Sunday, December 02, 2007

Hank's Bluff

God help me, but I love negotiation. Buyer or seller. Being in one or watching one. And above all talking about one. And the reason is simple.

I love the creativity. A really good negotiator is disciplined, confident and prepared, but above all they're creative. The whole goal is to get someone to buy into a reality that you want to exist, because in that particular reality you have leverage. And so the successful negotiator can think on their feet and create a myriad of scenarios to advance their reality. Like making sure a Yankees assistant overhears a phone conversation with the Red Sox. Or leaking that an "inside source" says that a team's offer isn't genuine. Or creating an artificial deadline.

Hank's Bluff
Last night, Hank Steinbrenner tried that last one. He made sure that tomorrow's NY dailies are reporting that a deal must be done by Monday or the Yankees will pull their offer of Phillip Hughes, Melky Cabrera and some unknown "other" guy off the table.

Steinbrenner, who was not planning to attend the meetings, said of his time frame: "The Twins are aware of it, that I'm not going to wait much longer. And the truth of the matter is, they don't want to be stuck with only one team to deal with. If they're stuck with just Boston, they're going to get a lot less. I'm not going to be played. This is not a game. This is serious business. I'm not going to be played, us against the Red Sox. That's not going to happen."

That's quite a threat there, Hank. So if the Twins don't accept the Yankees offer by tomorrow, Hank will punish the Twins by:
1) forcing the Twins to trade Johan Santana to the Red Sox, who will get Santana while
2) keeping their best prospects for future trades. Instead, the Yankees will
3) ask Oakland GM Billy Beane whether they can trade for a lesser pitcher, like Dan Haren.

So the Yankees would've have driven the best pitcher in baseball to their chief division rivals, at a reduced price, and would need to negotiate a do-or-die deal with one of the shrewdest GMs in baseball while no longer having a backup plan.

Yeah. Strong bluff there, Hank. Savvy.

The Leverage of Time
Especially because by simply setting a deadline, he's admitted to a key concession about leverage: you have it - I don't.

Usually, the person who tries to set a deadline is the seller. You see this all the time. I expect an offer from another couple by the end of the day. We may be out of this model. We're having a 3-day sale.

When these tactics are in play, you need to ask yourself exactly what the rush is. If they have the best deal, you'll certainly come back. So just what is the salesperson worried about?

Obviously, he's worried you're going to find a better deal.

The Fallback Option
Turns out, Hank probably is too, because ultimately the Yankees can't provide the best deal. They may have the most blue chip pitching prospects in the game, but the Yankees aren't offering all of them. And more importantly, the Twins don't need pitching prospects.

The Twins need offense, and that's where the Yankees are sorely lacking.

The Yankees best offer would likely be second baseman Robinson Cano, but they say he's untouchable. Also, he'll be eligible for arbitration this year anyway, so he's about to get expensive fast. That's not exactly what the Twins were looking for.

The name that's in every rumor is Melky Cabrera, who is a center fielder(+) and just 22 years old(+). But he's also never been a highly rated prospect(-) and while he's decent defensively(+), he's never put up above average offensive number in either the majors or the minors(--). His upside is that of a cheap(+) average center fielder, but he might also be a slightly gifted fourth outfielder whose inadequacies are hidden in that Yankee lineup.

And there's been a lot of discussion about a third prospect. The top two hitting prospects in the Yankees system are Austin Jackson and Jose Tabata. Tabata is impressive because he's just 19 years old, but he also hasn't dominated any of the levels he's played at. Worse, he hasn't faced pitching higher than High-A ball. Neither has Jackson.

But here's where it gets good - the Yankees reportedly won't offer these two. Both guys, neither of whom is particularly attractive to the Twins, are strictly off limits. And even better, they are the only two offensive prospects worth a damn in their organization right now. The next guy on Baseball Prospectus list of top Yankees prospects is a catcher who just finished up rookie ball.

The bottom line is that the Yankees, even if they really, really wanted to, probably can't beat the Red Sox existing offer. They're stuck being a fallback option, and in a negotiation, you NEVER want to be the fallback option. It's a powerless position. The buyer just keeps negotiating with their first choice until your offer isn't the attractive one.

The Twins Dilemma
Which isn't to say that everything's perfect for the Twins either. In a perfect world, they'd have a suitor that is both desperate for Santana and had the players they need. The Yankees are desperate, but don't have the players. The Red Sox have the players, but aren't nearly as desperate.

So there are some real risks here. The primary one is that the Red Sox are simply trying to see if they can drive the Yankee's price up, but when push comes to shove, their offer isn't genuine. That would be disastrous for the Twins.

Another is that both suitors would be nearly as happy if Santana wasn't traded at all. The best leverage that Smith has is that the stakes couldn't be higher for the Red Sox and Yankees. Either their team gets the most dominant pitcher of the decade, or their arch-rivals do. Hell, both would probably be relieved if a third team did enter the bidding, especially if that third team was in the National League.

Which is why Smith's vow to "not compromise" rings so hollow. Odds are that both eastern franchises would like nothing more than for this whole Santana thing to go away so they didn't need to worry about their rival getting him. It'll be interesting to see if Smith's creativity stretches as far as bringing a third team into the Yankees deal that might be able to provide some offense.

But regardless, it looks like there's almost no compelling reason for this standoff to be settled soon, let alone today. Which is just fine for this negotiation-loving fool.


Kyle Eliason said...

I'm with you. No rush. Some team with a playoffs-or-bust mentality will struggle out of the gate next season. There's $12.5M of payroll that we spent on Hunter last season that is available now. We can even toy with contract extension talks.

I don't believe for a second that if Santana will get Hughes-Cabrera-??? today, that the same package won't work after some made-up deadline has passed, unless New York works out a similar trade with another suitor like Oakland, but what's stopping them from doing that now?

Anonymous said...

More bluster than bluff. Steinbrenner is posturing that he is in charge, when he really doesn't have much control over the process.

As for the best deal, I think Hughes and Cabrera beats Ellsbury, Lowrie and mediocre pitchers. The fact is that Twins DO need top of the rotation pitching after losing Santana, Silva and Garza. And Ellsbury and Lowrie are not guys who transform an offense.

Lowrie is a probably a "serviceable" second baseman, as one scouting report put it. But he doesn't fill the holes at third (where his bat is mediocre) or shortstop (where is defense is highly questionable). You don't trade Santana for stopgaps who are really bench players.

Ellsbury is still a prospect. He barely has 100 major league at bats. He may turn out great. He many turn out to be the next Lew Ford. He is likely to turn out somewhere in between. Again, he is just not the kind of core franchise player you want for Santana, even if he played on this fall.

By contrast, Cabrera is a year younger than Ellsbury and will be a "serviceable" center fielder both defensively and offensively. But the center of the Yankees offer is Hughes. He is a potential replacement for Santana as staff ace. Any team can use that kind of player.

That is what makes the Yankee deal work. You have a guy included who could really be special, like Santana. None of the guys the Red Sox are offering really fit that definition. They could be good, but they are never going to inspire bidding wars to get them.

Anonymous said...

The more I think about it, the more I feel like I have bought into an artificial reality myself: not only that the Twins can't afford Santana and therefor must trade him, but that the Twins should be building for 2010, when the new stadium opens. Why is that, exactly? A lot of it is hot air negotiating by the Twins themselves.

Yes revenues don't jump a lot till 2010, but that jump is GUARANTEED. We start paying before then, so why should we wait to see results?

Also, though, even if we accept the logic that everything the Twins do must maximize profit, and so they'll need a good team in 2010 when the stadium opens, doesn't really hold water when I think about it.

If they idea is they need a good team to sell their more expensive tickets, well, people are more likely to come in 2010 to see a young team in a new stadium than a young team in the metrodome.

If the idea is the fans will be pissed off if they don't see a good team for their money in 2010, why won't they be just as pissed off or more now, right after the vote?

Maybe they SHOULD keep Santana and Nathan, use Torii's money for another hitter, and go for it. Wouldn't the fans be more willing to support young players in 2010 if they'd just come off a great pennant race?

What if they trade Santana now, they're mediocre, and they're still mediocre in 2010? Wouldn't that be the worst case scenario, even if you're thinking like the owners, not fans?

If they could get some good young talent for Santana, and then get some more good talent with all the money they save by not re-signing him and Torii, I'm fine with that. But whatever they do, they should be trying to win, not stick money in their pockets.

The biggest bargaining myth of all is that the Twins can't be expected to spend more than 50-54% of payroll. Since when is there a rule that when you're handed a 9-figure subsidy, half of it has to go into your pocket, even if you were already profitable before the subsidy?

Oh well, probably thinking about this too much. I should stop reading about scenarios and just wait and see what Smith does. But unfortunately I can't. Aarghh.

Anonymous said...

you're handed a 9-figure subsidy

Are you talking about Pohlad's helping pay for a publicly owned ballpark? I am not sure why fans think that should go in their pocket. Afterall, they are already getting a 9-figure subsidy for a new ballpark from the taxpayers. Why should they get a subsidy for players as well? Its perfectly appropriate that players get paid out of revenue that comesfrom fans.

On the larger issue of whether the Twins should be trying to win now, I think they should. That does not mean mortgaging the future to pay Torii $90 million and it probably doesn't mean paying Johan $120 million either. But they ought to be looking at having the pieces in place so that if their young pitching does prove it is ready, they have a good enough off core of everyday players to compete.

I think adding Young moved them in that direction. Adding another potential ace (Hughes) and a solid center fielder (Ellsbury or Cabrera) are the kind of moves that will likely still be helping in 2010, but might make the difference next year as well.

Batgirl said...

According to MLB trade rumors, Billy Beane has apparently come out and said what he would want for Haren--which is essentially the same things both teams are refusing to give the Twins. So, that sort of nullifies this whole bluff, oui?

Bryce said...

Oh, that Steinbrenner!
I think El Guapo said it best:
"You cannot force open the petals of a flower."

Twayn said...

I read that Johan has told the Twins he'll waive his no-trade clause only for the Yankees or BoSox, which reminds me of why people rob banks - because that's where the money is. He also reportedly won't waive the no-trade clause once the season begins. Which does not help Trader Bill's bargaining position a bit.

Anonymous said...

about the 9 figure subsidy, I was talking about the stadium as a subsidy for the Twins, and arguing that there is no reason half the money from that subsidy should go in Pohlad's pocket. That's what Pohlad is saying when he pegs payroll to half of revenue, even when revenue goes up due to subsidy. (He would say some of the rest goes into the organization just not in payroll; I would say, not nearly as much as the profits his accountants are hiding.)

shannon kocon said...

Please correct me if I am wrong, but my take on the 54% payroll issue is that the payroll isn't the only cost to the organization. There is the travel and the scouting and I have no idea what it costs to run multiple minor league franchises as well as the front office personel.


Nick N. said...

According to MLB trade rumors, Billy Beane has apparently come out and said what he would want for Haren--which is essentially the same things both teams are refusing to give the Twins. So, that sort of nullifies this whole bluff, oui?

Supposedly, Beane asked for Hughes, Chamberlain AND Kennedy for Haren. Have fun with that Hank.

Jarid said...

Shannon, ou have a point about the additional organizational costs, but many of those costs are fixed. Say, to make the numbers pretty, that the team took in $100 million last year, with $54 going to payroll, $40 going to other organizational expenses, and $6 in profit. If revenue jumps 50%, to $150, then the payroll would theoretically go up as well, to $81, but it's not likely that that the other organizational expenses have somehow jumped 50% - a substantial portion of that extra $20 million is pure profit.

Anonymous said...

Twinkies Ticked At Hank?

From the Star Tribune Blog -

A Twins official this morning confirmed that the club is not pleased with comments made by Yankees senior vice president Hank Steinbrenner about negotiations involving ace lefthander Johan Santana.

When asked if he thought the comments constituted tampering, the official replied, “We’re not happy. We’ll deal with this internally.'’

It’s unsure if the Twins will pursue tampering charges, but it’s definitely added even more spice to the Twins attempts to trade Santana.

Unless the Twins have some video of Hank making those statements, I doubt they have a case here. Besides, everyone and their mother knows that the Twins are shopping Santanna and that the Yankees and Red Sox have been talking to them about him. This is not a case where an owner, out of no where, says "Hey, Babe Ruth is going to be a Free Agent after this season and we would have to have him play for us next year."

Brass tacks, the Twins have been playing the Yankees and Hank called them out on that. That's what has the Twins' twisted here...and, to that, I say "Aw, Gee...too bad."

Blame Redsox Fans aka Terrorists for this ...With Andy Pettite returning to pitch next year . I think Redsox Fans feel need to do this. They're emailing Twins Organization about Hank comments trading for Santana. Redsox want Santana for themselves and prevent Yankees getting him

Like NY Times Tyler Kepner reported last year about about JD "Nancy" Drew opting out on his contract so Redsox Brass negotiate with him and offered him more money. Even Fat A** Curt Schilling even called JD Drew If He wanted to play with Redsox. The Dodgers accuse Redsox for tampering but They decided to let it go.

M.Klaun- Nj

Anonymous said...

t's not likely that that the other organizational expenses have somehow jumped 50%

I don't see why not. I doubt the major league player payroll is the only place the Twins are under-funded. They are going to want to use some of that extra money on signing bonuses prospects, etc.

I doubt revenues will increase 50% but none of that money has come in yet. Instead, the Twins have paid out a "nine figure subsidy" for a new public stadium. If anyone thinks they don't intend to recover that investment from increased revenue, I think they are ignoring the reality that the Twins are a business.

If the Twins suddenly spend a whole lot more money on players even before the stadium is built, I think the taxpayers who are subsidizing the stadium for Twins fans ought to have some questions about where that money is coming from.

KW said...

I tell you, I was relatively excited about getting Elsbury, but I found out today that he signed with Scott Boras. That's enough to make me want to take the Yankees trade. I want no part of ANY Boras client.