As the trade deadline approached in 2011, the Red Sox felt their hands, to a degree, were tied. Ditto 2010.
In both seasons, the team wanted to make midseason upgrades. But the players they wanted to acquire -- names like Carlos Beltran of the Mets in 2011, and Jake Westbrook and Kerry Wood of the Indians in 2010 -- had more money due to them than the Sox’ budget would permit.
In order to allow a deal to happen, the Red Sox would need a subsidy from the teams that were trading them. And that, in turn, meant that the prospect cost of a deal would be steeper. Somewhere, between the financial cost of a deal and the prospect cost, the Sox were unable to find the necessary match to make the deals they wanted to reinforce their club.
In 2009, the Sox had reserves available as the end of the season approached. With upwards of $3 million in their war chest, they acquired reliever Billy Wagner for the final weeks of the season and the playoffs, at essentially no prospect cost. The fact that the team had available in-season cash proved pivotal in allowing the team to address a need that had emerged during the season, when Hideki Okajima’s run of dominance was reaching its end.
The idea that the Red Sox might keep some money in reserve for the coming season has been treated with understandable skepticism. As of now, the Sox parted with a starting shortstop (Marco Scutaro) for whom they had budgeted in order to entrust that position to the tandem of Mike Aviles and Nick Punto and to add an outfielder (Cody Ross) whose role will be determined in the spring and early season.
With the Scutaro deal, the team cleared $7.67 million in salary (as calculated for luxury tax purposes) while taking on $3 million with Ross. So, if the team doesn’t sign someone like Roy Oswalt or add another starter through a trade prior to the season, suggestions that the Sox will have some money available during the season have been greeted with more than a few eye rolls.
But recent seasons underscore the idea that in-season financial flexibility can be a difference-maker. Areas that appear to be strengths entering a season become devastating shortcomings -- whether due to injuries or underperformance -- as a season progresses. In order to address those unexpected needs, teams that have a combination of money and prospects are in the best position to shore up their shortcomings.
The Sox had that in 2007 (when they made an ill-fated deal for Eric Gagne), 2008 (when they could swallow Manny Ramirez’ salary and add Jason Bay as well as Mark Kotsay) and 2009 (when they added Victor Martinez and Wagner). They had limited reserves in 2010 (when they stood pat at the deadline) and 2011 (when they added Erik Bedard).
There is still time for the Red Sox to do some tweaking of their Opening Day roster. Maybe they will try to use some of their money before the start of the year. But it would be a mistake to dismiss the idea that the Sox might -- again, might -- benefit from keeping some of their budget unspent so that they can react to both team needs and trade market opportunities during the season.
That notion may gain even further credence in 2012.
WHY 2012 MIGHT BE DIFFERENT IN THE TRADE MARKET
The rules have changed. And they may reward teams that are looking to add pieces during the coming year.
Major League Baseball owners and the Players’ Association agreed on a new collective bargaining agreement at the start of the offseason. And while not all details of that new CBA are known (indeed, multiple executives of multiple clubs say that the final language of the agreement has not yet been set), it potentially has significant implications for deal-making.
In particular, there might be a flurry of activity involving players who are in their contract years. In recent years, teams with prospective free agents to deal had leverage in trade negotiations thanks to the possibility of getting draft picks back if a player departed.
Teams with so-called Type A free agents could hold out for a significant prospect return knowing that they would get two high picks if they dealt players to whom they were comfortable offering salary arbitration. If a prospect package wasn’t deemed better than two picks, a team could hold onto a player in his walk year. (Witness the Padres last year with Heath Bell.) Most teams with prospective Type B free agents knew that, so long as they were willing to offer that player arbitration, they would get one pick if they held onto the player and let him walk after the season.
No longer. The number of players who will result in draft pick compensation has narrowed significantly. The new CBA states that teams will be entitled to two draft picks if, at the end of the season, they offer one of their own free agents a one-year contract worth the average of the top 125 salaries in baseball.
Suppose that the calculation is based on salaries for the just-concluded season rather than on average annual value (an approach that is appealing for this exercise in no small part because the salary data for 2011 is more readily available). The average of the top 125 salaries in baseball for last season was approximately $12.53 million.
Among the free agents, how many would have been likely to receive a one-year, $12.5 million(ish) offer from their clubs?
“It’s likely going to be a relatively small group,” noted Pirates general manager Neal Huntington.
Albert Pujols, Prince Fielder, Jose Reyes, C.J. Wilson, Mark Buehrle, Aramis Ramirez and David Ortiz would have been easy calls to receive such offers. Given that the Sox paid Jonathan Papelbon $12 million in 2011, they would have almost surely offered the closer a one-year deal for “Top 125” money (even had the Phillies waited before signing him to a four-year, $50 million deal). The Phillies ended up paying Jimmy Rollins $33 million for three years, so it’s hard to imagine they would have balked about paying $12.5 million on a one-year deal.
So that’s nine players who fall into the “definite” category.
Beyond that group, there were a handful of players who would have represented interesting calls, given that a one-year offer for their services would have represented significantly more than market value.
Heath Bell, who ended up signing a three-year, $27 million deal, might have taken a $12.5 million offer from the Padres. The Phillies would have faced an interesting decision with Ryan Madson, who ended up receiving a one-year, $8.5 million deal from the Reds. The Twins topped out their offer to Michael Cuddyer at three years, $24 million (he signed with the Rockies for three years and $31.5 million). Would the Cardinals have offered Edwin Jackson a one-year, $12.5 million deal that would have exceeded the $11 million he’ll make from the Nationals? After Francisco Rodriguez accepted the Brewers’ offer to arbitrate, he and Milwaukee worked out a one-year, $8 million deal. That’s five maybes.
And then, there were the other 23 players who were offered arbitration as either modified Type A free agents (Kelly Johnson, Josh Willingham) or Type B free agents (Rod Barajas, Clint Barmes, Matt Capps, Bruce Chen, Francisco Cordero, David DeJesus, Octavio Dotel, Ryan Doumit, Mark Ellis, Frank Francisco, Freddy Garcia, Aaron Harang, Ramon Hernandez, Raul Ibanez, Jason Kubel, Derrek Lee, Jose Molina, Darren Oliver, Carlos Pena, Jon Rauch, Dan Wheeler).
The modified Type A free agents who received arbitration offers could have netted their teams two draft picks if they went elsewhere. The Type B free agents could have secured one pick for a team that offered arbitration.
Under the new rules, however, it would have been nearly incomprehensible for any of those players to offer the prospect of a compensation pick. Teams simply couldn’t have afforded to dangle a one-year, $12.5 million contract in front of players who were worth far less than that. As such, nearly two dozen players who could have netted their clubs a draft pick this past winter would not have been in position to do so under the new CBA rules.
In other words, there were somewhere between 23 and 28 players who were offered arbitration this year, but who, under the new system, would almost surely fall into either the “no” or “maybe” category for arbitration offers.
So what does that have to do with the trade deadline? It’s too early to say -- but potentially, a lot. There could be a greater incentive than there’s been in years for teams that are falling out of contention to trade players.
For years, before the value of draft picks was appreciated fully by front offices and fans, a departure of a free agent would be decried. Teams might as well have printed T-shirts that said, “I lost my free agent and all I got were two lousy draft picks.”
In recent years, however, teams came to appreciate that those “two lousy draft picks” (or, in the case of Type B free agents, one lousy pick) might be worth quite a bit, something that created a barrier to trade deadline deals. For instance, in 2010, the Blue Jays had an active market for left-handed reliever Scott Downs, but they didn’t move him because there weren’t any offers on the table that the team considered better than the two draft picks they’d get back for the Type A free agent.
In this brave new world, however, Toronto would almost certainly have to bank on getting no picks back for Downs. (It would be all kinds of crazy for a team to plan on offering a one-year, $12.5 million to a middle reliever, even an exceptional one like Downs.) In such a world, had the Blue Jays determined they were indeed out of contention, they would have little choice but to deal Downs. Teams would no longer be competing against the two-pick standard; they’d simply be bidding against each other.
The result? There is a very strong possibility that the cost of acquiring players who had been prospective Type A or Type B free agents will go down, potentially significantly, while the number of available players could go up.
There will be another notable impact on the trade market this coming summer, this one representing something of an impediment to deals. The new CBA states that a player can only net a team draft pick compensation if he remains with a club for a full season.
As such, the players who would be in line for Top 125 offers would only offer a team the possibility of draft pick compensation if they remain untraded. In the past, “buying” teams could justify parting with a multiple-prospect package in the middle of a season based on the idea that they might net draft picks after the following year. That justification will no longer exist.
The result might be that it might become harder to trade top players in their contract years. A team would have to offer a prospect package superior to the two prospects whom a team might be able to get as draft pick compensation, but without the possibility of getting those picks themselves. The result would be that buyers would have to make a hard short-term vs. long-term decision when making a deal. That, in turn, could make it more difficult for teams to match up on deals with players in their contract years.
Of course, that doesn’t rule out the prospect of a deal.
“I think [the new rules] will impact [the trade market] some, but it’s to be determined how much, because that player who can put you over the top, if there are three teams bidding for that player there’s still a market. If you’ve only got one team that needs what you’ve got, you still don’t have much of a market,” said Huntington, who has been on both sides of the buying and selling equation with the Pirates and Indians. “I think it will play a role, but I think the bigger role is how many teams are in competition and how many teams are interested in what the seller is willing to sell.”
Some teams will still be willing to pay a steep prospect cost for top players who allow them to address in-season needs. Last year, after all, the Giants gave up a very impressive prospect in Zack Wheeler to get a half-season of Beltran even though he didn’t net the team any draft picks (there was an agreement in his contract preventing a team from offering him salary arbitration).
Moreover, the in-season trade market might end up focusing more on players who will remain under team control for more than a year. If a team can acquire a top player who has, say, a season and a half before he reaches free agency, or a player in spring training who has a full season before he reaches free agency, then it can justify a steep prospect cost based not only on the longer period of time for which it might have such a player but also because it will get longer-term value in the form of draft picks.
“[The new rules] may swing the pendulum a little bit towards trades of [players with] four-plus [years of service time] because you get a year and a half of control,” said Huntington. “It may swing it to the offseason prior to five-plus because of the ability to get compensation.”
A player like Cubs starter Matt Garza (who won't become eligible for free agency until after the 2013 season) would be the perfect example. Assuming that Chicago is unable to extend him and falls out of contention, he would be exactly the type of pitcher who should be moved and who would extract a massive haul this coming summer. The team that acquires him would get both a year and a half of his pitching as well as a likely longer-term return of two draft picks if he ends up leaving as a free agent. The Cubs could dangle him as the perfect option to address teams’ short- and long-term needs, a contrast to players who are in their contract years (pitchers like Matt Cain or Zack Greinke come to mind if the Giants or Brewers unexpectedly fall out of contention).
WHAT IT MEANS FOR THE RED SOX
For now, it remains an exercise in guesswork to figure out precisely how the new CBA will affect the trade market. But the likelihood is that it will have two chief impacts.
First, it will create a new motivation for out-of-contention teams to trade any pending free agents who aren’t legitimate stars. Secondly, it will likely shift the trade market of stars towards players who remain under team control for multiple seasons.
All of that suggests that the Sox might have an opportunity to impact their club more significantly this coming season than has been the case in past ones. If they do indeed have the resources to make a deal, the likelihood is that the buffet of potential trades to make could be more tantalizing than it has been in recent years.
That guarantees nothing, of course. Even a trade market that is more active than usual offers no guarantees that the Sox would be in position to make a deal. But, the last couple of years offered the Sox a reminder of the potential value of keeping some cash stuffed under the mattress for midyear upgrades, and in all likelihood, this coming summer will offer more case studies in that phenomenon.