Why Intra-division Trading Is a Bad Idea

On Twitter, Sky Kalkman of Beyond the Box Score and I have been going back and forth on the merits of trading within one’s own division. As the debate grew, Twitter’s 140-character limit became increasingly annoying, so I figured I’d write a short post explaining why I think intra-division trading is a bad idea.

Of course, the subject of the conversation was Roy Halladay, and Sky didn’t think the Toronto Blue Jays should be afraid of trading him within the division to the New York Yankees or Boston Red Sox. They should be, however.

Between 2002-08, Roy Halladay has been worth over six wins above replacement per season. As of right now, the Yankees have accrued 19 WAR in 88 games and the Blue Jays have accrued 12.4 in 90 games, putting them on pace for 35 and 22 WAR, respectively. Prorating Halladay’s average production for the rest of the season, if the Jays traded him right now to the Yankees, they would be losing about 3.3 WAR and the Yankees would be gaining about 2.7 WAR. Overall, that’s a 6-WAR shift, or about 10.5% of the WAR the teams are on pace for. That’s without accounting for players the Blue Jays acquire and contribute during the season.

If the Jays simply traded Halladay out of the AL East, they would only have to worry about losing the 3.3 WAR as opposed to another team also picking up 2.7 WAR on them.

We could get down to the nuts and bolts of it and calculate specific WAR estimations that include various packages the Yankees could put together in a Halladay trade, but it’s not necessary because any package the Yankees can put together can be matched in some way, shape, or form by other teams.

The only reason a team should ever trade an impact player within the division is if intra-division teams are the only ones willing to offer players that satisfy specific needs, or if they’re the only ones willing to take on bad salaries (which is why, if I’m J.P. Ricciardi, I’m insisting the Yankees take on Vernon Wells with Halladay as well). The Jays can get a good return on Halladay from a number of teams; they need not look to the Yankees for this, nor should any other team look to a division rival when it comes to trading.

That’s my take on the matter. I invite Sky to respond to this post via comments here or even via a response blog post.

Be sure to check out Sky’s breakdown of the Roy Halladay trade scenarios at BTB.

UPDATE: Here’s Sky’s response to my argument.

He points out that the Jays trading Halladay does hamper their 2009-10 post-season hopes but enhances them in future seasons (and hampers the Yankees’). This is true, assuming the prospects all pan out as predicted, which doesn’t always happen. As Matt Swartz pointed out in one of his submissions for BP Idol:

In total, 51% of first and second rounds picks make the majors.

So, the Jays would essentially be flipping a coin as many as four or five times, depending on the amount of top prospects they get.

Matt further points out:

Of the 2052 players in the study, 1041 of them made the majors. Of those, only 109 players were traded and then debuted with a different team than the one that had drafted them. Of that group of 109, only 19 accumulated a WARP3 of 10.0 in their careers. As it turns out, for all the fans who scream at GMs for trading away the farm system, rarely do the GMs trade away impact prospects.

Historically, the Jays would be running against the numbers if they were to trade the Jays to a division rival for a wealth of prospects. Probabilistically, if they are going to trade within the division, they should demand Major League-ready talent or bust.

UPDATE #2: Sky responds.

Prospects are a gamble no matter whether you acquire them intra-divisinally or inter-divisionally. But they have the same expected value.

The difference is that when you trade an impact player like Halladay within the division, you can confidently write in permanent marker that he’s going to provide his new team with around 6 WAR. Sure, he could get injured but he’s been very durable since 2006. There are a lot of sticks that could get caught in the gears, so to speak.

With the prospects, as Sky points out, it is a gamble. Going back to the figures from Matt Swartz, cited above, we have the following probabilities with four first- and second-round prospects:

  • 12.5% chance of all making the Majors; 25% three of four make it; 50% two of four; and 75% one of four.
  • 17.4% chance the prospect will contribute a WARP-3 of at least 10.0 over their careers (even less if you assume that many of the prospects end up playing with different teams than the ones they were traded to).

(Note: WARP-3 and WAR are not interchangeable. That may be obvious but I feel it’s worth pointing out.)

So, if the Jays trade Halladay to the Yankees, they are almost definitely going back 6 WAR in the division race (less MLB contributors they acquire) in at least the next two seasons. Halladay, at 32 years old, is going to start to decline at that point, so we can’t expect 6 WAR every season until he retires.

At any rate, the odds of the prospects providing an average of 3-5 WAR from 2011 until the end of Halladay’s career are not in favor of the Jays. To make an analogy to poker, the Jays making this trade to a division rival is like chasing an open-ended straight draw. If the Jays are going to gamble, they may as well gamble without spotting a division rival an average 6 WAR in 2009 (prorated) and ’10, and anywhere from 3-5 in ’11 and a couple years beyond.

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7 comments

  1. Sky

    July 16, 2009 03:37 PM

    Hot damn, we’ve got ourselves a Tweet-off! Working on my thoughts… now.

  2. Bill Baer

    July 16, 2009 03:42 PM

    Sounds like this will be fun. For future reference, I’ll be updating this post with any responses I feel are necessary.

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  4. Matt Swartz

    July 16, 2009 05:44 PM

    Hi all, thanks to Crashburn for highlighting this issue and alerting me to this conversation. It’s right up my alley. I’m going to take Sky’s side on this but for different reasons I think than Sky is saying.

    Firstly, Crashburn is absolutely right that trading Halladay to the Yankees basically doubles the cost in lost WAR for this year (not quite, because it may be that the Red Sox or Rays are the team to beat in those years, but you get the idea that it’s more valuable). However, that WAR is not worth the same dollar value to both teams. It’s worth more to the Yankees who stand a chance to compete in 2009 and 2010 unlike the Jays. Now, what is also true is that the value of the prospect doubles on the other side so even though that value comes with uncertainty (more on this in a second), it is still double the value to the Jays in subsequent years to not only get the benefit of those prospects but to take them away from the Yankees. So what this does is double the trade value– double the value for the Yankees now which they value relatively more than the Jays, and double the value for the Jays later which they value relatively more than the Yankees. The Jays need to damage the Yankees later on to have some sake of competing with them.

    Try this as a thought experiment. Suppose that the Red Sox and Yankees arranged the following trade. The Red Sox gave the Yankees all their best players for nothing for 2009, and the Yankees then traded them all back with all of their best players in 2010, and they alternated like this year after year. Would the teams be better off? If you go by straight WAR, this is a neutral trade. But it’s not. Doing something like this would create huge juggernauts every year to go along with a bad team. This would probably create more combined value because you’re almost guaranteeing a title to one team each year. That has more value then both teams being borderline playoff teams. This might not make as much sense with the Yankees and Red Sox because they play in a division that frequently produces the AL Wild Card, but you can try with any two very good teams in a division and get the same basic structure and outcome.

    Crashburn points out the randomness of prospects plays a role, and Sky counters that the expected value is the same. True, true. It works the other way though. The expected value is the same, and therefore the trade value in a neutral setting would be the same, but the variance of the outcome is higher. This is good for the Jays. Let’s say the Yankees trade a set of prospects to the Jays that yield about 5 WAR on average for 2011, but really its a 50-50 shot of 10 WAR and a 50-50 shot of 0 WAR. Let’s say the Jays were expected to win 80 +/- 5 games in 2011. Now they are suddenly expected to win 85 +/- 10 games. If the Yankees were expected to win 90 +/- 5 games, adding variance would help the Jays. They would rather add a 50-50 shot of 10 WAR than a 100% chance of 5 WAR. They want to increase the variance.

    Go ahead and spin my argument back at me. The Yankees had some variance in their win total too with those prospects on their team, right? So all it does is lower the variance for the Yankees and increase it for the Jays making the difference between the Yankees and Jays have the same variance, right? Not quite, because the Yankees frequently trade these prospects as should good teams who are expected to win enough game to make the playoffs. Why add variance? Trade it out of the division. Maybe it’s the Yankees who should be afraid to trade for an ace within the division.

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  6. Dan

    July 17, 2009 11:39 AM

    I certainly agree with you about intra-division trading being a bad idea. But the Jays really need to move Halladay. And they want Wells gone as well. And the Yanks are in a prime position to absorb both contracts. The Jays cannot contend in their divisions with New York, Boston and Tampa. If they can unload both contracts to the Yanks for a solid package, I think they’re making the right move.

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