THE BOOK--Playing The Percentages In Baseball

I responded to a comment on Primer.

***

much lower average salary

As a percentage of revenue, NHL players make more than MLB.

restricted free agency

That there is restricted free agency forced the Capitals to preemptively sign Ovechkin to a 124MM$ deal.  Seeing that MLB revenues are double that of the NHL, that’s a 248MM$ deal… BEFORE he hit arbitration.

Sidney Crosby signed a 45MM$ deal, again before arbitration.  Again, remember to double the salaries to compare to MLB.  And he’ll be 26 or so when that deal expires and into free agency.

There is a long list of young players who are signed to long-term deal in the NHL.  Basically, they all signed Evan Longoria deals or Tulowitzki deals for the same total dollar value, even though NHL players get half the salaries of MLB players.

teams actually getting penalized for actively going after free agents

Fantastically, teams have a choice to match the contract offer of other teams, or get a sh!t load of draft picks (up to 4 1st rounders I think), and STILL they prefer to match.  It’s not often that teams go for the draft picks.  Like I said, this system forced the Penguins and Caps to sign the two best players in the league extremely early compared to MLB.

Then the fact that the league has gotten significantly weaker over the past few years

How is that the NHLPA’s fault?  Swedish and Russian players, in some cases, prefer to play in...Sweden and Russia!  Go figure.  I think the NHLPA CAN be faulted for the rookie cap and that might make it less attractive to sign those guys.  But, the lack of a transfer agreement with Russia doesn’t help, and that has nothing to do with NHLPA.

And Hockey, Football and even Basketball all have a lower career average for players so their big payday needs to occur sooner

The career length in years for hockey is the same as baseball.

(hockey is 20-23) so it makes sense to have a larger than expected minimum salary

The minimun sal in NHL is 1% of team payroll.  In MLB, it’s half of that.  How would adding 5 guys on the NHL payroll at league minimum affect much?  Plus, unlike MLB, very few NHL players actually make the league minimum.

The one thing MLB players has that the NHL players don’t have is the signing bonus.  Seeing that the HS/College players have nothing to do with MLBPA, you can’t count that as a win for them either.

***

The NHL players are also subjected to actual Olympic testing ever four years (in addition to their regular testing program).  And, you have the 150 of best players in the NHL in the Olympics.

but it’s going to take an awful strong argument to really get me on board for a salary cap.

With revenue sharing and a payroll cap, the NHL players get a guaranteed fixed share of the pie.  Same with NBA players.  Roughly in the 55-57% range.

Without this, MLB players get whatever they can get, which is close to 50% these days, and can be anywhere from 40-65%.  You will get to 65% if owners are idiots.  You will get to 40% if they all act intelligently (and without collusion).

So, in terms of getting a share of the pie, there is a great risk with the MLBPA approach.

Now, is it possible that the size of the pie will increase more with the MLBPA approach than NHL/NBA?  Perhaps.  The less revenue sharing, the more motivation each team has to increase local revenues.

Finally, the allocation of salaries among the players themselves: NHL players are much more fair about it than MLB.  MLB players get 30 cents on the free agent dollar in their pre-FA years.  That’s a huge transfer of wealth from the young players to the veterans.  This does not happen in the NHL.  In terms of fairness, MLBPA scr-ws the non-free agents.  The NHLPA has a much better balance here.

The NHL cap is 20% of the cap number.  In MLB-speak, that would set the maximum salary at around 20MM$.

Why don’t you tell us what is so good about the current system, because the only one I see is that the growth of the pie could possibly (but not certainly) flourish better without revenue sharing.

Tango--you’re saying some interesting things over there on that primer thread, including talking about revenue sharing. Thanks for the contributions.

That it hasn’t engendered a more thoughtful discussion over there perhaps highlights the way primer/BTF has changed. It’s too bad, I’d like to see more debate on the subject.

I can’t believe it is taboo for stat types to entertain the notion of revenue sharing, or that lack of the same might affect competitive balance.

Yes, Primer has changed a little.

Here’s the thread in question:
http://www.baseballthinkfactory.org/files/newsstand/discussion/source_fehr_to_leave_job_after_25_years/P0/

I’ll repost my comments here:

Baseball works just fine right now. No need to fix something that isn’t broken.

I will guess that you are likely a fan of a big market club rather than a small market club?

but at the same time, he advocates for a much higher minimum salary, which would work as even more of a wealth transfer from young players to veterans.

That is incorrect.  If you have a fixed pie to give out (say 50% of revenues, or say 100MM of 200M), and if I make the minimum salary as 4MM$, then guess what: the minimum salary is ALSO the maximum salary.

The lower the minimum salary, and the stricter the pre-arb and arb process is, the more that the pie will go to those players with fewer entanglements, and that is the free agents.

I presume your opinion is valid in some other context.  It is not valid in the world I’m describing.

***

Dewey: can you answer my question directly first?

“I will guess that you are likely a fan of a big market club rather than a small market club?”

Wait, since when was there a fixed pie to give out? Now you’re proposing that Fehr should have negotiated a salary ceiling, too?

I guess you haven’t followed along closely.  I like the NHL model alot.  There is a team payroll cap, as well as a salary cap.  The total salaries paid out is fixed relative to revenue.

The current model is costing the players 300 million$ a year, and I suspect it will continue to get worse.  That’s what happens when you go with a variable method rather than fixed.

Phoenix is more than double the size of any potential market in Canada, I can understand why the league wants a team there for its long-term interest.

The potential market is not the number of human beings.  It’s the number of hockey fans or sports fans who can be sold on being hockey fans.  Otherwise, Mexico City provides the largest “potential” market.

***

Dewey: we all have biases.  I have to temper your remarks based on where your allegiance lies.  I’m an Expos/Canadiens/Devils fan (and Whitesox when Raines was there).

As for your comment, yes, the Twins and A’s have shown how a smart small-market team can compete.  But to do so, they have to give up virtually all their pending free agents. 

They also have to be fairly efficient, unlike the big market teams who can take chances and pay off for their carbon emissions when things don’t go well.

***

Now, as for the Hawks led by the great young duo (in some respects, similar to the Penguins), the question is how much do you allow a team to keep spending to keep their teams together.  The Larry Bird rule would seem to be one way.  You can have other models that would say count as a cap hit a 5% discount any of your returning players, a 10% discount any player that’s been with you for 2 years, a 15% discount for a 3-yr player, 4-yr 20%, etc (for anyone who has never become a free agent).

Your point is that a team that is smart in how it drafts (Kane, Toews) should be rewarded, and I say a team that muscles its way (Tex, CC, AJ) there should not be similarly rewarded.

If I ask you: you have carte blanche to create the system you want, can you honestly say that what is there is what you want?  Or, do you think you could do better?

***

Mark Ellis’ contract was a fantastic buy when he signed it.

***

If the MLBPA thought (and thinks) they can “beat” the owners, shouldn’t they keep going down this path?

Yes, that’s why gambling exists: everyone thinks they can beat the odds.  MLBPA is rolling the dice on their belief that they are more likely to hit the upper end than the lower end.  Their strategy is predicated on the owners/GMs acting as if they have a gun to their heads when they make deals.

It’s worked out great for the longest time.  Front offices are filled with smart people who know better.  At some point, the idiots will be pushed aside.

By my calculations, teams are paying out at least 500 million$ a year too much for free agents.  They are, in effect, taking their savings from the very restrictive pre-arb and arb system and rather than pocketing it, are fighting themselves in giving it to free agents.

Think about it.  MLB has the most restrictive pre-FA system in place, and yet, up until a few years ago, still managed to pay out the same percentage of their revenues in salary as the other sports.  Their monumental savings for the non-free agents was given out to free agents.

They are wising up.  The MLBPA will be begging MLB for payroll certainty.

***

I agree that the revenue transfer should not be based on success.

I have not seen any problem in the NHL with the cap in place.  You show me the NHL teams that have had to sell off their players, and I will show you Arod/Junior/RJ, Torii/Santana, the Beane A’s, every version of the Expos, and at least a dozen other teams.

And more:

***

By your definition of fairness—which, I am sure will come as a shock to you, is not universal.

My definition of fairness is pay-for-performance.  I should have made that clear.

And, why would you say that I think that my definition of fairness is universal?  There’s no need to put thoughts in my mouth, when I’m right here ready to answer you.

***

Their strategy is predicated on owners acting the way have acted in most years throughout the history of free agency, when collusion was not involved.

Yes, in an irrational manner.  Times are a changing.  MLBPA is betting on irrationality.  Players are oblivious to the implication of MLBPA’s strategy, I would bet.

***

I disagree

Your opinion as to my behaviour would be more effective if you provide evidence rather than a conclusion.  I could indeed very well be a d-ck.  But this thread is not a good example.  Anyway, talking about my character is pointless isn’t it?

***

They don’t offer them a deal when they can get a cheap young guy to replace them. But that will no longer be possible.

Is your suggestion that, today, a team would prefer to callup a minor league player for $400K than to sign a veteran free agent who is right around replacement level, for $1M.

But, if they had to choose to sign either one for $1M, they would go with the veteran?

And that this shift will have the effect to disproportionately benefit the veteran and not the younger players?

We have empirical evidence that this does not happen in the NHL.  The NHL’s minimum salary is (proportionate to the revenues) double that of MLB’s minimum salary.  And, there is a sh-tload of young players in the NHL, while veterans are cast off.

In any case, you may have a point, but I would disagree with you.  Not strongly, just moderately.  It’s an interesting thought.

But, for the guys with at least 1 year of service, all the way through to 5+ years of service, the young players will reclaim a large portion of the wealth that was being transferred to the free agents.  Simply put, the higher the minimum wage, the more socialistic the distribution of wealth.

Joe Sheehan:

http://www.baseballprospectus.com/article.php?articleid=9111

I laughed when I read this:

“and the amount of economic illiteracy in the coverage of the issues reached a peak”

That’s because at the time, I highlighted what Sheehan said (that Americans are economic illiterate b-tches) on Primer, and it was quite an enjoyable thread.  I love that Joe threw that one in for us.

The rest of the article is extremely tame.  Joe is usually pretty good, but this article was not my cup of tea at all.  Fehr’s been ineffective these last 10 years.  Overall, these last 25 years, I’m sure he’s a big net positive.  But, so has all great players who retired two years too late.

Michael Jackson reference turned out to be quite well-timed in hindsight.