In everyday conversation, the term “marginal” is derogatory, a word we use to describe a person or product of borderline desirability. In economics, an item’s “marginal” value is something quite different: it recognizes that the value of an item depends on who is shopping for it, and why they are shopping for it. To use a common example, people in the market for diamonds pay a premium because they are relatively scarce. By comparison most people (in the United States, anyway), are unlikely to pay much for water, because it is a resource they fortunately already have and see no need to stockpile.
This concept of marginal value is at the heart of decision-making in baseball markets, as general managers decide where to allocate their resources effectively. Certain big-picture decisions are obvious: don’t overpay for older, declining players, and don’t cheap out on a prospect you are confident will be a star. If your roster is long on bats but short on pitching, or vice versa, focus your attention where you need it.
As Nate Silver explained in Baseball between the Numbers, marginal value often dictates whether a team is interested in getting better at all. Certainly, teams that do not expect to contend won’t get much value from adding a few wins to a below-.500 record. For those teams, the marginal value of adding a good player is negligible, and may even be negative if it sucks money from prospect development or other areas of need. This is equally true for teams at the opposite end of the spectrum. For a preeminent club already expected to win 95 games, adding a multi-win player isn’t useful either. The team is already likely to make the postseason, and the last thing they need is to crowd their bench with another player who expects to play every day.
Where is the “margin” at which a few wins can matter? Here is a chart that Nate Silver has used a few times, including at Baseball Prospectus:
The numbers on the left (y-axis) are a bit outdated at this point: they refer to the financial benefits of the postseason for ownership. It’s safe to say those numbers are up: way up. But, the win numbers along the bottom, as well as the shape of the graph on top of them, remain relevant and aptly illustrate Silver’s point about marginal win value. It typically takes about 90 wins to be assured of the postseason, but any above .500-talent team can hit that with a few breaks — especially when one of those breaks is a key player acquisition. This is why teams are willing to pay, and sometimes overpay, for certain players they are convinced will put them in or above the sweet spot of this chart.
With that background, let’s talk about Kendrys Morales. Morales is the last remaining casualty of last season’s Qualifying Offer (QO) system, the means by which baseball teams can offer an outgoing star a lucrative one-year deal. If that deal is turned down by the player, any team who signs that player before the upcoming draft loses their first round pick in that draft. Morales turned his QO down at the end of last season, but nobody wanted to give up their pick to sign him, and he has been gathering dust ever since. However, the draft pick forfeiture expires once the draft begins this Thursday, June 5. And at that point, the race will be on to sign him.
Morales isn’t a fantastic player, but he is a switch-hitter who hits particularly well from the left side and can acceptably field first base. The Brewers need better production at first base, where they rank far behind any other contender. They could also use more left-handed options in their lineup, and could especially use a player like Morales who has been consistently clutch and makes decent contact. They also need better hitting overall to take the pressure off their overachieving pitching staff. Baseball Prospectus ranked Morales as roughly a 2.5-win player for 2014, which means Fangraphs-based systems would probably see him as a 3-win player. That means, over the course of the 100 games or so he would still play this year, that he would probably contribute at least one additional win in 2014, and more if he remains healthy.
A player like Morales has unique marginal value to the Brewers, who are almost universally projected currently to land within the bulge of that graph. The value of even one extra win could be enormous. At a minimum, the Brewers will probably be fighting the Dodgers, Rockies, and Braves for a wild-card spot. A little extra production can mean the difference between getting a wild card at all, or hosting versus visiting the wild card game (an important advantage), or even winning a close division race outright. Every extra win provides that much more assurance, and a player like Morales is exactly what the Brewers should be considering.
Doug Melvin does a fair amount of his negotiation through the media, and earlier this year he downplayed the possibility of adding Morales, suggesting (although not actually saying) that his first-base defense is subpar. I don’t blame Melvin for trying to keep the price down, but Morales is a rare bird: an available good player at a position of need, on the open market in mid-season, who will not require a trade. The Brewers have made it clear they are willing to spend money to upgrade mid-season, and with lean years likely on the horizon, they would be foolish to pinch pennies now.
The Brewers’ need to contend underscores other thing: if they in fact do bid on Morales, do not be surprised if they end up “overpaying” for him, at least by conventional standards. Dave Cameron estimated the present value of a win on the open market this past offseason was about $6 million. But Morales is more valuable to the Brewers than to other teams, meaning they may be willing to offer $7 million, $8 million, or even more money for each win they think Morales can bring them this season. The marginal value of Morales is higher to the Brewers than virtually any other contender, and given their desire to avoid trading prospects, money right now is the cheapest price the Brewers can pay.
Follow Jonathan on Twitter @bachlaw.