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December 13, 2007
De-Mything the Johan Negotiations
To write well about the charms and subtleties of the game of baseball, one need not be a master of statistics, or finance, or physics, or orthopedic surgery. But from time to time, a little specialized knowledge can come in handy. Take the Winter Meetings. The sportswriters who covered them did an exemplary job of keeping readers informed of every single rumor overheard in the corridors of the Gaylord Opryland, as well as introducing the estimable names of Cameron Maybin, Justin Masterson, Mitch Hilligoss and LaVelle E. Neal III into public consciousness. What they failed to do, however, is demonstrate a grasp of fundamental business principles. Things like leverage and supply and demand. Today’s case in point, of course, is Johan Santana. But first, a historical digression. Meanwhile, of course, Theo Epstein (and possibly Omar Minaya) recognized that the winning team would have several decisive advantages over Boras in contract negotiations: (1) there would only be one bidder; (2) Dice-K really wanted to come to the US in 2007 (otherwise he’d have waited a year for free-agency); and (3) that if Boras rejected the final offer from the winning team, that team would at the very least have succeeded in blocking other teams from getting Dice-K. Best of all, the Sox wouldn’t have had to spend a dime. From this, Epstein reasoned that he needed to blow everyone else out of the water with his posting bid. Which he did. Then he turned around and took a hard line in contract talks. We all know how it panned out. I bring this up because sportswriters are making a similar mistake with the grand prize of this year’s Hot-Stove league. Almost every piece I read over the past week peddled one or another of the following three myths: Myth #1: The Twins control The Best Pitcher in Baseball. They are in the driver’s seat and will demand—and receive—whatever they want from some desperate, whimpering supplicant. Picture Twins GM Bill Smith ordering from a list of other team’s prospects as if they were appetizers on a take-out menu. That’s how virtually every writer depicted the process: Hmmm. I’ll take a Lester, and an Ellsbury, and, while you’re at it, throw in a Buchholz. Imagine everyone’s surprise when the order never showed up. Once owners pondered all they’d be forced to surrender—not only the jewels of their minor league empire, but also their signature on possibly the riskiest contract ever signed by a baseball franchise—they began to feel a bit seasick. Besides which, The Best Pitcher in Baseball is the proud owner of a full no-trade clause. Nothing can happen by way of a trade unless TBPiB agrees. His Highness must be pleased with both the destination and the package he is offered. In other words, the Twins can negotiate for the services of the next Mays, Mantle and Aaron—or Oliva, Carew and Puckett—and if Johan doesn’t feel like performing in, say, Kenmore Square, he will yawn, wave his hand and say “I think not.” Since the no-trade clause is hardly a secret, you’d expect that sportswriters might be inspired to find out what TBPiB really wanted, by talking to his friends, for example, or by visiting his hometown of Tovar, Venezuela, or by soliciting enigmatic, non-tampering koans from his agent, Peter Greenberg. Or they might engage in some inductive reasoning: would he prefer to play for a National League team or stay with the heavy hitters? Might he enjoy the company of a fellow Venezuelan or two on his new team? How about toiling in a pitcher’s park? What’s his take on a large metropolis whose marketing opportunities are unequalled anywhere else on the planet? No such luck. Scarcely a mention of the actual wishes of TBPiB, a.k.a. the Spectre Haunting Nashville. Myth #2: One team, bidding only against itself during a 72-hour “window,” can effectively replicate the market. Sportswriters speak of the dollar figure that TBPiB will eventually receive as if it were a tiresome detail. It’ll be a lot of money, OK? Next question. But does anyone remember Barry Zito? We knew he was in for a big payday last year, but no one—not anyone—foresaw Brian Sabean’s magnificent leap into the void. What’s good for Johan? Six years at $20 million annually sounds right, but why not 7 years at $25 million? Or five years at $27 million? This is what markets do, they sort out the possibilities and force GMs to think hard about how much a player is worth to them. Santana will have no incentive at all to come to terms with the Twins’ trading partner, unless they really dig deep. Even then, why not wait till next year when money will be the only factor? The actual number of teams that have (1) the prospects and (2) the resources and (3) the payroll flexibility and (4) the desperate need for an ace, and (5) that special urban experience that Johan seeks is, what, maybe two? One? One sounds about right. Is it possible that the Mets are that team, and that they actually have some “leverage” in this proceeding? Surely not. Perish the thought. Myth #3: Dan Haren and Erik Bedard are not quite as good as Johan, so they’ll come cheaper. One writer called Bedard a “poor man’s Santana,” and opined that he’d cost maybe half the prospects that TBPiB will command. Plus, he’s under control at a reasonable salary for a couple more years. What’s not to like? Oh, wait. That last part about being cheap. Doesn’t that mean that even financially strapped teams can enter the bidding? And Lord knows there are a lot of those. So, more suitors bidding. Big deal. But what about this? “The chief determinant of market value is demand, relative to supply.” Adam Smith said that. Or maybe it was Bean Stringfellow. It doesn’t matter. Sportswriters act as if pitchers have value apart from what teams are willing to bid. But there is no metaphysical component to a pitcher’s pricetag, no independent panel setting salaries based on ability. Just a whole bunch of teams—twelve at last count—that are competing for Bedard’s services. What they’re doing is called “driving up the cost.” I predict that the package Bedard commands will not be inferior to that earned by the Twins for Santana and could be even better. And there are other matters that might weigh heavily upon the final outcome of the Johan-a-thon. Such as: what really is the value of a late-first round pick plus a sandwich pick (the Twins’ probable compensation if they hold onto TBPiB until his contract runs out)? Teams certainly have a way of calculating such things. C’mon sportswriters, let us in on their secrets! Does it look like this? One (1) late first-rounder + one (1) sandwich pick = Heilman + Pelfrey – Smith? And what if the Mets clobber the Red Sox and Yankees with quantity over quality? Like this: Humber + Heilman + Church + Gotay + Gomez + Smith = Santana. Would the Twins have to clear so much space on their 40-man roster that they’d never do such a deal? Or are they already exploring secondary trades to flip some of that surplus talent to another team? Is that what’s happening right now, behind the scenes? Or would that be “tampering”? Is there a way to speak hypothetically to other GM’s so as to stay on the good side of Bud Selig? Might be worth a call to some non-involved owners to see what they’ve been hearing, no? Good questions. I only wish some sportswriter had thought of them. Steve Hubbell blames the unquiet ghost of his cousin Carl (LHP, NY Giants, 1928-43) for his poignant inability to keep baseball in its "proper" place. 19 Responses to “De-Mything the Johan Negotiations”Leave a ReplyYou must be logged in to post a comment. |
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Excellent article! The truth is that the Twins likely have only two options: trade him now, or get two draft picks next year. Santana isn´t likely to approve a trade in-season. So whatever people offer now is the market, and if the Yankees are out of it it limits the possibilities.
I think it´ll come down to the Mets, RedSox, and maybe the Angels, though I think they´d prefer to get more offense. We still have a chance.
Nice piece. I was wondering when anyone would remember all the brouhaha over Barry Zito last winter - and point out his numbers this season.
I wanted Matsuzaka very badly last year….I carried on relentlessly. If we had gotten him would we be angsting after Santana and Bedard now? Was he spectacular? No. But he was more than adequate, durable and gave the Sox plenty of innings. He will be better this year with one year under his belt. Ahhhh….what could have been!
I too have questioned the logic (and often the agenda) behind what’s being reported on possible Santana trades. Well done, Mr. Hubbell!
nice work man - i bet that santana ends up staying on the twins until FA. and then everyone will freak out and if he doesnt sign with the mets next offseason everyone will bemoan the fact that we gould have had him for gomez and fmart last year.
PS….
my new favorite sportswriter name: LaVelle E. Neal III
I’m with shea (as usual!) - I wanted me some Dice-K in the worst way.
Good article, but the tone taken is a little strong for such an otherwise well-spoken argument. Sports writers want to sell papers, and low concept hoopla is going to generate a whole hell of a lot more readership over logical demystification of basically the only positive baseball information on the wire.
Which is why sites like this don’t rake in the dough or attract much of the meat headier “ayo i got dis trade proposal for yous guys” crowd.
Excellent article. In the end if the Mets get into this “ace” starting pitcher scrum, they better have a solid plan on how to replace all of the young player talent they will lose.
It’s one thing for the Mets to pay a perceived higher than fair market value to get Santana (to get him to give up the multiple bidder process next off season). Omar has paid high prices before in signing Pedro and Beltran. But in this case, he would also be giving up a lot of raw talent (not just a couple of draft picks, but up to six young players who might be considered “first round value talent”).
Omar should only make a deal for Santana if he has a clear plan to restock the farm’s talent pool with an equal number of grade “A” players (with the amortized cost of getting those players not too exobitant relative to the total financial package offered to Santana). Omar will have several ways to restock the minors quickly including: late picks in the amateur draft where he can pay higher than “slot” value and signing young foreign players who fall outside of the amateur draft. But because it is no “lock” that these players will succeed - a good planner would probably account for getting 50% more talent from these pools to ensure he gets the real value equation right.
Unfortunately, I don’t think of Omar as a logical thinker in big deals. He appears, often, to want to make a splash - more of playing to the Met fan emotional base than a rational, critical thinking approach to build team value.
We’ll see where this all leads. The Milldege trade (in division, no less) did not increase the team’s value (i.e., expected performance) much, if at all - and it has the opportunity to back fire tremendously. So I, for one, have little confidence in Omar’s ability to navigate this big stakes poker game well…
I enjoyed reading this.
Another thing I would mention is the concept of the winner’s curse. The papers (and Metsblog) do not seem to understand the real dynamic of the negotiations. For a while the Yankees and Red Sox were competing with each other, not for Santana, but for the other team to bid too much.
All of Minaya’s mistakes aside, I think the Mets understand this. Thus they lost out on the Zito negotiations because the Giants overbid. The Matsuzaka blind auction posting fee situation was different, of course.
If someone trades for Santana, they will probably have traded too much, which is why we should not be rooting for the Mets to do it.
Great post.
On a side note….
John, I don’t think the Mets will be overpaying just as much as the Redsox. I think they will have to take a bigger hit. They don’t have what the Twins really want so they have to meet the Twins with quantity rather than quality. The Mets don’t have the depth to absorb this drain of talent, while the Redsox do and can. The only real negative impact for the Sox is financial. The Redsox are lining themselves up to be an ultra competetive team with a reasonable salary base going forward. This will all go by the wayside with a Johan signing. Is this a big deal to the Sox? Who knows. I do know that losing four arms and two potentially productive OFers will be a bigger loss to the Mets then what the Sox are rumored to have on the table.
great post. there’s something i don’t understand, though: how is it that the mets have any leverage at all here, let alone a substantial amount? this is not a rhetorical question. i’m just having trouble understanding why that would be the case. unless johan simply won’t play anywhere but in queens, but that seems kind of foolish. if that were the case, why wouldn’t we just wait until next offseason and give him a 5/50 contract? it seems far more likely that santana’s open to anything as long as the price is right, which means that the twins and santana hold an equal amount of cards - because teams have to go through the twins to get to santana and then they have to give santana what he wants - but no one else, including the mets, holds any.
again, this is not a rhetorical question. it seems like my line of reasoning might be missing something, and i’d be interested in hearing what it is. thanks.
When Omar was bragging to the press that they already had two 15-game winners, at first I thought he meant Kazmir and Bannister.
This post is good it feels like it came directly from my mind and the tone is similar to my posts on another board.
Just because you get a 72 hour window doesn’t mean Johan would sign with you!
I’m so glad someone realized this. Sportswriters are not good business people and I’m certain they would run any baseball franchise into the ground. (Hey Mike and the Mad Dog - remember how you wanted to trade Reyes for Soriano???)
Anyway, the Johanathon will take a long time because it’s really a game of chicken. In reality, no one has leverage because as long as there are 2-3 teams involved, no one team can call the shots and Minnesota will always have incentive to delay the process to see if someone will blink.
The way I see this unfolding is that they wait until the trade deadline and hope that it’s a close race for the Mets, Yanks and Sox and at that point, one of them will want to unload their farm system for a chance at a title. It’s a lot harder to justify trading for Santana when everyone’s record is 0-0. Maybe the Mets will suck this year and having Santana won’t make a difference? Maybe Pedro will pitch like his old self and Maine and Perez step up and Pelfrey comes into his own and Duque pitches more than once a month and we don’t need Santana. Too many ifs right now for all involved. Right now you have to think that we have enough pitching to be in the hunt.
Minnesota is the hot girl at the dance, but the three teams are all bachelors who may decide they’d rather go home alone than spend all their money on expensive shoes.
Anyway - it’s not tampering to trade guys who are not on your team as long as the information is not made public. This goes on all the time - GMs always have contingencies and there can be cascades of trades of one leading to another over time. The purpose of the tampering rule is to not get players upset by trade talks coming from another team. As long as it’s done privately, having a problem with it would be like I should keep my fantasy baseball discussion a secret. (And yes, I have traded guys on other people’s rosters in fantasy baseball.)
Off topic but did anyone see the Mitchell report? Paul Lo Duca was named.
Fantastic article, Steve! You’ve proven once again that the pen is mightier than the steroid syringe!
Let’s make sure we get our sons together this summer for a few more Mets games.
Fantastic article, I have been wondering some of the same things during all this Santana-mania. The price will only be as high as everyone seems to think it will be if Santana cares what the twins get out of the deal. If he basically takes a very good but not his best offer from a ball club because it will also help the Twins that could actually happen.
However, I also think there is another comparison to the Dice-K thing, NY and Boston can bid like crazy to get an approval from the Twins to get their 72 hour window. If they don’t win they have driven up what the “other” guy has to pay, and if they do win they can always back out if they don’t like what the money + prospects will end up as.
So I do think that the Yankees and Boston are bidding higher than they normally would right now because they don’t have to win to make it worthwhile to them.
Fantastic article, I have been wondering some of the same things during all this Santana-mania. The price will only be as high as everyone seems to think it will be if Santana cares what the twins get out of the deal. If he basically takes a very good but not his best offer from a ball club because it will also help the Twins that could actually happen.
However, I also think there is another comparison to the Dice-K thing, NY and Boston can bid like crazy to get an approval from the Twins to get their 72 hour window. If they don’t win they have driven up what the “other” guy has to pay, and if they do win they can always back out if they don’t like what the money + prospects will end up as.
So I do think that the Yankees and Boston are bidding higher than they normally would right now because they don’t have to win to make it worthwhile to them.
That being said, I really don’t see the Mets in it right now, quantity is rarely as good as quality and most teams would take Philip Hughes and spare parts over the bulk we could over because Hughes has the potential of being the next Santana type pitcher. The only way I think we can get back in it is if Boston & the Yankees hold back the cream of their crop.