The Arithmetic of the Arenado Trade

It’s been a week since news first broke that the Cardinals were closing in on a deal to acquire superstar third baseman Nolan Arenado from the Rockies. The process to work around Arenado’s contract was so complicated that it took three more days of negotiations between the Cardinals and Rockies respective braintrusts. It included a series of mandatory approvals from the league, player’s union, and Arenado himself, as well as several alterations to Arenado’s contract. Once the deal was announced, casual fans and even a few pundits were vexed by the imbalance in the Cardinals’ favor in the deal. Words like “fleeced” and “swindled” dotted descriptions of the trade. While there’s a lot of truth to that notion, there’s more to the story. Let’s untangle the deal and determine what exactly each team acquired in the deal. First, here’s exactly what happened.

The Cardinals acquired:

• Nolan Arenado
• $15M for Arenado’s 2021 salary
• $15M for an extension on Arenado’s contract, covering his salary for the 2027 season
• $20M- the remainder of his 2021 salary- deferred to the other years of the contract if he doesn’t opt out. If he does opt out, the Rockies simply pay him that money rather than sending it to the Cardinals to pay Arenado.

The Rockies acquired:

• Austin Gomber
• Elehuris Montero
• Mateo Gil
• Toney Locey
• Jake Sommers

Arenado, who already had a player option after 2021, gained an additional option after 2022. The Cardinals tacked on a seventh year to the remaining contract for 2027 at $15M, paid by the Rockies. Arenado also agreed to defer $20M of his 2021 salary. The Cardinals owe Arenado $164M over 7 years. It’s unclear how the deferral works- when exactly the Cardinals would pay him that amount- other than we know it won’t be in 2021, and that amount is coming from the Rockies.

There’s been a lot of surprise in some circles that the Cardinals were able to acquire a player like Nolan Arenado without including their top tier prospects. Specifically, some folks- including even Jim Bowden, former General Manager for the Reds and Nats now writing for The Athletic- have been surprised that the Cardinals could acquire Arenado without including Nolan Gorman, Matthew Liberatore, Ivan Herrera, or- in some extreme cases among casual fans- Dylan Carlson. To understand how that happened, we first have to put a trade value on Arenado. If you want to skip a bunch of math, skip ahead to the “Ok... take a breath” section.

In VEB writer emertius Ben Clemens’ breakdown on FanGraphs of Arenado’s revised contract, he included a revised ZIPS progression from Dan Szymborski. We’ll plug those values into the D-Rays Bay surplus value calculator using Arenado’s pre-trade contract. Because of the large amount of money due, his surplus value is negative. Using the calculator, Arenado’s contract is $60.5M underwater. That’s not to say that Arenado is a bad player. It simply means his extension with the Rockies was going to pay him more than his projections suggest he’s worth.

Baseball Trade Values- another reliable resource on these matters- wrote a great deal about Arenado’s contract back in September. In that article, they specify that they added 10% of his value back in as a superstar premium, and also skewed his value to the high side. That gets them to a trade value of -$43.7M.

Last but not least, the D-Rays Bay calculator can show us how much an injury-riddled 2020 changed his trade value. His 2021 projection before 2020 was 4.6 fWAR. Extrapolating that out over the contract, he comes in at -$33M of trade value.

Let’s split the difference between the -$60M figure and a cleaner -$33M had he not been injured. Perhaps his projection is hurt too much by an odd, shortened 2020, injury or not. Combined with BTV’s 10% premium for superstars, that puts us at -$42.1M in trade value. I’m not going to skew it to the high side since combining it with a 2020-free projection already does that.

Here’s the wild card. None of that matters to the Cardinals. What the Cardinals are paying him is very different after those contract adjustments. Essentially, he’s free to the Cardinals in 2021 and in 2027. Using the ZIPS projections, his surplus value to the Cardinals is a much more manageable (but still negative) -$28.8M. We also have to add in the value to Arenado for the option before 2022. Thanks again to Ben Clemens’ amazing content, we can see that it’s between $7M and $10M depending on how you weight Arenado’s 2020 in his future projections. We don’t care about the 2021 option (worth $6M) for the Cardinals because the Rockies are paying his entire 2021 salary, eventually.

Ok... take a deep breath.

Now that we know that Arenado’s contract had negative trade value, everything starts to become more clear. The Rockies gave up $50M to outweigh the -$42.1M in trade value that Arenado had as a Rockie. That means they bought $7.9M of prospects in this trade. Top tier prospects like Gorman ($35.1M trade value on BTV), Liberatore ($25.7M), Herrera ($20.6M), and Zack Thompson ($13.7M), let alone Carlson ($62.8M), are worth much more than the $7.9M of value the Rockies gave the Cardinals. Let’s use BTV to gauge the prospect package traded by the Cardinals.

(extremely Mel Allen voice) How about that? The Rockies actually acquired more value than they gave up by about $5.2M. That certainly doesn’t mean the Rockies pulled one over on the Cardinals, though, which would be a hilariously incorrect conclusion. Remember when I mentioned the option value to Arenado? Add that $7-10M to the $-28.8M and you get -$35M to -$38M. Then remove the $50M the Rockies included. That’s a gap of $12-15M that the Cardinals had to account for with prospects... which is exactly what they did.

Side note: BTV really nailed this whole thing, particularly since they couldn’t have foreseen the complexities. Kudos to them.

The pundits and fans claiming this trade as “Cardinals trade good, Rockies trade bad” are correct, but it has nothing to do with the prospect package given the financial realities. For the Rockies, it’s more the glaring sign of organizational rot that they had to trade one of the best players in the league just two years into an extension because they made him mad. It’s also not great that they signed him to such a limiting extension in the first place if they felt there was any chance they’d have to move on in the near future. To their credit, the prospect package at least matches the value they gave up.

The Cardinals end of this is obviously good because they acquired an elite performer, something they’ve desperately needed for a few years now. They did so while absorbing some risk, but mitigated that risk by successfully negotiating bells and whistles that appeal to Arenado, the player’s union, the Rockies, and the Cardinals themselves. They did all of that without giving up any of their top tier prospects. Arenado is 100% free to them for 2021, which is of huge importance given that the league had no fans in attendance during 2020 and may not for portions of 2021. That’s quite a needle to thread.