Another trade deadline has passed. As you probably already know, the D-backs shipped off a few players, including Gerardo Parra, Martin Prado, and Brandon McCarthy. Throughout the Kevin Towers era, there have been mixed results on the trade front. There have been good trades: Towers acquired Aaron Hill and Brad Ziegler in two separate, successful deals. But more recently the trades have been more bad than good. Since the trades have been unfavorable, I wondered if Towers was doing something wrong strategically. Specifically, the circumstances surrounding the Justin Upton trade stood out. In case you don’t remember, the D-backs had bashed Upton publicly to the point where the basically had to trade him. They backed themselves into a corner. Using the Justin Upton scenario as an example, we’re going to explore whether necessitating a certain player be traded lowers the potential return in a trade.
First, let’s set out the parameter for our example. Generally, the first team (we’ll call them “team A”) wants to trade a certain player (“player A”). This fact becomes known one way or another. Through the rumor mill, as a result of trade negotiations, whatever. So we’ll assume the teams that comprise Major League Baseball know that player A is available.
Not every team is going to be willing to trade for player A. The player needs to meet a few specifications. Potential trade partners should have a need at the position. Teams also need to be able to afford the player. Lastly, teams need to have the assets to acquire the player. There may be other team-specific factors too. The point is, the market for a given player is a subset of all teams in MLB. The teams that meet the specifications bid on the player and whoever offers the most value will complete the deal.
In order to forecast how public denouncement of a player affects trade negotiations, we need to estimate what it does. In reality, it puts the team in a corner. It informs other teams that they are unwilling to hold on to a player. Let’s jump into an example to show exactly how this will change outcomes.
Assume team A is putting player A on the trading block, and somewhere between two and thirty teams are interested. Let’s engage an example. Two teams (“team B” and “team C”) engage in a bidding war. Team B bids $100. Then team C has the option of offering more than $100 or not offering anything. It’s simple – if team C values player A at more than $100 then they’ll make an offer. If team C does make an offer, then team B is in same scenario. The teams continue to compete against each other. They drive up the price until everyone is out except one potential buyer. Using the example above, let’s say team C values player A at $90. They wouldn’t bid anymore. So team A is left with keeping player A or taking $100 for him. This is where problems arise.
Regardless of how many teams are involved in the bidding, eventually it comes down to one buyer and one seller. I’m going to use a simple line graph to illustrate the situation.
There are two possibilities. One is that the team B’s bid is greater than team A’s value for player A. In that case, a deal is made and there’s no problem. The other possibility is that Team B’s last bid falls short of Team A’s value for player A, as the graph above (poorly) illustrates. Normally, in this situation Team A can reject the offer. Then team B can increase their offer until they reach either team A’s value or their own value for player A. If team B’s value for player A is greater than team A’s value, then a deal will be made. If not, no deal. Either way, team A will not be worse off than before.
This whole scenario collapses when team A is forced to trade player A. Once one team outbids the others, it has no incentive to continue to raise its bid in order to satisfy team A. Team A cannot back out; they have to take the best they can get.
This is a long-winded, game theory-inspired way of saying that tipping your hand causes you to lose leverage in negotiations. In certain situations it can really hurt a seller. Giving away free information serves no purpose. It can be incredibly costly, and there’s no benefit.
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14 Responses to Don’t Share Trade Secrets
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Oh man, this has been my biggest beef with Towers and Dbacks management! Publicly denouncing Upton and Bauer was awful for their trade value. You end up selling low because every other team knows the Dbacks are eager to get rid of them.
If I’m selling my car, I wouldn’t tell a potential buyer that I hate the car and am looking to get rid of it as soon as possible (even if it were true). They’d low-ball my asking price since I’ve shown my hand. Why the Dbacks do this with baseball assets baffles me.
What about the rest of the league? Where were they? How did they miss out on getting J-up?
All that being said, strange how aside from yesterday, and the questionable strike zone in the first inning that lit collmenter up, is how this team remains in every game. The pitching has been really good, and if Pollock/Goldy had been around the team could of possibly been charging like the Pads right now.
The didi trade was looking like a wash in july when didi was driving with his front shoulder now he’s dipping his back again. The guy has good bat speed, and will be a great slash hitter like Ender, he’s close.
Lamb what a glove yesterday, he’ll adjust with bat, too bad Goldy went down, Lamb who could of used his presence, both defensively and offensively.
Trumbo may actually be about to be a good all around hitter, goldy influenced btw, but what disastrous series with the glov.
Right now, losing the close games, and the overaggressive play like ender with the throws, didi with the bat, they’re missing Pollock, Goldy, and even Hill to keep the rookies stabilized, and win the close ones.
Jeff Wiser had some similar thoughts toward the end of last year: http://insidethezona.com/2013/09/diamondbacks-quit-talking/
I agree with both of you guys.
The only benefit I can think of from being so vocal about a player like Upton is that it should help attract the maximum number of bidders. When Doug Fister was traded to the Nationals last offseason for kind of a weird package of players, it seemed that everyone’s reaction was: the Tigers could have gotten more. There were even reports that some teams were prepared to offer more, but never got the chance. That will never happen to Kevin Towers if he is the seller.
But that strategy, of focusing most on getting the maximum number of bidders, is only necessary if you can’t artfully ferret out all of the likely bidders and contact them privately. And what’s more, it banks on the possibility that with more bidders comes bidding, which can drive up a price. I think we’ve seen that that doesn’t always work.
So, yeah. I don’t see how being vocal about assets you plan to move can be helpful, and I do see how it can be harmful. Lose-lose proposition.
I cannot agree with this article more, I cannot agree with Mr. Wiser more, and this is the exact reason that Kevin Towers needs to fired. He actually does very well in trades when he hasn’t either ran his player into the ground or become narrow minded on what he thinks he needs and gives up way to much talent to get it. The trades for Ziegler, Hill, and Pennington (only the part with the A’s. He should have left it with Young for Penny and not have acquired Bell) were all great trades. He’s definitely done some good things, but his problem is when he decides on doing something and then forces the issue. Already mentioned were Upton and Bauer, but how about Stephen Drew? I know that was partially Kendrick, but good job trading a former franchise player for nothing. Ian Kennedy too. He was a Cy Young caliber pitcher until he lost confidence and we ran his trade value down too.
He also gets too narrow minded on what he wants to acquire. A power hitter, Mark Trumbo, a closer, Addison Reed, a “TOR”, Bronson Arroyo, an innings eater, Trevor Cahill, a gritty veteran, Cody Ross, the next Derek Jeter, Didi Gregorius. The point is, he decides who he wants and then overpays for them. Every single person I just listed we overpaid to get whether it be money or value.
KT needs to be canned because he over values what “his team needs are,” and he runs players into the ground and then trades them for nothing.
Wait until tomorrow. Some of this may not be Kevin Towers’ fault…
I don’t know, after everything said and done, the thing this team is missing is an Ace. That was the difference 2 previous years, and the difference this year. Tower’s main mistake of not getting an Ace is the main handicap of this organization right now. The dislike of this organization and team has been a little over the top, in many different quarters. The Upton trade wasn’t as big of a disaster as the Scherzer trade.
Maybe they need two…
I wasn’t really commenting on the Upton trade. I was using that trade to show why a particular trade strategy is bad.
two is good
[…] and presumably lowered his bargaining power on the open market when trying to deal the two players, as RG described yesterday. He later publicly declared that Trevor Bauer needed to “grow up” and that probably […]
miniscule, the effects of calling guys out, and causing their value to sink. Now why you drafted someone like Bauer so high to begin with is failure. Why you call someone up like J-Up before their emotional maturity is ready as well, so that’s where the failures on both these guys probably rest.
I don’t necessarily disagree with you. I think the magnitude of the effect depends on the number of potential suitors. The more suitors for a given player, the less this stuff matters.
My only issue is with the premise that the D’backs were somehow “forced” to trade Upton due to the bashing. They were never forced. They didn’t HAVE to trade him no matter what they said. He was under contract, and as a player under contract he is required to play and do his best no matter the situation or he’d torpedo his own value. After all, who wants to pay millions to a player that mopes when management bashes him? The D’Backs never should have traded Upton is the real issue. Bashing or not, the trade was idiotic and flawed from the get-go.
Completely valid Kevin. You’re right. For the sake of simplicity I didn’t really get into the details, but I assumed that the value of keeping player A was significantly reduced. In other words, I thought the public denouncement reduced the value of keeping the player to the point where it would be to the right of team B’s bid in the hypothetical. This may not be true in all situations, depending on the level of bad blood between the parties.