Trading Certainty for Upside

Hello all. We got ourselves another writer to join the IIATMS crew. This time, we're introducing long-time reader, and vigilant member of the comments section, Ted Nelson to the fold. We figured Ted's ideas would make great posts on the site and guess what? We were right. So please, be gentle, and join us in welcoming him to the team! -Stacey, Jason and the rest of the IIATMS team


The other day Brad laid out how the Yankees' two most recent trades (Warren-Castro and Wilson-Cessa/Green) involved borrowing from a position of depth to address a perceived area of need.  Another commonality between those two trades is that in both cases the Yankees traded relatively certain assets for relatively uncertain assets.

It’s not that we knew exactly what the two departed pitchers would have given the Yankees going forward.  Adam Warren’s fWAR has ranged from 0.1-2.2 the past three years, while Justin Wilson’s has been 0.2-1.5.  Bottom line, though, is that there was a good chance that both of these guys would have been effective pieces in the 2016 Yankees MLB bullpen.

2013 2014 2015 2016

(Steamer 600)

Adam Warren xFIP 3.98 3.28 3.96 3.26 (FIP)
fWAR 0.1 1.4 2.2 0.7
Justin Wilson xFIP 3.82 3.88 3.12 3.59 (FIP)
fWAR 0.5 0.2 1.5 0.5

 

On the other hand, there’s a lot of variability with the three acquired players the Yankees brought back.  Starlin Castro is well known as an enigma who has oscillated between one of the most promising young players in the entire game and one of the worst regular starters in the entire game over his six MLB seasons.  Luis Cessa and Chad Green are both mere prospects whose cannon arms come with question marks in terms of off-speed stuff (and control in Green’s case) that may prevent them from starting in MLB, if they succeed in MLB at all.

A lot of Yankees fans have been asking, ‘Why would a contending team trade two guys who are near locks to help in 2016 for guys whose contribution is far less certain?’  I think that looking at the role, upside, and risk of the players involved in these trades gives us a good idea of why the Yankees believe they are bringing back more value than they sent out.

Role on the Team

The Yankees effectively parted with two relief pitchers.  There’s a chance that Warren can be a good MLB starter, but after using David Phelps over Warren in 2013 and 2014 then rushing Warren out of the rotation in 2015… it just doesn’t seem like the Yankees see Warren as a good starter (rightly or wrongly).

Relief pitchers don’t grow on trees; however, solid relievers (not elite RPs, solid ones) are relatively easy to find compared to any other prominent role in MLB.  Relievers don’t need the stamina and variety of pitches a starter needs to turn over a line-up multiple times.  An individual relief pitcher is also getting roughly one-third the playing time that a starting pitcher will over a full season:  ~65 IP from a reliever and ~200 IP from a starter.

In this sense, even if Starlin Castro is nothing more than a platoon utility-man who plays roughly one-third of the time or Luis Cessa is an MLB reliever… their playing time will be roughly equal to the guys they replaced.

But there’s the potential for these new guys to play a larger role than that.  Castro has been an MLB starter for six seasons.  Whether he’s the regular 2B or plays a move flexible role across multiple position, Castro is likely in a position to earn a prominent role on the 2016 Yankees.  Both Cessa and Green are still starting pitcher prospects, and are both slated for AAA in 2016.  Each seems to have a real shot at starting if he can refine his off-speed stuff.

High Upside

Filling a role is one thing, but how well you play it is what really matters.  The players the Yankees brought back do seem to have a chance to thrive in prominent roles.

In fact, Steamer 600 projects both Castro and Cessa to roughly double the full-season 2016 production of the guy the Yankees traded for them.  (The point of Steamer 600 is to even out playing time disparities to isolate projected production by comparing players across the same 600 PAs, 200 IP for a SP, or 65 IP for a RP.  Warren, by the way, is assumed to be a 65 IP reliever and not a starter.)

Steamer 600

Player

fWAR

Warren 0.7
Castro 1.4
Wilson 0.5
Cessa 1.6
Green N/A

 

In addition to these higher average projections for 2016, Castro and Cessa arguably have more upside that the departed pitchers.  By upside I mean both for 2016 and long-term…  That they have a better shot at a very good 2016 (3+ WAR, say) than Warren/Wilson, and that they have the skills to continue getting better beyond 2016.

While Warren and Wilson have good shots at being in that 0.5-1.5 WAR range in 2016, their chances of being in, say, the 2-3 WAR range are probably lower than those of Castro or Cessa.

Elevated Risk

The flip-side of the upside that the Yankees received, of course, is that they also took on greater downside or risk.  This is something that a lot of Yankees fans are choosing to focus on.  And it is part of these deals.

The Yankees got players with higher expected production but also greater variability in expected production.  They traded two solid contributors for the chance at getting above average starters…  along with a greater chance of getting nothing.

Investors generally value certainty.  For the same expected return, investors will prefer the more certain asset.  In order to take on a higher level of risk, investors must be compensated with a greater potential return.

The Yankees (arguably) took on more risk in these two trades… but they also seem to have gotten a higher expected return.  The 2x Steamer 600 projections make it fairly easy to argue that the Yankees got enough upside to offset the increased risk they’re taking on in these trades.

Conclusion

These two trades, and the Wilson trade in particular, have not gotten a particularly warm reception from Yankees fans.  Coverage was kind of surprisingly scarce, actually, but Yankees fans don’t generally seem to like the idea of trading certainty for uncertainty.  (Which is human nature and even more prevalent among Yankees fans used to certainty.)

Personally, I support the Yankees decision to accept greater uncertainty, greater risk, in order to get greater upside.  Warren and Wilson are nice pieces to have on the margins of your roster.  They’re not necessarily going to significantly move the needle, though… They were not likely to be a part of the Yankees next “core.”  Castro, Cessa, and Green have legitimate chances (to varying degrees) to be part of the Yankees “core” over the next ~5 years.

And if the newbies don’t reach their upsides, they still have fallback options that look a lot like what the Yankees gave up.  Castro is a middle infielder who at least hits LHP well, so even if he struggles… he should be a solid UTL who can cover 2B, 3B, and SS.  Cessa and Green both have live arms that profile pretty well for the bullpen even if they don’t make it as starters.

At the end of the day, the Yankees are really betting that their scouts have identified undervalued talents and/or that their coaches can bring the best out of the players they acquired.  They’re trying to buy low rather than high.  We’ll see if it works with these specific players, but I like the approach.