Playoff odds and the decision to buy or sell

We are at the point in the season where teams are trying to assess where they are in the hunt for the playoffs and whether it makes more sense to buy or sell at the trade deadline. For some teams, this decision is pretty straightforward. Teams that are the odds-on favorites to make the playoffs will look to strengthen their status as favorites by making an upgrade or two in the coming weeks. Then there are other teams, like the Phillies and Brewers, that have been out of the playoff hunt for most of the season and effectively have no chance of making the playoffs in 2015. For these teams, the decision to sell is a very easy one to make.

For a lot of teams, though, the decision of whether to buy or sell is not all that clear, especially now that there are two wild card spots in each league. Hope springs eternal, and every team within shouting distance of a playoff spot envisions themselves doing what the Royals did last year. Last week, Jon Heyman wrote a column listing the wish lists of 23 would-be buyers, illustrating the fact that very few teams see themselves as sellers at this point in the year. With 23 buyers and only ten playoff spots (including 14 potential buyers for five spots in the American League), it seems quite possible that teams will make the mistake of buying when their chances of making the playoffs are not really all that high. And even if these supposed playoff pretenders don't make the decision to buy at the deadline, they may still hurt their team in the long run by refusing to be sellers.

Over the last few years, it feels as though more teams have fooled themselves into buying (or not selling) at the deadline due to the extra wild card spot. Given the sheer quantity of potential buyers at this year's deadline, I thought I'd go back to last year's deadline to see how the decision to buy or sell played out for different teams.

For this exercise, I thought it would be helpful to look at a team's playoff odds going into the deadline in order to take away any hindsight bias that may result from such analysis. Unlike standings, playoff odds combine what has already happened with what can be expected to happen going forward. Playoff odds use projections to estimate what will happen for the rest of the season, but they factor in the games that have already been played and the wins that teams have already banked in determining a team's chances of making the postseason. While playoff odds are not perfect, I find them more helpful than simply looking at a team's place in the standings going into the deadline. As Jeff Sullivan of Fangraphs pointed out last week, a team's projected winning percentage going forward appears to be more predictive than a team's actual winning percentage, even this late in the season. As a result, a playoff odds system that incorporates rest of season projections will likely be more reliable than one that only looks at standings.

A perfect example of the difference between standings and playoff odds is the Minnesota Twins. At the All-Star Break, the Twins have a 49-40 record, which puts them in the first wild card spot, four games up on the first team out of the playoffs. Despite this, the Twins have a 34.8% chance of making the playoffs, according to Baseball Prospectus, in large part because their projected rest of season winning percentage is .465.

So here's a look at where teams' playoff odds were going into last year's deadline and what decision (buy, sell, or neither) they ended up making. (The win-loss record, games out of a playoff spot, and playoff odds are from July 24th, a week before the trade deadline. This may seem like an an arbitrary point to choose for this exercise, but I figured that this is pretty close to the latest point at which teams can decide whether they will be buying or selling. After all, teams may not have time to adjust to small fluctuations in playoff odds in the few days preceding the deadline. In addition, I was afraid that the playoff odds from a later date might reflect trades that were made in that final week, and I wanted to avoid this as much as possible.)

(Note: buy/sell decision based on my interpretation of the moves each team made before the deadline. Every trade made before the deadline last year can be found here.)

Looking at this table, there don't appear to be many teams that made obvious mistakes in which direction they chose to go at the deadline. Naturally, the teams with the highest playoff odds were buyers, and most of the teams with the lowest playoff odds were sellers. As expected, the teams in the middle had the most variation in what they ended up doing.

The Blue Jays and Pirates, who were contenders but not odd-on favorites going into the deadline, can barely be considered buyers, since the players they acquired (Danny Valencia, Ernesto Frieri) were not difference makers. The Blue Jays appeared to be constrained by ownership in who they could acquire and how much salary they could pick up, while the Pirates did not see trading away top prospects for short-term gain to be a worthwhile endeavor. It's hard to argue with either of these teams' strategies in hindsight. The Pirates made the playoffs with the team they had, while the Blue Jays finished five games out of the second wild card spot, a gap that probably couldn't have been closed with one deadline acquisition.

The Yankees and Mariners were two of the teams that didn't end up making the playoffs despite being buyers at the deadline. Neither team brought in major difference making type players, but they still worked to fill some holes on the roster. Given where they were in late July, it is hard to argue with either of the decisions to be buyers. The Yankees were tied for one of the wild card spots in late July and had solid playoff odds at the time and the Mariners were only slightly behind the Yankees, both in the standings and in their playoff odds. Their individual moves didn't end up working out very well, but the fact that they nearly made the playoffs makes it hard to question their overall deadline approach.

After these two teams, the only other buyer with lower playoff odds was the Marlins, who are well known for doing things their own way. In fairness, their major move, the acquisition of starting pitcher Jarred Cosart, was supposed to help them both in the short term and in the long term, as Cosart was under team control for another few years. Also, the Marlins didn't really have any players that a seller would typically look to trade at the deadline. The only rumors surrounding the Marlins at the deadline last summer were about Giancarlo Stanton, and as it turned out, the Marlins were intent on keeping him in Miami for a very long time.

The sellers with the highest playoff odds (the Indians, Rays, and Red Sox) seemed to be making sound decisions at the time, as none of them had better than a one in five chance of reaching the postseason. What was interesting about these teams, especially the Rays and Red Sox, is that they didn't act like sellers in the traditional sense. Most of the players these teams acquired were major-league ready and gave them a chance to compete as soon as 2015. They were still selling present value for future value, but that future value was more in the near future than most of us are used to seeing with teams labelled as sellers.

The only teams that can be second guessed are the ones that didn't commit to buying or selling at the deadline. The Reds, Royals, White Sox, Mets, and Phillies basically stood pat at the deadline, not in a good enough spot to be buyers, but not bold enough to be sellers. They were all hoping to catch lightning in a bottle for the final two months of the season and somehow manage to sneak into the playoffs. As it turned out, one of these teams, the Royals, ended up doing just that. Still, the fact that one of these teams made the playoffs doesn't necessarily mean all of them were justified in being non-sellers. After all, it's hard to say what the success rate for this kind of strategy needs to be for it to be a sound course of action.

It is important to remember that each of these teams was in a unique situation and probably considered other factors besides playoff odds. For example, the Royals were very much in a win-now mode due to their trade for James Shields and Wade Davis, and it wasn't clear whether the team would have a better opportunity to end their playoff drought anytime in the near future.

Other teams, including the Mets and the White Sox, did not appear to have many obvious trade candidates, especially rentals. Sure, the Mets could have considered trading Dillon Gee, Bartolo Colon, or Daniel Murphy, but each of these players was under contract for at least another year, and the Mets appeared to like their chances of contending heading into 2015. The White Sox were in a similar situation, preferring to hold onto players for 2015, and while things haven't gone as well for them this season, the most they could have done as sellers a year ago, short of trading away players with several years of team control, would have been to deal someone like Alexei Ramirez.

The Phillies are the Phillies, and they probably should have been sellers well before last season's trade deadline. It would be a waste of time for me to rehash all the ways that Ruben Amaro hurt the Phillies in the long-term by hanging onto players as their trade value slowly disappeared.

Perhaps the most interesting buy/sell non-decision from last season's trade deadline belongs to the Reds, who had plenty of desirable players they could have traded away. Selling at the deadline with 21 percent playoff odds is a tough decision to make, but for the Reds, it could have jump started a rebuild that people have seen coming for a while now. Even if they were planning on making a run at contending one more time in 2015 with their core group of players, they probably could have acquired more in return for players like Alfredo Simon and Mat Latos at the deadline than they did when trading them away in the offseason. Then again, if owner Bob Castellini is finding it hard to commit to selling given where the Reds are at this season, it's hard to imagine him letting the Reds front office do anything remotely close to selling at last year's deadline.

All in all, it appears as though teams had a pretty good sense of their playoff odds going into the trade deadline last season. Yes, there were a few teams on the fence who probably could have been more decisive one way or the other, but I don't think any teams made gross misjudgments in their decision to buy or sell. My guess is that we will see much of the same at this year's deadline. There may be 23 teams that have the chance to be buyers in the coming weeks, but some of those teams will lose a few too many games in the coming weeks and end up being sellers. If last year's deadline was any indication, there won't be too many teams fooling themselves into being buyers when it's all said and done, and all the concerns about a lopsided trade market (with too many buyers and not enough sellers) will end up being overblown.

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Nick Lampe is a contributor at Beyond the Box Score and Viva el Birdos. You can follow him on Twitter at @NickLampe1.