10 January 2017

Manny Machado Is Dan Duquette's Kobayashi Maru

Kobayashi Maru is a term that is gradually entering into common parlance.  Very gradually.  It is a term I have largely ignored, but it kept coming up and I consulted Wikipedia.  The term comes from a simulation test that cadets go through in the Star Trek series.  The scenario is one where a starship has a choice to response to a distress beacon of a civilian ship in a highly contested demilitarized zone.  If the captain chooses to go in, the enemy appears in an unwinnable battle.  If the captain chooses to ignore the beacon, the crew is demoralized and loses faith in the captain moving forward.  The test is not to see if the captain can make the right decision; there is no winnable solution.  The test is how does the captain handle a situation in which winning is not possible.  Manny Machado is Dan Duquette's Kobayashi Maru.

The Orioles currently hold onto the rights of Manny Machado for two more seasons, 2017 and 2018.  In 2017, his arbitration is assumed to be around 11 MM.  It will likely increase to about 15 MM in 2018.  These numbers sound like a great deal, but Machado's true value is like somewhere in the 120 MM range (roughly 60 MM per season) in excess of his cost.  He is worth that if you assume his level of play rises to an average of 8 wins each season.

For a club like the Orioles, dealing an 8 win player who makes 11 MM a year effectively means that you are trading yourself out of playoff contention.  As is, the club is a fringe high 80s win club.  With Machado elsewhere and nothing but high minors prospects coming back, you have a team that hopes to break even.  It is a losing scenario as that 11 MM saved might bring back a second division starter in the remains of free agency.  It is a losing scenario for 2017 and likely 2018.

However, the issue at play might well be 2019.  Do the Orioles really have a plan?  The minors is bereft of talent, arguably.  The jewel of the farm is Chance Sisco, a young high minors catcher whose does not possess MLB ready catching skills and whose offensive profile entails high contact and plate discipline.  While some like Keith Law choose to indulge themselves in hyperbole and call him "at worst...an average catcher", the industry is more varied in their response.  A sizable portion (though still a minority) has difficulty imagining Sisco with his poor footwork, slow pop times, and weak framing skills to be able to improve to a competent level behind the  plate.  Previous work I have presented here shows that it is quite rare for a poor defensive catcher to ever make the Majors as a catcher.

Going beyond Sisco, you have your Sedlock, Akin, and Harveys.  These are low minors pitchers who would typically find themselves in the 6-15 range in more flourishing systems.  Or a Ryan Mountcastle who has an interesting bat, but no real position.  What this amounts to is that the club has difficulty finding the needed, cheap internal options required to field a contender on a mid-league payroll.  If you scoff at the notion that the Orioles are stretching things at a mid-league payroll, then please remember that MLB itself with all of its jockeying to keep and get money considers the Orioles as roughly the 20th monied team in baseball.  This is an argument I put forward almost ten years ago.  It makes sense and MLB goes along with it even though the Orioles anger a lot of people who calculate these things.  Anyway, the way the roster is constructed the team basically runs out of the needed horses to compete just as the moment Buck Showalter and Dan Duquette have their contracts terminate after the 2018 season.

2017 and 2018 are it and Machado is rather essential for this club to be a playoff contender, but it looks dire after that.  With a payroll in the 160 MM range, Machado at 30-40 MM is a difficult fit in there.  Added to that, why would Machado choose to take a contract that he could sign anywhere and sign with a team who lacks the young, quality players needed to make the club competitive.  Does Machado care more about Baltimore than about winning?  That would seem to remarkable to me for a player who shut his season down in 2014 in the midst of a playoff run.  He can walk and he likely will walk and the best the Orioles will see from him in that scenario is a complementary pick after the first round for one of the top five players in baseball.

If the Orioles deal Machado, they lose.  They simply cannot replace what is heading out with the money they have if it was even possible to replace that value.  Likewise, if they hold onto Machado for two years to see him walk, then they have left a crater of a franchise for whoever takes over.  It will be a near complete loss except for the fun memories of an aging Chris Davis around the clubhouse.  So, let's explore what a deal might look like.

One place to look is at the Adam Eaton deal between the Nationals and White Sox.  Eaton is owed 5/37.4 on his contract.  If you assume he maintains a 4 WAR pace with a post 30 0.5 WAR decline and cost is 8 MM/win, then he is a 148 MM player.  Surplus value on his would be 110.6 MM.  Using recent comps for prospect value, the White Sox received Lucas Giolito (69.9 MM), Reynaldo Lopez (29.8 MM), and Dave Dunning (10.3 MM, adjusted from Victor Wang's original research for a B level pitcher).  That total value come to 109 MM, which is 1.6 MM short of what Eaton's value is.  That is a close hit.

Oh, I see your face just went pale.  Yes, Eaton has a surplus value of 110.6 MM and Machado's is ~120 MM.  They are very roughly equivalent in surplus value.  Sure, what you are feeling is sadness.  Five years locked into a small contract is helpful to develop surplus value.  Machado with two years are arbitration, less so.  While exclusive negotiations has some merit, it means simply you are able to pay market value up front without any true competition for a player like Machado. 

Again, though, think about it.  Why would Machado want to sign long term with the Orioles?  The club has almost no cost controlled talent in the minors ready to bubble up and provide complementary performance to Machado.  That is necessary for a team who has apparently maxed out their payroll and are unable or unwilling to spend 4-6 MM on outfielders (e.g., Peter Bourjos, Rajai Davis).  If you know you are going to pull in a 30+ MM per year deal, do you take it and hamstring the Orioles payroll or do you go for a much larger payroll that has the flexibility to support you with other talent?  In other words, maybe the best way to keep Machado is to trade him for the talent needed to be appealing.

Dealing him this year has grown difficult as the third base market has progressively shrunk.  Dealing Machado and signing Justin Turner would have been ideal.  Dealing Machado would mean replacing him with Trevor Plouffe or Luis Valbuena, players who look fitting for a fringe backend divisional club and not for a contender.  Regardless, dealing Machado and seeing a full return of 120 MM in value would be ideal for the Orioles future, but would also suggest that the rest of the club needs to be sold.  That is hard to do right after a playoff season.

Anyway, let's see what 120 MM gets you and why not go for the heart.  The Yankees are a pretty obvious fit.  They have the money to sign Machado in the now as well as long term.  They also have a rich minor league system after a long decade of neglect by the previous regime.  Depending on what you want, you could acquire a soon to be MLB quality SS in Gleyber Torres (62 MM), a near ready athletic and strong right fielders in Aaron Judge (38.2 MM), a promising left handed starting pitcher in Justus Sheffield (15.6 MM), and a fringe starter/relief arm in Dillon Tate (5 MM).  Torres is in a Machado defensive mold with average range, but great reflexes and arm.  If Machado really wants to play shortstop in two years, Torres could slide to the hot corner.  Otherwise, you could exchange his name for Clint Frazier and have a pretty solid outfield inked out.

Once a year passes, the value takes a large hit.  You could go big and grab a Torres or you can diversify your portfolio a bit and take a boat of prospects back given the dearth of the current farm.  I will take the latter approach using current names as types of players who could be looked at next year.  For this exercise, the Astros line up nicely.  For 60 MM, you can include a very young but  well accomplished bat in Kyle Tucker (22.4 MM), a young hard throwing righty in Forrest Whitley (16.5 MM), another right handed horse in David Paulino (15.6 MM), and a once shiny centerfield prospect in Daz Cameron (7.1 MM).

Basically, you go from two starting position players and two good arms to a starting position player several years away, a fringey position player and two good arms.  Prospects with positional starting capacity are worth a ton.  In the end, the most likely trade scenario is one to consider next year.  This year seems done and never appeared much to be a likelihood.  This GM would need to have full permission of ownership and some major bravado to deal Machado after a playoff season.  Instead, we have an abyss lying in front of the club for 2019.  I am unsure how they get out of it.  Every possible direction for action seems like a major loss at this point.

26 comments:

Don Smith said...

Great article. The trade with Houston makes sense. Although, I believe the O's could still be "competitive" (Duquette's version), with Trevor Plouffe or Luis Valbuena, and a strong package in return, for Manny. A "near-ready" outfield prospect, with tools, would have been a nice addition to our club. Robles, Giolito, and Joe Ross, would have made the O's better in 2017.

Sadly, Duquette is very slow and he will not jump out early and make a move. Had he done that, we may have gotten a serious package of prospects for Manny, like Chicago got for Eaton. It isn't happening as Duquette has no stake in 2019.

Our window is basically closed and all the supporters of our reactive and plan-less front office will now start to back-peddle.

Shawn Crosby said...

Great article. What is your opinion on the option to sign Manny to the deal necessary it will take to sign him but then deal Britton, Brach, Jones? Would those three players warrant enough of a return to field a good team around him?

The team that has been assembled so far has made think if rooting for a terrible first half is what to hope for so we can be sellers at the deadline. Then again can we even count on Duquette to get the return on players that we should?


Pip said...

Manny doesn't want to be Mike Trout: a superstar with nothing around him and no future. But Dan doesn't trade well, he doesnt trade in a timely manner, and he ignores draft possibilities. Sad you didn't mention DJ Stewart, who seems to have been such a bad pick he's not worthy of note.
Manny should be traded, but Dan doesn't do things like that.

Rob said...

Buck just needs to channel his inner James T. Kirk and we'll be fine.

Jacob W Smith said...

Machado has been stating that he's open to an extension for several years now. A few years ago an extension would have been much more affordable, with a lot more risk for both sides to share. Unfortunately that ship has sailed. It does seem that right now the return for Machado might be better mid-season than pre-season, and it can't hurt to take the half-season of an elite player.

Jacob W Smith said...

I do think additionally that a big part of the problem you haven't addressed here is the incredibly negative attitude of the fan base in recent years. You read comments from guys like Don Smith on this article, and many, many, many people on Orioles.com, masnsports.com, et., and you certainly would have no idea that this is the winningest organization in the American League during DD's tenure. There's a huge portion of the fan base he just can't win over, along with an even bigger portion who will never trust ownership. If Machado is traded away these guys will lose even more of the fan base. As good as it might be for the long-term health of the team on the field, it might be a bad financial decision to further alienate the fan base.

I suspect a lot of O's fans don't understand how the development of the modern media-driven financial environment in MLB has changed the financial landscape. They think that without the current ownership group's involvement this would still be one of the wealthiest franchises in the league. After being a fan of a dominant team for a very long time it can be hard to accept that those days are never coming back. Under the current financial model Baltimore will never compete on a level playing field with New York or Boston without a salary cap. I'm not in favor of a cap, by the way. But it does create a reality in which the Orioles are more a part of the have-nots than the haves.

Jon Shepherd said...

I think what many people miss in the column above is this: why would Manny Machado really want to be here? Yes, he gives the polite statement about wanting to sign here long term. A couple seasons back, they tried but nothing worked out between the sides. This does not mean he finds himself truly in a situation to sign here long term. If all he cares about is money, then, yes, there is the opportunity to sign with Baltimore. If he cares about money and winning, then that muddies it up quite a bit. The Orioles have spent years leveraging their resources into the parent club. What Machado will find himself in will be a situation similar to what ARod found when he signed with the Rangers.

Jacob W Smith said...

Jon, while I agree that it doesn't necessarily make sense for Machado to sign from an objective analytical perspective, history suggests that a lot of baseball players - particularly young ones - take a less analytical approach to this decision. The obvious example is that for the same reason it didn't make analytical sense for Stanton to sign with the Marlines. They had some young talent, but not enough, and he ate up all the payroll space. Also they have a well-established track record of trading away the talent they do have when it gets too expensive. But he was happy there, liked his teammates, and wanted to stay. Manny seems to have a fairly good relationship with the coaching staff and most of his teammates, he's been happy in Baltimore, and at least for the time being his buddy Schoop is in Baltimore. There may be no reason for him to want to leave.

H. Diggs said...

"Instead, we have an abyss lying in front of the club for 2019. I am unsure how they get out of it. Every possible direction for action seems like a major loss at this point."

The 2019 season is two full seasons from now. The way you field a competitive roster that far down the road is simple: develop minor league talent. The O's have Sedlock, Harvey, Reyes, Mountcastle and Dietz - young talent who can improve during that two year window. It wouldn't be unreasonable to expect two competent starters out of that list. Maybe one more could breakout in the minors by the 2020 season. That list also doesn't include Sisco who might start contributing in 2017 and turn into a nice player.

The other route is the draft. The O's have a chance to nab two early round comp picks with the loss of Wieters and Trumbo. Take full advantage of every selection and hope by the 2019 season, one or two of them develops into bright prospects.

Jon Shepherd said...

Wieters is not a QO player.

Jon Shepherd said...

Opt out clause and several pieces of cost controlled talent helped Stanton decision.

Jon Shepherd said...

Also...keep in mind, hard to build with minors when your system is currently one of the worst, you are the lowest spender in international amateur talent, and you give away draft picks. Additionally any new interest in amateurs means grabbing players who might be useful in about 5 years.

Anonymous said...

Dan?
Is that you??

Roger said...

This team was built on two trades (Bedard/Uehara) of decent but middling players and a couple of lucky draft picks. Remember that Machado came up when he was 19 and had his first big season at 20. The suggestion above of signing Machado, trading Britton/Brach/Tillman, and getting a big draft pick (someone who may not yet have been drafted or maybe a Sedlock/Harvey to go with Gausman/Bundy) is not unprecedented in being able to keep a winning team on the field or maybe after one season of losing. You then sign a decent FA or two (Hardy/Kim/Cruz/Alvarez or some such) and your team will play (maybe go after Lucroy???). This should be doable for decent baseball execs.

Jon Shepherd said...

I am unsure why we would plan on being able to strike gold twice like that. It was a remarkable situation and having expectations about an unlikely series of events is not exactly how a franchise should plan. Additionally, overpraising those trades ignores the impact of players drafted very high. And...one more thing...Machado is one of the best young baseball players in history. Why do we think that is easily reproducible?

Precedent is not really a strong basis for decision making. Bartolo Colon has been excellent in his 40s. We should not assume that we can plug in a failed 40 yo pitcher who can figure out himself again.

Roger said...

Without a pipeline, the best you can do is lightning in a bottle. But that's why I advocate keeping Machado and trading at the next level. I don't think it's a bad plan if you have three assets you can trade like Britton, Brach, and Tillman. Does Brach not have similar value to Uehara? Tillman as much as Bedard? Being a playoff team means there are some decent players on the team. Trading two of those three does not gut the team; even trading all three would not. And there's no telling what you might get in return.

Jon Shepherd said...

There is some telling. That kind is the crux of this article.

Unknown said...

I enjoyed this article very much, as it is a lightning rod for debate. Some people on this board have suggested we build through the draft, but it would take more than 2 year to accomplish anything. For years we had top picks, and the one that worked out best was Machado. That year though we had the easiest pick. There were 3 studs that year and we picked 3. Harper, Tallion, Machado. Previously Weiters fell into our lap because of signability concerns. Simply put the O's typically do not draft well, and are way behind the eight ball in international scouting. The only way for us to continue success is to go through a mini rebuild. Trading Machado, Britton, Beach, Tillman, and Jones could net this team enough talent to compete for the next 8 years.

Jon, how about a potential trade of Machado to the Dodgers. Would Urias,DeLeon, Joc Peterson, and anow A ball positional player match up on your scale? Thoughts?

Jon Shepherd said...

Urias, Deleon, and a good A ball prospect would be worth about 120 MM.

Joc Peterson? He is worth about 50-70 MM.

Anonymous said...

Has Manny carried the team deep into the playoffs? Don't think so.

Unknown said...

Sometimes, we as sports fans desire a dynasty before our team even wins anything. Yes, as it stands now, the Orioles don't have the depth to be a dynasty, but how about instead we try to enjoy these next two years rather than panic. The Orioles could win the World Series in either of the next two years as constituted now in a few dominos fall the right way, so why don't we try to enjoy the ride. I'm not saying they're the favorites, I'm just saying we have a good team to enjoy for the next two years that has a realistic shot of winning it all, so let's not tear it all down too soon in search of a dynasty that hasn't won anything yet. I'm not ready to return to 1998 - 2011 just yet.

sarasotosfan said...

Machado is a generational type player. Decisions on his future are an order of magnitude greater than for your average player, and as such are in the hands of ownership.

All Duquette can do is continuously inform ownership what he believes he can get for Manny at each trade deadline. The rest is on ownership.

Jon Shepherd said...

Well...to some extent Duquette can make the club look good beyond 2018. He has yet to do that so I am at a loss why Manny would even sign.

Anonymous said...

If Dan Duquette wants out of Baltimore after 2018 he would probably be very happy to keep Manny, Britton, etc for the next two years and depart with them.

The decision to move those players almost has to come from above DD anyway. Which means to some degree would love to see DD sign an extension so we know he has a longer term view then two years.

Jim Adams said...

Hey Jon,

Hope all is well. Yes all is true. The Orioles and Manny got to this point because we could not buy out his arbitration years because of knee issues and rightfully so. So we are stuck in a win now lose later situation. When Pujols left the Cards after the won the WS in 2011, they survived and went to the WS two years later. - CB Coach

Anonymous said...

The O's should have sold high on Britton at the trade deadline last year. They should re-sign Trumbo and look to deal Chris Davis at the deadline this year if he's having a decent year. Unloading Tillman for some prospects at the deadline would be a good move as well.

I would lock up Manny and Schoop long term as a package deal and build the future team around them.