Behind the Scenes-2014 MLB Trade

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>.

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