Trading Cole Hamels: Pt 1 – Surplus Value

Until he is traded the speculation around Phillies ace LHP  Cole Hamels will never end.  What has played out over the past 3 months has been a battle at the core of WAR and prospects and how we value players in trades.  In many ways the debate as left me questioning the models we use for WAR and whether we are truly advancing the game forward with how we use statistics in analysis.  I got into writing because of statistics, I majored in Physics because of my love of numbers, but I have learned something through the process, if you live in a world purely of numbers and idealized scenarios you lose your grasp on reality.  In an ideal world we marry numbers and observation to further what questions we can ask about the game and create a more vibrant discussion.  Over the next few days I am going to break through some parts of the Hamels trade speculation and what kind of return the Phillies feel like they should get vs what the media and fan are saying they should review

Lets Start with the Player:

Lets look at the 2010-2014 seasons and look at all pitchers with at least 600 innings pitched (roughly 3 full years), here is Hamels line over that time:

1064.2 IP 3.00 ERA 3.27 FIP 129 ERA+ 266 BB 1021 K 27.8 bWAR

Now statistics are useless without context, so here is how he ranks in baseball during that time period:

  • 6th IP
  • 6th Strikeouts
  • 7th ERA
  • 12th FIP
  • 6th ERA+
  • 2nd bWAR

That is a sustained run of success matched only by the elite of baseball; Felix Hernandez, Clayton Kershaw, David Price, Adam Wainwright, Johnny Cueto, Cliff Lee, and Justin Verlander.  Now some of those players have already dropped off, which is the risk.  From a health standpoint, Cole had bicep tendonitis to start 2014 and was poor in his first few outings, but after that he was dominant.  In terms of stuff Hamels posted the highest average FB velocity of his career in 2014 and his changeup is one of the most singularly dominant pitches in baseball.  Hamels has given every indication that he is at his peak physically right now.

Surplus Value:

The basic concept of surplus value is very simple; the idea that you are trying to get the most amount of value for money spent makes a ton of sense.  The practical application of surplus value comes in two flavors; one is that it allows you to compete on a budget that you would be impossible to at free agent $/WAR costs, the second is that it allows you to spend at or above free agent $/WAR to fill in the rest of your team.  This is where I now take a turn away from surplus value arguments for three common assumptions made by the writers of such pieces; the lack of valuation of roster spots used, the assumption that maximizing $/WAR is important for all baseball teams, and that there is a limitless supply of replacement talent.

Lets start with roster spots.  Matt Swartz devotes a good part of his article on the foundations of $/WAR talking about the linearity of WAR.  Swartz finds that given certain restraints the $/WAR is fairly linear.  This means in an idealized world a team could choose between two players of 2 WAR each and one player of 4 WAR and receive the same value from those contracts.  The problem is that except in rare cases (2013 Boston Red Sox) teams don’t have a bunch of empty spots available on a roster.  So if we assume that a team can find players who can provide ~1 WAR for relatively cheap, then our evaluation is now that I can make an upgrade on two spots of +1 WAR and have a total of 4 WAR, or I can give myself an upgrade of +3 WAR on one spot and end up with 5 WAR total.  Since most teams fall in the category where they are looking to upgrade existing players, this means the impact of a single player is much greater to a team’s total expected results then if you spread that value out, even though you are in a vacuum paying for the same amount of $/WAR.

The second assumption is that all teams are governed by efficiency.  This does not mean that all teams do not take it into account, but that is much more important for the Rays than the Dodgers.  For large market teams it is about maximizing talent on the roster.  The Phillies for example can pay a premium in $/WAR on a high-end player because they can afford it and it allows them to maximize against the scarce resource, in this case roster spots.  We should not treat each transaction in a vacuum, team needs and resources factor into the equation as well because the goal is not efficiency, the goal is to win the World Series.

Lastly we get to replacement talent.  We referenced in the first point that we can assume that a team can find players ~1 WAR for cheap, this is both true and false.  The truth is those players exist and are readily available, the lie is that they can be counted on.  A smart organization can turn over near replacement level players from FA and the minor leagues, but it is far from certain.  But regardless this is not the place of scarcity of which I refer.  I refer to high-end players.  If the goal is to maximize $/WAR so you have more resources to spend, you need something to spend them on.  If we isolate this to just Hamels we see from above that players like him are all tied to franchises and most have already received a large pay-day.  Right now on the market are two exceptions Max Scherzer and Jon Lester.  I would put Scherzer in Hamels’ level of production but Lester may be a step back.  Either way teams have a unique opportunity to acquire these players in FA, after that it is all gone.  Two pitchers for 30 clubs.  This positions a player like Hamels in a unique situation as the only other player available at that level.  In this case his surplus value is still the same, but for a team his upgrade value may be higher than any other player available.  Players like Cole Hamels are extremely rare, they are incredibly hard to develop and are almost never available to acquire.  If a team is looking for that singular impact they would really struggle to replicate it elsewhere.

The idea of surplus value in this case is that Team A is giving up their ability to sign player Player X in FA by trading for Hamels, in return they get some amount of surplus value on the contract over what they would pay for Player X.  The Phillies in trading Hamels receive the surplus value of the prospects and now have the opportunity to sign Player X.  In this idealized scenario the Phillies usually come out on top because of how we calculate prospect surplus value (more on that in a later post), and so sabermatricians argue that the prospect price must be very low in a deal for Hamels.  However, if we move from our idealized scenario to a world where Player X no longer exists, that our scenario changes dramatically.  Team A now has the pure value of Hamels in a form they could not independently acquire on their own, meanwhile the Phillies have the future value of the prospects, but that surplus value no longer exists because there is nothing to spend it on.  It is translated into owner profits or maybe if a team is lucky they can translate it into smaller upgrades, but overall they have not gained the value generated.

This is why looking at a trade based purely on a surplus value for surplus value model creates a scenario that no longer aligns with real life.  Up next we look at how we overvalue prospects, especially their safety, and how that translates into what is attractive for teams.

Photo by Matthew Straubmuller

Author: Matt Winkelman

Matt Winkelman

Matt is originally from Mt. Holly, NJ, but after a 4 year side track to Cleveland for college he now resides in Madison, WI. His work has appeared on Phuture Phillies, The Good Phight, and TheDynastyGuru.