Off a Cliff: The Lee-Smoak Deal

(puns = awesome headlines)

As you've undoubtedly heard by now, the Seattle Mariners  have traded Cliff Lee and reliever Mark Lowe to the Texas Rangers for first baseman Justin Smoak (the big prize), Blake Beavan, Josh Lueke, and Matthew Lawson. The Mariners are also throwing in $2.5 million dollars. In Lee, Texas gets the most obvious "big prize" at the trade deadline this season, coming off two monster seasons in 2008 and 2009, and has perhaps being even better so far in 2010. In Smoak, the Mariners are get a player ranked by some analysts as one of the better hitting prospects in baseball prior to the beginning of the season.

While the trade "fits" the obvious expectation of the contender trading for a big upgrade and the non-contender trading for youth, the repercussions of any trade go beyond the current season and on-the-field value. What can Lee be expected to deliver over the rest of the season? Smoak has very little major league experience, what can a prospect of his caliber be expected to give the Mariners in value? What about the other players in the deal? Lee will  be a Type A free agent after the season, what is his draft pick compensation worth? 

Lee, Lowe, and Cash

Putting it all in dollar figures is the easiest way to get common valuation for major leaguer, prospects, and other considerations. That means figuring out how many wins the players are worth. I'll be assuming four million dollars per marginal win for the 2010 season.

We are, of course, concerned with what each player will be worth going forward, so projections are in order. CHONE's updated pitcher projections (updated on July 1) see Lee as 54 runs above replacement over a full season with a 3.10 (component generated) ERA. ZiPS rest-of-season projections (at FanGraphs) give a 3.11 FIP. That's about 27 runs, and given that a pitcher influences his run environment, it's fair to say that Lee is projected to be worth 3 wins above replacement over the rest of the season, or about $12 million dollars.

Lee's value goes beyond that, as he will (barring unforeseen disaster) be a Type A free agent after the season, and will want to go on the market as the best pitcher available by turning down arbitration from the Rangers (who will certainly offer it). According to Victor Wang's research (summarized here by Sky), the value of Type A compensation is about $6 million dollars. So Lee's value then jumps to $18 million for just half-a-season. Of course, he's also owed about $4 million dollars, so the net projected surplus value for Lee alone is $14 million.

Both CHONE and ZiPS see Lowe as about a 4.00 FIP/ERA reliever, which CHONE sees as being about 0.5 WAR over a full season, or a quarter of a win over half a season. Lowe is making little over a million dollars in his first arbitration season in 2010,  over in this half season the Rangers are projected to get about $500,000 in surplus value. Next season, Lowe will probably get about $2M in arbitration if the Rangers offer it, but given his current projection, there's very little surplus value to be had if they do in 2011, even after accounting for salary inflation.

[Note: Just after posting this, I was just reminded by a little orange birdie that Lowe is actually out for the rest of the season due to back surgery. So that knocks about one million dollars of the value the Rangers are getting back in this trade, which is smaller than the margin of error on the projections. In any case it makes my overall point (a bit) stronger.]

The Rangers are a financial mess right now, which is probably why it was important that the Mariners sent along $2.5 million dollars. Altogether, Texas is projected to get about $17 million dollars of surplus value out of this trade, considered straight up. There are other considerations I'll mention below, but let's start from there. 

Smoak and the Other Guys

Given Smoak's relative lack of major league plate appearances (no, 275 PA are not terribly significant) and the difficulties with projections based primarily on MLEs, I'll stick with prospect rankings to determine general projected value. I'm am hardly a prospect maven, so I will rely on the rankings of well known "prospectors" on the 'Net, primarily John Sickels (whose rankings were used by Wang in his studies upon which these values are based).

At the end of 2009, John Sickels ranked Smoak as the #10 hitting prospect in baseball. Since Smoak is the centerpiece of the deal going to the Mariners, it might be good to get other opinions. Keith Law ranked Smoak as the #9 prior to th 2010 season. Baseball Prospectus's Kevin Goldstein ranked Smoak the #17prospect in all of baseball. According to Sky's Wang-based article, top ten hitting prospects are typically valued at $36.5 million dollars. Goldstein and Law's rankings were for all prospects, not just hitters. Still, if you think that Smoak is more like a #11-25 hitting prospect, his valuation is still about $25.1 million. If you have doubts about what these values, I recommend reading Sky's article. A quick way of putting it in perspective for myself: If in 2011 and 2012 Smoak is makes the minimum, and is merely a league average player (2 WAR), and there is NO salary inflation during that period, he's still worth $16 million dollars worth of surplus; in two years of average performance the Mariners would nearly break even on this trade. And I think most analysts would think that Smoak is likely to provide more value than that.

With all apologies to Mssrs. Lueke and Lawson, I'm not going to embarrass myself by trying to estimate their value from my scant knowledge, particularly given that Smoak's value is the Big Thing in this trade. Sickels rated  Beavan as a C+ pitching prospect earlier this season, and given his age, that Wang's research gives us a value of $2.1 milllion. 

Even Smoak valued as a #11-25 prospect makes this trade a big win for the Mariners on a surface, as they get "only" $25.1 million in value, and that's very conservative, as one could very well value Smoak at $36.5 million and include Beavan at $2.1 for a total of $38.6 million, about twice what we estimated Lee's value to be. And that's without valuing two of the prospects going to Seattle.

Other Considerations in Conclusion

These valuations were done "straight," but there are other factors that go into these decisions. I can't address all the possilities, but let me (very briefly) discuss a couple that one might use to defend the Rangers' decision

An obvious point is that the projections could be wrong. I didn't make them upto suit my whim, of course I used those from CHONE and ZiPS for  objectivity -- which is different from saying they are absolutely "true" or "right."Let's say Lee is better thought of as a 4 win pitcher over half a season, and that the other prospects are worthless, while Smoak's value is of the $25 million dollar variety. Salaries aside, Lee would still be worth $22 million ($16 for 4 WAR plus six million for draft picks), still falling $3M of value short. Now, some have argued that the 2011 draft is so stacked that the draft picks will be worth significant more. But how much more? Even 20 percent seems generous, given the attrition rate of even first round picks (and the compensation picks for Lee will not be high). But even boosting the value by 50% to $9 million dollars plus a $16 million dollar Lee only makes things "even" with the $25M Smoak, and that's with the relative valuation of players and picks altered to favor the Rangers, and being unfavorable to Mariners.

A more compelling case in defense of the Rangers' decision would be to admit that while there is a large gap in the "straight up" valuation of the respective takes, that it is worth it for the Rangers because they are in contention and thus the marginal value of each win (and the possibility of playoff advancement) makes it worth it. This is a legitimate and important consideration, upon which I will make two brief comments. First, the Rangers already have a sizable lead in the American League West and have the most talented team in the division, so while Lee increases their playoff odds,so the value added in terms of odds of making the playoffs isn't as great as one might think. Actually winning playoff series also adds value, and Lee would obviously help in that regard. I won't try to measure it, and although a truly great starting pitcher like Lee has a big impact on those games, it is again less than one might think (for perspective, remember that over a full season  Lee is probably worth eight wins at most over the Sidney Ponsons of the world). 

On the most neutral projection, I think the Rangers gave up far too much relative to what they received in return. That doesn't mean they Rangers shouldn't have done a deal around Lee and Smoak. They should, however, have received more in return in some combination of money and/or players, and perhaps shouldn't have sent so much back to Seattle (not Beavan, for example). Flags fly forever, of course, and if the Rangers go to the World Series and win it (with substantial help from Cliff Lee), the positive impact on the franchise will last for years. But they are taking a big chance -- if they don't win a playoff series this season, their chances of doing so in the future are likely to be significantly diminished without Smoak.