THE BOOK--Playing The Percentages In Baseball

Monday, March 02, 2009

Colin tackles JC’s MRP model

Colin breaks down the errors in JC’s MRP model in The Baseball Economist.

The other two mistakes are more serious. His first problem is assuming that the sum total of MRP is equal to the sum total of revenue. Nowhere does he even bother to offer a rationale for this decision.
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Bradbury then goes on to divide his payroll equally between hitters and pitchers, or “offense and defense,” as he terms it.. The problem here is that (as he has already acknowledged by incorporating DIPS into his valuation system) is that pitchers and fielders share responsibility on defense. Unfortunately, at no point does he attempt to assign credit for a fielder’s defensive contribution in relation to their MRP, either in his estimates of $ValAA or of average value.
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Shorting position players part of their value seems to compensate for the use of total revenue in estimating player value. This does, however, lead to a median 36% difference between his MRP estimates and salaries for free agent pitchers.

There is more that could be said about Bradbury’s MRP estimates but not, I think, more that needs to be said about them, at least for right now. They seem to have some rather glaring and crucial flaws.

I reviewed the book when it came out, and it reads in part:

Matter-of-factly splitting the payroll between nonpitchers and pitchers as 50/50.  Anyone who’s been to my site knows that this is wrong.  The better split is around 57/43. ... So, what happens as a result of using the 50/50?  On page 195, Table 34, JC shows that the average nonpitcher free agent earns 92% of the salary he deserves.  (The average nonpitcher non-arbitration eligible pitcher earns a mere 10% of the salary he deserves.) But, the average pitcher free agent earns only 64% of the salary he deserves.

Now, the “deserving salary” is tied in to the 50/50.  Since it should be somewhere closer to 59/41, let’s see what happens.  If you earn 64% of the “50” you deserve, then you are earninging 78% of the “41” you deserve.  Similarly, if you are earning 92% of the “50” you deserve, then you are earning 78% of the “59” you deserve.  As we can see, both nonpitchers and pitchers earn at the same deserving rate!

3. JC notes that an average team will earn 109 million$ in revenue.  I’m not sure where he got that figure.  According to Forbes, MLB revenues in 2005 was 4.269 billion$, or an average of 142 million$ per team.  We need to multiply all of his “deserved salaries” by 1.30.  So, the free agents, which we have adjusted to 78% of “deserved salaries” in the previous step, now gets bumped up to 101% of the “new deserved salaries”.  Isn’t this more reasonable?  That both hitters and pitchers earn 100% of their salaries as free agents?

(Studes: you need a permalink on your blog entries.)