FanPost

The Trade Deadline and Baseball Economics

With the trade deadline approaching and the Pirates being thought of as legitimate buyers, I thought it would be appropriate to bring up how the economics of baseball affect how the Pirates will attack the end of July. Basically, this can be viewed as the revenue a player will generate minus their cost. The cost of a player is usually pretty simple, in that it is his salary. The revenue from a player can be derived, primarily, from three different areas: 1) Marquee Value 2) World Series Value and 3) Ticket Value.

The marquee value of a player is pretty straight forward. This is just the value that a player’s name will bring to a team. Although I would say that this is the smallest of the three areas, many people do come to games just to see Albert Pujols, Justin Verlander, or even A.J. Burnett. In addition, how much Greinke related memorabilia would the Pirates sell if they traded for him? With that said, the Pirates would have a maximum of three months to capture as much revenue from the marquee value of a player if they go for a rental player like Greinke, Hamels, or Michael Bourn. If you are in the camp of the Pirates trading for a guy that may resign with the Pirates, like Anibal Sanchez, do you really think people would go nuts over Anibal Sanchez jerseys? Probably not, we would most likely see people busting out their old Freddy Sanchez jerseys instead. So I am not saying that the marquee value of a player, or the value generated from the Pirates being able to market a big name, is useless, but I think it shouldn’t be the primary focus going into the trade deadline.

The World Series value of a player is solely the fact that a World Series victory would generate abnormal revenue jumps in the following 3 to 5 years. This is through all revenue generating opportunities for a team. It is important to note that the WS value is not the peak of a linear relationship between future revenue and how far a team advances in the playoffs, rather, it is an astronomical jump from WS runner up to WS champion. However, with the MLB playoffs being such a small sample size, we all know the best team sometimes doesn't win. How does this factor in to the trade deadline? Well, I really don't think there is one player that puts a team "over the top" for a WS victory. I think it is a better plan to gear your team to make the playoffs. With that in mind, trading for a guy like Justin Upton may be a good idea if he moves you into the playoffs.

Ticket value comes from the amount of tickets a team sells. I forget the exact stat, but I think around 62% of an MLB team's average revenue comes from ticket sales. I got that stat, and many of the concepts of this post, from a book by Vince Gennaro called Diamond Dollars. I believe Vince Gennaro is the current president of SABR. Either way, ticket revenue doesn't get affected too much post deadline. After the deadline, even a big name player will only give you a couple extra wins. These couple extra wins shouldn't change the drive for the playoffs too much, so I don't think ticket value adds too much economical value after the deadline.

What I am saying here is two things. One is the obvious in that the only noticeable economical boost available after the trade deadline is WS value. This isn't even necessarily through WS chances, but rather getting in the playoffs, and giving yourself a 1 in 10 chance of being WS champ. But the second point here is the more important thing. The Pirates are not in a normal position. Do you really want to mortgage the future for a 1 in 10 shot at a WS title? The Pirates will rarely be in a position to grab a BIG marquee value player for a long enough period of time to reap the economical benefits. If you want to argue that the Pirates have a legit shot at the playoffs this year, and that opportunity is certainly not guaranteed down the line and, therefore, the Pirates should push hard now, I'll take your argument. However, I think the more logical thing is to consider the future of the club. The Pirates can compete for years and be profitable while upping their payroll into the top 15 in MLB if they maintain their core. Not to mention the fact that I think the Pirates are in a position to make the playoffs, even if they only make minor moves. Will they be the best team in baseball? Almost certainly not, but they could get into the playoffs, and that's all you need. Make moves at the deadline, but be conservatively aggressive. Kinda like last year.

This was tough to shrink, so it's far from perfectly written, but I think it gets my point across at least a little. Also, I don't mean to make the playoffs seem like a total toss up like 1 in 10 implies, I was just trying to make my point clear. Sorry about the length



This is a FanPost and does not necessarily reflect the views of the managing editor (Charlie) or SB Nation. FanPosts are written by Bucs Dugout readers.

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