01 August 2018

Orioles Went Fishing in the Kevin Gausman Trade

A few days ago, I established what I thought would likely be the market rate for Kevin Gausman: the Sonny Gray deal.  It made a lot of sense.  Gray and Gausman had similar career, had similar service time, and what Gausman lacked in notoriety among the fanbases, the front office knew he had performed better than Gray in their recent histories.  The Yankees got three fringe top 100 talents.  They were hit or miss top 100 guys.  Guys with name recognition.  They would be players one would be happy with if you went on a prospect trophy hunt.  Based on conversations, I know the Orioles literally asked for this.  As the deadline fell though, Gausman was traded, but not for a package that resembled Sonny Gray's.

What made the Sonny Gray deal so interesting was that value was concentrated into three players.  While Gray and Gausman both were about 50 MM players, the Gausman deal diversified the portfolio of talent that was coming back.  Instead of viable (yet injured) 50s the Yankees got with Dustin Fowler, Jorge Mateo, and James Kaprielian, the Orioles acquired a couple 45s and a couple 40s with international money and the Darren O'Day money bomb splitting the difference.  In other words, the value exchanging hands in both deals was effectively the same, but the way in which that value came together was quite different and it comes down to philosophy.

First, though, lets visit each piece in the deal:

As noted above, I addressed Kevin Gausman's value in a previous post and pegged him at 50.2 MM.  To be brief, that number comes from his current salary and his projected cost in arbitration over the next two seasons against the value associated with his performance as expected over the next two and a half years based on wins above replacement.

Darren O'Day is the other player going to the Braves.  O'Day has three million or so left for this year and eight for next year.  After undergoing hamstring surgery, his three million this year is a loss.  Among scouts, there is concern that his hamstring issue is related to a more chronic issue with his back, so performance project varies between zero and ten million.  Split the differences and you come up with a general value of -5 MM for O'Day.

The total package comes to roughly 45 MM going from the Orioles to the Braves.  In a concentrated deal, you could expect three backend top 100 pitchers (15.1 MM value) concentrating that value in a vein similar to what was seen with Gray, but as noted before that was not the case.

Based on what scouts you listen to, the Orioles got two 45+ prospects in Jean Carlos Encarnacion and Brett Cumberland.  They could also be described as a 45 and a 40, too, depending on who you listen to.

First, lets discuss Jean Carlos Encarnacion.  Encarnacion was a minor signing in the Braves 2016 class, coming in at 10k.  He was largely overlooked for a couple years as he did not have skills or much strength.  The flyer the Braves took in 2016 paid off massively as Encarnacion has physically developed significantly and began showing some loud tools.  He shows sufficient reaction for third base, has a gun for an arm, and has great batting practice power.  That power has shown up in his game.  Still he is considered quite raw.  Scouts vary in their opinion on him.  Some see him as a raw player without much feel, having foolish errors in the field, and striking out once a game, and slap a 45 on him.  Others see him currently trending upward with a 45+ on him as he harnesses his power and begins to settle down.  I have heard him called an eventual Quad-A first baseman to a potential first division third baseman.

As a 45/45+, his value is somewhere in the 15-20 MM range.  That might seem strange that a player rated below a backend top 100 pitcher would be valued more than a position player.  There are two major reasons for that: (1) as a 3B, he can slide down the defensive spectrum to left field or first base and still provide some value as opposed to a pitcher providing value as he shifts into the pen and (2) pitchers get injured a lot, which lowers their absolute value.

Brett Cumberland is the other potential 45+, though he is also described as a 35.  Cumberland was taken out of Berkeley in the lottery portion of the second round of the 2016 draft, overslotting at 1.5 MM.  He was a player who was seen as having a good, polished bat with the potential of catching.  If you see that 45+, you see a player who might be more if the catching sticks, but whose bat is solid enough to carry a second division score at first base.  If you are like me, you see a poor defensive catcher and poor defensive catchers rarely ever become adequate behind the plate (see Chance Sisco).  Additionally, you see a player who has only shown off his bat in leagues where he is older than most of the other players and he still swings and misses a lot.

One thing that is important to note is rankings pre-season against in-season rankings.  Most public evaluators are using last year's rankings with this year's performance and a scout or two providing some newer information.  This means there is a significant data lag in the analysis, particularly for someone like me.  It may well be true that after this season is over, we find that the general view of Cumberland (and Encarnacion) have drastically improved.  That all said, the range of valuations on Cumberland fall between 5 and 20 MM.

The third piece in the Braves deal is Bruce Zimmerman.  He was selected in the fifth round in 2017 out of Mount Olive (formerly was with Towson University) as a senior signing who signed for 10k.  He does not seem to bring much except for polish as a lefthander.  This creates some red flags.  Polished lefties tend to struggle as they move up against more advanced hitting.  More advanced hitters do not get as flummoxed by platoons as younger or less talented hitters.  Plus, polish tends to mean a limited project, a limited range of possibilities to improve performance.  Grades on him are in the 35/40 range and he is worth about 5 MM, maybe 10 MM if you are really a believer.

Evan Phillips is the last piece in the deal and some are intrigued as he flirts with 100 mph heat.  Historically, he has had terrible control, which has led him into situations where he is quite predictable and is hit hard.  The Orioles certainly need more live arms in their system and Phillips qualifies as that, but he is the type of guy an organization should have a half dozen off throughout their organization.  I would put Phillips as a 35, which carries about a 5 MM value.

You can see where the pessimism comes from.  The worst case scenario for these four players is 15 for Encarnacion, 5 for Cumberland, 5 for Zimmerman, and 5 for Phillips for a 30 MM total.  If you are big on Cumberland only, then that winds up at a 45 MM value and the deal breaks even.  If you like Zimmerman as a starter or think Phillips is a true setup man it sets the value up where if you really like Encarnacion, the deal breaks even.

This leads us to the final part: 2.5 MM in international bonus pool money.  The Orioles now sit at 8.25 MM with only a bit of it dedicated to players right now.  Three big fish remain out there: Victor Victor Mesa, Victor Mesa, Jr., and Sandy Gaston.  Their value is about 20, 10, and 10 MM and their expected cost is around 3.5, 1, and 2 MM.  The 2.5 MM could bring back another respectable prospect into the organization.

What this all leads back to is philosophy.  If you concern is value, then in a number of ways, it looks like the Orioles got their fair value.  The initial reports, however, indicated that they were trophy hunting similar to their other deals (i.e., Yusniel Diaz, Dillon Tate, Luis Ortiz).  They took a different direction and diversified their asset portfolio for a quantity of decent but not exceptional prospects.  Based on conversations, the return on Gausman/O'Day was seen as "light" to "genius".  I lean on the light side, but I may not be the best evaluator of that.  It may not be until the offseason when I have enough information to make a more certain conclusion.

As it is now, I think the Orioles went out with a big trophy or three on their minds and instead went fishing.

6 comments:

stevej said...

The 2nd encarnacion paragraph needs an edit

stevej said...

The right to spend bonus $ is then worth around 5+ times the amount. (I.e. spend 3$ to get 20 in value). So that makes the bonus pool in the trade worth about $20mm. So the worst case $30mm plus upside plus bonus pool $20 looks like a nice deal for $45mm of pennant-race immediate help with O'Day risk.

Jon Shepherd said...

Well, it depends.

Bonus pool money value is dependent about the value of the prospect. It is not really a one to five relationship. If you look at a talent like Victor Victor Mesa, he is probably worth about 15-20 million. He will cost maybe 3-5 MM. That is rare.

Most talents are far more raw with much greater projection and that collapses the value quite a bit. Most international talent represents something similar to a 3rd rd talent at best and most are post 7th rd talents. It is a complex market.

stevej said...

And yet the price to value ratio should hold. From your article, the 2nd and 3rd big fish are together worth 20$ and will cost $3.

aj barrell said...

I was a bigger fan of the other deals they made. Honestly they should of kept o"day and got better players back. Personally if this was the best deal it would of been there in the winter. Gausman seems better in the second halfs if he popped off like last year he would of gotten more value.

aj barrell said...

Hobestly the 11mill from oday could have been recouped next yesr if he pitched half way decent. Just seems foolish to take lesser package to save a few dollars whe .They will be bad next year and probably not add payroll anyways.