Showing posts with label Orioles. Show all posts
Showing posts with label Orioles. Show all posts

02 June 2014

Should the Orioles Trade a Top Prospect for Samardzija?

There is a rumor that the Orioles are interested in upgrading their pitching staff by trading for Jeff Samardzija. Jeff is having a career season so far. Before Sunday's start he had a 1.68 ERA with a lot of help from a high strand rate of 79.7%, a favorable BABIP of .267 and an HR/FB rate of 5.2%. Samardzija historically allows a low percentage of fly balls. This year only 27.6% balls in play have been flyballs. That’s perfect for a stadium like Camden Yards.

Adding a pitcher makes sense for the Orioles because their rotation is ranked #9 in innings per start, #12 in ERA, #11 in xFIP and worst in the league in WAR. Bud Norris boasts the best ERA with an unimpressive 4.04 while Wei-Yin Chen is the only starter with an FIP or xFIP below 4. For a team with playoff aspirations this simply isn’t going to work.

It has also been rumored that the Cubs want at least one and possibly two of the following prospects: Gausman, Bundy, Harvey or Rodriguez. It makes sense that the Cubs would want a lot for Samardzija because last year they were able to trade Garza for C.J Edwards, Mike Olt, Russ Grimm and Neil Ramirez. Edwards was ranked #28 by Baseball America this year and is a promising pitching prospect. Grimm and Ramirez are promising reliever prospects and Olt is currently the Cubs third baseman. Despite the Rangers GM stating that he regretted the trade and thought it could come back to haunt him the Cubs probably feel that if they were able to get that much for half a season of Garza then they should get more for a season and a half of Jeff.

In order for the Orioles to know how much they should be willing to trade for Jeff it would be helpful to know the value of their two top prospects.

Bundy and Gausman were ranked #15 and #20 respectively by Baseball America in 2014. Harvey is doing well in LoA and has a chance to be at the range in 2015. From 2007 to 2013 there have been 40 pitching prospects ranked at one point between 10 and 25. Of those forty prospects all but eight have played in the majors. Archie Bradley, Jameson Taillon and Kyle Zimmer are three of those eight prospects and were ranked by Baseball America in 2014 and therefore don't belong in the sample.  One of the forty prospects, Nick Adenhart, was pitching well for the Angels when he was killed by a drunk driver early in his career and therefore will be taken out of the sample. That leaves 36 pitching prospects of which 31 made it to the majors. Here’s a list of the 31 prospects that played in the majors as well as Jeff.

Name Year Ranked Excess Wins
Kyle Drabek 2010 -0.373
Jacob Turner 2012 -0.34
Tyler Skaggs 2012 -0.245
Casey Kelly 2010 -0.176
Trevor Bauer 2013 -0.145
Dylan Bundy 2012 -0.076
Taijuan Walker 2013 0.432
Zack Wheeler 2013 0.532
Andrew Miller 2007 0.955
Martin Perez 2010 1.854
Jake McGee 2008 2.226
Gerrit Cole 2012 2.432
Shelby Miller 2011 2.454
Michael Pineda 2011 3.142
Chris Tillman 2009 3.471
Brian Matusz 2009 3.681
Aroldis Chapman 2010 3.836
Jeremy Hellickson 2010 4.026
Jeff Samardzija 2009 4.029
Matt Moore 2011 4.21
Neftali Feliz 2009 4.221
Wade Davis 2008 4.779
Mike Pelfrey 2007 5.216
Trevor Cahill 2009 5.515
Rick Porcello 2008 10.357
Chris Sale 2011 11.274
Matt Garza 2007 12.684
Madison Bumgarner 2010 12.996
David Price 2008 15.997
Tim Lincecum 2007 17.16
Yovani Gallardo 2007 17.299
Clayton Kershaw 2007 25.535


The excess wins stat converts players’ fWAR into dollars by using the retrospect value of a win for each year as developed by Lew Pollis. Then I subtract his salary from the value of his production and reconvert it back into wins. I use wins instead of dollars because a win in 2013 is more valuable than a win in 2009.

Clayton Kershaw, Tim Lincecum, Yovani Gallardo, David Price, Madison Bumgarner, Chris Sale, Matt Garza and Rick Porcello have each produced over ten wins in excess value. Note that Rick Porcello, Madison Bumgarner and Chris Sale had less than six years of service time entering this season. Porcello and Garza haven’t been as good as the rest of the group but they’ve all been at least solid. It is likely that all of these pitchers will be more valuable than Jeff. Other pitchers like Trevor Cahill and Mike Pelfrey have been mediocre. They’ve had a few good years in their careers with a few mediocre years. 

Gerrit Cole, Shelby Miller and Martin Perez haven’t had much experience as starters but they’ve each shown TOR potential. We won’t know whether they’ll become TORs for another few years but so far they’ve been good to great. Likewise, it’s too early to judge Matt Moore, Jeremy Hellickson, Chris Tillman, Tyler Skaggs, Michael Pineda and Zack Wheeler but they all seem to have a chance to be average starters. Michael Pineda had an excellent rookie year in 2011 but was injured for all of 2012 and 2013 and has had injury issues in 2014. He will be arbitration eligible in 2015. Arlodis Chapman is one of the best closers in the majors while Neftali Feliz was good for a few years before becoming arbitration eligible. Wade Davis struggled as a starter but has been amazing as a reliever and is probably one of the best relievers in the majors. Andrew Miller and Jake McGee are solid relievers while Brian Matusz put together one strong season as a starter and a few decent ones as a reliever. This is disappointing but they are helping their team.

Dylan Bundy and Taijuan Walker have both been injured. Each of them has plenty of time to come back and have a solid major league career. It is worth noting that Michael Pineda, Martin Perez, Matt Moore and Jeremy Hellickson are also currently injured. Trevor Bauer and Jacob Turner have been unimpressive so far but have spent limited time in the majors.

It appears that Casey Kelly and Kyle Drabek are going to be busts. Adam Miller, Danny Hultzen, John Lamb, Mike Montgomery and Tyler Matzek are the five prospects that haven't made it to the majors and are no longer rated by Baseball America. Adam Miller and John Lamb have been disappointing and may never make it to the majors. Mike Montgomery and Tyler Matzek have struggled in the past but have shown some promise in AAA and may still make it to the majors. Danny Hultzen suffered a severe shoulder injury and it is questionable whether he will ever pitch again. I wouldn't be stunned if Danny Hultzen, Mike Montgomery or Tyler Matzek ended up being successful in the majors in some role but at the moment they look like busts.

Out of the 36 prospects ranked between 10-25 from 2007-2013 there have been 8 stars, 3 potential stars, 2 average starters, 3 excellent relievers, 3 solid relievers, 10 unknowns and 7 busts. That probably means that one-third will become stars, one-third will be either average starting pitchers or good relievers and the other third will either be decent relievers or busts. For every Casey Kelly or Kyle Drabek there is a Clayton Kershaw and David Price.

If I were a Cubs fan I would want better prospects in a Samardzija trade then the ones they received in the Garza trade. But after looking at the value of a Baseball America pitcher ranked between 10 and 25 from 2007 to 2013 I wouldn’t be willing to trade one of Gausman or Bundy for Jeff. Many of these prospects ended up being considerably better than Jeff at a considerably lower price. Even if Gausman or Bundy don't end up being better it is likely that they will be worth more due to their minimum salaries and the six years of service time. 

25 February 2014

What We Don't Know About MASN

My previous post discussed what we know about MASN. In this post, I'd like to take a look at some of the things that we don't know in this post. Just to recap from last time, here's the table I printed at the end of last post with everything that known in it.



I’d like to start with a thought experiment. Suppose that the MASN deal provided an equal amount of equity stakes profits each year. In other words, suppose MASN paid out 50 million in equity stakes profits in 2014, 50 million in 2015, 50 million in 2016 and so forth. If so (it isn’t), then the Nationals would receive 22.5% of the equity stakes profits while the Orioles would receive 77.5%. This is because the average of the Nationals equity stake from 2012-2031 is 22.5%.

Now in 2012, the Nationals received an amount between $7 and $7.3 million in equity stakes profits. In 2013, the Nationals received between $8 and $8.3 million in equity stakes profits. And in 2016, the Nationals are projected to receive between $11.5 and $12 million in equity stakes profits. We don’t know what they are projected to receive in either 2014 or 2015 but we can presume that the amounts are between $8.5 and $11 million. Otherwise, this would indicate that the Nationals received more money in either 2014/2015 than they did in 2016 or less than they did in 2013. It also seems reasonable to surmise that the number in 2014 is smaller than the number in 2015.

If this is all correct then the Nationals will receive an amount between $45.5 million and $48.5 million in equity stakes profits between 2012 and 2016. Suppose that amount is actually $47 million. 

Now suppose the Nationals will receive $47 million in the first five year span and an equal amount in equity stakes profits from 2017-2031. If so, the Nationals should be projected to receive 24.2% of all equity stakes profits. Now suppose that the Nationals will receive 47 million in the first five year span, a similar amount the next fifteen years with a 2% bump for inflation and all the rest of the money in the last five years. In that case, the Nationals will receive 26.3% of all equity stakes profits. I don’t believe that either of these cases are what will happen or what is projected to happen. 

What they tell me though is that the Nationals will receive an amount between 24 and 26.5% from this deal or that the Nationals will receive roughly one out of every four dollars in equity stakes profits from 2012-2031. If so then if as the Washington Post reported that the Nationals are projected to receive $600 million from equity stake payments than the Orioles should be projected to make roughly $1.8 billion from equity stake payments give or take $50 million over the twenty year period.


POSSIBLE MODELS

Using what we know from the previous post, I attempted to build a model that would project what MASNs revenue, media rights payments, equity stake payments and operating expenses look like. I was able to come up with one model based on the revenue numbers that Keri stated in his article and another model based on the revenue numbers that I’ve heard. Both models presume that operating expenses go up by a fixed amount per year while revenue goes up by a fixed amount per year plus an extra increase for each incremental year. This is because the revenue numbers that are known increase by a larger percentage each year.  

The financials using my revenue numbers may look similar to this. All numbers are in millions.



Using the revenue numbers provided by Jonah Keri the data might look like this.



The model using the revenue numbers provided by Keri has an annual operating expenses amount similar to that of CSN Houston. The model using the revenue numbers that I heard has a more linear amount of revenues. I feel that including both is helpful. Fortunately, each model results in a similar amount of equity stake payments paid to the clubs and therefore end up with the same results describing how much the Orioles and Nationals will receive from MASN from 2012-2031. I tried building a number of models and the relationship between the Orioles and Nationals equity payments remained roughly the same. 
 
The last unknown is the future value of MASN. As stated earlier, the Nationals will control 33% of MASN while the Orioles will control 67% of MASN at the end of 2031. Unfortunately, I have been unable to find any information about how much MASN is projected to be worth at the end of 2031. 

This Washington Post article, quoted Bloomberg as currently valuing MASN at $600 million. If so, 33% of this is $200 million. If MASN doesn't gain any value between now and 2031 than the Nationals stake will be worth $200 million. But this seems unlikely.

This article from the Philadelphia Daily News suggests that CSN Philadelphia might grow by 10% per year. If MASN grows by 10% per year than MASN will be worth $4 billion in 2031 and the Nationals stake will be worth $1.3 billion. The Nationals stake will grow by 20% from 2012-2031 and the Nationals will have received another $800 million in equity.

To sum up, both teams are receiving $1.5 billion in media right fees. The Orioles are receiving roughly $1.8 billion from equity stake payments while the Nationals are receiving $600 million from equity stake payments. If MASN is worth $4 billion in 2031, than the Nationals will have received $800 million in equity due to this deal bringing them to a total of $1.33 billion while the Orioles will own $2.66 billion in equity. The Orioles will have received $3.3 billion in money payments and will own an asset worth $2.66 billion while the Nationals will have received $2.1 billion in money payments and an extra $800 million in equity while owning an asset worth $1.33 billion.

Now that I've discussed MASN's financial situation and what each team receives from MASN on a year-by-year basis, next I'd like to compare what the Orioles and Nationals receive from MASN to what other teams receive from their media deals.