An issue that always pops up during deadline season is team payroll space, or how much budget room a team has to add major league talent at the deadline to bolster a run to the playoffs. Selling teams don’t have to worry about this pesky number for their own organizations as the minor leaguers make peanuts that constitute rounding errors in a multi-billion-dollar industry, but they always have to be aware of how much room potential trading partners have. However, selling teams should become more worried about their own budgets because that budget room can become a valuable asset in its own right.
Teams have always been amenable to including cash with a major leaguer in a trade, provided it nets them either more assets in return, or better assets, than what the major leaguer himself would have produced as a return. However, only a few teams have started to scratch the surface of using their budget room to produce more minor leaguers without giving up notable major league assets. Atlanta took on Bronson Arroyo’s contract to acquire Touki Toussaint, a minor league pitcher with a first-round pedigree, sending back a player (Phil Gosslin) who would barely net anything in a trade by himself. The Dodgers one upped the Braves, acquiring a Competitive Balance pick and Ryan Webb, paying Webb’s salary in order to get the pick. The next logical step is a deadline market where selling teams can act as third-party and send cash to a contending team to allow the contender to make a deal for the piece they need.
While teams would prefer that a convenient contract was sitting around the clubhouse that could be traded to clear the needed room, with the plus that the open roster spot could then be filled with the desired trade target, cash can serve the same purpose. Even if the commissioner’s office wouldn’t be huge fans of teams straight up trading players for cash, it’s within the rules and just takes out the annoying step of having to DFA the contract just acquired. The optics might suggest that the team getting the cash is cheap and would rather save money instead, but when a team increases the prospect haul given up for a deadline acquisition to get some cash as well, this is exactly what they’re doing. They’re just making it less obvious when simply increasing the prospect haul.
This would be a good way for contending teams to literally cash in on the recent inflation of the values of prospects. It also makes sense for the teams that are out of the race to buy up as many prospects as they can to try to produce major leaguers. While the first team that trades away a prospect for cash, only to see the prospect become a valuable major leaguer, will be ridiculed by fans, it is no different than Atlanta seeing the haul that they gave up for a season of Mark Teixeira turn into a major part of the core of back-to-back pennant winners. Plus, this kind of two tiered transaction (selling a prospect to help absorb a deadline deal) can help reduce the prospect cost in deadline trades.
If there becomes a market for cash at the deadline, then the prospect cost will go down because of the competition. Right now, the teams who have the major league trade assets have a monopoly over this aspect of deadline deals. By introducing competition, the selling teams would have to lower their cost for including the cash, or see their trade partners go elsewhere for the cash aspect of the trade, even further reducing the returns they receive. There would be a lower limit to the price though as teams would refuse to engage in a deal where they didn’t feel they got enough value. But for the front office to be able to use cash in this manner, they need an owner willing to give them the cash in the first place.
Owners who are seeing their organization go through a rebuilding period tend to want to slash payroll. It makes logical business sense: why spend any more money than required? However, if owners were willing to give their GMs some cash to be able to use to acquire prospects and be able to act as a third team in deadline deals, it would be a good investment. A prospect who reaches the majors and produces is one of the best returns on investment that owners see in their lucrative careers. While the return always reflects the risk (the high rate of players who never see the majors), front offices could target certain types of prospects in these deals. While smaller market teams wouldn’t be able to produce the cash needed to actively participate in this market, medium and large teams should have the cash capacity to start next year.
While this kind of market would introduce additional complexity to a time where front offices are already surviving off of coffee and Red Bull, teams already have the valuations of prospects in their systems already. This would just be another way to use the numbers and work that front offices are already doing, another way to improve their minor league systems. With the recent expansion of front offices, they should have the capacity to take on this additional market.
It is important to note the use of terms above. Players were referred to as contracts and assets to show how from a business and economic standpoint this kind of market makes sense. Moving from theoretical to practical presents a bunch of issues, the number one issue being the fact that GMs deal with humans and not paper, which makes the job several times more complex. But it would be interesting to see this market pop up at future deadlines.Next post: An NL Central Podcast, Episode 10
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