Wednesday, July 8, 2009

Trades - Why are you giving the other team cash?

There's one thing that has always puzzled me when reviewing/approving trades over the last few years. Well, maybe more than one thing - but in this case I'm talking about teams giving up cash when it appears that they are giving up the established star in return for future help.

First, let me say, that I just don't tend to be a trader very often. Partly this is due to spending more time trying to run BWB than playing it and it seems like I have limited time to suggest trades or analyze requests sent to me. But, if I'm in a trade where I'm giving up a player who has a much higher salary than the player(s) I'm getting in return, I'm most often seeing part of that benefit being the salary rebate I'm getting for my original player - particularly if I'm getting prospects or backups in return. I'm less inclined to want to send back some cash to that other team.

Cash may be an essential part of the negotiation - and "buying" a player certainly is an option. But I'm referring more to a team that seems to be giving up the more established - key contributer type players - and then sends cash along with it.

An example. Let's say that I'm running the team "Minneapolis" and I'm in 4th place - 20 games out - and looking now to build for 2010 and beyond. Brad runs the team "Portland" and is just 1 game out in his division and fighting hard to win the title, but he has a big hole at 1B.

Current Cash Balances:
Minneapolis - 4500
Portland - 3000

My strategy for building for the future is to get prospects on my roster and cash ready to spend in the off season or to spend multiyear contracts by the end of July.

Brad sees Adrian Gonzalez on my roster (salary 5310) and covets his power for his cleanup slot and offers me Gordon Beckham, Travis Snider, and Dustin Ackley - 3 first-rounders from the past few years - each with salary of 100. Beckham's playing now. Snider could be back up later and maybe starting again in 2010. Ackley's a potential future stud.

Assume we're doing this in Week 14 and the cost/rebate is 44% which becomes 2336 for Gonzalez and 44 for the three prospects.

(I'm not saying this is a perfect trade...I'm just trying to find an example - maybe I'd actually want to be getting someone a little more established so I'd be getting more immediate help in 2010...but let's just go with it.)

So, we do the deal. No cash involved - and when it's all done, the cash balances are now:
Minneapolis - 6704
Portland - 796

This is good for me. I've taken a risk on future guys - given up an established power hitter - and I have extra cash for rebuilding to boot. But what I often end up seeing in these deals is a cash aspect too that Brad has attached to the trade details - let's say in this case 1500 from Minneapolis to Portland.

In this case, the cash balances after the trade are:
Minneapolis - 5204
Portland - 2296

In fact - often the cash transfer is worked out so that both teams have the same cash balance after the trade as they did before starting.

Why is that in my benefit? If I've got David Price on my pitching staff and I want to sign him to a contract for 2010 and 2011, 1500 is what that will cost. Or that 1500 will come in handy in December when I'm picking up players in the Redistribution Draft.

I also look at this as a continual competition. By sending Gonzalez to Portland this season, I may be giving him the missing link to a league title this season. By sending him 1500 in cash, I'm potentially setting him up to better defend that title and might be in direct competition with Brad for the same free agents over the winter.

I'm giving up Gonzalez and maybe won't see the full benefit of the three players for 2-3 years - if at all. I'm not necessarily concerned that Portland still has as much cash after the deal as he does before - that's his part of the risk.

There are many other side situations that come into play - and I am not looking at the back and forth that's going into trades before they are consummated, so I don't know where the negotiations are progressing. But I personally think many teams in the situation of Minneapolis are giving back too much. Maybe the Portlands of the world are just better negotiators, but I think that's because the precedent is set up around the leagues to do it.

It's a bit different when a multiyear contract is in play - there may be some cash to reimburse a team who has spent cash on the contract (though I usually see that contract as a bargaining chip). What if Portland's original cash was 2000, not 3000? Then he wouldn't have enough cash to cover this deal. OK, maybe now as Minneapolis I help him out with some cash back to help him pay for Gonzalez for the rest of 2009. OR - maybe it's just up to Portland to cut some dead weight on his roster or make a tough roster choice and cut/trade another productive player to get some cash back - that's usually the way I look at it.

And - I've been in the situation here of being the Minneapolis side of the deal and ME offering the deal and the cash - almost to make the deal too hard to turn down. Like I said, there are many situations in play...but put me on the side generally of wanting to reap the full benefits of the salary rebate if I'm giving up the more established players or I'm the team in rebuilding mode.

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