Assessing the Phillies Trading Chips

The Phillies are talking about trading some of their players.

Before we do this, let’s recall some of the Phillies great trades of great players:

1) 1918 – traded Grover Cleveland Alexander for several boxes of cashews and cash to the Cubs.  He went on to win 300 games and go to the Hall of Fame.  And win a World Series.  the Phillies finished last 10 straight years.

some old history stuff

some old history stuff

2)  1930s – traded Chuck Klein Dolph Camilli and Lefty O’Doul for Cash and some Cracker Jack.  Camilli became the MVP and led the Dodgers to the 1941 NL Pennants, Klein and O’Doul continued to hit for other clubs.  The Phillies started to finish last every year.

4) 1950s – release Curt Simmons “because he could not pitch anymore.” – Curt Simmons came back to torture them in 1964 as a pitcher for the St. Louis Cardinals when the Phillies collapsed down the stretch.  The Phillies could have used a third starter other than Bunning and Short–like Curt Simmons.

Sen & Mrs. John & Teresa Heinz prior to his untimely death in 1991

i think John Heinz was US Senatory back in the 1930s and 1940s

5) 1960s – traded Dick Allen for Curt Flood and three so so players – Curt Flood sued baseball and moved to some island in the Mediterranean rather than play in Philly, saying “he wasn’t a slave” and “Philly was racist”.  Tim McCarver reported.  Dick Allen went on to become MVP of the American League in 1972, and nearly led the Chisox to the AL West Divisional Title.  The Phillies fell to last place–behind the Montreal Expos, an expansion team.  Tim McCarver was traded for a used chevy and later re-signed with the Phils as a free agent.

6) 1980s – traded Ryne Sandberg, Larry Bowa and Gary Matthews to the Cubs for dog poop.  The Cubs won the division twice, Ryne Sandberg became the greatest 2d baseman since Rogers Hornsby, and it would take until 1993 for the Phils to win a division again.

OJ Simpson was a very popular football player and actor during the 1970s and 1980s.

OJ Simpson was a very popular football player and actor during the 1970s and 1980s.

7) 1990s – The Phils traded Curt Schilling to Arizona for some table cloths and Vincente Padilla, a mexican-american actor impersonating a starting pitcher.  Arizona immediately won the World Series. Later, Curt Schilling did the bloody sock thing with the Red Sox.   The Phils also traded Scott Rolen to the Cards for Placido Polanco, who the Phils then traded to the Tigers for some used napkins.  The Cardinals went on to win several pennants and two World Series, with Rolen as their 3d baseman.  The Phils won one world series and lost another–with Pedro Feliz at 3d base.  Basically, most of the 2000s was a highlight reel of Curt Schilling and Scott Rolen going to the World Series while the Phillies didn’t.  And yes, those two are probably going to get into the HOF too.

so there’s your Phillies trading history in a nutshell.

Let’s take a statistical look at the actual value of their players.

1) Cliff Lee – Cliff Lee has a JAWs rating in the top 100 of all pitchers lifetime.  He has achieved Pitcher WAR levels above 7.0 in several of his Phillies seasons, and has been the single best pitcher aside from Roy Halladay on the Phils’ staff the past few seasons.  He works quickly and can hit and field his position.  He and Cole Hamels were together worth more than 11 WAR last year collectively–which means, since the team won 70 games or so last year, that without Lee and Hamels, the team would have won around 59 games without them in 2013, and trading Lee and Hamels means the Phils will probably drop to around that level.  He is easily the most valuable piece the Phils have to trade.  He is is great shape, should pitch well for at least 3-5 years, and should fit well as a #1 on a contender.  Lee’s ERA+ this year is 117 and his career ERA+ is 119.  He is a great pitcher, 20% better than league at all times.   Lee has had three years in the past where he was 160 plus ERA or 60% better than league, which is to say virtually unhittable, including 2011.

The Phillies Win the Series 2008

The Phillies Win the Series 2008

2) Cole Hamels – Cole Hamels has a JAWS rating in the top 120 of all pitchers lifetime.  He’s five years younger than Lee, so he should get higher than Lee eventually.  His established WAR levels are around 5.0 but he’s been higher in some seasons.  He pitches 200 innings a year, and he’s a quality starter in the postseason.  He’s been a #1 in the past, as well as a #2 and a #3, and he’s shown he can pitch under pressure.  With the established WAR levels he has, he is a quality starter.  A very valuable trading chip.  Hamels is 131+ ERA this year, and his career ERA+ is 123, very similar to Lee, but slightly better.  He’s been a bit more inconsistent than Lee, but in his good years Hamels puts up 130 plus ERA marks, in his off years he’s around league average, so he’s actually usually 30% better than league.

Chuck Bednarik flattens Frank Gifford

Chuck Bednarik flattens Frank Gifford

 

3)  Chase Utley – Chase Utley is now #13 on the JAWS list alltime of 2d basemen, and has passed Roberto Alomar.  He was the starting All-Star 2d baseman at age 35, and is currently the top offensive Phillie in WAR.  With the renaissance he is having this season, he shows that he will continue to be an excellent hitter for some time to come.  If he were traded to the Yankees or another AL club, Utley could be used somewhat like Jeter–resting some days by DHing–and could last until age 40–and most certainly will go into the Hall of Fame.  He is a 10/5 player and has to waive those rights to be traded.  Utley is a leader, and a clubhouse force.  He’s exactly what the Yankees need as Jeter is on the brink of retirement.

ON MY MARK, UNLEASH HELL!  WAIT A MINUTE, THAT' RUSSELL CROWE'S LINE FROM GLADIATOR...TONITE MEN, WE DINE IN HELL!!!! WE ARE SPARTANS!!!

ON MY MARK, UNLEASH HELL! WAIT A MINUTE, THAT’ RUSSELL CROWE’S LINE FROM GLADIATOR…TONITE MEN, WE DINE IN HELL!!!! WE ARE SPARTANS!!!

 

4) Jonathan Papelbon – having a terrific season, nearly 2.4 WAR as a closer with 60 games to go.  despite the big contract, he has an established WAR of 1.0 plus per season, and despite his contract of $10 million a year, he is a known quantity closer.  Papelbon’s ERA+ this year is 317.   Valuable to a contender needing a closer, and the Phils are ready to move Giles or Diekman into the closer role for less money.  Moreover, Papelbon wants a trade.  The most valuable and most likely to be traded.

HOOSIERS - THE GREATEST SPORTS FILM EVER MADE - ABOUT INDIANA HIGH SCHOOL BASKETBALL - BUTLERS' KIDS PLAY HOOPS THE WAY COACH'S KIDS PLAY HOOPS IN HOOSIERS!

HOOSIERS – THE GREATEST SPORTS FILM EVER MADE – ABOUT INDIANA HIGH SCHOOL BASKETBALL – BUTLERS’ KIDS PLAY HOOPS THE WAY COACH’S KIDS PLAY HOOPS IN HOOSIERS!

 

5)  Jimmy Rollins – right behind Utley in offensive WAR this year, having a great season.  His defensive range has diminished, but he can still hit and run effectively, and among available shortstops, he is 2.5 WAR with 60 games to go.  He currently is 34th on the JAWS list of Shortstops, and can move up still.  Shortstops above and below him on the list are in the Hall of Fame, and he has done things sufficient to get to the Hall.  An interesting fact is that Rollins plays 92% of the games each year, and has an established hit level of 150 hits a year, and is only 738 hits away from 3000.  At his established hit level, he will reach 3,000 hits in just under five more seasons from now, at around age 40.  The odds that he will continue to be productive and hit and field as a shortstop are fairly great; and he could also move over to second base and continue to hit and field and play until age 45 conceivably.  He has home run power, alley power and is excellent from the left side.  He would be a marquee addition to a contending ballclub.  Rollins is a 10/5 player and would have to waive his no trade clause in order to be traded.  The Yankees would be wise to trade for Rollins and Utley as a package to replace the retiring Jeter and whatever 2d baseman they have.  Rolllins would hit 20 homers a year in the new Yankee Stadium, and Utley and Rollins would give tremendous leadership to the existing Yankees along with speed and veteran leadership.

PLACIDO POLANCO - only Phillies to win Gold Gloves at two different positions - second base and third base.  Defense has been a problem for the current Phillies.

PLACIDO POLANCO – only Phillies to win Gold Gloves at two different positions – second base and third base. Defense has been a problem for the current Phillies.

6) Marlon Byrd – currently has WAR of 2.2 with 60 games to go.  Ranks fairly high career wise on the all time CF list, in the top 120 JAWS list.  has an established WAR of nearly 2.0 over 13 seasons.  He can field, he can hit, and he can hit for power.  He had a 4.0 WAR last year and is on pace for a 3.67 WAR this year at age 36.  Normally a team should not trade for a guy this age, but Marlon Byrd is having his best years every right now, and he is a proven veteran.  Watching him day in day out, he seems like a proven professional ballplayer.  He seems very different than the rookie I say play here in the early part of the 2000s.  Marlon Byrd gets good cuts on every at bat, always has a plan when he’s up, and seems to drive the ball, whether its into the alley or over the wall.  He has a fairly inexpensive contract.  An excellent trade piece for a team looking for a corner OF bat.  Very likely to be traded, and will do an excellent job for any team that gets him.  Helped the Pirates last year on their way to the playoffs.

 

Big Ed Delahanty - Left Fielder who once hit four homers in a game and hit .400 in consecutive seasons for the 1890s Phillies.  In the Hall of Fame.

Big Ed Delahanty – Left Fielder who once hit four homers in a game and hit .400 in consecutive seasons for the 1890s Phillies. In the Hall of Fame.

7)  AJ Burnett – even though the stats and peripherals don’t look impressive, Burnett has accumulated 1.0 WAR as a pitcher thus far, and that is with 60 games to go, so he’s on pace for about 1.4 WAR for the year.  Not great, but not shabby.  AJ Burnett has a lot of post season experience, and was helpful for the Pirates last year.  He’s had some good outings this year, and for the right club with run support, he can go 5-7 innings.  Significantly, he’s thrown by far the most innings of any Phillies starter, has 113 Ks in 136 IP, and even though the walks are high (as they are with him), he has allowed fewer hits than innings pitched, with a WHIP of 1.361.  His numbers are a bit off, but his established WAR level in 16 seasons is 1.75–he’s had a couple seasons where he went 4.0 plus, but basically this is what he is, an innings eater who strikes out a lot of guys, but can also be a bit wild.  He’s led the league in strikeouts, but also led the league in walks twice and wild pitches three times and batters hit by pitch once–he’s a classic hard thrower who has trouble locating.  but his career ERA+ is 104+ and he can go out and give you a gem one game, and then blow up the next, as he did in 2009 with the Yankees in the World Series v the Phils, where he blew the Phils away in one Series game, but got torched in the other.  He had a 4.4 WAR season for the Yanks that year, btw.  AJ Burnett should be a great trade piece for the Phils to move.  He’s a big game pitcher, a fastball pitcher who can throw hard and long, and a guy with World Series and playoff experience.  He is the very definition of wily veteran.

 

NATE THE GREAT THURMOND TANGLING IT UP WITH WILT THE STILT CHAMBERLAIN - THOSE AREN'T AIR JORDANS THEY'RE WEARING

NATE THE GREAT THURMOND TANGLING IT UP WITH WILT THE STILT CHAMBERLAIN – THOSE AREN’T AIR JORDANS THEY’RE WEARING

Conclusion

This is about it for players of real value.  The Phils essentially have three wily veteran pitchers – Lee, Hamels and Burnett–all of whom could make a huge difference in the pennant races.  They have an established keystone combo in Rollins and Utley, which they should move as a unit, probably to the Yankees.  And they have a power hitting slugging corner OF in Byrd, who can make a difference to a contender looking for a RH power bat.

The rest of the team is valueless.  People may say Ryan Howard, but in fact, he has no value at all.  At best, the Phils should move him to an AL club, but the better play would be for the Phils to lobby for a change in the rules so the NL gets a DH, so they can keep Howard and use him as a DH themselves, since they will pay his contract in any event.

Howard as a DH would be useful.  Moving the entire NL to a DH would be useful, and the Phils have the votes.  The cubs want a DH, as do several other NL clubs, and only a majority, e.g. 8 clubs, are needed.  The Dodgers now have too many OFs, so they will vote for a DH.  So Cubs, Phils, Dodgers.  Then you have Brewers–they have lots of potential DH’s.  They will go DH.  They were in the AL before anyway.  That’s four.  The Mets get no offense, so they will vote DH.  that’s five.  The Marlins don’t care one way or the others, so that’s six.  The Giants will want to play their MVP catcher Buster Posey at DH, so that’s seven.  Cincinnati will definitely want to play Joey Votto at DH, so that’s eight.  St Louis will want to play Allen Craig at DH, so thats nine.  Colorado will want nine hitters period, so that’s ten.  Arizona and the Padres can’t care so that’s 12.  why Washington would object is beyond me, so that’s 13.  that leaves the Pirates and the Braves, who might object, but who might not.

a big argument for going over to the DH is the fact that there is currently interleague play all the time, and the fact that all teams have a 25 man roster and need a lot of relievers.  a DH means less pinch hitters, and thus you can keep 12-13 pitchers on your 25 man roster, and keep only 12 position players–you only need to sub out if a player is hurt, tired or you need to pinch hit in a specific situation.  What you want in a DH lineup is nine regulars who can go every day, maybe with a platoon a one or two positions.  You don’t pinch-hit, except maybe for poor hitting SS.  So you can carry a lot of pitchers, and bring in relievers early.

Once you do this, you keep Ryan Howard around as a career DH, and just bring up Franco as your 1B, or 2B if you move Utley, and put Galvis at SS, and Ruf on 1B or Mayberry on 1B.  Grady Sizemore can play RF, and Brown and Revere CF and LF.  and you wait for all those new prospects to develop.

 

Perry Mason & Della Street

I rest my case: let’s go get dinner, Della!

Time Magazine just did a cover story on stem cell research, which is commendable. They also entitled the story “The Quest Resumes,” which is commendable, focusing on the fact that the Federal Government, under the Obama Administration, may finally allow (this may already have been approved by executive order) federal funds for stem-cell research at federally funded research institutions.

However, the subtitle of the article is “After eight years of political ostracism, stem-cell scientists like Harvard’s Douglas Melton are coming back into the light—and making discoveries that may soon bring lifesaving breakthroughs.” Time Feb 9, 2009 at p. 36.

Now, let’s examine that for a second—In Massachusetts, where Prof. Melton plies his craft, the Commonwealth and State of Massachusetts, like the State of California, has voted state support of stem-cell research at institutions of higher education. Therefore in Massachusetts, like California a bastion of biotechnology, the biotech lobby was able to secure state support for stem-cell research during the eight-year long federal ban on such research. So compared to the other 48 states, Prof. Melton was actually at an advantage because his lab was in Massachusetts.

Because of the federal funds ban, a great deal of stem cell-research has begun to spring up in places like Southeast Asia, as the Time Magazine article correctly notes, and as it well-known in the biotech industry. But a lot of it is also staying put in Cali and Mass due to those states putting up seed money for biotech research that is stem cell oriented.

Next, Prof. Melton works as co-director of the Harvard Stem Cell Institute (HSCI), which Harvard has committed substantial resources to supporting over the past eight years and well into the future. According to their 2008 report, their annual spending has grown in the past two years from just over $5 million to over $16 million in fiscal year 2008, most of that culled from private and corporate donations. HSCI currently has no less than eight ongoing challenge grant research projects sponsored for $75,000 each, all of them stem cell oriented.

Now I am a powerful supporter of stem-cell research, and I strongly advocate that the federal government support stem cell research. The question I have for Time Magazine is, and maybe perhaps for the Federal Government, is HSCI the most needy recipient for federal funds for stem cell research? The article omits that HSCI is well-funded by private donors, and omits that Massachusetts provides state support (it is not clear if HSCI accepts Massachusetts money) and therefore the article in Time is somewhat misleading.

The argument for funding HSCI federally has to be this; we, e.g. HSCI, made a good faith effort to get the ball rolling the past three years through private financing, we have already a lab in motion with research projects, so if you fund us, we will be three years closer to getting results than any other academic lab you choose to fun. Consequently, their NIH grant requests will carry a certain heft.

On the other hand, they are not as dramatically in need of the money as some other labs who don’t have any private funding at all.

A more useful article would have been to depict the overall situation in the rest of the United States, and some of the labs outside CA & MA.

This is an interesting issue and one on which arguments on both sides would and could be marshalled.

It should be pointed out that I strongly support the work of Prof. Melton and the work of HSCI. Those initiatives were put into place by then President Lawrence Summers, along with the Broad Institute initiative, a few years back, and clearly they have had the effect of putting Harvard back on the map in terms of genetics and molecular biology research.

The good news about the Time article is that the words “Stem Cells” made the cover, along with a nice bio-photo. If nothing else, Americans this week can forget about the economy and the war for a moment and realize that stem cell research is an answer to many of our problems that don’t involve boundaries and account balances and fumes spewing out of our cars.

–art kyriazis philly/south jersey
home of the world champion phillies

this is an actual case study I did at Wharton about fifteen years ago for Steve Sammut’s class on advanced patent portfolio management theory. This case is of interest because it concerns a biotech company, and because, re-reading it after a long time, it actually reads very well. Even before I had all the experience I do now, I actually had a good feel for what to do with the management of a biotech company even back then, so here it is. And yes, I did get an “A” in the class, of course. Dr. Sammut used to run the tech transfer office for Penn during the 1990s.

–art k

ps enjoy!

T-CELL SCIENCES, INC. CASE

by Arthur J. Kyriazis

MGMT 898 – PROF. SAMMUT

Wharton School (WEMBA)
University of Pennsylvania

April 22, 1994

Issues

T-Cell Sciences, Inc. (“T-Cell”) is a 1983 Cambridge, MA biotech/pharmaceutical startup sired by Patrick Kung, a “recognized pioneer in immunological research.” The main issue appears to be defining T-Cell’s ultimate market niche even as it undergoes the process of transition from a venture-funded start-up to a more mature publicly held corporation. Specifically, in the coming months and years, should T-Cell (1) concentrate upon basic across the board immunological R&D; (2) concentrate upon basic immunological R&D with a focus on diagnostic drugs and product(s); or (3) focus upon strategic alliances with large pharmaceutical companies with an eye cast towards the development and delivery of therapeutic pharmaceutical drugs?

It would appear that until the arrival of James D. Grant as CEO in November of 1986, the main issue might well have been a different one altogether, namely whether T-Cell would reorganize or liquidate. In early 1986, T-Cell was a company in trouble and one which was not being particularly well-run or well-managed, even though it had brilliant scientists and innovative technologies full of commercial promise. Even though startups might be expected to lose money at the outset, T-Cell’s losses in 1985 and 1986 totalled nearly $2 million, compared with $5.5 million capitalization from December of 1983 throught January of 1986. This apparently necessitated a public offering in May of 1986, which raised $11.1 million, followed by the hiring of Mr. Grant in November of 1986, and his hiring of a well-heeled financial CFO immediately thereafter.

In addition, up through Grant’s arrival, T-Cell had only developed two products of any consequence, ACT-T-SET, and CELLFREE, and only two joint venture/research alliances/R&D contracts of any consequence, the Syntex USA contract and the Pfizer contract, and had failed to show any revenue from product sales through 1986, and only $13 million in revenue from contracts in 1986.

In brief, one may surmise from the case study that a great deal of money was spent at T-Cell, until Grant’s arrival, on basic immunological research, without a very well defined sense of where the research was going, or how it would be profitable or generate a return to the company and to the investors. This might have been a result of Dr. Kung’s diffuse vision of the company’s market niche as somehow doing R&D better or faster, and perhaps a touch of the academic fondness for the intrinsic value of broad based academic research as opposed to targeted research and strategic alliances directed to product development and ultimate profit.

Grant’s arrival placed T-Cell on a radically different footing and he appears to have turned the company around. Losses were reduced by nearly a million dolars from 1986 to 1987, and for the year ending in April of 1987, T-Cell reported positive product sales revenue of nearly $400,000 together with contract revenues of nearly $2 million. In addition, Grant apparently negotiated the deal with Yamanouchi Parmaceutical, which as he characterizes it places T-Cell on a sound cash flow footing for the foreseeable future. In addition, Grant has introduced a sound line of command and professionalized the management of the company by hiring a financial officer and a regulatory affairs officer, paying attention to patent management issues, and spending time painting a sound, attractive picture to shareholders, potential investors and to regulators. Finally, Grant’s status an a former FDA head bodes well for the regulatory hurdles awaiting T-Cell’s products.

T-Cell’s Strengths

T-Cell’s strengths are many. First, it has a distinguished corps of researchers led off by Dr. Kung, who appears to be a leader in the field of T cell research. It is situated in Cambridge, MA, in the heart of the Harvard-MIT research community, and can be expected to easily draw upon an outstanding technical scientific staff for its research needs. Also, the scientific advisory board includes people like Dr. Mark Davis and others who are world-recognized scientific leaders.

Second, T-Cell has introduced two product lines in 1986, the ACT-T-SET and CELLFREE technologies, which assuming patent protection and FDA approval, are potentially product mainstays for the company. These two products are expected to have applicability in the diagnosis of various stages of immune system stimulation and white blood cell activity. Dr. Kung and Mr. Grant expect R&D to eventually identify other new products in the same T cell related vein with applicability in the diagnostic field.

Third, T-Cell has two joint ventures, with Syntex and Pfizer, and now a third, with Yamanouchi, which promise to focus on specific product development, with the obvious potential of delivering a drug to market which can be of wide therapeutic applicability and therefore be a cash mainstay for the company. The Syntex and Pfizer ventures aim to produce therapeutic drugs targeted at common medical ailments, including breast cancer, type 1 diabetes, rheumatoid arthritis and cytomegalovirus. The Yamanouchi venture aims to develop products to diagnose rheumatoid arthritis and lung cancer. An added benefit is the global ability to develop and market products and drugs in Japan and the rest of the world while awaiting FDA approval for their sale in the United States.

Fourth, T-Cell now has James D. Grant, who must be reckoned as an important asset of the company at this juncture. His management skills have put T-Cell on a sound business footing; his contacts have resulted in new joint venture(s); and his FDA expertise should translate into FDA product approvals.

Which Fields or Options are Most Attractive for T-Cell?

The basic R&D approach is wrong for this size company. What the company needs to do is ultimately make a decision between developing diagnostic products/drugs on its own, or on developing them with partners. Grant appears to be committed to a strategy of hedging his bets by pursuing both options. He is willing to commit some money to R&D and to diagnostics, while courting and signing deals with large pharmaceuticals for strategic alliance(s) aimed at delivering specific types of therapeutic products/drugs. Grant also feels that the diagnostic(s) division, once profitable, should be spun off because of the competition in that field.

Recommendations

Grant probably has it right. The therapeutic emphasis is the best way for T-Cell to go right now. The joint venture/strategic alliance approach is a sound one. If successful, the development of even one drug marketed to a patient population as widespread as the breast cancer or lung cancer populations promises immediate payoff for T-Cell’s efforts and a handsome reward for its investors.

With diagnostic drugs on the other hand, even if approved and even if proprietary, it is hard to see how T-Cell will be able to exploit the discoveries, so that Grant is probably correct when he surmises that this division or these proprietary discoveries will ultimately be spun off. Of course, licensing and franchising are options we have discussed which absent from Grant’s discussion(s).

The best way for T-Cell to go would be to continue to solicity these contracts and joint ventures. T-Cell has recognized, proven scientific talent and recognized expertise in this very specific area of immunological research.

One specific recommendation is that the company hire a patent portfolio manager and begin to concentrate on patenting more of its discoveries, as well as concentrate on getting products to FDA submission stage. This manager must also concentrate on getting the researchers to recognize when a discovery may or might be patentable or commerciable in some respect. These two steps will make the company attractive to investors and a steady stream of patent application(s) and FDA approval applications are evidence that a company has been doing its homework.

These steps, if followed, should result in a successful new round of equity financing and/or an invitation to buy the company out altogether. In either event, the company will have attained a substantial goal. Finally, T-Cell should keep Grant around. Given the company’s history, investors could get extremely nervous if he were to depart suddenly or unexpectedly.

–Arthur J Kyriazis, 1994

THIS WAS AN ACTUAL CASE STUDY I WROTE FOR THE WHARTON SCHOOL IN THE SPRING OF 1994.

–art kyriazis
Philly/South Jersey
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Making the Playoffs in 2008: The Sixers, the Flyers, the Phillies and the Eagles!
Happy New Year 2009