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The sunk cost fallacy and the Troy Tulowitzki release

The organization has taken a somewhat bold step in cutting ties with the oft injured short stop.

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MLB: Toronto Blue Jays-Workouts Butch Dill-USA TODAY Sports

Roster construction is an exercise in economics. Given the scarcity of the resource, teams - in theory - try to maximize as many wins as possible from each spot. This maximizing of resources is constrained by factors such as budgets, desire to contend, availability of players as well as replacement value of those players.

For a 40-man roster, additional considerations may include protecting prospects from the Rule 5, having roster spots available for trades as well has having replacement players who can be promoted to the 25-man roster in the event of an injury, or some other circumstance.

However, sometimes teams end up in a situation where a player signed to a long-term deal starts to show signs of decline, the popular decision is to ride keep him on the roster till his contract runs out. Case in point is Albert Pujols – once a great hitter, Pujols ended 2018 with -0.2 fWAR while making $27 million. The Los Angeles Angels have refused to move Pujols where he’s effectively a below replacement hitter all because they owe him $87 million for the next three seasons.

So why is that an organization continue to use the resource inefficiently only because they’ve paid a price for it? Of course there are examples when teams have released players with significant cost attached to him; Boston Red Sox parted ways with Pablo Sandoval a couple of years ago, but it’s not a common occurrence in baseball.

Behavioral Economists have used terms like “Sunk Cost Fallacy” and “Loss Aversion” to describe this phenomenon. Sunk Cost is defined as “cost incurred which is unrecoverable”. Daniel Kahneman, in his best-selling book “Thinking, Fast and Slow” said: “A rational decision maker is interested only in the future consequences of current investments. Justifying earlier mistakes is not among the Econ’s concerns. The decision to invest additional resources in a losing account, when better investments are available, is know as sunk-cost fallacy”.

The longer you invest in something, the harder it is to abandon. Loss Aversion is defined as “people’s preference to avoid a loss to acquiring a future gain”. Almost every industry has suffered from these two fallacies and baseball is no exception. To justify keeping bad contracts on the roster you’ll hear comments like:

“It’s already a sunk cost and the team is rebuilding, why not see what he’s got left”

Sometimes they’ll identify intangibles:

  • “His veteran presence and proven leadership is a key part of this club house”
  • “He knows how to win”
  • “He’s a big game player”

Sometimes front offices truly believe in these intangibles, but more often than not, what they’re really telling you is that i) their decisions are driven by emotions and the length of commitment and ii) they would hate to cut ties with a player only to see him rebound with another team, no matter how minuscule a chance exists of that ever happening (Hint: Chris Carpenter).

So when the Toronto Blue Jays announced earlier today that they’ve released Troy Tulowitzki, it came as a shock to many fans and as well as folks in the media. After all, he’s owed $38 million over the next two years and the fact that Jays don’t plan on contending over the next couple of years, an argument could be made that it’s ideal to have Tulowitzki around, see if he’s still got music in him and if there is, would there be a desperate trading partner at either 2019 or 2020 trade deadlines?. Also, he could have been a good foil for younger kids like Vladimir Guerrero Jr., Lourdes Gurriel Jr. and all other kids expected to be up in the next year or two.

However, if we take a step back and assess the situation, I think it makes a lot of sense for the club to down this route. First, it takes away what would have been an unnecessary distraction for the club over Tulowitzki’s remaining two years. Given Ross Atkin’s comments earlier about not seeing him play 140 games at shortstop meant that the team is better off to cut ties and move on.

Second, given the Jays have shown a commitment to go with their younger guys, it makes sense to play Gurriel Jr. as many games as shortstop in 2019 to see what they have in him, especially with Bo Bichette expected to come up in 2020. Moving Diaz earlier in the offseason was also a signal that the front office was committing to Gurriel Jr. as their everyday shortstop.

Third, given the Blue Jays are rebuilding for the next year or two, it makes sense to let Troy Tulowitzki find another home which maybe a better fit given his age and what he could offer to a potentially contending team. There has already been talks about him being a fit for Oakland Athletics to play second base.

Fourthly, it also opens an extra spot on the 40-man roster. As things stand now, Blue Jays have 38 spots occupied. They may need an extra spot or two if they plan on adding arms in the free agency, trade or through a Rule 5 draft.

It’s also beneficial for a young player like Gurriel Jr. to know he’s the everyday shortstop and has an opportunity to put himself in a conversation for a long-term role. Whether that happens, and Bichette moves to second base or vice versa, the organization will have enough time to make a decision on Gurriel Jr. after 2019.

There’s also a glut of infielders with Brandon Drury, Devon Travis, Lourdes Gurriel Jr. Justin Smoak, Randy Tellez and Richard Urena on 40-man. It can be safely assumed that Guerrero Jr. will be up in a month or two which means he too will be added to 40-man creating more challenges for the front office.

This does not mean that there’s are no mixed feelings about how the Tulowitzki era ended in Toronto. Despite not being on the field for almost two seasons, he was pivotal in their second half run in 2015, making spectacular plays and providing some memorable hits along the way including the two playoffs as well as the wild card berth clinching hit in the 8th against the Red Sox in 2016. In 238 regular season games for Toronto, he produced a 4.8 bWAR.

Going by Kahneman’s theory, the Jays made a baseball decision where they feel the roster spot occupied by Tulowitzki can be someone who either offers a better value or has potential to provide better value in the future. Whether one agrees this is the right decision or not, we know money wasn’t a motivating factor and should give confidence to the fan base that the organization is willing to spend in the right places. This decision was made purely from a baseball standpoint. Let’s hope more teams including the Jays learn to avoid the sunk cost fallacy and maximize the use of their roster spots. Maybe they can do the same with Kendrys Morales.

I don’t think this is the end of the road for Tulowitzki. For the sake of all things that’s good about baseball, I sincerely hope that he finds a perfect fit and makes a comeback to dazzle us with his 360-degree moves at short for another few years before he calls it quits on his own terms.

Azam Farooqui is a contributor at Beyond the Box Score. You can follow him on Twitter at @DRCoverwRC