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Not sure if you have heard or not, but the Padres have gone from being incredibly boring to intriguing and, more importantly, playoff contenders. How did they do it? They acquired better players. How did they acquire better players? Through trades (mostly) and free agent signings (less-ly). The exciting part is that San Diego was able to do so without completely wiping out their farm system (holding onto their three top prospects in Austin Hedges, Hunter Renfroe, and Matt Wisler as well as Rymer Liriano) and without spending a ton of cash. Put differently, the Padres paid a price to become relevant, but it was a price far less than anyone would have guessed given the pieces they acquired.

So how were the Padres—a team that was thought to be relatively void of playoff-level talent—able to position themselves as playoff contenders at such a seemingly low price? They did so by being opportunistic and leveraging depth, which they were able to do by finding motivated sellers and acquiring value instead of focusing on need.

Being there (for motivated sellers)
Age-old negotiation advice tells us to “never make the first offer.” While this is pretty terrible advice (making the first offer often allows us to anchor the negotiation as well as providing other benefits), the logic behind this advice is worth noting. The reason we want someone else to make the first offer is because we want to be negotiating with someone who wants something, who is potentially willing to get 90 cents back on the dollar (or even just fair value) in order to get what they want. Translating this to baseball, when a team is looking to cash in on a redundant asset such as Matt Kemp, Steven Souza (and consequently Wil Myers), Derek Norris, Will Middlebrooks, Shawn Kelley, or Brandon Maurer, or an expiring asset on a non-contender such as Justin Upton, the acquiring team can often get a more favorable deal. Why? Because in these situations, the acquiring team is less likely to pay as much of an “endowment effect premium” for the asset they are acquiring.

Richard Thaler, who coined the term, describes the endowment effect as “the fact that people often demand much more to give up an object than they would be willing to pay to acquire it.” This is most famously demonstrated in a study conducted by Daniel Kahneman, Jack Knetsch, and Thaler, which “found that randomly assigned owners of a mug required significantly more money to part with their possession (around $7) than randomly assigned buyers were willing to pay to acquire it (around $3).” While I am currently unaware of a follow up study, I am comfortable predicting that the “sellers” would lower their selling price if given a second mug they would not use (redundancy) or if they were told their mug would be taken away from them before they would be able to use it (Upton). By finding equivalent situations in the offseason trade market, it appears that the Padres have been able to somewhat avoid this premium by targeting players who are more valuable to them than they were to their current team.

If this is seemingly such a great tactic, then why are not more teams employing it or employing it as frequently as the Padres?

Acquiring value first, worrying about need later
Again, guessing here, but the Padres have been able to acquire all this talent at a seemingly cheap price by being indiscriminate about where value comes from and by not fixating on weaknesses. It could have been argued that the outfield was full after acquiring Matt Kemp. It could have been argued that the Padres were set at catcher, even after dealing Yasmani Grandal, with Rene Rivera breaking out in 2014 and Austin Hedges waiting in the wings. And it definitely could have been argued that first base, third base, and shortstop were bigger weaknesses than catcher, outfield, or starting pitcher.

The issue with framing our decision through weaknesses is that the market does not always give us a nice, neat solution to upgrading those weaknesses. Sometimes, given what is available in free agency or the trade market, the best way to upgrade is to go from good to great as opposed to bad to mediocre. Maybe for the Padres, the best or most affordable way of upgrading was to trade from their minor-league and major-league depth for redundant or expiring more-likely-to-be-impact players such as Wil Myers, Derek Norris, and Justin Upton. While an upgrade at shortstop seemed like the easiest way for the Padres to improve in 2015, maybe the best option out there was signing a seemingly undervalued James Shields. To borrow a golf term, “It ain’t how, it’s how many.” It does not matter how each team goes about creating or preventing runs, it only matters how many are created and prevented.

Lastly, but maybe most importantly, being opportunistic and relatively indiscriminate about finding value seems to have allowed for the Padres to find situations where the impact of winner’s curse is not as evident. Again, as you guessed it, this is speculative because we were not involved in the trade discussions, but given the rumors we heard, fierce bidding wars did not appear to have taken place. More importantly, given the prices paid, the bidding wars did not drive up prices enough to the point where we would have believed them to be fierce. By looking for value as opposed to focusing on a weakness, the Padres were able to find more buyer-friendly markets.

What is next?
Luckily, for the sake of intrigue, no one knows. What we do know is that the Padres now have better hitters, starting pitchers, and relief pitchers heading into 2015 than they did in 2014 when they went 77-85. They have most likely taken a step backward in outfield defense, but when combined with the previously mentioned improvements, the Padres still appear to have captured a significant net gain. Additionally, the Padres do not need to make the playoffs in 2015 for this to be a successful offseason. Of the additions, only Justin Upton is coming off the books before 2016 (Ian Kennedy is the only core incumbent whose contract expires next winter), and their outfield depth at the major-league and minor-league levels should allow them to continue to compete without him. Hopefully, the new regime will continue to be strategically opportunistic and agile (and therefore active), continuing to add values wherever they come, and continuing to add or prevent runs as each opportunity presents itself. Of course, this could all be coincidence (just an overzealous writer reading too far into a handful of transactions), but if it is not, the Padres will not only continue to be interesting to follow, they should also continue to be contenders.

Thank you for reading

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swarmee
2/10
I think the Padres had a perfect storm happen for this offseason to take place. Their offense has been historically bad for two years, they don't really *love* anyone on their team, and they hired a new GM who doesn't have any loyalty to the guys they had when he got there.

For one, it's difficult to trade "fan favorites," because they're normally good performers and you risk alienating your fanbase by not re-signing or trading them. Ask Atlanta about getting rid of Heyward, The Good Upton, and El Oso Blanco in the same off-season. They were vilified for starting their rebuild for when they re-open in 2017 in Cobb County. And their ticket sales are likely to drop as a result this summer.

San Diego had no position players (after their NYY trade of Chase Headley) that any fans really felt passionate about. They were a collection of under-performing failed prospects or journeymen. That allowed Preller to make the trades/signings that most GMs wouldn't have the ability to make. And kudos to him for making those trades.
lewist
2/10
I agree with you to an extent, but credit where credit is due for Preller working the phone lines, building the relationships and not just improving assets literally anyone could improve, but obtaining talented assets that fit a plan.

I don't buy the Padres as true contenders, but offseason winners? Hands down the Padres win.

Anybody claiming Red Sox as offseason winners doesn't understand big market teams, free agency, and money.
alwaxman
2/10
Great article. Are you able to make a similar explanation for the A's offseason?

It pretty much explains the Mets offseason too as due to need, roster construction and ownership the front office could not be so flexible.

Alderson : What do you want for [place name of stopgap SS here]?

Other GM : How about Syndergaard, Nimmo and Matz?

Alderson : Would you consider Murphy and Gee?

Other GM : How about Syndergaard, Plawecki and Rosario?
craneplace
2/11
Thanks! Regarding the A's, it looks like they are the "motivated sellers" at times (especially regarding the Donaldson and Shark trades). That said, they appear to have definitely been one of the most strategically opportunistic teams under Beane.
maphal
2/10
I'm glad to see the Padres do this. The team was perhaps the most irrelevant and faceless club in the big leagues. It will be nice to see another team give SF and LA a little competition. (Sorry, Rockies and Dbacks.)
digiderek
2/10
It's still debatable whether or not the Padres "Won the Offseason."
abcjr2
2/10
Seems to me they got there by taking on a lot of salary for players with prominent Steve Garvey stats but other weaknesses. If you let me increase the budget $50 million or more on any team, I could make it look better over an offseason.
gyoung858
2/10
Last year's payroll was $90 million. This year's will be nowhere near $140 million.
lyricalkiller
2/10
It looks like around $105 million, in fact. Likely below median.
kcboomer
2/10
This club will have serious problems fielding batted balls. If the Padres didn't win the off-season then the White Sox did.

It sure seemed like the Padres picked up a ton of talent without paying a real price for it.
Justice
2/10
The general managers of the Padres and the White Sox were very shrewd and showed great skill in reworking their respective rosters.

Interestingly, neither club "sold the farm" when making their offseason improvements.
WaiverWireKing
2/10
A real good article and it is less then what the Padres are doing and more of a tactic you can use in your fantasy league leagues as long as you can get past that small problem. How do you get someone to make an offer for a player that you are willing to give up.
craneplace
2/11
Thanks. I do not think it has to be mutually exclusive.

Regarding your question, check this out (a fantasy article) http://www.baseballprospectus.com/article.php?articleid=24767
oh, and this one (another fantasy article) http://www.baseballprospectus.com/article.php?articleid=23376
dfloren1
2/11
Thanks for referring us to your earlier articles. I was particularly struck by your admission that in the early years of your fantasy career you focused far too much on your own team and its needs. I fell victim to that for a few years with my first Scoresheet team, but once I pulled off a trade I felt like a million bucks and I got the bug to start analyzing other squads for what they might be looking for. This attitude increased my interest in my league immensely. Asking what would I do if I owned X team forced me to sympathize with the other owners in my league, which to this day continues to help me be more reasonable in my trade offers and likewise helps me seem more reasonable to others in my league, which makes them more open to dealing with me. One thing to avoid is mindlessly sticking with guys who've been on your squad for years. I wonder if there's a BP article on how powerful this familiarity factor comes into play in decisions whether to keep certain players and inflate their value during drafts and trade negotiations. Familiarity is supposed to breed contempt. But in keeper leagues it can breed unwise clinging to the players we've rostered and who we've grown to know as "our guys."
jkaflagg
2/11
Sort of the Nate Berkus method of building a ball club: if you see something you like, buy it - and worry about where it fits in your house later. Could turn out great or could be a total mess.....but no one can deny it will unquestionably be more interesting than recent Padre teams.
mbodell
2/11
Most Jays fans view this off season as similar for Toronto. Where the Jays didn't necessarily fill the obvious holes, but instead made some improvements from good to great.

Less clear if this will turn into a "won the off season", although they probably would have if they had signed Shields to the same length/$ as San Diego did (apparently Shields wanted ~$14 million more to play in Toronto with the cold, non-West coast, and pain of the AL East).
alangreene
2/12
Great article. It's been interesting to see what writers are understanding what Preller is doing versus those that see that the acquired players are flawed in some ways and immediately see overpay.

I'm not surprised it is someone with a fantasy background. Most of the good fantasy players I know are constantly doing something to get slightly better, making moves in volume rather than waiting for the big score.

Preller is aggressively improving his team now step by step. I doubt he's done. $15M net and prospects he's lost just aren't that big a cost for +8 wins or so. Especially once you factor in playoff contention, excitement and the upside of some of the players.
craneplace
2/12
Thanks! I think a lot of the moves have been criticized because they aren't perfect, but making the team better below market cost (or at least it appears so) is almost always a good thing.
alangreene
2/12
Yep. I still don't really like the Kemp deal because it's a health risk, but I feel like a large portion of the "statistical media" is panning every move as some sort of weird reaction to that deal.