Clarifying The Benefits Of Trading

            In his article “The True Cost of Winning in the MLB”, Grantland’s Michael Bertin tries to debunk a claim that the Oakland A’s “spend less than any other MLB team per win” because the metric used to support this claim is faulty. Or he sort of does. Actually, the article seems more like the end of Fight Club where a hallucinogenic Ed Norton is arguing with himself (with the other “version” of himself being played by Brad Pitt). Bertin first goes on to say that payrolls at the beginning of the year often do not match payrolls at the end of the year. He uses the Houston Astros and the Boston Red Sox as examples of teams that dumped a significant amount of salary through late season trades. These examples shows how it is hard to calculate how much teams pay per win because who is on these teams can change throughout the year. However, he later states that team’s effective salaries remain constant. Both the Astros and Red Sox actually ended up having to pay much of the salaries of the traded players. Therefore, a team’s Opening Day salary could be used to calculate the cost per wins because they often are responsible for contracts even after trading players. Yes, we are as confused typing these sentences as you are by reading them.

            Yet, this was not the most head-scratching part of the article. Bertin also states, “You can't do much to effect revenue in season, so why would you want to wildly increase costs by taking on more salary? You can't raise ticket prices mid-season. Even adding players in August won't impact attendance that much (if you're in a playoff race, you're probably already drawing well; if not, you're not)... By two-thirds of the way through the season, a team isn't finding more money in an old shoe box (unless Carl Pohlad left behind some boxes somewhere).”

While these statements are somewhat easier to understand than his cost per wins logic, Bertin’s argument here is actually a little more difficult take. First, he completely discounts the efforts made by a team’s ticket sales and marketing professionals, who make up a large portion of an organization’s business operations staff, throughout the course of the season. According to Bertin, teams are essentially paying these people to do nothing because ticket sales are totally dependent on if a team is in a playoff race or not. Second, he discounts any impact that dynamic ticket pricing would have on a team’s ticket sales. Dynamic ticket pricing allows teams to adjust ticket prices based on factors like if the team adds new players from a trade. In fact, adjusting for changing circumstances is the whole point of dynamic ticket pricing. Third, a team trading for players will likely increase jersey / merchandise sales. This means there is a larger amount of new merchandise revenue available for an organization even if it has to split the money with all 30 other teams per Major League Baseball’s revenue sharing agreements.

             Ironicaly, Bertin’s comments represent an old way of thinking about off the field success even as he examining a relatively new metric for measuring on the field success. Sports managers and decision makers should not (and most do not) allow their teams to stand idle if there are ways to increase revenue during the season. While this does not always mean that teams should trade for more expensive players, it can mean that organizations can make trades to enhance a team’s bottom line.