ottoneu Trade: When Should You Trade Youth?

As Chad Young already spelled out in his piece earlier today, the two of us recently completed a trade in the second FanGraphs Staff LeaguePablo Sandoval and Hong-Chih Kuo for Matt Thornton and Paul Goldschmidt.

I was on the end receiving Sandoval, and as far as overall trade analysis goes, I have to agree almost entirely with Chad. Due to the relative strengths and weaknesses of both our teams, I think this was one of those trades that — right now, at least — rates as a win-win. Both of us are dealing from depth; I get the third baseman I desperately need without destroying my bullpen or offensive depth, and Chad improves his bullpen considerably and gets a young, high upside first baseman without hurting his offense. Only time will tell exactly how this works out, but in the moment, both of us left feeling quite happy with our returns.

But when contemplating this trade, I found myself coming back to one question over and over: how exactly should we value prospects in ottoneu leagues? I was loath to give up Goldschmidt in this trade, but in the end, I had to pull the trigger based on my team needs. But still, when focusing in on the position players involved here, I found myself going back and forth:

Sandoval ($24): 25 years old, already an all-star third baseman.
Goldschmidt ($6): 24 years old, tremendous power potential, plays in Arizona.

Sandoval plays a weak position, he’s still quite young, and his salary isn’t even that high; depending how this year goes, he’s still a keeper candidate. I’m excited that I acquired him…but then I look at Goldschmidt. There is risk involved with Goldschmidt, considering that he’s a relatively unproven commodity at the major league level, but he’s also not exactly that risky a pick. He’s going to hit for power — it’s the contact issues that are the biggest question mark — and he has the potential to become a perennial 30+ homer threat out in the Arizona air.

Even if Goldschmidt only becomes around an 850 point/year player — which seems like a relatively safe bet, considering he’s projected at 790 points this season — he’s a heck of a bargain at $6. Keep him for next season and he’s $8. The season after that? $10. In our league, people paid around $15-20 for first baseman that finished last season with between 850-900 points. Even if Goldschmidt never reaches that level, he’s a great value at his price and there’s little risk that he won’t be worth his salary. And then if he reaches his upside….well, then you have a dynasty keeper and you never, ever let go.

So which way do you go: do you value the present day more, or do you prefer to take the long-term view and gamble on upside? I’ve struggled with this same question when discussing trades in my other ottoneu league, and this format really makes you stop and consider the risks and value of prospects. Dollars are a valuable commodity in ottoneu leagues, so if you can acquire one prospect that blossoms into a star, you’re giving yourself a huge competitive advantage.

In part, your answer to that question probably depends on where your team stands on the Win Curve. If you think your team is good enough to compete that season, then it makes more sense to take the short term value gain while cashing in on a prospect. Is my team at that point? I’m not sure, but I think it’s good enough to make a run at least. If it turns out I’m toward the bottom of the league by July, though, I’m going to be sorely regretting this trade.

Am I overvaluing prospects like crazy? Or does this jive with what other people have experienced? I’d love to hear.

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Steve is the editor-in-chief of DRaysBay and the keeper of the FanGraphs Library. You can follow him on Twitter at @steveslow.

11 Responses to “ottoneu Trade: When Should You Trade Youth?”

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  1. byron says:

    You pick which years you’re going to try and win in advance. I tried last year, looked destined for third, blew everything up for prospects. Now I’m throwing this year and planning on winning next year, the year after that, and every year after until I can’t get anyone into my league because I have all the players.

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  2. Chike says:

    Maybe someone can help me out here because I still don’t understand how this deal makes any sense.

    Trading on potential seems unnecessarily reckless to me. I appreciate all the different algorithms and available equations, but there are simply too many variables that can throw off the entire system. There is a major difference between the minors and majors. When formulating projections, do these equations account for the hitter’s ability to make adjustments? Do they factor in the learning curve or how the hitter will fare against pitchers at the game’s highest level? Each player handles these things differently.

    At this point in his career, Paul Goldschmidt is very similar to the A’s Brandon Allen. Check their minor league numbers – nearly identical in terms of age, build, and skill set. Goldschmidt is viewed as the next big thing while Allen sits on the waiver wire. They both have potential for greatness – it’s just we know a little bit more about Allen than we do Goldschimdt. He’s still an unknown.

    And that’s my point. A power hitter with contact issues isn’t a sure-fire bet. Certainly not sure enough to move a young, proven commodity like Sandoval. When evaluating the trade, it’s good to look at the upside, but what about the downside? Say Goldschmidt doesn’t live up to his projections… what then? You’re out Pablo Sandoval and you’re stuck with a AAAA bust.

    I would need at least three Paul Goldschmidts before I’d consider making that deal. It’s like trading your Chipotle burrito for whatever is in my brown bag lunch. You know what you’re getting with Chipotle and it’s good. With my brown bag lunch though, sure, it has the potential to be great, but do you really know how it will taste? It may smell or look great on the outside, but there could be anything from rotting PB&J to…well…Chipotle in there.

    Even if you’re not looking to win now, there’s no justification for trading Sandoval for a single prospect.

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    • Chad Young says:

      Goldschmidt’s MLB line – 48 games, 8 HR, .807 OPS, 4 SB, 9 2B, 1 3B, all at 23 years old (now 24)
      Allen’s MLB line – 106 games, 11 HR, .680 OPS, 3 SB, 19 2B, 2 3B, between ages 23 and 25

      Allen is now 26, hasn’t adjusted, and plays in a brutal hitters park. Goldschmidt is 24, has shown much better abilities in MLB, plays in a powe-friendly park. His BB% in the majors is higher than Allen’s, and his K% is lower. The comparison is not that good a comparison.

      That said, I do think Sandoval>Goldschmidt, but I think you are downplaying the risk with Pablo. He does not walk much, which a) hurts his value in a league that values walks and b) makes his offensive value highly dependent on balls in play. In ’09 and ’11 this was great. In ’10, not so much. He has also had issues with weight and work ethic (which are probably tied together). The downside for Goldschmidt is probably not quad-A seeing as he has a third of a season of productive MLB time under his belt, showing that he can, in fact, make those adjustments. His youth, in this case, suggests that is he makes adjustments to his plate discipline and contact, he could actually get much better…and if he doesn’t, he has shown he can succeed as is. The sample size isn’t huge, but you can’t ignore the success just because it was in limited time – you just have to weigh it accordingly.

      Besides, you are leaving out the relievers in the deal – I wanted to improve my pen and had to give something up to do that. What I “gave up” was to take on risk. I project these two offensive players to put up similar points this year (about a 40 point gap, as I noted), with Goldschmidt obviously carrying more risk. If things go as I expect, I take a minimal hit on offense, and gain a lot on the mound. If things go well (and not crazy well, just well), Goldy could outperform Sandoval. If things go poorly, I could lose out.

      So be it. My odds of winning the league are better with Thornton and Goldschmidt than they were with Sandoval and Kuo. Steve’s chances of winning are better with Sandoval. If I didn’t have Zimmerman, I wouldn’t like this deal. But I do. And in this case, that context means a ton.

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      • Chike says:

        I would be careful in placing so much emphasis on the context behind the deal. The fact that you have a good third baseman shouldn’t cause you to accept less than 100 cents on the dollar for Sandoval.

        My point in writing all of this is potential performance should never be traded straight up for present performance. Even if Goldschmidt is the player you project him to be, we have no way of knowing that for sure. We haven’t seen enough of him to make such a definitive statement. Goldschmidt could very well become a quality major leaguer, but there’s a chance he doesn’t. You’d need something there to mitigate the risk – maybe another prospect or a solid major leaguer.

        You’re giving up a top 3 consensus fantasy 3B for a shaky closer and a first base prospect with potential. I think you should have asked for much more considering Panda’s elite status. All’s well if both sides are happy, but objectively speaking, this is not a balanced trade.

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      • lankhaar says:

        In ottoneu, context is everything. Roster depth, how a player’s salary fits into your team this year (and next year, and the year after…), and position on the Win Curve is just as relevant as player production. A deal that might get laughed at in March might be eagerly accepted in November. Making sure that you always get 100 cents on the dollar is a good way to never finish a deal with another owner.

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      • Chike says:

        Iankhaar, there’s no reason to short-sell Sandoval in this situation. Chad’s team is well put together, he’s under the cap and there aren’t any pressing needs he must address before the season begins. He very well could have started Sandoval on Opening Day.

        Each asset has individual value and market value. Chad was able to trade Sandoval since he already had Zimmerman. Sandoval’s individual value to his team was low. To the market, however, Sandoval is a cost-controlled, 25 year old all star moving into the prime of his career. Chad traded Sandoval like he was an expendable third baseman. He took whatever marginal team upgrade he could get without regard to Sandoval’s extremely high market value. If Zimmerman weren’t on his team, you can bet Chad would have asked for much more than an old reliever and a first base prospect.

        Scott Boras wouldn’t give the Indians a discount on Shin-Soo Choo just because he signed other outfield clients. Those clients don’t have anything to do with Choo, the Indians or the actual deal. While it’s important to look for something that works for both sides, that should not be the primary concern. Your job as an agent/GM/team owner is to assess the relative value of an asset and make your trading partner pay for what that asset is worth to him.

        There’s no reason to settle for 60 cents on the dollar when you can just keep the dollar itself. Sometimes the best trades you make are the ones you don’t make.

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      • Chad Young says:

        It’s worth remembering that in points leagues, Thornton’s value barely takes a hit if he gets “demoted” from the closer role. He’ll acquire holds instead of saves which are worth 4 pts instead of 5. and my guess is he pitches far more often in a relief-ace type role than he does as the closer. So I see absolutely no reason for Addison Reed to have any impact on Thornton’s value in a pts league. If this were 5×5, I would feel differently…but it’s not.

        Also, Chike, I think you are making big assumptions about market value. I have shopped Sandoval, put him on the trade block and generally made it known he was available (him or Zimmerman) and had almost no bites. Looking around the league, I think most teams are set at 3B – Steve had more need for Panda than any other owner. I am pretty confident that the deal I got was the most value I was going to get.

        The only questions I ask myself before agreeing to a trade are a) is my team better after the trade than before and b) is there a better offer out there for this player/package? If the answer to the first one is yes, and the answer to the second is no…I am not worried about much of anything else. In this case, I project my team to be better, even with the added risk, and I could not get more for Sandoval right now.

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  3. dudley says:

    in finance, people talk about discounting future cash flows based on risk & uncertainty. you can essentially think of a prospect like goldschmidt as a future cash flow, converting points to $. you’d need to discount for: 1) possible injuries; 2) possible position shifts; and 3) possible subpar performance. with goldschmidt, we’re not too concerned with #1 and #2 isn’t a factor because he’s already at an offense first position, so that just leaves us with #3, however, his enormous K-rate leaves a serious risk there. factoring all those things, I think $6 is about fair value for him right now.

    i’ve also noticed that people seem to be way overvaluing pitching prospects in my ottoneu leagues. i think it’s because they are dramatically underrating the possibility of #1, injury risk, which is huge for young pitchers, but also #2, which is that a SP prospect gets converted to an RP and becomes far less valuable. count me out for pitching prospects that cost more than a buck.

    finally, i don’t think enough ottoneu owners are factoring in the ‘dead salaries’ and arbitration risks with prospects. take bryce harper for example. if you signed him for $17 last year, you paid that $17 and got absolutely no production in return. this year, you pay him another $18, and you likely get nothing again, or possibly a few months of replacement level offense. then, next year, you can try to keep him at $20, but then maybe he gets voted into arbitration, and all you did was spend $35 over two years for the right to get a $5 discount on him during the following year’s auction. not only that, but you absorbed 100% of the injury risk during those two years, while paying that $35, too. again, count me out–no thanks on the pricey prospects.

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    • lankhaar says:

      Completely agree with you on prospect valuation. Not enough people realize that the cost of many of these prospects is just the same as guys already in the majors. Just taking a look at average ottoneu values, Harper and Trout are making about the same money as Adam Jones, Victorino, Markakis, etc. I’d much rather have the the guys already up and producing in my OF than in the minors and sitting on my bench.

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  4. david says:

    goldschmidt is also playing in arizona where they have aspirations of winning a pretty moderate/weak division.

    if he doesn’t perform right away, he might find ab’s hard to come by at the mlb level (ie brandon belt, 2011).

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  5. Jorts says:

    I must agree with the context of trades in ottoneu being a huge factor in every deal.However, based on the amount of information given, I would definitely hold onto Sandoval even if I own Zimmerman. In fact, I think the two players compliment one another quite well. We’ve seen both players perform at a very high level but we must consider Zimmerman’s health issues and Sandoval’s inconsistency and effort as someone previously mentioned. Having said that, if Zimmerman lands on the disabled list or if Sandoval under performs, you still have one to replace the other as sort of an insurance policy at third base. I think the value in having a much more proven player who is eligible at both corners far outweighs that of a potential 30 HR first base prospect, especially when you consider the amount of depth that already exists at first base. Not to mention the best case scenario being if both Sandoval and Zimmerman are healthy and productive midway through the season, imagine how much you could get for either one of them from the team who just put A-Rod, Youkilis, or David Wright on the DL.

    You did get an bullpen upgrade with Thornton, but it seems the White Sox can’t wait to replace Thornton with Addison Reed which seems like more of a “when” than an “if”. When that happens, the only way for you to break even on this trade is for Goldschmidt to live up to his full potential.

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