Iwamura and Chavez

Yesterday, the Tampa Bay Rays traded Akinori Iwamura to the Pittsburgh Pirates for relief pitcher Jesse Chavez. The Rays were motivated by the fact that they would have to pay a $650,000 buyout if they did not pick up Iwamura’s $4.25 million option.

Iwamura missed much of last season with an injury, but returned to form at the end of the year. Based on his 2007 and 2008 performances, I anticipate him being worth a little more than $7 million in 2009. Thus, even if the injury offers some risk, Iwamura appears to be worth a bit more than his salary. Why would the Rays trade him? They have Ben Zobrist at second and Evan Longoria at third, so there isn’t any room. It’s better to capture some of the value the team would be giving up by having him ride the bench.

In return, the Rays get Jesse Chavez, a young and decent-but-not-spectacular reliever. He’s difficult to value because he doesn’t have a long record of performance, and as a reliever his career sample size is small. As an average reliever who pitches 80ish innings, he’s worth around $2 million/year. He’s got two more years before he hits arbitration when he’ll be making a little over $400K a season. Thus, he provides about $3 million in total surplus (marginal revenue product — salary) over the next two years. This doesn’t even take into account his arbitration years, when he’ll make a little less than half of what he’s generating in revenue (He’ll also be improving and league revenues will be growing). Though, I’m reluctant to put much value on this time period given the difficulty in predicting what he’ll become from his short career. There is a lot of uncertainty here.

In summary, it looks like a pretty even deal; but, definitely mutually beneficial.

2 Responses “Iwamura and Chavez”

  1. Marc Schneider says:

    Seems to me that this is an example of how different a team like Tampa Bay has to operate from the Yankees. I can imagine the Yankees keeping Iwamura because they can afford to absorb the cost. And it might have paid off if they had an injury or poor performance from a starter. Tampa Bay can’t do this; they can’t maintain the depth that the Yankees have. I understand that there is some resistence to saying the Yankees win because of their money, but it seems to me that this is at least an example of how their money gives them an edge.

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