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Unintended and Overvalued; or: A Funny Thing Happened On the Way To the Trade Market

Considering the trade market, why it's so thin, and what that has to do with the amateur draft.

Jeff Curry-USA TODAY Sports

First things first: I don't want to talk about last night's game. I'm going with that thing my mother (and presumably your mother as well), told me when I was very young: if you don't have anything nice to say, just don't say anything at all. Adam Wainwright was awful, the offense was just as bad, and the Cardinals lost a game they really needed to win. The Redbirds managed to occupy first place for all of about four hours the other day; I fully expect them to go 3-7 over the next ten games in order to fall well back of the Brewers once again, because that sort of seems to be what the 2014 Cardinals do best: shoot themselves in the collective foot every time it appears they're gaining some real momentum.

So, it was a bad game, one not really even containing much of anything I consider interesting. Some losses at least have interesting elements to them; this one really had nothing, other than Jake Odorizzi pitching pretty well -- if very inefficiently -- and making me wish all the more the Cards had drafted him back in 2008 like I was hoping they would instead of Brett Wallace. Then again, Wallace turned into an excellent trade piece before falling off a cliff, so I can't really complain too much.

But anyway, bad game, so I'll say nothing more about it. I have an actual topic today, luckily.


I've been thinking a lot about the trade market lately. Not surprising, I'm sure, given that we're less than ten days from the trade deadline and every other baseball fan on god's green earth is probably speculating on the same handful of players.

However, I've also been thinking a lot about the amateur draft, which isn't quite such a common topic, I don't believe, even if the Astros' current disaster has put the draft a bit further toward the front of people's consciousnesses.

Thirdly, I've been thinking about the free agent market, which is almost never on anyone's mind this time of year, unless maybe you happen to be a somewhat weirdly un-extended lefty pitching for the Boston Red Sox.

Lastly, and most specifically, I've been thinking a lot about Huston Street. Why Huston Street? Well, because in the alternate reality I've constructed in my head, the one where I am god, Huston Street was drafted by the Astros, is currently their all-time saves leader, and has been honoured already by the club naming the street outside the stadium after him. And at some point in time in that alternate reality, there's an almost-hilarious moment when someone using the voice-activated GPS in their car has to say the words "Huston Street Street, Houston." And yes, these are the sorts of things that go on in my head.

Of course, if I'm being honest, the real reason Huston Street has been on my mind -- and the minds of plenty of other people, I'm sure -- isn't because of what I consider to be the very height of comedy, but the fact he was recently traded, and the haul the San Diego Padres received in return for him is, at least a little, dumb as hell.

Now, it should be said, the California Angels were the team doing the acquiring of Street, and so them giving up pretty much everything not nailed down in their farm system isn't exactly the same as, say, El Birdos doing the same thing. Nonetheless, the Angels gave up a ton of talent in return for adding Huston Street, including their consensus top prospect, Taylor Lindsey, who is, in fact, quite a good prospect.

The question is this: why did the Angels give up so much to get Street? Or, to put it another way, what made the Padres able to extort such a remarkable price for a year and a half of reasonably-salaried closer work?

The answer, of course, is leverage. And by leverage I really mean our old friends supply and demand, and the imbalance between them. (There is another answer, if you care to assume Jerry Dipoto is just a terrible negotiator, but I'm not comfortable assuming that about a major league GM, usually.)

As things stand right now, there are very, very, very few outright sellers in the game. Particularly considering the Rays' recent run of success has them at least considering the notion of contention and, ergo, holding on to David Price for this season, we're talking about one of the thinnest markets of sellers I think I've ever seen. The reason? The second wild card, aka the Bud Selig Special (which is also a sandwich comprised of roast beef, provolone cheese, garlic aoli, and a rising economic tide serving to obscure the really shitty job one has done as commissioner of a major sporting league, all served on grilled pumpernickel); there are more teams than ever who at least believe themselves to be in contention for the ridiculous farce that is the play-in game, and are making their decisions to buy, sell, or stand pat in the trade market accordingly.

The amazing dearth of selling teams on the market has had the predictable outcome we all learned about way back in, um, whatever class that was in seventh grade where supply and demand first came up as a thing (civics, maybe?): the price (in talent), to acquire difference-making players in the trade market has gone through the roof, to the point of being prohibitively high in many cases. I gave up on the Cardinals somehow acquiring David Price the moment I saw what Oakland had to give up for Samardzija and the ghost of Jason Hammel, aka Jason Hammel. The few teams who are far enough out of contention to comfortably sell assets are in an amazingly advantageous position right now. And, honestly, I think it's only going to get worse, to the point teams are going to be so loathe to give up the haul in future talent it's going to take to acquire these meaningful upgrade type talents that the whole enterprise is going to just grind to a hault.

So where do the other two bits come into this? Well, I'm glad you asked.

The new collective bargaining agreement that baseball and the player's association agreed to just a couple years ago largely overhauled the way the first-year amateur draft works. The biggest change was the slotting system, which changed the bonus structure from a suggestion by the commissioner's office to a hard-ish sort of cap number, a total teams cannot overspend without forfeiting future draft picks, which virtually no intelligent General Manager is going to be willing to do. The reason behind the harder slots? Well, that's kind of tricky, because there are plenty of reasons given. In the end, though, it really boils down to this: team owners, for some reason, wanted to control the costs in the draft, even though those dollars have been shown, over and over, to be the most efficient dollars a team can possibly spend. The surplus value generated by just one draftee who makes it is so massive that it can pay for a whole draft budget in basically one season, if not less. Still, teams wanted to spend less in the draft, and the player's association had reason to go along with that demand. After all, the players in the draft aren't part of the MLBPA, the body doing the collective bargaining for said players who aren't members of it (seems weird and kind of super illegal when you say it that way, doesn't it?), and thus aren't really being represented by the player's association. Ergo, the MLBPA doesn't really care if draftees are getting the shaft.

Even better for the player's association is this: all that money not being spent in the draft should, in theory, make its way into the pockets of the guys the MLBPA is concerned with: major league free agents. After all, if you limit teams' ability to spend to acquire talent in the international market and the draft, the only place left for them to spend their money is on free agents, right? Well, hang on.

There was one other big change to the draft rules in the last CBA: the compensation pick rules were changed. See, as it used to be, when a team signed a high-end free agent, they would lose a draft pick, which would then go to the team losing the player. Remember the whole Type A/Type B ranking from Elias? Sure you do. It's why the Cardinals got Michael Wacha for Albert Pujols leaving, that sort of thing.

In the new system, the compensatory picks essentially disappeared. Instead, teams signing high-end free agents still lose their draft picks, but those picks don't go to the team losing the players. The picks just...disappear. A new pick is then created later, in the sandwich round, offering far less value to a team losing its free agent.

Here's the strange thing about this new process: it essentially penalizes a team for signing free agents. It's not longer a compensation system; it's really now much more punitive. There's a big imbalance between the value of the pick being lost and the later pick being created, and the loss of that 1:1 rate of exchange is why I say it's no longer really a compensatory pick. And, as we've seen, most recently this past offseason, teams are very, very hesitant to give up a first round draft pick in order to sign a free agent. Sure, the absolute tippy top guys are still worth signing, but there are a whole lot of players, really good players, who are just not quite worth losing what has become one of the most valuable commodities in all of baseball: early draft picks.

And that's where we come to the last piece of this puzzle, the free agent market. Why have draft picks become so highly valued? Because young talent is so highly valued. And why is young talent so highly valued? Two reasons. One, free agent talent keeps getting more and more expensive all the time, and two, the guys on the free agent market oftentimes simply aren't worth those high costs. We have more examples now than ever before as to how the aging curve works, and why it's a bad idea to sign a player beyond a certain age. Time is a real bitch, and she gets us all in the end. Athletes are worse off than even the rest of us in this one specific way, as 35 years old isn't at all old in human terms, at least not since the Dark Ages ended, but in professional athlete terms? You're nearing the end.

So let's look at this confluence of events all together. We have a draft system designed to suppress spending on young talent, and an international bonus pool designed to do the same thing, only in relation to 16 year old Dominican kids instead of 18-to-21 year old American kids. The money not being spent on amateur talent should, in theory, be spent on major league free agents.

But we also have a free agent tax, in the form of losing both a draft pick and the associated spending power. So there's a penalty for signing free agents. We also have teams getting smarter all the time about the way aging works and refusing to hand out crazy long term deals to free agents, outside of the absolute most elite players, and even in those cases we're seeing the really smart teams shying away from those kinds of commitments. (See also: Pujols, Albert and the 2011/2012 offseason.)

On top of those things, we have a market so tilted in favour of sellers that the returns for, say, 1.5 WAR late-inning relief pitchers is completely insane, to the point it's almost unimaginable that true game-changing talent can be acquired for any price that makes actual sense when you weigh out what's being given up versus what's being received.

So we have a trade market that vastly inflates the value of established big leaguers, simply because the supply of them is so thin. Acquiring that established talent requires an enormous outlay of young talent, which continues to become more and more important because the rising cost of free agent players makes it economically unfeasible to construct a quality team by buying talent. (Outside of maybe five or so teams in the league, that is.) Plus, the elite players have a penalty attached which makes it harder to acquire that incredibly valuable young talent that, because of the cost controls placed in the draft, cannot be invested in beyond a set amount. The young talent becomes more valuable and more desirable because the aging talent isn't worth those giant salaries, while the dearth of options in the trade market drives up the cost in that young talent to pick up any other players.

It seems that we are heading for an impasse, I have to say. I don't know where it all ends, beyond a trade market so bereft of interesting moves it may as well be the NFL, and a player market in general where there's very little worth spending money on. Teams can't invest in the draft, those young players every team is desperate to acquire, and the players they can spend on are looking more and more all the time like they aren't really worth investing in. Would you want to be the GM to sign the next Joey Votto contract? Or the next Verlander deal? Of course not.

I don't think this was a sinister plan by MLB ownership to construct a system of incentives that might end up nearly in the same place as baseball was in the days of the reserve clause, when players really only changed teams once they moved beyond usefulness. (It it was, then bravo, owners. No one saw it coming.) But, really, it isn't completely out of the realm of possibility we could be headed that direction. Teams have figured out they need to lock up their young talent early, through their most productive years. The trade market is slowly choking because of both the parity in the game and the expanded playoff format, as the limited pool of sellers drives up the price in young talent to levels teams simply aren't going to pay at a certain point. Players coming onto the free agent market after that extension they signed at 23 runs out at 30 aren't going to find a whole lot of buyers for their services at a premium price and a draft pick penalty added on to the cost of the signing.

I don't have a solution, sadly, nor do I even have a concrete conclusion to all this. I can't say for sure things are going to continue this way, until we simply don't see player movement at all until such time as the assets themselves are no longer worth the prices they'll command, with owners pocketing more and more. Maybe the market changes in some other way, and balances itself back out. But the system of incentives in baseball right now, whether intended or not, appears to me to be pushing us further in that direction all the time.

At the very least, it's an abject lesson in how unintended consequences, when you're talking about numerous moving parts and decisions, can turn something we thought we knew (rising salaries, more free agent movement, etc.), into something else entirely.