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New rules altering teams' trade strategy

Posted by Matt Pepin, Boston.com Staff  July 18, 2012 10:35 AM

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Shortly after 3 p.m. on Tuesday, Cleveland Indians president and former general manager Mark Shapiro took to his Twitter account. And what he typed centered on one of the key principles of this major league trading season, for the Red Sox and everyone else.

"Slow trade mkt due to new compensation rules + 11 teams in AL alone above .500 and w in 2 G's of wild card. In NL 8 teams w in 3 G."

Translation: July ain't what it used to be. And thanks to the terms of the new collective bargaining agreement between players and owners, the approach for all involved parties at the trading deadline is likely to change dramatically.

Let us explain.

In 2007, when the Red Sox were on their way to a second world title, the team had an obvious need for bullpen depth behind Jonathan Papelbon and Hideki Okajima, the latter of whom was in his first major league season. Club officials feared that Okajima would hit a wall late in the season, and so they wanted a more established reliever as insurance for the late innings.

The Sox subsequently made a July 31 trade with the Texas Rangers for righthanded closer Eric Gagne, who proved to be a colossal bust as a set-up man. Even so, the Red Sox believed there was relatively little to lose by "renting" Gagne for two or three months, the Sox could let him depart via free agency and get compensatory draft picks in return. The logic was simple.

Even though the Sox sacrificed first-round pick David Murphy (still with the Rangers) and lefthander Kason Gabbard in the trade with Texas, the Sox would be able to "replenish" those players in the following June draft with one or two compensatory picks in the first two rounds. Two players out. Two players in. Two months (or more) of relatively cost-free service from a reliever whom many deemed to be among the best in the game.

As it turned out, Gagne's poor performance entitled the Sox to only one draft pick (and not two) in the subsequent draft, a 45th overall choice that the team used on pitcher Bryan Price. Even so, Price was far more than the Sox would garner if they made the very same trade today.

Specifically, nothing.

If that sounds like a small change, it isn't. In the aftermath of "Moneyball," major league draft choices have more value than ever before. Under Theo Epstein, the Red Sox were highly skilled in managing the flow of draft picks in and out of the organization, a skill that had a profound impact on the success of their player development system. The existence of compensatory draft picks allowed the Sox to have among the most first- and second-round selections in all of baseball during Epstein's tenure, an interesting paradox given what the draft was intended for.

The draft, after all, was designed to help the bad teams more than the good ones, not the other way around.

Hence the changes to the rules governing free-agency compensation, which make true "rental" deals like the Gagne maneuver far less appealing to teams like Boston.

For example: The sexiest names on the current trade market at the moment are Cole Hamels (Philadelphia Phillies), Zack Greinke (Milwaukee Brewers), and Ryan Dempster (Chicago Cubs), all starting pitchers eligible for free agency at the end of this season. For the Phils, Brewers and Cubs, the value of those players on the trade market is now considerably less than it was a year ago at this time, when any acquiring team likely would have received two compensation picks if and when those players hit free agency.

But now? Guys like Hamels, Greinke, and Dempster aren't as valuable as they used to be. Their sole value to any acquiring team is in the current pennant race, and the longer teams wait, the fewer the starts that any of those men would make. By the time July 31 rolls around, Hamels, Greinke and Dempster will have roughly nine or 10 starts remaining this season, which seems like a terribly small amount to pay any substantive price for in the absence of compensatory draft picks.

So what does this all mean? That if the Phils, Brewers and Cubs do not get better offers than something amounting to roughly a top 50 player in the draft - the compensation Philly, Milwaukee and Chicago would receive when their pitcher leaves - they might be better served to keep the player and bite the financial bullet on the remaining salary. Unless the Brewers, say, are hard up for cash, moving Greinke for a marginal prospect is not worth it.

As such, someone like Dempster shouldn't really be the focus of any team talking to Chicago Cubs president Theo Epstein about his pitching. The real focus should be Matt Garza. And here's why:

Currently signed for this season at $9.5 million, Garza is eligible only for arbitration at the end of this season. As a result, Garza is not a true "rental." Any acquiring team would have Garza for the balance of this year and all of next. And under the new rules, any player who spends a full year (or more) with a team qualifies for a sandwich-round compensation pick (roughly in the top 50) of the following draft.

Again the bottom line: if you're trading with the Cubs, you can have Dempster (at a prorated $14 million - or roughly $4.7 million) for two months and get nothing in the way of compensation when he leaves. Or you can have Garza for a total of $15-$16 million over a year-and-a-half - two stretch runs in the pennant race - and get a top 50 pick when he leaves.

No brainer, right?

Door No. 2, please.

For someone like Epstein, this obviously makes Dempster a hard sell, no matter how well he is pitching. In the absence of draft compensation, only the most desperate team for a championship would sacrifice anything of real value for a player who might (or might not) impact nine or 10 games down the stretch. Baseball is a game most teams play at or near .500. Had the Cubs known the rules changes were coming last fall, they would have undoubtedly traded Dempster last season, when he would have had a much higher value because he qualified for compensation.

Now, the Cubs might get almost nothing for him, a scenario that might help explain why the Red sox got what they did (read: relatively little) for Kevin Youkilis.

For the Red Sox, this means the Sox may need to explore the market as sellers as much as buyers, particularly as it pertains to people like Jacoby Ellsbury, Jon Lester or even Josh Beckett. If the Sox have doubts about keeping any of those players beyond next season, trading them now might be the best plan because their value will be next to nil on the trade market once they hit the final year of their respective contracts.

Of particular interest here are Ellsbury and Lester, who could be a free agents at the end of next season. (The Sox hold an option on Lester for 2014, but the option is null and void if he is traded before then.) If the Sox believe that Ellsbury and Lester are destined to leave via free agency, they might be wise to trade them now, particularly during a season in which the Sox look like just one of the middle-class pack in the American League.

As for Beckett, consider the following: if you were the Texas Rangers and wanted a front-end starter, Hamels/Greinke/Dempster or Beckett provide dramatically different options. In the case of the former, there would be no draft compensation and the cost of re-signing the player would be exorbitant. In the case of the latter, the Rangers might give up a little more, but they would have Beckett locked up for two more years (a very reasonable risk for pitching) and be entitled to draft compensation when he departs.

Again, Door No. 2 is a very appealing option.

For all of major league baseball, the new rules changes are undoubtedly having a profound impact, particularly during an American League season in which an incredible 11 teams are, at worst, within two games of the final playoff spot. At the moment, there are 11 potential buyers and just three true sellers. In theory, that should fuel competition on the trade market. But the absence of draft compensation on many players means the bidding is likely low or non-existent at a time when it should be high, which cannot help but make you wonder if changes are in the game's future.

Maybe, as Shapiro later suggested on Twitter, there will be more action now before the Aug. 31 deadline for postseason eligibility, though deals after July 31 still would require players to clear waivers. Or maybe, after many years of speculation, baseball will indeed move the trading deadline back to, say, Aug. 15.

In the interim, we can all only stand by and watch as major league executives play a new game of poker almost entirely on the fly.

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About Mazz

Tony Massarotti is a Globe sportswriter and has been writing about sports in Boston for the last 19 years. A lifelong Bostonian, Massarotti graduated from Waltham High School and Tufts University. He was voted the Massachusetts Sportswriter of the Year by his peers in 2000 and 2008 and has been a finalist for the award on several other occasions. This blog won a 2008 EPpy award for "Best Sports Blog".

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