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To the Mats: Power of Towers

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Diamondbacks GM Kevin Towers has the upper hand in any Justin Upton deal because he doesn't really have to move him (AP).

The article on Justin Upton to which reader Jeremy S. responds below was Steve's, and he'll be along with some thoughts about the Yankees' potential dalliance with Upton later this afternoon, but as I'd had a few thoughts about the player as well as Diamondbacks general manager Towers bubbling in my brain — not to mention a severe need for procrastination — I though I'd take a swing at answering the following email:

Regarding Steve's post from yesterday about how the prospect (no pun intended) of acquiring J. Upton seems too good to be true, since the news broke I've been wondering "what's the catch?"

The best analogy is the scene from Michael Lewis' "The Big Short" where Greg Lippman is offering Steve Eisman the chance to make an investment which by all logic sounds too good to be true (and it in fact did well enough to be the subject of another book titled "The Greatest Trade Ever"), and Eisman and his team wait for a long time before making the investment while they desperately try to figure out whether Lippman is actually trying to @#$#@$ them over. (If you haven't read the book, the sequence is described in this blog post).

Kevin Towers is smart enough to know that under normal circumstances, Upton is one of the ten (perhaps top-5) most valuable properties in all of baseball - and he's signed to a reasonable contract and is young enough to be old of the next good D-Backs team (unless they intend to follow the Royals / Pirates organizational cycle). There must be a catch: the key for the Yankees is determining whether the catch is Upton's shoulder (is it going to ruin his career like it has for BJ?) or massively undercapitalized ownership deciding the Marlins are just too profligate.

Jeremy S.

I haven't read The Big Short yet, as I've been eagerly waiting for it to come out in paperback. But not surprisingly, I am a big fan of Lewis since reading Moneyball, and am familiar with the analogy, which may or may not have popped up in one of the Vanity Fair pieces of his I've read in the past year or so. The more I've thought about any potential Upton trade, whether to the Yankees or elsewhere, the more I've reached the conclusion that the catch is that there's no catch — except for the fact that Towers is in a position of power here, as a guy who's got an extremely desirable commodity but no real pressure to move it. He can ask for half of a team's farm system and a unicorn that poops rainbows and know that the worst-case scenario is that he's got a 23-year-old hitter with incredible upside as a cornerstone of his team. Allow me to explain...

Ideally, every team knows the players in its own organization better than it does those in another organization, and when making a trade, they can use that to their advantage by exploiting the information asymmetry. Maybe they don't think this guy can really catch at the big league level but want to unload him before the rest of the league finds that out. Maybe the team's scouts don't like this guy's violent delivery and think he's an elbow injury waiting to happen. Maybe they know that the player in question has recently taken up motocross racing or skydiving or another high-risk activity, and they want to unload the player before he does his Evel Knievel impression.

That's not always how it happens, of course. Leaving aside the ones that are so dumb they defy logic — a delicious topic for another day, perhaps — many trades are borne of the need to fill holes, to turn surpluses in one area of talent into a more well-rounded team. "I've got pitching. You've got hitting. Let's dance, shall we?" Others are designed to move payroll around, acknowledging that it makes less sense to pay this guy a big salary on a team that's not going to contend this year than to trade him for prospects who can help in two to three years.

Kevin Towers is relatively new on the job in Arizona, having only been hired in late September. He wasn't born last night, however; he served as GM of the Padres for a 14-year stretch which included four playoff appearances and one pennant, this despite being consistently outspent by his division rivals. Towers has a scouting background — he's a former pitcher whom I saw back in Low-A ball at Walla Walla circa 1982 — but while in San Diego he had the savvy to employ more statistically-minded underlings as well, most notably Paul DePodesta, formerly the GM of the Dodgers in 2004 -2005 and prior to that an assistant GM of the A's who was featured in Moneyball. In fact, it's this "beer and tacos" mix which made Towers one of the most desirable GM candidates in the game; I've said several times that he's the guy I'd hire if I just bought a team, so it was a surprise to see him forced out of San Diego by an ownership change last year, after which he spent last year as a special assignment scout for the Yankees before landing the Diamondbacks job.

If Towers is exploring the possibility of trading Upton, it is likely some mix of the first and third reasons I listed, the information asymmetry and the need to shift payroll. As Jeremy notes, there are questions about his shoulder, questions which bear a relationship to the plight of his older brother. As my former Baseball Prospectus colleague Will Carroll summarized on September 1:

Genetics fascinates me. I don't pretend to understand it, but I'm lucky to have friends that do. We have a ton of relatives in the game, whether it's generations like the Griffeys or the Boones, or brothers like the Giambis, Cansecos, and Uptons. (Even in PEDs, there's a massive lesson. Why did Jason hit homers and collect millions while Jeremy didn't on what both testified were similar regimens?) The Uptons don't have the drug issues, but they may have something they inherited from their parents aside from ridiculous athleticism. Justin Upton is dealing with a shoulder problem that sources say is similar to the one that forced B.J. Upton to have shoulder surgery after the Rays' playoff run in '08. The basic problem is a laxity in the shoulders that is taxed by the sheer forces of the swing. Both swing very hard and very long. I'm hardly an expert on swings or the physics, but knowing that it's enough to pull the head of the humerus slightly out of socket on some swings is certainly enough to realize it could be a problem. Whether Upton eventually will need the shoulder tightened remains to be seen. The Diamondbacks will be conservative with him over the next month, so look for off days here and there, as was the case on Tuesday night.

In a late-September follow-up, Carroll wrote:

The Diamondbacks sent Upton to Dr. James Andrews on Monday... or did Upton request the second opinion? Either way, it looks as if Upton's 2010 is done. Dr. Andrews found a small labrum tear, but that surgery is not necessary yet. The lax shoulder is similar to what his brother B.J. had after the 2008 campaign and is a good guide. The older Upton might be something of a disappointment to Rays partisans, but after the surgery, Upton was essentially back to level six to eight months after surgery. Over a year out now, his stats and scouting reports at bat and in the field look substantially similar to what he was doing before the surgery. That's success, but many only remember Upton going insane during the 2008 postseason and had the expectation that the hot streak was him finally finding the next level. It wasn't, he didn't, but that doesn't make the surgery less of a success. Some have tried to say that the surgery reduced B.J.'s power, but I don't see the evidence for that. The timeline for recovery means a decision needs to be made soon. With Kevin Towers coming in as general manager, expect this to be one of the first things he'll weigh in on.

To date, Upton has not had the surgery, which seems to suggest Towers was at least somewhat satisfied with the prognosis, though a cynic might suggest he wanted to downplay the injury's severity so as not to lower his player's value on the trade market. The likelihood of that tactic working is minimal, however, given that everyone in baseball is now familiar with the Upton brothers' shoulders, and any team looking to deal a significant haul of players for one of them is going to need to look at his medical files before doing so, perhaps even making the trade contingent on passing a physical. For Towers to try to get away with dealing such high-profile damaged goods would be an incredibly short-sighted, scorched-earth tactic which would make him carrying out his job as a general manager all the tougher, to say nothing about what it would do to his future employment chances elsewhere. So I don't think that's very likely. Which isn't to say that within the information Towers has, there may not be other reasons to deal him, but by and large, the kid has gotten good marks for what scouts call makeup. He may not be an angel, but he's not the second coming of Milton Bradley.

So let's look at the other possibility, the need to shift payroll. We know that based on the terms of the contract he signed last March, the 23-year-old Upton has $49.5 million coming his way for the 2011-2014 seasons, starting with a $4.25 million salary for next year. That's hardly a backbreaker, and even at the level he played in 2010 (.273/.356/.442 with 17 homers in a hitter-friendly environment, with subpar defense in right field, for a 1.8 WARP), he figures to be worth about twice that amount, since each win above replacement level is worth about $5 million in market terms. At a level equal to his 2009 campaign (5.6 WARP), he'd be worth about $28 million on the open market. The truth regarding his 2011 may lie somewhere in between, but you can see he's a reasonable bet to be a bargain not just in 2011 but also 2012 ($6.75 million) and 2013 ($9.75) if the worst-case scenarios don't play out.

Once it became apparent they were not going to win the NL West this past season, the Diamondbacks spent the summer paring payroll to the bone, to the point that they traded ace Dan Haren as well as Edwin Jackson, Conor Jackson... and every other Jackson besides Tito. They've bid adieu to injured former ace Brandon Webb, let Adam LaRoche depart as a free agent, and right now don't have anybody on the books who will make more than $6 million in 2011. Their target payroll is rumored to be in the $50-60 million range. In a division where the Dodgers and Giants began last year with $95-$98 million in payroll last year and the Rockies were at $84 million, that $50-60 million won't go very far without a roster of young and talented players who are making below-market salaries.

Upton fits that bill, and it's unlikely he'd be traded unless it's to gain even more players who do — not just prospects, but also major league-ready talent — because Towers is only on a two-year deal, a short time horizon which may have something to do with a desire to work his way to a more prestigious job. In that aforementioned link, FanHouse's Tom Krasovic mentions that Towers is friends with former agent Dennis Gilbert, who may eventually mount a bid for the Dodgers once the McCourt divorce mess is untangled. There's no guarantee any of that's going to happen along the necessary timeline, though, and Towers has to make the most of his current opportunity.

Ultimately, the key thing to note is that the worst time to trade a player is when you're under pressure to do so; look at the often-uninspiring hauls teams get for free agents who only have a year (or even a few months) left on their deals as well as the knowledge that they won't be re-sign with their current employers. Conversely, the best time to trade a player is when you don't have to be pressured into it. Ideally, that player's coming off a career year and his value is at an unsustainable peak, and while that's not the case here, Towers' pressure is low because he has cost certainty on Upton; he doesn't have to worry about whether the next Collective Bargaining Agreement or an improving economy or the 40-homer season Upton is capable of manifests itself and drives his salary even higher than it would be given what's already known. He's free to field all trade offers, and if he doesn't get exactly the package he wants — as many as five players, depending upon who you listen to — he can take his ball and go home, knowing he's got a player who was the overall number one pick in the draft back in 2005, a guy who may yet turn out to be the next Ken Griffey Jr., a guy who is more than likely to be the building block of the Diamondbacks for years to come.

In the end, I don't think any team will meet Towers' steep demands. But I can't blame him for taking phone calls to see what's out there.