Joe’s Notes: Trade Deadlines and Inefficient Markets

The NBA Trade Deadline has come and gone, and without any league-shaking moves going down, let’s talk a little about how trade deadlines work:

Trade markets in professional sports are inefficient. Free agency markets are inefficient as well, but trade markets are more inefficient. In a free agent market, there’s still a degree of commoditization, the notion that each player will earn the highest price the market can offer. In trade markets, the number of assets available is so few and so specific, as are the number and needs of sellers, that pricing must be widely inexact. Sometimes, the Nuggets have Carmelo Anthony and the Knicks need Carmelo Anthony and more interchangeable parts can be added to the scale’s two sides until the balance is good enough to make the deal work. Sometimes, Dejounte Murray stays put.

Trade deadlines make these markets even less efficient.

This isn’t necessarily a bad thing. Like most rules in professional sports, trade deadlines are imposed in order to enhance entertainment value. Trade deadlines serve their purpose well, locking rosters in for the playoff push and making teams decide to what extent they’ll push towards said playoffs (though the collision of the NBA’s messy lottery and the NBA’s bloated playoff format have recently made those decisions ugly and sad). What trade deadlines functionally do, though, is create a semi-silent auction. It’s not a full auction. Buyers don’t up their bids and up their bids again until their bid outbids all the seller’s other bids. But it’s also not completely silent. There’s some shadowy interaction between teams. You have to beat this offer if you want Patrick Beverley.

Within this semi-silent auction, the deadline is a main character. The deadline is the cliff in the game of chicken. We aren’t offering more for Patrick Beverley. We’re going to let that clock tick.

What does this mean? More suboptimal trades, and more suboptimal absences of trades. Early trades can carry some sort of premium, one where sides have to pay a higher price to make it worthwhile for the other, for whom a better offer could theoretically materialize over the ensuing days. Deadline trades come with a different kind of premium, one where the cliff makes its presence known and one or both sides blink, agreeing to a deal they don’t like in order to avoid a situation they feel necessary to avoid.

Again, trade deadlines aren’t a bad thing. Are they a good thing? Probably, but thought experiments in which they don’t exist are fascinating to game out. More than anything, trade deadlines are interesting. That’s their purpose—to generate interest—but in a meta sense as well, they make for interesting economic markets. It’s like if luxury real estate could only be bought and sold within a specific few months.

Ranking the Boras Four

In the baseball world, the MLB offseason has grown dangerously slow. I’m not sure how the numbers compare to 2019, when Craig Kimbrel and Dallas Keuchel didn’t sign until after the draft, but the possibility of someone not signing until June is growing larger by the moment.

What’s going on?

One theory goes: Scott Boras.

Not all the remaining unsigned free agents employ Scott Boras as their agent. Jorge Soler is not a Scott Boras guy. Amed Rosario is not a Scott Boras guy. Still, the four best unsigned prizes are all Scott Boras clients. Whether he’s the cause or not, Scott Boras is a primary part of this story.

We could get more into Boras, and if this becomes a bigger story we will. The short version of our Boras thoughts is that we aren’t sure he actually puts his players’ best interests first, instead prioritizing appearances of power. This clearly works for him—a lot of players want to be represented by Scott Boras—but as with our trade deadline bit above, we might be looking at a market inefficiency.

Rather than talk too much about the agent, though, we want to talk about the four players: Blake Snell, Jordan Montgomery, Cody Bellinger, and Matt Chapman. Specifically, we want to talk about Cody Bellinger, projected by many to receive the largest contract of the four.

Snell, Montgomery, and Chapman are all 31 years old (or, in Chapman’s case, about to turn 31 years old). If they age in customary fashions, they are past their respective peaks. Cody Bellinger is 28 years old, and while he’s lived a baseball lifetime since bursting onto the scene in 2017, he has prime years left. The question is how closely those years resemble last season, when he hit 34% better than the average big-leaguer, and how closely they resemble 2021 and 2022, when he was 53% and 17% worse than average, respectively.

We like FanGraphs’s Depth Charts as a projection system, partly because averaging out other projection systems (which it does) seems a wise thing to do and partly because it’s naturally integrated across that website’s various features. Going off of that system, Bellinger should be expected to be the least valuable player of the four in 2024.

This isn’t a big surprise. Last season, going by fWAR, Bellinger was right alongside Snell and Montgomery in his production and only narrowly led Chapman in what was a good season for Bellinger and a bad one for Chapman, compared to results in 2021 and 2022. The argument in favor of giving Bellinger a big contract is the age thing: He’s younger. Three years younger. That’s a lot, especially when Bellinger’s three upcoming years all come within the window in which players aren’t generally thought to start seeing the negative effects of age.

Just to confirm, though, that Bellinger should be getting the biggest contract of these four guys, let’s take a look at what we should expect to happen over the next seven seasons. (Bellinger is projected to get a six-year deal.) Taking the FanGraphs Depth Charts projection and assigning a 0.5-WAR decrease every season after age 30 (in line with our very simplistic view of how the median player ages), here’s what happens over the timeframe of a potential Bellinger deal:

Not until 2026 does Bellinger become more valuable than Snell, Montgomery, and Chapman. Three years from now. Here’s the cumulative projected production:

Not until 2029 does Bellinger’s total production eclipse that of all three of his counterparts. He passes Chapman in 2026. He passes Montgomery in 2028. He doesn’t pass Snell until 2029.

It isn’t necessarily a health thing, though Snell missed some time in both 2021 and 2022. It isn’t really the age thing, unless Bellinger is being projected to age more gracefully than the other three players on the list. The thought that Bellinger should receive a better deal than Montgomery, Chapman, and possibly even Snell comes back to either an error in the contract estimations industry, a heavy weighting of upside, or a rather specific recency bias, one which discounts Montgomery and Snell’s dominant 2023 campaigns but makes a big deal of Bellinger’s 2023 rebound.

Is Bellinger going to receive a bigger deal than his fellow Boras men? Maybe, and he might deserve it. It’s safer to give Bellinger a lot of years than it is to give those years to the other guys. But in terms of AAV, it’s not obvious that Bellinger should lead this pack. In fact, he probably shouldn’t. Because while the four are all roughly the same player in terms of value when you forecast the next five years, the teams signing them will be signing them primarily for the value they bring this year and next year, the value which fills specific needs those teams hold. Come 2026, who knows what current rosters and current farm systems will have produced.

We’re Cubs fans on this website. We like Bellinger a lot, and we hope the Cubs land him, for his sake and ours. But if we could choose a player at the prices these guys are each expected to eventually command, he’d be third if not fourth on our list. Snell or Montgomery. Montgomery or Snell. Bellinger or Chapman. Chapman or Bellinger. There’s a gap between the pairs.

The Rest

College basketball:

• I stepped out of the room for a minute late in the first half of Auburn vs. Alabama last night, and it was one of those moments where the raw noise from the TV tells you exactly what is happening. I don’t believe Auburn separated itself from that top-three SEC pack, but they held their own, and it’s partly recency bias and partly kenpom but they probably are the best of the three.
• Devin Carter was something else for Providence in the win over Creighton. The Friars keep hanging around. We’ve been waiting for them to fall more firmly off the bubble, but they stay perched directly on top of it, and Creighton continues to struggle to break through.
• Arizona’s trip to Utah is the big one tonight. Utah has a win at Saint Mary’s that’s looking better and better, and they’ve beaten both Wake Forest and BYU, but they’re a medium enough team overall that they could still use huge wins as they try to stay ahead of the bubble. Meanwhile, Arizona is trying to put the Pac-12 away. They should have done it by now. It’ll take more than tonight to actually do it.

More Chicago, and a little Iowa State:

• Monte Morris was traded to the Timberwolves yesterday, sending him closer to the heart of Cyclone country. He’ll be backing up Mike Conley.
• The Bulls did nothing at the trade deadline, which is a hilarious thing to do as the Bulls. As we said yesterday and hinted at above, the Bulls are doing what you’d like every team to do in an ideally-designed NBA: Sticking with their good, well-liked players and trying to get as far into the playoffs as they can get. Unfortunately, this NBA is not ideally designed. The franchise remains directionless. They visit the Grizzlies tonight.
• The Blackhawks returned from the All-Star Break and lost their fifth straight. I didn’t realize how bad the Wild’s season was going. I don’t think theirs was supposed to be this way??
• My friend and I did our Cubs season ticket draft yesterday (we split a two-seat season ticket package in the nosebleeds), and thinking of the individual games made springtime feel very near and very real. If you want to get into the baseball spirit, I’d recommend looking at your favorite team’s schedule and listing out every game you could conceivably see yourself attending. Dream big. (Or, if you live down the street from the stadium, just figure out your top ten or something.)