Why a Manny Machado trade might be so hard to get done

The NL Central is winnable for the St. Louis Cardinals. They’re a few games behind the Brewers but still project to finish a game ahead of them; the projections think the Cubs will still win the division comfortably, but the Cards can address that by continuing to win their Cubs games. Failing that, a Wild Card is well within reach. As a team that still has a solid chance at reaching the playoffs now that hot weather has arrived, the Cardinals should be doing what they can to make their 2018 team as good as it can be.

The AL East is not winnable for the Baltimore Orioles. Nor is a Wild Card within reach. See?

Baltimore’s season is done. As a team done playing meaningful games when the hot weather arrives (done well before that point, frankly) the Orioles should be doing what they can do turn 2018 value into future value. The place to start is obvious: as Craig Edwards wrote weeks ago, a Manny Machado trade is now inevitable.

So the Cardinals and Orioles make natural trade partners right now. They already were in the offseason, but now Baltimore really has no excuse for not getting serious about moving Machado. Of course the Cardinals aren’t alone in wanting to get better right now; all the remaining contenders (which is still a lot of the league) are in the same spot. And of course all those other contenders are perfectly capable of seeing Baltimore’s situation. Machado would make any team better, and Baltimore will have many offers to choose from.

Still, the Cardinals are a great match — as strong as anybody — for what Baltimore is reported to be looking for. Baltimore (we’re told) wants strong young pitching. St. Louis is, once again, proving itself to be as good as anybody out there at keeping a pipeline full of strong young pitching. The only real hurdle to a Machado trade, then, is figuring out exactly which pitcher or pitchers Baltimore would receive.

That’s a big hurdle, though. It it weren’t, it’s likely a trade would already have happened this offseason: Buster Olney has reported that Baltimore felt it was nearing a trade of Machado to the Cards in the winter based around Jedd Gyorko and unnamed pitching prospects (plural?). If the prospects were named Weaver, Flaherty, or Reyes, well, you can see why the Cards would have gotten cold feet. Those are very valuable assets, especially to give up in a rental of a player who will become a free agent in November.

It’s a hell of a rental, though. Machado is a superstar having a superstar season. Entering play today, he has a 170 wRC+ and 2.9 fWAR. Even though he doesn’t appear to be the elite defensive player he was his first few seasons in the league, that kind of offensive output from either a solid defensive third baseman or even-minimally-competent defensive shortstop adds up to an extremely valuable player. Machado is already approaching 3 WAR in value for 2018, and projects for another 3-4 over the rest of the season.

So a team buying Machado is buying let’s say 4 WAR* in production; the winning bid is going to be the one projecting him on the aggressive side. It’s not as simple as paying 4 WAR in future value, though; if it were, the Cardinals could just offer some fifth-starter-ish guy like Austin Gomber and call it square. There are a couple of factors in play that make the sticker price on Machado higher than his projected production before free agency would suggest in a vacuum:

*4 WAR assumes he’s traded tomorrow; the price theoretically goes down every day Baltimore holds him, although that may be mitigated some by increased buyer intensity as the trade deadline nears.

• Not all WAR is priced alike. The buyer, specifically the buyer’s place on the win curve, matters. Adding 4 WAR to the Cincinnati Reds for the rest of 2018 still leaves them in last place. On the other hand, for the right team, adding 4 WAR over the rest of 2018 could potentially take them from out of the playoffs entirely to a winning division title. The latter type of team will pay more than the former, and the bidding for Machado will consist mostly (maybe entirely) of teams in the latter category.
• Being handed $100 today in a lump sum is worth more than $100 dribbled out over the next 5-6 years. There’s empirical evidence that teams apply discounting to future value, and maybe do so pretty heavily.

So we should expect the winning bidder to pay a premium for Machado’s production. I don’t know how much that will be; nobody does yet. For the sake of moving forward, let’s call it a 50% premium; eyeballing a recent win curve constructed by Eno Sarris suggests that’s about the right amount for the peak of the win curve vs. an average team. A team buying Machado today is buying 4 WAR, but should be willing to pay for more like 6. Reduced to a dollar value, that’s about $60 million in value — less the ~$10M still owed to Machado, that puts us around $50M in net present value for Machado.

So what does that look like? It’s not necessarily easy to define. Take Jack Flaherty: based on his scouting evaluations coming into this season, Flaherty is worth around $22M in NPV. By that metric, the Orioles asking over the winter for (say) Gyorko, Flaherty, and another quality pitching prospect looks reasonable.

But do you still treat Flaherty as an untested “prospect” at this point, or is he just a good, young, MLB-caliber pitcher? If you use Flaherty’s projections instead of his scouting grades, he currently looks like a 2.5-WAR pitcher over a full season. If you project that out over six years, even with projected salary inflation and a 10% annual discount on future value, then Flaherty’s a $100M+ asset. There’s a ton of daylight between $22M and $110M, and a lot of uncertainty about how to price the risk inherent in any young pitcher. Regardless of where you stand, you can certainly appreciate why the Cardinals would make Flaherty unavailable — and ditto Luke Weaver and Alex Reyes, who project similarly (if not better).

Looking at the chasm in how a team might value a rookie pitcher, it’s easy to see how negotiations between these clubs could stall out despite the apparent ease of the fit. The Cardinals may reasonably feel that they know their most prominent young pitchers well — and if they’re confident that each can be an average MLB starter or better, then they’ll feel that each of them individually is worth more than a Machado rental. For their part, the Orioles may reasonably feel that none of the trio is really proven yet — and if they’re treated more like prospects than established pitchers, their values should be discounted to the point where none of them is even enough for a Machado trade by himself.

One easy way around this would be to just leave Flaherty, Reyes, and Weaver out of it; it’s not like the Cardinals don’t have other good arms almost ready to graduate, and those guys’ values are easier to agree upon because they’re definitely still unproven prospects. But beyond the thorny problem of how to value the Cards’ best young pitchers in the first place, there’s always the problem of Baltimore’s front office getting any trade past the club’s famously hands-on (in a bad way) owner, Peter Angelos.

If you’re Dan Duquette and the only way to get approval to move Machado is to come away with one or two of the best prospects your trading partner has, and the Cardinals’ prospect lists your boss is looking at all start with Reyes and Flaherty, and they’re off-limits for perfectly good reasons that your boss doesn’t accept... maybe the path of least resistance is, eventually, to just go elsewhere. Or maybe you stand firm, keep waiting, and hope the Cardinals give in. But that’s a recipe for a staring contest, with no easy resolution.