Jessica Sklenar
Mrs. Straub
Economics A3
14 September 2014
Behind the Scenes-2014 MLB Trade
The 2014 Major League Baseball (MLB) trade is truly one that will go down in history. In the months prior to the 2014 trade officials decided to move the trade deadline up to July 31st, 2014. By doing so the MLB created the perfect economic conditions and a sufficient understanding of realistic trade based on the new two wild card format. The new two wild card format establishes a new one-game, wild card round in each league between non division winning teams with the best records, meaning a third place team could win the World Series . In the end the success of a team all comes down to the supply and demand of players
As the trade deadline grows nearer the representatives of teams begin to adjust to the possibility of trading players that could help them reach the playoffs. Upon reaching the trade deadline eight of the American and National League teams have a fifteen percent of reaching the playoffs; however nine teams have absolutely no chance of making the playoffs. Now due to the fact that there are nine teams with a zero percent chance of making the playoffs, supply of players will decrease while demand of players will increase as teams try to improve their chances of reaching the playoffs by investing in the trade. After all because the tension is rising with the addition of the two wild-card format teams need to make sure they have the best roster possible if said teams want to make it to the playoffs; let alone win the World Series.
The chart below shows how the supply (blue line) and demand (red line) for players eligible for trade as of July 2014. The equilibrium point represents where the price is set by the market with the supply of players meeting demand for the amount of players located at Quantity 1 and Price 1.
Based on the fact that the sixteen teams with a fifteen percent chance of reaching the playoffs would be less likely to participate in the trade than the nine teams with a zero percent chance of reaching the playoffs, the supply of players would typically decrease. Due to this decrease in supply of players and rising demand of trade, the price of trading players would in turn increase and profit margins would increase as well.
For example when the Oakland Athletics traded Addison Russel for Billy McKinney and Dan Starily for Jeff Samardzija and Jason Hammel, other teams began to take notice and look for ways to improve their chances of reaching the playoffs by participating in the trade. However in comparison to what can be inferred based on the graph above, as demand increased; supply decreased, the cost of trade increased as well; teams that were not at first considering trade are almost forced into the process.
Much like the invisible hand the MLB trade is affected by all surrounding factors: the performance of players, competing teams, supply, demand, profit margins and trade expenses. But in the end, if there are not enough players drafted to fill the demands of teams, the draft can be nearly impossible depending on the trades made by competing teams. Thus based on the evidence provided the statement rings true that the entire MLB draft is overall dependant on the supply and demand of drafted players.
Works Cited
"Why the 2014 MLB trade deadline was so crazy." Beyond the Box Score. N.p., n.d. Web. 15 Sept. 2014. <http://www.beyondtheboxscore.com/2014/8/1/5959053/2014-mlb-trade-deadline-crazy-lester-price-cespedes>.
services, ESPN.com. "MLB, union agree to expand playoffs." ESPN. ESPN Internet Ventures, 2 Mar. 2012. Web. 15 Sept. 2014. <http://espn.go.com/mlb/story/_/id/7638357/mlb-expand-playoffs-two-teams-10>.
Jessi, you did an outstanding job incorporating pretty much all of the vocab, and understanding the economics behind MLB baseball. I too, have a strong passion for baseball and the MLB league; so reading this was very interesting to understand the basics behind the whole operation that I didn’t even know existed before. The only thing that was a little hard to read was the graph. Even though you explained what it was showing in the paragraph above it, I still was confused on what it was trying to show me exactly. Overall, it was a joy to read and flowed very smoothly. Well done Jessi!
ReplyDeleteI really enjoyed your connection between baseball and the invisible hand. It is very true that there are many surrounding factors when making a baseball trade. There really is a strong underlying self-interest when trading a player because obviously you want what's best for your team. Overall this was really good and I enjoyed reading it! You made great economic connections.
ReplyDeleteThis is a great topic and it really looks like you spent time on your research. I do think that the demand would increase now that more teams have better chances of making it into the playoffs, but I think the supply would increase along with it. As more and more teams dropped out of the playoff race as the deadline approaching, that would lead to more teams willing to trade away their good players and begin to look towards the future.
ReplyDeleteIm confused about how exactly the trade deadline and two-wild card teams idea correlate with the increasing the economic business of baseball. Im not sure if the supply and demand of the players determines the success of a team. sure, sometimes teams make trades for needs. Like, if they need a starting third baseman they may trade there backup second baseman and cash for a starting third baseman. Also, on the idea of not enough people getting drafted there are 40 some rounds in the MLB draft every single year in which a full roster could be made. They set the drafted players up with minor league teams to get them ready for a possible stint or career in the majors. However many of them do not make it. There will always be a high supply of players and a high demand for good players as well as teams want the best players.
ReplyDeleteI really liked how you used baseball and supply and demand together. It was a very interesting topic in how even a wild card team can win the world series. It was also nice how you incorporated the invisible hand method. This is a good example of how you can use anything and make it connected to economics.
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