Making sense of the Padres/Brewers trade
When the Padres and Brewers agreed on a trade recently, my first thought was: that’s ridiculous. The package the Brewers received from San Diego far exceeded any reasonable bounds of a fair trade. We had Luis Urias at 55.2, and Trent Grisham at 8.8 at the time. Further, we had Eric Lauer at 16.5 and Zach Davies at 0.8. That’s a huge gap.
As Dan Szymborski of Fangraphs (and ZiPS creator) wrote:
If Urías is eventually traded, I’m sincerely hopeful it’s part of a package for a real difference-maker, a Jacob deGrom or a Noah Syndergaard. If Urías fetched only, say, a year of Mike Minor, I will be sorely disappointed and extremely crabby on social media.
Since the trade, we’ve had time to reflect on it – and you’ll also notice that we adjusted our numbers of the players involved (not to pretend we were off, but to adjust to the market prices). It’s still a huge bargain for Milwaukee (which is why we noticed Brewers GM David Stearns sounding delighted in his comments afterward), but it may not be as far off as we first thought.
Let’s look at this piece by piece. The biggest gap is that between Urias and Grisham. The main reason for that is that Urias was rated by all the established prospect evaluators we follow as a Top 20 prospect, at least a 55 on the Fangraphs scale. Based on Fangraphs’ research, a 55 is worth $50M (now a touch more with inflation). On the other side, Grisham was rated a 40 on the FG scale (you can still look these up). That’s worth about $2.2M.
However, neither is considered a prospect anymore, because both have had just enough MLB service time to graduate. Since those ratings were established, Urias has largely disappointed, albeit in a small sample size, while Grisham had a breakout in the minors that somewhat carried into his brief MLB stint in 2019. So: figure Urias trends down a bit, while Grisham trends up a bit. That was factored in.
However, the key here is that prospect ratings are both highly variable and have enormous gaps. Based on Fangraphs’ research, a 50 is worth $22.8M, which is less than half of a 55. That’s a difference of over $27M. In other words, if the ratings systems were still evaluating Urias, they may have downgraded him one level, which would have caused a huge change in his value. And if they were to have upgraded Grisham, say from a 40 to a 45, that would have caused his value to jump by at least $6M.
Given that assumption, the new values are somewhat closer:
Generally, we’re loath to assume such changes would have happened, but we also need to take actual market transactions into account. Presumably, Padres GM A.J. Preller shopped around for other offers for Urias, and decided this was the best one he was going to get. We’re going to infer from that that Urias’ value was downgraded by roughly the equivalent of a 55 to a 50. That still makes him more valuable than Grisham, even after Grisham’s upgrade, but the gap is now smaller, and a bit more justifiable given normal variance with prospects.
The two pitchers involved are similar, in that they’re both back-end starters. Zach Davies [2.3] has a more reliable track record than Eric Lauer [14.0] , and that may have appealed to Preller given the pressure he’s under from his owner to win now. However, Davies has only two years of control, and is more expensive, while Lauer comes with four years of control (the first at league minimum salary), so he’s much cheaper. Even if Lauer is only a 1-ish WAR pitcher over those four years (which is essentially what we’ve adjusted down to), he’ll still accumulate more surplus than Davies, so most of that valuation gap is just going to remain.
Here at BTV, we base our model on publicly available data. If that data is off, or incomplete, it will be reflected in our numbers. It’s a bit like Zillow for homeowners. Zillow may think your house is worth $500K based on market comps in your neighborhood. But it doesn’t know if you recently remodeled your kitchen, or replaced your HVAC system, which would in reality make your house more valuable. Or, it may not be aware that you have a leaky oil tank buried in your front yard, which would make your house less valuable. That’s private information only you have. Once you sell your house, that information will be reflected in the market price. That’s why we’ve now adjusted our numbers on the players involved in this trade – to reflect the fact that some of that private information was factored in.
But we still think the Brewers got a bargain. GMs report to their owners, and if their owners give them a mandate to win now, as is the case with the Padres, they’re going to make some deals that are less than rational.