Saber-Friendly Blogging 101: Trade Value Calculator

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In case you're not following along, Dave Cameron has a stellar series going on over at Fangraphs.  He's running through the most valuable contracts in MLB, which you could also view as a raning of trade value, assuming all teams currently had the same financial and competitive situations.  (Check out last year's top five.)

If we had enough data, a project like this could be automated.  We'd need complete contract information and multi-year WAR projections just to start.  Unfortunately, I don't have any of that lying around (if you do, let me know.)  But it's still worth crunching the numbers player by player, especially if you disagree with any of Dave's rankings.  It's really not that helpful to get into a war of opinions, and bringing some data to the shouting match is a great strategy.

In that vein, I've put together a little spreadsheet you can download to help estimate a player's excess value to his team, based on expected future production and salary.  Pick a player, plug in the data, and post the results.  Disagree with someone's assessment?  Simply change the numbers and spit out your own analysis.  The download link and tutorial after the jump.

Download the Excel file here.  Some folks will want to jump right in (there are directions in the file), so go for it, but I've included a thorough tutorial below for everyone else.  Here's what the calculator looks like:

The output is the information inside the box: year, actual/estimated salary, projected WAR, projected FA value based on WAR, and net savings.  And we really only to care about the totals at the bottom, especially the net value number in the orange box.  That's the monetary savings of a player to his team compared to paying for the same production on the free agent market.  Aka, it's his context-neutral trade value.

Tutorial

To figure the actual/estimated salary (the column after year), you either need to enter a number in the Sal column (the second to last column, this one's for either free agent years or pre-arb years) or a percentage in the Arb column.  We estimate arbitration players will earn 40% of free agent value in their first arb year, 60% in their second, and 80% in their third, so enter one of those three figures.

In the Halladay example above, I entered his actual salaries for 2009 (halved) and 2010 and pretended he'd be in the second year of arbitration in 2011, thus entering 60% in the Arb column and no value in the Sal column.  Either way, a number pops up in the first Sal column, pulling the proper data via magic (IF and ISBLANK Excel functions).

The WAR column will need to be estimated by you.  You could eye-ball a weighted average or crunch your own multi-year projections.  The Val column is automatically calculated based on WAR, at $4.5M per win, plus $.4M base salary.  The net value column is also automatically calculated and is the cost savings to a team of each player's contract.  For years a player isn't under contract, make sure no cells in that column are filled in.  Finally, if you're sure a player will walk after their contract is up, enter the value of the draft picks the team will receive as free agent compensation in the solitary green cell.  As per Victor Wang, Type A's return about $5M while Type B's return about $2.5.  Feel free to hedge your bets and pick numbers in the middle or lower than $2.5M.

Now take a look at the totals.  You'll see the total cost of the contract, total expectel production (WAR) provided by the player, total expected free agent value of the player, and the total net value of the player's contract (that's the number in the little box).  Zero means a player has zero trade value (team context aside) because you could supply the same amount of production by signing a free agent at the going free agent rate without giving up anything else.  Positive numbers are good.  Negative numbers mean a team should have to include something of positive value in order to get another team to take the player.

Prospects

You could run prospects through this chart, but there's an easier approach.  Use Victor Wang's research, which Erik Manning summarized nicely in this table.  Based on whether the prospect is a pitcher or hitter and where they fall in top 100 prospects lists or John Sickels' ratings, we can estimate the total net value they'll provide to their team.  That number can range from about $36M for a stud hitting prospect to $7M for a Grade B pitcher to peanuts for Grade C prospects.

Where to Find Data

• Fangraphs and BaseballProjection player pages have historical WAR you can use to estimate future WAR.
• Cot's contracts has phenomenal salary information.
• Favor: give those sites credit when you post conclusions using their input.

One last tip.  If you're going to analyze multiple players and don't want to lose your work for each one (maybe because you want to come back and change some things later), just copy the worksheet each time and re-name the tabs to keep track of the various players.

Some Analysis Using This Tool

• What's a Fair Return For Roy Halladay? (BtB)
  
• How About Packaging Vernon Wells With Roy Halladay? (BtB)
• Braves Should Trade For Willie Harris (BtB)
• Economics of the Astros (Crawfish Boxes)
• Blue Jays Biggest Trade Values (Bluebird Banter)

As always, please share any links to work you've done related to this article in the comments.  We all want to see what others come up with in terms of trade value.