When does it make sense to not trade Cole Hamels?

Much of the Cole Hamels trade debate revolves around the idea that the Phillies must trade Cole Hamels in order to execute a avenge.  This has then phrased the debate as about when the best time to trade Hamels is.  On one side there are those that point to parts of the future where value should be at its maximum, another side argues that the Phillies should trade Hamels now and minimize the risk of his value decreasing.  However, both seem to return to the same point, the Phillies MUST trade Cole Hamels.  Additionally, there have been many things written using surplus value and other metrics to try to pinpoint where Hamels’ trade value should be and some of the results seem laughably low.  Which brings me to an interesting question, is there a point of trade value where the Phillies are better off keeping Hamels and using him as the cornerstone of their avenge?

Laying the Groundwork:

Before we start going into the numbers too much, lets lay some groundwork on the Phillies’ situation since they are not governed by the same rules as surplus value.

Money is not an issue

On a whole for the Phillies, even outside their payroll obligations, money will not be a problem for the Phillies.  They are likely a step behind the Dodger, Yankees, and Red Sox who have a combination of market and name value advantages over the Phillies, but their financial resources are near the top in baseball.  Hamels’ salary is not an obstacle to them in acquiring future major league talent.  Their new TV contract kicks in during the 2016 season, which should add additional revenue.

Outside what is going into the org, their books are really clean going forward.  In 2017 their guaranteed salaries are $34 million which includes buyouts for Ryan Howard and Carlos Ruiz, and Cole Hamels’ salary.  It does not include potential options for Chase Utley and Miguel Alfredo Gonzalez.  Given their current farm system they should be paying at least 2 starting pitching spots the minimum salary and possibly two infield spots as well (Crawford and Franco).  Regardless of who is in it, the bullpen should be relatively cheap as well.  This leaves a large amount of cash and not an infinite number of spots to spend it on.

The Goal is to Win Again as soon as possible

This may seem obvious, but it bears repeating.  The Phillies are going to be near all-in when they are competitive again.  This doesn’t mean they are going to trade everything for veterans the minute the team is good.  But it does mean that once the ball gets rolling again the goal will be to win, not to be as good as we can under a constrained system.  We already touched on money, but this is an ownership and management team that might not be long for this situation.  Trading for prospect who are going to appear in 2020 is not the goal here, the goal is 2017-2018.

2015/2016 Production is useless

This one hurts any keeping Hamels argument, but it also hurts some trade proposals.  Because the team is not looking to compete in 2015 and 2016, any value and any surplus value accumulated during the 2015 and 2016 seasons is useless to the Phillies.  This means the Phillies will pay Hamels $27M to just hold onto him.  As we talked about with money, this really comes out of ownership’s pockets, but it is potential value that the Phillies did not trade.  Of the other side, the maximum value of a player is during the years when he is worth the league minimum salary.  Lets say Prospect Thing #1 is expected to be worth an average of 2 wins a year over the next two years and a win is hypothetically worth $6M.  The Phillies would get $24M of value for $1M of pay, a surplus of $23M.  If the Phillies were competitive and not under a constrained budget, this value goes right into the pocket of the owners, if the budget were constrained this is $23M they can spend on another player, however if you aren’t trying to win, the value of a win to the Phillies is $0 and so the player is merely the cost of occupying a roster spot.  So for maximizing future value the Phillies want those max efficiency years to happen in the future during their competitive cycle, not before that.

On to Prospects and Trades

The consistent rumor is that Ruben Amaro Jr is enamored with prospects that rank highly on both organizational and global prospect lists.  This a fact that should surprise no one.  The number of top prospects in the game is very limited.  We can disagree about the names in each tier, but here is the breakdown from Kiley McDaniel’s Top 200.

 

That on its own does not communicate the whole story.  So lets translate those FV (Future Value) as described by Kiley.  The WAR and role is their likely peak, with equal chance at going higher or lower.

	Hitter	Starting Pitcher	Relief Pitcher	WAR
80	Top 1-2	#1 Starter	—-	7
75	Top 2-3	#1	—-	6
70	Top 5	#1/2	—-	5
65	All-Star	#2/3	—-	4
60	Plus	#3	High Closer	3
55	Above Avg	#3/4	Mid Closer	2.5
50	Avg Regular	#4	Low CL/High SU	2
45	Platoon/Util	#5	Low Setup	1.5
40	Bench	Swing/Spot SP	Middle RP	1
35	Emergency Call-Up	Emergency Call-Up	Emergency Call-Up	0
30	*Organizational	*Organizational	*Organizational	-1

This is not necessarily the end all be all of prospects, and is merely a snapshot in time.  But it does illustrate how the minors condenses the overall structure of value into a small group of players.

By this scale, Cole Hamels is a 70 grade pitcher who can go up to 75 and down to 65 in a year.  By this scale there are 2 prospects in the game who have a likely outcome of Hamels and another 6 that have a likely outcome of a down Hamels year.  It is pretty safe to say that achieving the next Cole Hamels in a deal just isn’t going to happen.  Now this is current state Hamels, and even the most ardent supporter expects some decline.  Hamels will be entering his age 31 season in 2015, however 2014 saw his velocity rise and new career best marks in many statistics across the board.  Both Cliff Lee and Roy Halladay were injured during their age 35 season, so the serious decline may be somewhat in the future.  This is coupled with a pitching profile based on an elite changeup and plus plus control, not on fastball velocity.  In terms of profile, Hamels is as well built to handle aging as any pitcher over the age of 30.

The most cited study on prospect value has been this one by the December 2014 study by Kevin Creagh and Steve DiMicello.  They looked at the average outcome of Baseball America’s Top 100 prospects and used that to find the surplus value of various prospect groups.  I have stripped away surplus value since that has already been talked about in many circles, instead lets us focus on wins and risk.

First I have added two columns following the theory put forth in the article that roughly 2/3 of value comes in the final three years.  The first is the average WAR/yr over the first 3 seasons and average WAR/yr over the final 3 seasons.  This is admittedly a little flawed as the flameout rate means that many prospects don’t actually reach that second group.

Tier	Number of Players	Avg. WAR	Avg. WAR/yr yr 1-3	Avg. WAR/yr yr 4-6	% Less than 3 WAR	% Zero WAR or less
Hitters #1-10	53	15.6	1.7	3.5	13.21%	9.43%
Hitters #11-25	34	12.5	1.4	2.8	32.35%	8.82%
Hitters #26-50	86	6.8	0.8	1.5	50%	31.40%
Hitters #51-75	97	5.0	0.6	1.1	56.70%	44.33%
Hitters #76-100	96	4.1	0.5	0.9	64.58%	41.67%
Pitchers #1-10	18	13.1	1.5	2.9	5.58%	0%
Pitchers #11-25	47	8.1	0.9	1.8	44.68%	27.66%
Pitchers #26-50	77	6.3	0.7	1.4	41.56%	24.68%
Pitchers #51-75	94	3.4	0.4	0.8	70.21%	47.87%
Pitchers #76-100	105	3.5	0.4	0.8	66.67%	44.76%

The author’s first point is one that fits with the data from Kiley’s ranking.  The very top of the list is quite valuable, and additionally that tier does not go on forever.  Also much like Kiley’s rankings we see the group of “plus” players really extend to about 25.  Then you see some cluster until about 50, and if we look at the rankings we see there is some fuzziness as our group gets larger with some more towards the fringes both high and low.  Once you get towards the back of the list the gap really widens from the top and there is less difference, especially if you start to tail off the rankings.  Just looking at this table we can see that it is unlikely that any prospect outside the Top 50 is even going to produce equal to what we expect out of Cole Hamels in 2015, let alone over the life of his contract.

Let’s now transition to risk.  The authors of the study used 3 WAR as their cut off because that is about the production you would expect out of a solid bench player of 6 years.  A level that is not quite replacement level, but very fungible.  What we find is that nearly 2/3rds of all prospects ranked after 50 will fail to reach this point.  If we look above that, we see that on average 40% of all players in the 11-50 tier will also fail to reach that mark.  This doesn’t account for the fact that 40% of the overall group under 50 won’t even make a positive contribution to a major league club.  That is a lot of risk for a team to take on.

It likely is not a stretch that in the years remaining on Hamels’ contract after the avenge (2017-2019) he is about as much of a lock as anyone to achieve 3 WAR.  So from a pure value perspective, the Phillies are almost certainly better off in 2017 and beyond with an older Hamels that they are with a lower ranked prospect (lets remember we are operating in a world where money is irrelevant).  So we begin to reach a point where anything outside of the Top 25 prospects in the game, and the Phillies are not getting back an asset that has a decent chance of helping them more than Hamels.  Of course the mitigating factor here is that they would ideally be seeking multiple top prospects to play the odds that they can get at least one player who will beat the averages.  But given all the factors and the small sample size that 2-3 prospects in a return bring, that is not something we can count on in isolation.

A Practical Example – Padres

Lets take all of our knowledge into the real world and talk about an actual potential trade, the rumors that surrounded the Padres making an offer and the Phillies refusing it.  Here are the average Top 100 (101/200) rankings for the Padres Top Prospects.

	MLB	BP	Fangraphs	Law	Average
Hunter Renfroe	48	50	49	39	46.5
Austin Hedges	51	23	130	74	69.5
Matt Wisler	69	53	41	UR	54.3

Before looking at the average ranking, lets acknowledge that the range on everyone but Hunter Renfroe is gigantic.  Now let’s see those averages, none of the players are in the elite category, and they all trend towards rather middling in the context of top prospects.  The rumor was the Phillies weren’t enamored with the Padres prospects (we don’t know where the Phillies would internally rank them), and frankly given what we saw above, it is hard to blame them.  It is possible that a package of all three adds enough risk mitigation that you can see the Phillies pulling the trigger, but once you lower the number of players involved, the variability goes up.

Conclusion

If you operate within a system where surplus value governs the moves you make, then this equation changes dramatically.  However, once you remove money as a factor intrinsic to value and instead focus directly on value, you can see where the Phillies demands come from.  For them, it only makes sense for them to trade Hamels if it nets a top prospect, because the alternative does not move them any closer to being competitive in the future.  There is certainly risk with pitchers, but there is huge risk in any prospect too and to ignore one and not the other can unbalance the scales.  At the end of the day, the goal is to win baseball games and ultimately the World Series.  Until they give baseball a hard cap, those for whom money is plentiful do not need to operate in a world where they must pretend that money is scarce and elite talent is not.