THE BOOK--Playing The Percentages In Baseball

I have Troy at exactly 3 WAA or around 5 WAR. He is a monster!

I also have him with the 14th best projection in all of baseball next year (by rate). And there is only 10 runs separating #3 from #14, so he can easily be higher than that. I also have Bonds as #1, so you can probably move Tulo to 13 on that list.

Of course a player’s current value is a continuous moving “average,” so you never know.

I thought the $136 million looked crazy at first glance, but what team wouldn’t trade Torii Hunter and $46MM for Tulo?

The Twins would be silly to hold onto Santana; I assume they were just waiting for the bidding war to culminate.  Historically, the team acquiring the young players has done very well in this type of trade, so I’m not surprised that the Red Sox are getting ripped off by such a wide margin.

It’s true that by making this deal, they prevent the Yankees from acquiring Santana, but shouldn’t they be rooting for their rivals to make a terrible trade?  New York’s loss is Boston’s gain.

I think kind of analysis kind of fall apart since the talent market is finite and teams aren’t always rational

Say there’s an imaginary team where the lineup, rotation and bullpen are all 27 year old rookies that are all exactly as good as each other and the team projects to win 80-85 games.  Now let’s say the free agent market looks like it has the last two years with not much talent substantially better than average.  Let’s also say that the trade market is such that there is absolutely no way to trade for a star and get fair surplus value, which also reflects reality.  How does this team, which would have the highest cumulative surplus value of any team in the league, compete?

How do they compete?  By winning 80-85 games with a ridiculously low payroll (all rookies being paid the MLB minimum salary) and making a crapload of money!

We are NEVER talking about teams “competing” in terms of evaluating personnel moves.  We are talking about economics.  If a team wants to win without regard (or with SOME regard) to how much profit they make, that is a whole different ballgame (and analysis).

And of course, the whole trading, acquiring FA, etc., thing is enormously complex given each team’s unique market, revenue per win, place on the “win curve,” goal, etc.

Here, we are only talking about the average market value of players based on their short and long-term projections in WAR, and their status (FA, arb-eligible, etc.) and the current average value of a marginal win.

James, Tango says that there is 80 mil equity in Tulo (which is true).  He is worth around 136 mil for his career until a FA and will be paid around 56mm.

So if they were to trade him, they would want at least 80 mil in equity back and a team would want to give less than 80 mil in equity.  (Obviously it depends on a team’s needs, in the short and long terms, etc.)

Notice that the equities are what is important.  Hunter has zero or negative equity right now (given his new contract), so a team that gets him gets nothing of value. So if a team trades him and 46mm cash for Tulo, they make out like a bandit, getting 80 mil in equity for 46mm cash (of course the 80 mil has to be discounted because some of it is in future inflated dollars).

If the Yankees traded A-Rod and Jeter (and practically everyone else on their team other than Hughes and Joba) for Tulo, they would net enough equity for you, me, about 200 other people to retire for life.  But they would never do that even if given the opp.  One reason is that a marginal win for them might be worth 15 or 20mm in extra revenue.

Yes, I knew that.  I was just making a point and worded it badly.

Should read “What team doesn’t value Tulo at $46 million more than Hunter over five years?”

We are NEVER talking about teams “competing” in terms of evaluating personnel moves.  We are talking about economics.  If a team wants to win without regard (or with SOME regard) to how much profit they make, that is a whole different ballgame (and analysis).

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But this kind of analysis is patently unrealistic! It just isn’t how baseball teams operate. Tango’s free agent analysis is grounded in reality, and thus when he says a player is over-or-under-paid, it means something. The idea of MC = MR is useful in economics because that’s how much of the real world operates. It is NOT how baseball operates. So why stick to that when clearly that isn’t what’s happening?

DG, I don’t get what you are saying.  Tango’s analysis is good or bad?  Baseball operates how?  You posted in riddles or some kind of code.

The way baseball operates is unlike almost any other business, because it is part business and part “art collecting.” Plus it is different for every team. Some teams are businesses with only one goal in mind (even though for the most part they try and achieve that goal badly for various reasons).  Some teams are merely collectibles.  Some teams are hybrid.

Most importantly, because baseball is a monopoly with a strong union, is it NOT even close to a free market.  Nothing is exactly a free market of course, but baseball is as far from one as just about any other market.  So you can throw all of your free market economic analyses right out the window.  Plus many teams have singular owners as opposed to shareholders and boards of directors.  That leads to a very sloppy model because those human beings who singularly own and operate their teams are fallible and quirky.

Not that I know what you are arguing anyway.  I have no idea.

Tango mentioned that the 20-30 million that clubs spend on development/farm systems (i.e. lottery tickets) has to be offset against net player value in the pre-free agency years.  It seems to me that a significant portion (probably most) of the development costs should be viewed as fixed for a couple of reasons.

First, we measure net player value against replacement value.  Farm systems are a necessary element in determining replacement value.  If a club did not make the most basic investment in its farm system, its replacement level would fall.  Second, farm systems support the performance of major league players through injury/other rehab.

So, let’s say the minimum a club spends on the system amounts to $20 million, and the Rockies spend $25 million (including Tulowitzki’s signing bonus).  In my view, the amount to be offset against Tulowitzki’s net player value is a fraction of $5 million.  It probably would amount to little more than his signing bonus.

That’s a really interesting question, though.  How much DO teams spend on scouting, coaching, and paying all their minor leaguers?  Is it $20 to $30 million for all clubs or is there a wider range?

Does Michael Salfino read my blog?

http://www.sny.tv/news/article.jsp?ymd=20071207&content_id=1444634&vkey=1

This year, the team that acquires Santana is obligated to pay him only $13 million, a savings of $14.5 million.
...
Jose Reyes is likely to be worth about $100 million over the next four years. The Mets have Reyes under contract during that period for $30 million. If you want to downgrade him a little for the poor 2007 second half (which I think is silly), fine. He’s conservatively worth $50 million more than the Mets (or whoever gets him in a trade) will be obligated to pay through 2011.

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He also quotes the BP numbers.  BP: please, will you disavow WARP and MORP?  As discussed in the past, the only reason MORP isn’t linear is to counteract the poor construction of WARP.  Fix WARP, and then MORP becomes rather linear.  C’mon guys.  Time to fix what’s broken.

Dave Cameron makes the point to the USSM readers, some of whom are incredulous at the thought:
http://ussmariner.com/2008/01/08/adam-jones-and-erik-bedard-quantified/

Here was my response:

Dave’s data breaks down as follows:

Adam Jones will generate 15.75 wins above replacement for the next 6 years.  Presuming a 10% payroll inflation, that kind of production would cost 94 million$ on the open (free agent) market.

Because you get to control Jones’ salary, it will actually cost you 40 million$ for that kind of expected production.

For Bedard, he’s a 4+ player, meaning he’s a free agent after the 2009 season.  He’d have to sign a 4 year contract get him him to 2013.

Presuming he’s a 4 WAR pitcher and maintains that level, he will give you 24 wins over 6 years.  On the open market, that would cost you 138 million$.  With a 20MM, 4 year extension, and another 20MM for his 2 arb years, that’ll cost you 100 million$.

So, that’s your comparison point: do you want real estate that is worth 94MM but will cost you 40MM, or do you want real estate that is worth 138MM but will cost you 100MM?

You’ll obviously make more money with the first one.  But, what if you REALLY need a 138MM property?  Well, buy the first one (94MM) for 40MM, and you buy another one for 44MM on the open market for 44MM.  That gets you two properties, total cost of 84MM, whose total value is 138MM.

It’s on this basis that you would not give up your young player.

Now, if you decide to make do with only a 94MM property, well, you will be worse off, since you are depriving your mind, body, and soul of what you really want: a 138MM property.

But, the market is open enough that you can spend that money that’s in your pocket.

That strategy sounds exactly like what they’ve done - keep Jones and sign Carlos Silva.

I think trading Jones for Bedard would be defensible, but I probably wouldn’t do it.

There are rumors about the Angels trying to trade for Paul Konerko and offering something like Howie Kendrick plus another player.  Its so indefensible on so many levels.  Konerko’s not even a better player than Casey Kotchman, before you get to the contracts and giving up a player like Kendrick, under your control for 5 years.

I’d sleep better if the Angels would laugh off such rumors, but they don’t comment on any trade rumors.  There are GM’s dumb enough to make trades like that.  At this point I’m not sure if Tony Reagins is smarter than that.

Ooooohhhhhh.... very perceptive.  (Of course, Silva isn’t really a 44MM pitcher, but, basically, he kinda fits the bill.  Jake Westbrook would have been a better choice, if the Mariners could.)

So, the choice is Adam Jones plus Carlos Silva (aka Jake Westbrook), or Erik Bedard plus Willie Bloomquist?  I mean, that’s gotta be somewhat close, right?

Actually, I guess Silva would fit the bill, since I need a pitcher for 6 years, and that’s probably what 44M would have gotten me.

Didn’t Silva get 44 million?

(checks Cot’s)

Actually 48 million, over 4 years.  And you’re not getting a better pitcher this year without trading talent, there’s just nobody else out there as a free agent.

Maybe they should have traded for Bedard if Jones straight up would have done it.  It wouldn’t be Willie “worst player in MLB” Bloomquist replacing Jones, it would be Wladimir Balentien, a pretty good prospect himself.  But then I’m not sure where they’d go when they need Balentien to replace Sexson or Ibanez.

I’d say Jones for Bedard is a judgement call, you can make a case for saying yes or no.  Unlike trading Kendrick for Konerko, which should be a firable offense.

http://sports.espn.go.com/mlb/news/story?id=3205453

Are you kidding me?  This will go down as one of the worst player deals of recent years, giving Chase Utley a run for his money… uhmmm… missing money.

He’s giving over a 50% discount, for the right to lock him up for 6 years.  How can MLBPA accept a payroll structure that is inferior to the one the NHL has?

Just compare his deal to Nomar and Vlad of many many years ago.  Now, adjust their deals for baseball inflation.

Troy’s agent: call me.  You are scr-wing Tulowitzki out of millions of dollars.

What should we expect from Troy Tulowitzki in the next 5 years?

Using studes’ handy-dandy Win Shares database, I did this:
- excluded all pitchers
- selected all players aged 22, between 1946 and 2002
- minimum 20 win shares

59 players passed this filter.  Basically, every year, there’s one great player at age 22.

These guys averaged 25 win shares each (the same as Tulo in 2007, aged 22).

So, what happened in the next 5 years?  These 59 players totalled 6908 win shares, or an average of 117 win shares each (an average of 23.4 win shares per year).

Therefore, if you are trying to balance out Tulo’s improvement potential, his playing time, his regression, his injuries, etc, you can pretty much assume that he will perform at 94% of his 2007 performance, over the next 5 years.

Age by age:
23: 23.4 win shares
24: 22.8
25: 24.6
26: 24.3
27: 21.9

If I go to 6 years (meaning that I only select players until 2001, dropping Pujols and Adam Dunn), I still get an average win shares of 25 at age 22 (i.e., I got good comps for Tulo).

The average win shares for those 57 players is 133 over 6 years, or an average of 22.2 win shares.

Worried that one guy like Pujols can throw a wrench in this? The median of the 57 players was 136 win shares in 6 years (22.7 win shares per year), and the median of the 59 players was 115 win shares in 5 years (23.0 win shares per year).  That is, that 6th year (age 28) is 21 win shares, the difference between 136 and 115.

We have enough for our calculations.  If we start off Tulo at only a 4 WAR player, and give him the mild -0.10 wins per year that the above Win Shares analysis would imply, his pure free agent value is $129MM.  Using my discounts for non-free agents, his year-by-year salary would be $67MM.  He is being paid $30MM.

As far as I can tell, he is giving the team a 50% discount to a year-by-year deal.  And the Rox have a $100MM surplus in Tulo. 

This likely makes Tulowitzki the most valuable player in baseball.

And, it’s almost certainly a low expectation from me, since I gave Tulowitzki just a 4 WAR.  He would get that simply by being a great fielder with an average bat.

By the way, if I do the same for pitchers using Win Shares, setting my minimum to 15 win shares at age 22, I get 39 pitchers (average of 18.2 WS).

Over the next 5 years, they averaged 59.5 WS (median of 53).  That’s a huge dropoff.  If there was no dropoff, we would have expected 91 win shares over 5 years.

Tulowitzki’s career road statistical line is .250/.325/.381--that doesn’t exactly scream out “best young player in baseball” to me, even if you give him credit for exceptional defense--that stat line conjures up visions of Jack Wilson or, god forbid, Neifi Perez, who put up a robust .291/.333/.444 line a 24 year old rookie, also with huge home/road splits.  Obviously Tulowitzki is way better than those two, but how many other players have benefited from the Coors mirage?  Before we start anointing him the next great player, maybe we should consider what kind of numbers he’d be putting up if he was playing in Oakland or New York instead of Denver.

Tulo has a .370 BABIP at Coors and .294 away from Coors (career .332).

As we know:
http://www.insidethebook.com/ee/index.php/site/comments/run_impact_in_parks/#5

the average hitter at Coors has about a 40 point difference.

Isn’t it possible that he was a bit unlucky away from Coors, and is really a true talent .310 BABIP hitter away from Coors?  And with the 40 point adjustment, he’s a .350 BABIP hitter at Coors?  That’s an average of .330.

I fail to see why his road stats are much more relevant than his Coors stats.  I think it’s fair to knock 20 BABIP points off of every Rox hitter (40 points times half their games at Coors).  And I don’t see why you’d want to knock down more from Tulo than from Holliday or Helton or anyone else.

He’s also the 7th overall pick, preceded by Ryans Braun and Zimmerman.  I think the excitement is justified.

Plus, all the fielding metrics have him as the best fielding SS in baseball.  Like I said, just being an average hitter is enough for him to be a 4 WAR player.  There’s very few things more valuable than an average hitting, great fielding SS.  Especially one that is signed so cheaply.

I just want to reiterate that his numbers in post 18 are based on him being an average batter (4 WAR overall).  I think he’s really a 5 WAR, making his contract really ridiculously low.

I’m not saying that I’d knock him down more than Holliday or Helton. But, like you know, you need to look deeper at all those Coors guys to see who is legit and who is looking better than they really are because of playing 81 games each year in one of the greatest hitters parks of all time.  The reason the road stats are important because if you are trying to look at who to trade for--ie. worth--it is important to see what that player will likely do in a more neutral park.  Sure the .294 BABIP is probably a bit on the unlucky side and should normalize will more PA, but even if we bump him to a .310 BABIP, he is an average hitting great fielding shortstop--an incredibly valuable commodity no doubt--but not the most valuable young player in the league. 

I guess we shall see in the coming years.  Like you said, he’s got the pedigree, and, no doubt, he had a fantastic rookie year, but is a .370 BABIP at home sustainable?  Also, I think there is much more to the Coors effect than the bump in BABIP.  That could explain why his BA and OBP take a hit on the road, but why does his power disappear away from Coors?  I have no idea how to do this, but if Reyes and Tulowitzki were traded straight up, I would bet every dollar that I have that Reyes puts up offensive numbers in Coors that would dwarf Tulo’s. What would Tulowitzki’s offensive contribution be in a neutral park?

Let’s say Tulowitzky actually does take advantage of Coors more than the average hitter.  Fine, he’ll be playing in Coors for the next seven years and he’ll have that extra advantage for the next seven years.  That’s valuable and worth paying for.

Jim Callis is not a The Book Blog reader.  Not a single mention of the finances of the deal, which is a minimum requirement in evaluating a trade:

http://www.baseballamerica.com/blog/prospects/?p=707