Ottoneu Arbitration: Using Early Trade Talks

Last week, I re-introduced the ottoneu arbitration omnibus. It’s a one-stop shop for just about everything arbitration. Since then, Chad Young has chipped in with a few additional thoughts about this season’s allocations.

Arbitration runs through November 14. So you still have a few weeks to decide on your allocations or votes. Once the 14th rolls by, we can shift into offseason trade mode. Even though I don’t have much more advice to offer about the arbitration process, we can still discuss arbitration-adjacent topics.

You can’t trade yet. In fact, the trade wizard is completely disabled. However, nothing is stopping you from early negotiations. And, depending how those talks shape up, it can affect your (and your rival’s) allocation decisions.

Let’s say you want to acquire my Mike Trout. The first thing you have to do is convince me that it’s in my best interest to trade Trout. That’s not going to be easy. Ostensibly, your best argument will revolve around budget constraints.

Using my actual team as an example, I probably have to trade one of Trout or Clayton Kershaw to get back under the $400 cap. But I don’t want to. They’re both so valuable in-season, and I’ve seen the underwhelming return they generate due to their high cost.

Last offseason, Kershaw netted pre-injury Marcus Stroman ($6) (this trade wasn’t with me). Trout ($55) and Jonathan Lucroy ($14) cost me Steven Souza ($4), Corey Seager ($5), and Jace Peterson ($3). In both cases, the previous owner got something good, but I can’t help feeling underwhelmed. Trout and Kershaw win leagues. Stroman, Seager, and Souza are merely nice, cost effective core components. Add up enough of those, and you can afford to roster a Trout or Kershaw. Except these owners already traded them away. See the problem?

You can potentially convince me to trade Trout by bidding him up during the arbitration process. Trout went into the offseason as a $57 player. He’s already been allocated $5 more dollars with seven teams left to allocate.

Obviously, those early allocations can be changed between now and the end of arbitration. However, all you have to do is help to make me open-minded about trading him. If you pile on another $3, I’ll start to feel like I have to trade him. You can even reallocate those dollars later – chances are I’ll stick with my previous decision to trade him. Decisions are sticky.

From there you two options. If you have plenty of budget space, you could keep your $3 on Trout. That might devalue my bargaining position in trade talks. If you want him at the cheapest price possible, you can remove those $3 prior to November 14 and maybe pay slightly more in talent. The optimal decision probably depends upon whether your $3 will bring his price above a milestone (i.e. $60). As advertisers know, $60 looks a lot worse than $59.

You can also use trade negotiations to your advantage. Let’s say I start shopping Trout right now. Chances are, most prospective buyers will want him to cost as little as possible. I’m going to take the position that his price doesn’t matter. I’ll want the same return no matter how much money is allocated to him. He’s Mike Trout. If you can fit him on your roster without crippling yourself, you do it.

In that scenario, a rational rival will allocate their money elsewhere. That’s not actually a good thing if I really want to trade Trout. I’d rather my alternatives like a $6 Lance McCullers fly under the radar.

But what if I actually hope to keep Trout? Perhaps I can squeeze him in at $60 but not $65. If I can convince a few owners that they stand a real chance to acquire him, maybe I’ll actually wind up keeping Trout at $60 and trading a $12 McCullers.

This highlights the challenge of early trade talks. Especially when you’re talking about a dynamic talent like Trout, it’s often in his owner’s best interest to inflate your odds of completing a trade. Of course, the deception could run both ways. You might mislead your rival with some dummy bids.