FanPost

Bell and Street: Byrnes is Good at Arbitrage

I am not ashamed of the fact that I love "The Extra 2%" I think most people do. Its the book by Jonah Keri about how the Rays became competitive with the Yankees and the Red Sox.

One of the many things that helped the Ray's to get better was the concept of arbitrage, or making sure that every decision creates a "net positive" for the organization even if only by small margins (the 2%).

I love the way that this Bell and Street thing has gone down. It is a great example of arbitrage and creates a great positive for the team. Follow me below and I will demonstrate, the best I can, as to why this is good.

Bell Deal

For arbitrage to work properly you have to assign value to all assets. So allow me to set this up.

Heath Bell moving to the Marlins created value in a couple of places. First, as a GM, the conventional thought is that you have a budget. As such theoretical money has a value too. So "theoretically" Bell was going to cost us money one of two ways, the money I am putting here is from educated guesses:

1 year Arb deal @ Approx: $10m

or

2 year deal @ Approx: $9m a year

Bell was always looking for 3 years. But for interest of expediency lets look at JUST this year, and if Heater had such a heart of San Diego he would have eventually folded for 2/$18. The price for Heath Bell would have been $9m for 2012.

So when the Marlins signed Bell, they have actually provided Byrnes and vis a vi the Padres value in two ways.

1) Took $9 of potential Arb or contract money off Padres hands.

2) Gave us value in two draft picks: $4.5m (I am using the PRE Slot expense formula as Prospect Signing $ is NOT Payroll $, and because with new spending caps, I don't think teams will be spending much under it, so its sort of "given" cash.)

Total value to Padres of Bell deal? $13.5m

Street Deal

Byrnes wants to be competitive and knows that our bullpen depth isn't exactly the same as it has been... at least as far as proven commodities is concerned. So he wanted to get a quality closer. So the Street deal went down. It is as follows. (Again only using 2012 budget NOT 2013 Budget).

1) Got Street for $7.5m - $.5m in Rockies cash + PTBNL. = $7m + PTBNL (Not major Prospect)

Total Arbitrage

Street was highly affected by Coors his HR rate skyrocketed. He is projected to be significantly better at Petco, and probably as good, and younger than Bell. So I am going to say with some degree of certainty that Street will be as good or better than Bell, but that remains to be seen. Assuming they are equal in production here is the value to the team.

Bell Deal= +$13.5m - Bell

Street Deal= -$7m - PTBNL + Street (who equals Bell)

Padres Got= $6.5 Mill - PTBNL

Byrnes got 2 draft picks, $2m in budget room for a PTBNL.

So far, I like this guy a lot.

This FanPost was written by a member of the Gaslamp Ball community and does not necessarily reflect the views of the Gaslamp Ball managers or SB Nation.

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