out of the loopness, but who are the Twins rumored to be offering? Doesn’t every other team have a top prospect that they *could* put on the table?

    From the Twin’s perspective, this could be a great deal. Makes good on Mauer and (possibly) Morneau’s best years. After that, it seems like the Tom Kelly draft effect has passed and the team is not likely to appear near the top of the division for a while.

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  5. otherside says:

    The real conclusion here is that the answer to whether to trade within your division depends on whether you are trading a veteran relatively close to free-agency or future prospects. While there might be a slight advantage to the within-division trading partner that is dealing the veteran, there is then the converse disadvantage to the within-division trading partner that is giving up future prospects. More specifically, you are better off if you can go and get 1/2 year of pitching ace X from outside the division, because you do so without making your within-division competition better in the future.

    So again, whether its a good idea to trade within your division depends on which side of the trade you are on (and what you are giving up).

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    • kp says:

      I think you’ve made a good point. Might we be looking at it from the wrong direction? It seems to me that the fact that a team trading prospects would be bettering a division rival down the road would tend to depress the amount of talent a team would be willing to give up. The Twins, then, would be more willing to be the “top bidder” for an ace from another division. It makes perfect sense that not many intra-division trades happen simply because the top prospect package is more likely to come from outside the division.

      The big question, then, is why do the clubs come out and say “We won’t entertain offers for Veteran-player-x from divisional opponents.” It should be the way around.

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      • Barkey Walker says:

        If the offer is worse, it doesn’t cost them anything.

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      • chuckb says:

        My guess is that the Twins are perfectly willing to trade for Greinke (and the Rangers for Lee, etc.) b/c there are so few players around of their caliber. They’re willing to trade future wins for present wins and, to them, it’s worth it to salvage those wins if it means acquiring a player of Greinke’s (or Lee’s or Uggla’s) caliber. If those guys were a dime, a dozen, I think teams would be more hesitant.

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  6. tbr says:

    The Royals NEVER said they wouldn’t trade Greinke within the division. That story came out on December 2. Here is what was actually said that day:

    “There’s been speculation that the Twins will be hot in the hunt for Greinke but it’s been learned that the Twins have no intense designs on him, at least at the moment. It’s also been guessed that Moore would not trade him within the AL Central Division, but those who know the GM feel that he’d make the right deal regardless of the division.

    “If you get the type of deal that’s necessary to improve your team, you don’t worry a whole lot about that,” Moore said. “I don’t say you don’t consider it, because you do. Everything being equal, you’d love to get him out of the division and out of the league.”

    Dayton Moore merely said that his preference would be outside the division, but it wasn’t a requirement. This got blown WAY out of proportion.

    Here’s the link to the quote, BTW:

    http://kansascity.royals.mlb.com/news/article.jsp?ymd=20101202&content_id=16245452&vkey=news_kc&c_id=kc

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  7. Kyle says:

    One thing I do not understand from the article, especially in Grienke’s case, is lack of long term benefit for the Twins or whoever in the division. Let’s say the Twins do sign resign him after trading for him, but for a ton of money. Your argument is that because a star is being paid exorbitantly they aren’t valuable? While “surplus value” is always a great thing, and teams do have limited funds, I feel like you are diminishing the value of players ability because of their paychecks a little much. I do understand how this trade could make sense for the Royals, but it still could end up biting them in the ass.

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    • Chuck says:

      The value in these next 2 years comes from the fact that he’s ‘underpaid’ at 13.5 mil per year. Therefore, the Twins could afford a guy like Thome to DH for 4 mil and a couple good relievers at 3 mil each.

      In year 3, Greinke will be worth – let’s say 23.5 mil – so the Twins don’t have that extra 10 mil to spend on a DH and 2 above average bullpen arms, making the team weaker overall.

      The player still has the same production, and therefore value to wins and loses, but relative value is much lower, because the player is hamstringing the team in other areas.

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    • Travis says:

      Payrolls are generally pretty fixed, which makes them a scarce resource. Surplus value is the result from optimizing your production/paycheck equation. Yes, they contribute on the field, but at the opportunity cost of getting another guy.

      It’s not the end all be all, but a more efficient payroll is better.

      It’s similar to looking at a player’s offensive numbers in relation to their defensive position. Positional scarcity means that you have to optimize and try to get the best production out of every position.

      Would you rather have a guy who produces 5 wins @ $10 million cost, or 5 wins at $25 million cost? I think that’s a HUGE difference, and it isn’t (IMO) particularly overstated.

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  8. jamie says:

    I always assumed the aversion to trading within the division had more to do with minimizing negative fan reaction (and subsequent lost revenue) than any actual competitive strategy. It’s one thing to ask Royals fans to swallow trading Greinke; it’s another to ask them to pay good money to watch Greinke beat the Royals 3 or 4 times next year. The exceptions mentioned above (Lee and Uggla) seem to bear that out. The Mariners season was lost already, so ticket sales weren’t going to get any worse; the Marlins make their money from revenue sharing (and probably couldn’t sell fewer tickets if they tried).

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    • Joshua Maciel says:

      This is my opinion too. Watching a former player beat you soundly again and again after you trade him adds insult to injury. At least if he’s in a different division (or league) you minimize the amount of times you have to deal with that situation.

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  9. JMN says:

    I don’t know if there is also a subconscious underwhelming level of value being offered within the division. I know others have already suggested that you don’t want to give up a guy that could blossom and make your rival better for years to come, it’s a little easier to take when it’s in another division and not a constant reminder that that 4 or 5 WAR player allowed the rival to edge you out of the division title by a couple of games. I think based on just that psychology that any premium value attached to a targeted player is going to be paid from outside the division.

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  10. Chuck says:

    In the Twins / Greinke case, you could extend this discussion and say the Twins should NOT trade prospects within the division. It would seem there is a good chance at least 1 of the 4 top prospects needed to get Greinke would make it on the Royals and haunt the Twins for 5-6 years of cheap team control. Plus they could lose Greinke after only 2 years and even though 13.5 mil is a ‘bargain’ it still ties their hands somewhat in filling their other needs – bullpen, bench.

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  11. AK707 says:

    “Even fairly ‘progressive’ general managers consider moving a player within the division only if the team in the division is offering the best return. But I believe there is a slight advantage for teams to trade within their own division. The reason stems from the relevant time-frames of the players involved.”

    I hope that most general managers only consider moving players to teams that offer the best return – duh. I mean, I can see sabean waking up and saying “Huh, the Brewers are offering Prince Fielder straight up for Cain…interesting. Nah, I’ll see if Mozeliak is willing to flip Ryan Theriot for Cain instead” but I think thats the exception.

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  12. Cliff says:

    Yankees will give the Royals what they want for Greinke. As quickly as the Phillies rose, the Yankees can fall and they know it. They need another pitcher to help them compete in the next 3 years before Mo, DJ, and AJ (sigh) fall off the books and other decent young starters approach FA/Trade market. Royals will want Romine and Betances and the Yankees will oblige, throw in Nunez, Phelps, and Adams to round out the deal. All up the middle with one high ceiling pitcher and 4 near ready players, should get it done.

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  13. Bigmouth says:

    Very interesting argument!

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  14. R M says:

    Are you related to Andy?

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  15. Joel says:

    Great post. I think many GM’s live in fear of having a bad trade haunt them when trading within the division. Picture listening to the local media for the duration of a traded hall of fame players career…..”Lou Brock comes to the plate” probably tore Holland apart (and shortened his GM tenure).

    At least if you make a bad trade out of the division it won’t be rubbed in your face as much.

    I had always taken it for granted that trading within the division was a bad idea, your post opened my eyes.

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  16. Rusty says:

    If you are willing to trade within division, you also potentially expand the market for your players, thus maximizing the value you get in return for trading your players in a free market system.

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  17. Jeff Wise says:

    The Mariners example is a good one for sure. I believe that both teams got what they wanted but in the long run the Mariners made out better I believe. If I were the Rangers I would have made the gamble too and it almost paid off.

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  18. TRE says:

    What kind of deal nets the Twins Greinke? Would a Kyle Gibson, Kevin Slowey and Denard Span deal get it done? Gibson is nearly ready and cruised through 3 levels last year, and is their top SP prospect after being a bit of a steal in the 09 draft. Slowey is still pretty young and seems like he could be an ok middle rotation type, but could use a change of scenery. Span is a solid if unspectacular player. I think he’s more suited to corner OF spot, but doesn’t have the bat for it.

    From a Twins perspective it seems that several of their top prospects are speedy OF types (Revere and Hicks for example), so Span is pretty easily replaced. The rotation then becomes Greinke, Liriano, Baker, Duensing, Blackburn with the potential of adding Pavano back (not sure if they’d spend the cash on top of that deal.)

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  19. MikeS says:

    I’m calling it. Grienke to the Phillies as their 5th starter!

    Seriously, though. Don’t you think part if the problems is teams inability to self scout? Or maybe their inability to be honest with the fanbase. To say “hey, we’re crappy. We’re gonna suck for two or three years and by then he’ll be somewhere else” just doesn’t fly. Either teams feel they are closer than they really are, they feel they need to make a splash to sell tickets (hello Jason Werth) or they just aren’t willing to be honest with the meatball fans.

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  20. CarlosM7 says:

    If I told you how easy it is to get a job in this recession, you wouldn’t believe me. But the truth is more employers are going online to find people just like you and me who are ready to work at a good job (one that pays good!). The only thing that makes sense is to stop wasting time driving around all day filling out a dozen applications and going from one boring low paying job to another. I found this site that pretty much matches you up with your dream job that is available in your city right now. I have found it very helpful. Go to YouFindWork.com

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  21. GTStD says:

    One thing that doesn’t seem to be mentioned about intra-division trading that seems to make sense to me is that you will have better knowledge of your opponent. A large amount of time and effort goes into developing good scouting reports for your team, so you can know your opponents strengths and weaknesses.

    When you trade away a star player that you’ve developed, you should have a pretty good understanding of the best way to go about neutralizing him. You essentially have the best, first-hand scouting report you are ever going to get on them. By contrast, the players you are getting in return likely haven’t gotten to the point where your opponent will have the same advantage over them, as they are still much more malleable by your own team. If it is an out of division trade, this won’t matter a whole lot, because you don’t play them all that much. If you are playing against them with the frequency of in-division games, it might make a difference.

    Obviously, this won’t always matter, and their weaknesses may not even be expoitable… especially if its someone like Albert Pujols, who may not actually have any. I don’t even know if it would have a measurable difference on anything, but in a game where information and trends are power, it couldn’t hurt.

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