May 14, 2014
Growing the Pie
We are not talking about an actual pie in the baked-dish sense. We are not even talking about the late, great tomato pies at Hudson Street and Hamilton Avenue, may they rest in peace. Rather, we are here today to talk about a figurative pie, that figurative pie being the total asset pool that is being moved in a trade. Moreover, we are here to discuss the advantages of growing that asset pool beyond the framework of the initial trade to the benefit of both parties involved when possible.
The majority of discussion around trades is about how the pie is divided; who got the most value out of the trade, who should have gotten more, who bought or sold too early or too late, who got the best player in the deal, etcetera. The focus on winning and losing trades is not specific to fantasy baseball either; it is a phenomenon that we see in all arenas of negotiation. This focus, however, often causes us to miss opportunities. We will often quickly agree to a small, definitive win, instead of working to add additional pieces that can be larger benefits to both parties involved. In other words, carving up a bigger pie more evenly can often be more beneficial than getting the extra slice of a much smaller pie.
The devil’s advocate in me is objecting here. It asks, “why not make a trade that is a quick, definitive win, which will then allow you to make a trade for an even bigger pie?” My answer is that there is nothing wrong with this strategy if you can pull it off, but this is easier said than done. First, trade markets are not always perfect as we have previously discussed; thus, trading to make another trade can be a faulty plan. Secondly, while the assets we acquire in a quick, decisive win might be more valuable than the assets we have given up in terms of production (for example, an aging, yet productive hitter for a back-end top-100 prospect in Low-A), the assets we acquire might also be less valuable than the assets we have given up in terms of trade value.
That said, let us get back to growing the pie. For starters, what does growing the pie realistically look like? A trade between teams X and Y involves Team X sending assets to Team Y in exchange for assets from Team Y. Because most leagues disallow mergers and acquisitions (probably due to a lack of a proper regulatory authority), a trade not only involves the movement of specific assets, it also involves the staying put of specific assets. There are often some assets on both sides that stay put, even though swapping those said assets could potentially help both sides. Getting those assets added to a trade is thus growing the pie. An example follows:
Team X is selling and Team Y is looking to make a run. Team Y has a prospect that Team X covets, say Carlos Correa. Team X has an expensive veteran pitcher in Justin Verlander that Team Y desperately needs in order to replace Jose Fernandez. The initial framework for this trade is already set, Correa for Verlander; however, there are many ways in which we could potentially add to this trade that could help both sides. Maybe Team X has an expiring Josh Willingham on the DL that they have been unable to move, while Team Y has a cheap Aaron Hicks who they are considering cutting. For the sake of the example, let us also say that Team Y has an open DL slot. In this situation, Willingham is more valuable to Team Y and Hicks is more valuable to Team X (who can afford deal with his poor play in order to see if he rebounds to become a keeper for next season), but the pieces are so small that they never merited their own trade discussion. As you can see, we are not talking about trading half a roster for half a roster; rather, we talking about adding in those little pieces that have a chance (albeit a very small chance) to make a difference in a playoff run or make a difference in a successful rebuild. The most likely outcome here is that Team Y finds a better fifth outfielder than Willingham and cuts him upon his return, and Team X are the ones holding onto Hicks when we discover he is truly terrible. This, however, is okay, and it beats Team Y cutting Hicks or watching him destroy their average, while Team X pointlessly holds onto Willingham or cuts him from their roster.
The growing of the pie does not need to be for inconsequential pieces either. If Team X (seller) has a better player for this season, such as A.J. Burnett or Hiroki Kuroda, and Team Y (buyer) has a better piece for future years that is still figuring things out, such as Chris Archer, Tyler Skaggs, or Kyle Gibson, then a swap that is beneficial for both parties can potentially be added to the deal. These deals are of more consequence, but are still of the same spirit as the Willingham/Hicks example in that we are tacking on beneficial pieces onto a bigger trade; albeit pieces that are not far enough apart to have garnered their own, independent trade talk.
The last and probably most important part is in the execution of growing the pie. The devil’s advocate in me wants to ask something again. It asks, “Is adding on these small pieces worth potentially losing out on a beneficial deal?” The answer of course is no, but growing the pie does not need to put the larger deal at risk. For starters, you can avoid this risk by agreeing to the deal and then asking, “Obviously, you can stick with the initial deal that has already been agreed upon, but if you want, I would be interested in adding in these pieces to the deal.” This way you already have the initial deal locked in. However, more often than not, based on my own personal experience, it is these extra pieces that often serve to bring trades to fruition. Owners might be just a little bit apart when discussing the initial framework, but adding in some beneficial pieces on both sides can often bridge that gap.