Wednesday, December 23, 2009

More good ideas from English footie


I was reading Mark Bradley's round up of national coverage on the Braves' Vazquez/Cabrera trade, and got to thinking how silly this whole trading players thing is.  I previously lauded the Premier League's dual championship format, and I think the Europeans have the right idea about personnel management, too.

All of the commentary in Bradley's round-up is basically about assessing whether the Braves got a fair-market for Javier Vazquez.   This means trying to assess the specific needs of both clubs with the specific talents of many different players.  It also means assessing the potential free agent signing the Braves can do with the extra salary freed up by dumping Vazquez.  Teams have to try and find clubs that have both the player they want, plus that want a player they have.  The whole trading idea just seems way to complicated to me.

In European football, you simply buy or sell a player's contract.  You determine a market value for the rights to the player's contract by negotiating with teams that want him, and you pocket the transfer fee.  This money can then be used for paying salaries or for buying contracts for other players.  If the Braves want to unload Vazquez, they simply sell him to the highest bidder, instead of having to take Melky Cabrera and some (very good) prospects. 

In economic terms, the present value of the contracts for Cabrera and the prospects should be equal to the present value of Vazquez.  All the talk about "was this a good deal" is really about trying to determine whether one team ended up with a higher PV for the contracts under their possession.  The mix-and-match nature of trading makes me think that it is very, very hard to make this collection of contract values match perfectly.  Someone is always going to get a better deal at the time of the trade, regardless of how each player performs down the line.

Isn't this analysis just a lot easier to do through just paying for the contracts outright?  If you still insisted on a trade, you'd at least be able to make up any discrepancy in present value in cash.  I would also think that the flexibility inherent in the European system would bring added value to these contracts, which would be a positive for team owners.

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