Flash forward a few weeks, in Toronto, on a sports-talk radio show.
“Today in a blockbuster deal, the Toronto Blue Jays have parted ways with former Cy Young Award-winner Roy Halladay, trading him to the (insert team name here) for a package of prospects including (insert names of blue-chippers here). Blue Jays GM Alex Anthopolous said that it was a sad day for the franchise to lose a pitcher who had been the heart and soul of the Blue Jays’ pitching staff for several years, but acknowledged that the Jays would not be able to meet Halladay’s asking price on the free agent market and that it was better for the team to trade him now.
“Now, we’re getting your reaction to the deal and on the line with us is Ed from Scarborough. Go ahead, Ed.”
“Yeah, I can’t believe that the Jays traded away Halladay for nothing, man…”
—
Let’s play a game. Someone puts ten dollars on the table. I will propose to you how we will split the money. After I do that, you have a decision to make. You can accept my proposal, in which case you walk away with whatever my proposal was, or you can decline my proposal and we both get nothing. Would you accept if I proposed an even split, five dollars for you, and five for me? Probably. Now, would you accept if I proposed that I take $9.95 and left you with a lousy nickel? Probably not.
Why not accept though? The choice, from your perspective, is between nothing at all and a free nickel. It makes no sense to do something that’s clearly irrational to cling to some stubborn idea of fariness. But surprisingly, if you responded irrationally by rejecting my hypothetical offer of a nickel, you’re not alone; in fact, you’re in the majority. What I’ve recounted is a classic framework in game theory called the Ultimatum Game. It’s been studied experimentally, and what’s shocking is that people routinely turn down offers that would make them better off because they “aren’t fair.” The idea that justice must prevail is apparently worth more than free money, and it’s very ingrained into the human mind-it doesn’t feel right to do.
The baseball equivalent of this game is exactly what’s about the play out with the Blue Jays. See, the Jays have this guy named Roy Halladay and he’s on the trading block right now; perhaps you’ve heard of him. The question now is how to establish fair value in return for a Cy Young winner and undoubtedly, one of the premier starting pitchers in the game today.
Or is it? In some sense, Roy Halladay is worthless-at least to the Blue Jays. A sober look at the Blue Jays’ roster suggests that the chances of making the 2010 playoffs are minimal, even with Roy toeing the rubber every fifth day. Trading Halladay certainly doesn’t make things better, but there isn’t much further down to go. If the Blue Jays don’t trade him, he likely walks away at the end of the season, and the Blue Jays will get a first-round draft pick in the bottom half of the round in return. Considering that Halladay will likely go to a “big market” team who is constantly in contention, it will likely be deep in the first round. (Yes, they’ll also get a sandwich pick. I’d personally go for roast beef.) It’s hardly fair compensation for a player of Halladay’s caliber.
It’s not likely that the Blue Jays will get back equal present value in a trade either. CC Sabathia-for-Halladay makes for a great debate-starter, but those types of trades are the domain of fantasy baseball. Of course, the Jays wouldn’t walk away completely empty-handed from any Halladay deal. They’ll get a package of “prospects” in return, but prospects are a risky business because their value is three years in the future, and a lot can happen between now and 2012. Like the world ending.
Enter the realities of the market. Revenues are down for a lot of teams, but agents are still politely requesting salaries in line with those given out when times were better. Increasingly, teams are reluctant to part with blue-chip minor leaguers, for the simple reason that they are a cheap source of talent. This leads teams to place a premium of value on a player not just for his talent, but also because he is young. The Blue Jays may be offered second-tier prospects where they would prefer the top-line guys, because as nice as Halladay would be for the other team, he’s not as nice as having two or three guys who will put up good numbers for the MLB minimum for a few years.
You could make a pretty good argument that Roy Halladay is worth two or three high-grade prospects in a perfect world, but what happens if potential trading partners don’t offer them? Teams don’t have to match the value of the player for whom they are trading. They need only to make the best offer among the other teams bidding and out-do the default option (the two compensatory Type-A picks). While the Blue Jays would do well to get two or three (or more) teams bidding against each other to get the value of the package up, that process only works when at least two of the teams are willing to bid high. If market forces clamp down that bidding process, the Blue Jays might be faced with a best offer that is better than two low first-round draft picks, but doesn’t come close to equaling the value on the field that Roy Halladay brings, even after you factor in what the prospects might become in three years.
And so we have all the elements of the Ultimatum Game. In Halladay, the Jays functionally have nothing. Someone is willing to come along and give them an offer which will make them better off for saying yes than for saying no (and taking the two draft picks). The problem is that it’s not an “equal” trade in terms of talent. Here’s where Alex Anthopolous just can’t win. If he’s thinking rationally, then he has to say yes (assuming he doesn’t think a better offer from another team is waiting). A team should say yes to any trade which makes them better off compared to the other options available. However, he’s going to have to fight what appears to be a very normal human inclination to say, “That’s not fair! No deal!” Even if he makes the deal, he’s going to have guys like Ed from Scarborough angry at him for “not getting enough” or “getting nothing” for his star pitcher.
To say that the Roy Halladay situation is the first big test for the new Blue Jays regime is a little cliché. It is, but not for the reason you might think. It’s shaping up to be a test of how Alex Anthopolous makes decisions. Does he make decisions based on rationality or on emotion? Deciding based on emotion feels better for you and makes the fans happier. Deciding rationally will make the team better in the long run, but will probably feel awful. How he makes that decision will say a lot about the new man running the show in Toronto.
Russell A. Carleton, the writer formerly known as ‘Pizza Cutter,’ is a contributor to Baseball Prospectus. He can be reached here.
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A pack of prospects that helps make the Blue Jays an 85-90 win team for a couple years in the early-to-mid-'10s would generate far greater attendance at the gates, increased season ticket revenues, and higher ad revenues that I think would outweigh any gains made by having Halladay pitch 17 or so home games this year. I doubt a lot of Toronto residents are paying for season tickets based on seeing just Roy Halladay.
Both competitively and keeping in mind the value of the franchise, dealing Halladay now seems to make nothing but sense for the Jays.
When you play in the AL East, you don't have the luxury of building a very good team (as the Jays have done the past few years) but instead must construct the Best Team In Baseball since you're directly competing against 2-3 of the best teams in baseball just to get a chance at the playoffs.
If they don't feel they'll be competitive for the playoffs with the prospects netted for halladay, then maybe their goal for the next few years is just to win as many games as possible. there is no reason to accept the trade then unless the prospects provide more wins than halladay will provide in 2010, which as you say, isn't likely going to happen.
There might also be an interest for a small interest team to devalue prospects and overvalue veterans. If the blue jays hang on to halladay and some contender misses the playoffs by a game or two, I'm sure the jays will gloat, "probably should have made a better offer for halladay, huh?" there is no tangible value in doing this, but may work to their advantage in the future, an aspect missing in the otherwise apt ultimatum game analogy.
This also only represents baseball interests. There are various economic interests that, while you may disagree with, are factors when running a baseball team. Sure the Jays might be better off getting something rather than nothing for halladay, but if that something discourages enough Ed's from Scarborough, then maybe it's not worth doing.
The following shows:
Day of Week/ Avg Home Attendance in Doc Starts/ Avg Home Attendance in Non-Doc Starts
Mon / 26,959 / 16,063
Tue / 31,302 / 19,009
Wed / 18,542 / 18,734
Thu / N/A / 20,436
Fri / 21,026 / 23,002
Sat / N/A / 26,126
Sun / 30,554 / 28,324
Note that Monday is skewed by Opening Day, which drew 48,000+ and was started by Doc. Take that out and his Monday average is 16,425. Tuesday, half of Doc's 4 home starts were vs. NYY. Otherwise, the #s are fairly flat. He doesn't draw as well as other starters on Wed and Fri, does a bit better on Sunday. He's not drawing a significant number of fans to the seats in Toronto, relative to what a more competitive overall club would in the near future.
What does draw fans to the Rogers Centre is competitive baseball. Home games with 35000+ in attendance:
8 total
4 started by Halladay/4 by other
1 Opening Day
3 vs. Red Sox
1 vs. Yankees
1 vs. Phillies
1 vs. Mariners
1 vs. a losing team (White Sox)
Note Halladay is no more or less likely to bring in a big crowd than are the Red Sox--in fact, as a % of total appearances in the Rogers Centre, Halladay is less a draw to the home fans than the Red Sox.
The other thing that draws the fans is a weekend afternoon. Outside Opening Day, those 8 games w/ 35,000+ in attendance were the first home game vs. the Yankees on a weeknight and six Saturday or Sunday 1pm starts.
Residents of Toronto will go to see competitive baseball. They did it to the tune of 4 million in home attendance three times in a row, dropped off following the strike the next year and never got their home fans back to the park by finishing above 3rd place only once in 15 years. If dealing Roy Hallady for prospects that will get you more competitive quickly is a possibility, you gotta do it.
I'm a big fan of behavioral modeling and the Ultimatum Game in particular, but isn't the Blue Jays situation a little different than the Ultimatum Game due to the closed environment that MLB teams function in?
In the Ultimatum Game, I don't really care how much money my deal-proposing partner gets, because I know I'm going to win something. My partner getting more money than me never hurts me. In MLB, if the Blue Jays send Halladay away for a tiny prize, it might improve one of their competitors in the long-term.
While an "unfair" deal might benefit the Blue Jays even if it's tiny returns, it does make one of their competitors better, and especially an in-division trade might screw the Blue Jays down the road. If they get any offer from the NL, it might make sense to get Halladay as far away as possible, but I'm not sure if it's always best to unload him for anything no matter how small the best offer might be.
Pretending that the one-time monetary outcomes of the game are the only outcomes is a mistake that probably not even Kenneth Arrow would make.
Giving up on a season, however. That certainly does affect how many season tickets you'll sell. Even granting that first paragraph, it probably makes financial sense to hang on to Halladay unless you do get full value for him. At least until the trading deadline, maybe then you take the best you can get for him.
The question to ask is, will the Jays get more trading Halliday now for a team that wants him for the whole year or will they be able to ignite a bidding war among contending teams -- like Cliff Lee or C.C. Sabathia -- during the year?
In this case, the decider should come out with a pretty sweet deal. Certainly, the decider will have more than 0.05. Even if the offerers were not allowed to change their offers, the decided will have a significant amount of power. Maybe more accurate models will contain offerers with varying amounts of money, but in most cases, the decider should come out with the lions share of surplus.
In the Halladay example, fairness is arbitrated by a number of participants making offers, where the rational response is to accept the value-maximizing offer. To say that the Blue Jays should accept any offer because it is greater than zero assumes that the game is being played by the Blue Jays and one other team which, if Anthopolous is doing his job correctly, shouldn't be the case.
Beyond that, there are other concerns with taking "a nickel" for him. One is that the team is setting up a bad precedent for future deals, where other teams think you'll do bad business just to unload a player. Think about it this way: if the new administration already had a reputation for unloading just to do it, would they get good or bad offers for Halladay? Yes, the potential trade partners have to compete against one another, but you don't want to make it any easier for them.
Furthermore, there is some value to a game of chicken here. If you don't get a deal and you aren't in a rush to get whatever you can, you can wait until another team decides they want him bad enough to pay handsomely. Could be now, in March or at the trade deadline, but it is pretty senseless to take your nickel when you might get a couple of Franklins down the road.
The Blue Jays have finished second once and never better in the NLE the last 16 seasons. And although that second place team was a pretty darn good one--good front end, lights-out closer, production in all the right places--second place was still a bit of an overachievement in a year that only four Boston players appeared in more than 130 games and only two of their starters were healthy enough to start more than 23 games.
Several of you have brought up good points about other variables which will no doubt play into the Blue Jays' thought process. Of course, nothing in baseball is simple enough that it can fit into a few thousand words.
A couple people have brought up whether this is a true analog to the Ultimatum Game more properly. It's true that a year of Halladay and his compensatory draft picks aren't worthless, but there's probably a better offer out there. True, there are multiple teams (I assume) making offers, but eventually, they will all bid up to their highest point. One of them will be the best. That's when it becomes a two player game. What if that offer isn't "equal value" to Halladay? So long as it beats the two draft picks, then the Blue Jays should take it. The idea of taking things to the trading deadline is a rational idea, but eventually, you have to make a decision. It's possible that you get a better deal in July, but at that point, you might still find yourself not getting equal value.
I think some people misunderstand here. It's not that the Jays should take the first offer that comes along that's better than the two draft picks. They should build a market, encourage teams to bid up, etc. When everyone says "... and that really is my final offer" they should take that one.
The other issue is whether there is some value in not cooperating, whether in the form of "hey you know you screwed the other guy over" (which, added to $3.00, will get you a cup of coffee), or whether building a reputation for further trades is worth it. (Something like: "Anthopolous is soft and will take less than full value.") I don't think that holds up in this case for a couple reasons. One, Halladay is a major stakes game. How often do you trade a guy like him? You need to make sure that you get something for him. If that means you get a little less when you trade some random middle infielder next year, so be it. Second, I don't know that it really is "giving in" here as much as bowing to the reality of the situation. Structurally, the Jays are screwed. They have no leverage other than "make a better offer or we'll send him to Team B," but even that has its upper limit. When they make another deal where they have some leverage, they can hold out all they want. They can spin this one (correctly) as "what were our other options?"
Yes, the fans are going to be mad. Trading Halladay is an admission that the Jays don't think they have a chance for the next few years, and that's discouraging, because Americans... oh right... want a winner and want it now, and most of the time, you can only have one of those.
Also, I think a very strong argument can be made that "screwing over" a person is in a teams best interest. The Red Sox losing Halladay to the Yankees or Rays is entirely different than losing him to the Pirates. The Red Sox's utility gained (or lost) from this trade is dependent on where Halladay goes. If the alternative is the Pirates, maybe Halladay is worth $10 to the Red Sox. If the alternative is the Yankees, he may be worth $12 (since, the Red Sox are less likely to make the playoffs if they don't win, dropping their expected revenue).
At the end of the day/week/month/trade-deadline/haggling, the Jays have a choice of accepting their best offer - yes or no. The best offer may still seem unfair, but 'no' means they get his services for the remainder of the season and nothing else.
But the only very large difference in this year's conundrum concerning Halladay is the fact that if the Jays kept him for another season, they themselves speak as if they see no chance to contend whatsoever.
Why does a GM have to win each and every deal? They don't. I thought Ken Williams gave up too much for Peavy but as I read more about it the deal appears more solid. I wish the Jays would give up Wells to the Cubs or Sox too. The Cubs can give them Bradley for an almost even switch of bad recent memories. Please leave Rios in CF too.
There is a sound argument that he should do whatever he can to guarantee that Halladay does not end up with either the Red Sox or Yankees. His goal, after all, is to finish ahead of one of them sometime soon. He's only going to trade Halladay within the division if he gets overwhelmed relative to the value of the two picks, and it's unlikely that either the Sox or Yankees will make that kind of offer; they will both be content to let him go elsewhere, as they were with Santana.
That leaves the Phillies and Angels, and Halladay is very unlikely to sign an extension with the latter because he wants to play on the East Coast. In fact, he's stated that the Phillies are his ideal destination.
So it's basically the Phillies (who are reportedly trying to deal Blanton's last arb year to create salary space) or bust. Trading Halladay for Michael Taylor and Travis D'Arnaud would be a huge win -- you'd save Halladay's 2010 salary, save the signing bonuses on the two picks, improve your 2011 draft position, end up with two better players more quickly, and guarantee that Halladay does not pitch the next five years for a team you're trying to catch. (The Phillies would then let Cliff Lee walk a year from now and recover some of the value they gave up with those two draft picks.)
Getting two picks for Doc and having him sign with the Phillies would be clearly less desirable; getting just the two picks and having him sign with the Yankees or Sox would be a disaster.
Of course, as good as it is when examined rationally, this trade would give Ed from Scarborough an aneurysm.
Hell of a dilemma. But if I can explain the logic so succinctly here, why can't Anthopolpus explain it to Ed? (You'd leave out the "we're trying to get worse" part, of course.)
When I saw the title of the article, I thought it was going to be about trading Halladay and Wells together to someone for nothing in return. Would getting out from under Wells's contract be worth more than a late first round pick and a sandwich pick?
Just found the following link when trying to find the remaining value of Wells's contract ($107 million), and I think I had seen the idea somewhere else too (maybe another BP column?):
http://bats.blogs.nytimes.com/2009/11/27/to-get-halladay-mets-should-offer-to-take-wells-too/