THE BOOK--Playing The Percentages In Baseball

Well, money is money, and happiness is inside one’s head.  IOW, A-Rod can “choose” to be happy and content no matter where he is and for whom he play.

That being said, easier said than done.  From experience, there is no price on happiness, and money does not make one any happier or content in life.

OOTH, there is a jewish saying, “Rich or poor, it is better to have money.”

Finally, depending on your lifestyle, every increment in wealth has declining “value” (the value marginal dollars in personal wealth is definitely not linear). Unless you live like a hog, the “extra” 45 mil has little if any value to you. Of course, you can give it away to charity, so it definitely has value…

Well, to amend what MGL wrote, money does not make one happier, unless you are talking about financial “replacement level"-- a level which is not in ARod’s solar system.

It’s easy for us normal folk to say what is the difference between having 50 or 100 million. I suspect that many players in that position convince themselves that the extra money is not for them, but for their heirs. “How can you pass up a chance to make like easier for your great great granchildren, you selfish bastard!”

Me, I would tell those folks (or that voice in my head) to go to hell. I’ll live my life to maximize my, and my immediate family’s, happiness and security--but beyond that, you future people can fight over the scraps, or piss on my grave if I didn’t leave you enough…

Is David Smyth really Buffet, Gates, and/or Branson?

Wow, I just read the BTF link where they are arguing about what you could get for ARod or Jeter.

If you have a house that has a market value of 10 million$, but your mortgage is 15 million$, aren’t you just glad if someone would take over the contract as-is, and you get nothing?  This is exactly why Manny was placed on waivers, and this is exactly why no one bit.

And, if the Yankees want to release Jeter, there’s not a single team that would take him.  ARod would be close though, especially since the Rangers are eating so much of the contract.  But, giving up Verlander?  Wow, that’s like giving up the 90 million$ house with an 80 million mortgage, for a 30 million$ house with a 10 million$ mortgage (or whatever it would be until FA).  And then throwing in Zumaya too?  Yeesh.

Don’t people realize how much the Tigers could get for Zumaya and Verlander?  You think ARod and his 16 million$ contract is a steal??

Tango, that is exactly what I said in that thread and what I have been saying for years.  The value of a player in a trade is the difference between his contract and his current value in the open market.  For many players that is zero or negative.  Most fans and some teams do not realize and/or understand that.

This is not an 100% airtight rule of course.  Supply and demand and other considerations apply, as always.  For example, if you MUST have a high priced good player and one is not available on the “open market” (generally a FA), then you may have go give up something to get a high priced, good player with a “fair” or even overpriced contract.

You are right about Jeter, A-Rod, Manny, and many other aging high-priced veterans.  Not only do they have zero (usually negative) trade value, but teams should have to give up something (like subsidize the existing contract) when offering these players in a trade.

It is amazing how many fans and even astute people (not that SOME fans are not astute) assume that when you acquire a high-priced player, you must somehow give something up, irrespective of the high-priced player’s contract.

To give up a prospect or good, young player making next to nothing, you better absolutely need the high-priced, veteran players to win a WS or get into the playoffs, or he better be a very underpaid player, which is rare for a veteran FA.

And, if the Yankees want to release Jeter, there’s not a single team that would take him.

Well, I can guarantee you that’s not true.  If you want to amend “would” as “should”, you could probably construct an argument, but there’s no way Derek Jeter clears waivers, even with that contract.  No way.  Combine his excellent performance with his perceived intangibles/leadership and his marketability, and I’d bet half the teams in baseball would put in a claim.

Of course it is not even close that Jeter “should” not be picked up by a team.  That would be 20 mil for a player that is worth 3.5 wins above replacement, at most (that is being generous) right now.  That is almost 6 mil per marginal win as compared to the going rate for FA of 2.5.

As far as who would pick him up (and actually acquire him and his salary), no one knows, but I would bet 100,000 that it is less than “half the teams” in a NY minute.  I even think there is a reasonable chance that it would be zero teams.  Sure, teams are going to overrate Jeter by 2-3 wins a year (I guess), but even if they did, surely most teams would have to realize that 20 mil is still WAY too much.  Almost all teams have no idea what a marginal win is, let alone how many marginal wins a particular player is worth, but somehow that have some idea as to what a player is worth, both in wins and in dollars.  Even if they thought that Jeter was worth 6 wins a year, they would “realize” that 20 mil was too much to pay for that…

That would be 20 mil for a player that is worth 3.5 wins above replacement, at most (that is being generous) right now.

You have Jeter at +3.5 wins for 2006? That’s hard to buy.  Since I don’t have his slwts or UZR, his VORP was 79.2, 4th highest in baseball.  Even if you’re going to say he’s -20 on defense, that puts him at about +60 runs, give or take a few considering the differences between the systems.  I have a hard time turning +60 runs into +3.5 wins, and I’m not sure I buy Jeter as a -20 defender, either. 

I even think there is a reasonable chance that it would be zero teams.

Not unless the reason he was placed on waivers was for assaulting a 3-year-old with a tire iron. 

Sure, teams are going to overrate Jeter by 2-3 wins a year (I guess), but even if they did, surely most teams would have to realize that 20 mil is still WAY too much.

A pretty well managed team offered Carlos Lee $12 million a year, then traded him to another fairly well managed team when he turned it down.  You’re on record as saying Carlos Lee is worth less than 1 win over replacement.  He’s going to get something like 4/60 or 5/75 this offseason. 

And Carlos Lee isn’t Mr. Clutch, the most marketable player in the game, and the guy who needs two hands to hold his championship rings. 

MLB sees Jeter as being much, much better than you do.  I’d imagine most teams see Jeter as a 6-8 win player, and that’s not even counting the marketing side of things. 

Also, can you imagine how quickly the folks in Boston would burn down Fenway if the Red Sox passed on claiming Derek Jeter on waivers so they could bring back Alex Gonzalez for another season? Theo would have to relocate to France.

David, why does a smart guy like you quote his 2006 VORP (and I have no idea what the hell VORP is) and presumably equate that with his projection?

I shouldn’t even have to say any more.

His defensive projection is around -10.  Here are his park and opponent adjusted offensive lwts for the last 5 years.  You tell me what his offensive projection for next year might be.

2002 +12
2003 +14
2004 +17
2005 +17
2006 +41

Add in another +2 runs for baserunning (that’s all his baserunning projection is, and that is actually generous). 

I tell you what, add in another +5 runs for all of those intangibles, whatever that means.

So we have -10 in defense (I don’t think anyone will quarrel with that, other than your casual fan and other Jeter-lovers like Tim McCarver and Michael Kay), +2 in baserunning, +5 in intangibles, and whatever you come up with YOUR projection.  I’ll just say +17 as that is a basic Marcel with an age adjustment.  In fact, I’ll grant you (or anyone else) +20 just because I am in a generous mood.

So we have a projection of -10 on defense, +2 for baserunning (generous), +20 for offense (very generous), and +5 for all those intangibles (Happy Birthday), for a total of +17.  The average SS is -9 and the replacement SS is around -27.  That puts Jeter at +44 runs above replacement if I still remember my 3rd grade math, which is around 4 wins in the AL, using 11 runs per win.

My 3.5 was without all the generousity and the birthday gift, but you can have the 4.  So that is 5 per marginal win.  My bad.

David, why does a smart guy like you quote his 2006 VORP (and I have no idea what the hell VORP is) and presumably equate that with his projection?

Really, you have never heard of VORP? That’s pretty surprising.  It’s a Keith Woolner creation to measure offensive performance, and it stands for Value Over Replacement Player. 

Anyways, as for Jeter’s projection, my point was that he’s coming off a +35 to +40 (give or take) season, which by your numbers, makes him a 6-7 win player this year.  That’s what MLB teams would be judging him off of. 

GMs don’t do particularly well with adjusting for prior history.  I’m not saying Jeter is a +6 to +7 win player going forward, but I am saying that MLB teams think he is, and for the discussion of whether he’d get claimed on waivers, that’s what matters.

One of the threads on primer suggested that a player’s dollar value based on his value over replacement should not be linear, which I happen to agree with.

After thinking about it for a little while other threads got bumped up over there and I don’t know where to post it, so I’ll post it here instead.

First of all, a player who is one win over replacement is NOT worth 2.5 million dollars.  That’s about halfway between replacement and average.  You stock you team with players like that and you’ll pay 62 million dollars to win 65 games.  You don’t need to pay that, the teams that gut their rosters and minimize payrolls probably average 65 wins.  Talent is a pyramid in MLB, so an exponential equation might work best.

Just by playing around with the numbers, I get this:  $ = Wins over rep ^ 1.5 * 1 million.

So its one million for a 1 worp player, 2.8 for a 2, 8 for a 4 like Jeter, 11.2 for a 5 like A-Rod, and 31.6 million for a 10 worp player.  I don’t think anyone projects as a 10 worp, though every year somebody might play at that level for one year, and Pujols comes pretty close.

And yeah, any way you slice it Jeter and A-Rod are overpaid.

I know what VORP is supposed to do, but I have no idea how they compute it, and given that Jeter’s offensive lwts was around +37 this year in 154 “games” (the +41 per 150 was wrong), where the heck do they get 79 in VORP?  Are they including defense (using DT’s I guess)?  If they are, then 79 is an absurd number.  If they are not, then it is just a ridiculous number.

Rally, I’m not sure I understand your argument.  First of all, we are talking about FA value (the 2.5 mil).  All teams have lots of above replacement level players who are still pre-arb or arb.  That is why a team that guts their payroll wins 65 or 70 games on the average.  Team wins above replacement divided by marginal wins above replacement by the players is certainly not even close to 2.5 mil (because of the pre-FA players).

The 2.5 mil is simply what teams actually pay per marginal win for FA talent.  Sure, they probably overvalue the better players (I am not sure about that) and they are more scarce such that their $ per marginal win is probably higher.

But whether a team “should” pay substantially more for high talent - I am not sure. Many teams can elect to acquire 2 or 3 players who are equivalent to one high-priced and high-talent player such that they don’t have to overpay for scarce high-level talent.  If you are already stocked with talent, will you probably have to play a lot more for wins than 2.5 mil?  I guess.

So you are right in a sense, but I am not sure what it means or what the equation even refers to.  Going rate for players as a function of their marginal wins above replacement?  Perhaps.  Other people like DSG who have done work on salaries and wins can discuss this a lot better than I can…

I know what VORP is supposed to do, but I have no idea how they compute it, and given that Jeter’s offensive lwts was around +37 this year in 154 “games” (the +41 per 150 was wrong), where the heck do they get 79 in VORP?  Are they including defense (using DT’s I guess)?  If they are, then 79 is an absurd number.  If they are not, then it is just a ridiculous number.

VORP is a strictly offensive measure.  If I recall correctly from my conversations with Keith about how he calculates VORP, he sets replacement level at 85% of league average (except for catcher, where I think he uses 90%) for that position, creates the rate statistic of VORPr, than multiplies that by plate appearances. 

I’m pretty sure there’s a long article on VORP in one of the more recent BP annuals, but I haven’t bought one in five years, so I’m not sure which one.

MGL, the VORP includes the “positional adjustment” of say 9 runs.  So, if Jeter is +40 runs in offense, above the average hitter, he’s +49 above the average SS, and +69 above the replacement SS.  All implying average fielding.

VORP is detailed on Keith’s site:

http://www.stathead.com/bbeng/woolner/vorpdescnew.htm

As for how MLB will perceive Jeter, I think they’d see him like Manny.  Manny is the better hitter, but Jeter the better fielder at the tougher position, and it all balances out.

Jeter’s WPA (hitting only) from 2002-2006 is +12 wins, which includes +3 wins of clutchey. 

Manny was +19 wins, including a Chokey of 5 wins.

So, with the clutchiness, Jeter is 7 batting wins behind Manny.  Excluding clutchiness, Jeter is 15 batting wins behind Manny.  All over the 5 years. 

If, per season, we see Manny as being -2 wins behind the avg LF, and Jeter being -1 win behind the avg SS, and the avg SS being 2 wins ahead of the avg LF, that puts Jeter at 3 wins ahead of Manny, fielding-wise, per season.  Over 5 seasons, he’d be +15 wins fielding-wise behind Manny.

To recap, over 5 years:
Manny hitting +15 wins ahead of Jeter
Jeter fielding +15 wins ahead of Manny
Jeter clutchy +8 wins ahead of Manny
Let’s give Jeter +2 wins for baserunning ahead of Manny.

Overall, giving Jeter all the breaks, that’s +10 wins to Jeter over 5 years.  (Big break on the clutchey)

At what point would Manny have been claimed, since he wasn’t at 100/5?  75/5?  Jeter therefore, with his extra 10 wins, or 25 million$, would be claimed maybe at 100/5.

So, I stand corrected.  If the Jeter mystique is included, a team would pick up Jeter.

Btw, I don’t think they are worth all that.  Likely 80% of FA contracts are overpriced, and probably 95% of FA contracts over 40 million are overpriced.

Player valuation is an extremely tricky subject. I’ve been looking at it quite a bit for the past year, and besides some articles on specific contracts, I’ve never published any kind of article on the topic because at this point, I still am not at the point where I could be sure of anything. Nate Silver has done some good stuff in this area as well, with MORP and his chapter in Baseball Between the Numbers. Still, even Nate hasn’t scratched the surface.

I will make three points, however:

(1) Wins in the free agent market are extremely expensive—$3.5 to $4 million per marginal win. Studes has documented this in detail on the Hardball Times website and Annual(s). This suggests that teams are highly over-valuing the worth of a marginal win (which is about $2.5 million).

But that’s wrong, I think. There are a few things that come into play. One, it may be that pre-FA players are severely underpaid (Neifi Perez makes four times what Miguel Cabrera does). So owners have lots of extra cash to spend on free agents. You can’t make the playoffs with a team full of replacement-level players, and as Nate documented, the playoffs are where the real money is (and again, his research undervalues marginal wins because he used WARP).

There’s more than just that, though. One thing Nate did not look at, and I do (or will—when I publish something) include in my analysis is the increasing value of the team itself, which goes way beyond extra revenues. For example, Forbes says that the Yankees lost $50 million last year, but their VALUE grew $76 million. The Twins made $7 million, and their value grew $28 million. So while traditional analysis might say that the Twins did $57 million better than the Yankees, they actually only did $9 million better. And that’s with the Yankees sporting a $200+ million payroll. Across town, the Mets lost *just* $16 million, and their value increased by $99 million (though that number is higher than it would be in a normal year because of their new cable network).  The Red Sox lost $18.5 million but the value of the team grew $54 million.

But that’s still not all. Once you factor in growing team values, you’ll see that all owners make money, pretty much. So owning a baseball team—even a poorly-managed one—is a cash cow. (And this isn’t even mentioning all the tax loopholes that owning a team opens up.) So the longer you can own a team, the better. But guess what? Owners of bad teams are run out quickly. Part of it might be that they just want to make a quick buck (though I doubt it), but part of it is certainly public pressure (and maybe that REALLY bad teams do end up losing money because eventually the fans don’t show up). Teams like the Royals or Pirates are constantly on the selling block—Steinbrenner has owned the Yankees for decades.

So if a team is guaranteed to make money no matter how much you spend (pretty much), it is in an owner’s best interests to hang on to it for as long as possible. That further increases the value of each marginal win. All of these things need to be taken into account when appraising the value of a marginal win.

(2) Player value is non-linear. Both Nate and I have documented this. It’s much more expensive to get a 4 WARP players than it is to get a 2 WARP player, but a team of 2 WARP players will only be about average. So you need the 4 WARP guys to make the playoffs, and unless you can bring them up through your minor league system (which is also expensive, BTW), you’re going to need to overpay them.

(3) I had another good point, but I forgot it while typing out a Mickey-length post.

Told you it wasn’t easy…

Oh, the third thing was going to be inflation (or maybe it wasn’t, but I was going to mention it anyways). Inflation in the MLB is at about 10% per year. So if $10 million buys you four marginal wins today, five years from now it’ll buy you 2.5 five years from now. That’s why large long-term contracts are not nearly as bad as they look. If you sign a 4 WARP player for 5 years/$50 million, and he declines by .4 wins a year, he’ll be worth his salary in the last year and not overpaid by $4 million as most would think.

Of course, you also have to ask if those wins could be acquired more cheaply because making money isn’t the same thing as maximizing profits, because the opportunity cost might be greater than what you’re making. This has to do with the difference between absolute and comparative advantages and a lot complex economics that I’m not going to explain, nor am I particularly qualified to talk about. Economists solve these kinds of problems for a living, so let’s not make it sound simpler than it is.

Seriously, Nate’s chapter was a nice start, but a whole book could be written about this. It’s on my to-do list as part of a larger GM handbook—sort of like The Book for general managers. As Mickey, Tom, and Andy can attest, these things take a long time to do.

"Likely 80% of FA contracts are overpriced, and probably 95% of FA contracts over 40 million are overpriced.”

I’m not sure what it means to say that FAs are overpaid in the aggregate.  What do you think teams should do with that money instead:  More bobbleheads for fans?  Bribe umpires? Hire smarter managers?  Invest more in scouts and signing prospects?  OK, the last one is a serious option.  But the payoff is very longterm—it doesn’t help you win now.  And even if teams spent a LOT more on developing talent, it wouldn’t appreciably bring down the price of FAs. 

Most FA contracts are fair value BY DEFINITION--it’s what it costs to obtain players.  They may exceed the marginal revenue generated—though I doubt it—but why do we care about that as fans?  And given the surplus-profits extracted from pre-arb and arb-elig players, the FA price should be bid up past marginal revenue.

The defintion only applies if that is your universe.  Stock prices can be terribly overpriced, even if the supply/demand is stable.  It’s a question of fundamentals and technicals.

The option, as you pointed out, is player development.  There’s no reason to ever have any player over 30 that is being paid more than double the league average.  If you have one of those guys, it’s almost certain that he’s overpriced, and that money can be sunk into player development.

As for “longterm payoff”, I don’t buy it.  I think a complete overhaul should put a below .400 team at .500 in 3 years, and in the playoffs in 5.

The option, as you pointed out, is player development.  There’s no reason to ever have any player over 30 that is being paid more than double the league average.  If you have one of those guys, it’s almost certain that he’s overpriced, and that money can be sunk into player development.

How exactly do you suggest sinking this money into player development? If teams did as you suggest here, most teams would be lopping $25-$30 million anually off their major league payroll, and now they’d all be chasing high profile international free agents in an attempt to spend that cash on the best talent possible. 

Instead of giving Derek Jeter $20 million a year, we’d be giving Carlos Truinfel a $20 million signing bonus.  The teams wouldn’t be spending less money, and the crop of major league talent wouldn’t be any different; they’d simply be spending money on teenagers with a higher failure rate than the veterans you’re suggesting you take the money away from. 

Dumping money into player development by signing more talent has massive diminishing returns, and I’m pretty sure this would prove to be a faulty plan very, very quickly.

As long as not all the teams do it, you won’t have the chase.  Right now, the chase is in the FA, and that is not money well-spent.  There are plenty of teams that have decided to forego big-money FA, and still put out a quality product.  All my Expos teams were like that.  I don’t follow the Marlins too much, but, for the most part, they seem to follow that.

International signees haven’t proven to be money well-spent either.  For every Miguel Cabrera, there are ten Joel Guzmans.  I’ve seen two studies done by clubs on the issue, including one who basically abandoned the Dominican Republic because they determined that they were paying about $10 million in bonuses for every major league player they developed, and they both came to the same conclusion; the international signing market is a money pit. 

There were five teenagers signed to seven figure signing bonus’ this summer, an unusually high number.  There’s just not enough supply of talented low-cost players identifiable at a young age for an organization to actually put this “no veterans, farm system machine” system to use. 

It’s a nice hypothetical that won’t work in real life.  The Expos never won a championship, and the Marlins only win ones when they start splurging for veterans.  A major league club’s goal is not to recreate the 2006 Marlins season, but to win baseball games. 

I’m obviously a big fan of productive farm systems and building from within, but there’s no way the ideal roster balance is 25 guys under the age of 30.

“There’s more than just that, though. One thing Nate did not look at, and I do (or will—when I publish something) include in my analysis is the increasing value of the team itself, which goes way beyond extra revenues. For example, Forbes says that the Yankees lost $50 million last year, but their VALUE grew $76 million. The Twins made $7 million, and their value grew $28 million. So while traditional analysis might say that the Twins did $57 million better than the Yankees, they actually only did $9 million better. And that’s with the Yankees sporting a $200+ million payroll. Across town, the Mets lost *just* $16 million, and their value increased by $99 million (though that number is higher than it would be in a normal year because of their new cable network).  The Red Sox lost $18.5 million but the value of the team grew $54 million.”

I’ve said it before and I’ll say it again here, but I think that there are questions as to how one (and particularly Forbes) values a ballclub. Ultimately a ballclub is worth as much as someone is prepared to pay for it and the fact that there is a limited supply of baseball teams and the money supply continues to grow means that traditional methods can be difficult to employ when working out the value of a baseball club.

However, saying that, the correct way to value a ball club is to use a DCF technique; the fact that mlb is a monopoly should be reflected in higher profits, (as well as a possible premium value - though economically this is incorrect).

The other thing is that ballclubs are extremely sensitive to changes in a few of the assumptions which determine value—for example the long term weighted average cost of capital, which is driven by a large number of factors.

Now I have NO idea how Forbes’ calculates its valuation, I suspect is largely based on comps and not DCF. Without them publishing them methodology it is difficult to comment, but the confidence that I have in the value number would be low.

Good points abound, but fer crissakes, isn’t it a little early to make *Joel Guzman* the poster boy for a wasted bonus? (Obvious caveat that the Dodgers got no value for him when they ~gave him to TB.) He’s just 21, aight?

Don’t forget, also, that baseball teams probably are far from optimally structured, organizationally. GM’s don’t set their own budgets and aren’t really given discretion to decide how much to spend and how to envision the franchise’s long-term future. So when, in the 2004-5 offseason, the M’s, Tigers, and Dodgers more or less overspent on a bunch of free agents (Sexson, Beltre, Percival, Ordonez, Lowe, Drew), it’s fairly hard to argue that any of those GM’s had somewhere else to invest the money. GM’s have to leverage their budget to maximize wins as best they can, and if that means eight digits for Derek Lowe or Richie Sexson, the GM should probably be kicking themselves, but given how complicated offseason timing is, it’s hard to blame them just for overspending.

Detroit in that offseason overspent wildly for mediocrity and essentially got no return. Yet few were agitating to can Dombrowski then and I don’t think anyone is complaining now. If the Tigers come up short in the ALCS or WS, will anybody be citing the ridiculous amount of payroll tied up in faux closers and pointless veteran corner guys (Casey, Ordonez)? Not to mention that they had to give up talent to pick up Polanco, who they could have signed as a FA. Or that they could have had a very productive Shelton/Pena platoon but instead ate Pena’s contract and paid for Casey… I’m rambling.

In any event, though Dombrowski spent very poorly, IMO, he couldn’t have simply pocketed the budget surplus, and he may not even have been able to attract any better FA’s - it was Detroit. Illitch could have just kept his money, I guess, but he probably decided at some point that the Tigers needed to overspend in order to get to a point where they could attract talent without overspending, and without any solid knowledge of value in baseball talent, pushed for or was duped into Ordonez.

A good GM can, I imagine, present a long-term plan to the owner/president and, with a smart plan, can make things work out on the budget side. But as long as baseball owners know very, very little about what works in running a winning franchise, the margin for error is darn small. Baseball teams aren’t like many other businesses that are owned by people with expertise in the business who have simply ‘moved upstairs’ and delegate the work to the GM/CEO/whatever; for the most part (I think), baseball owners know diddley and use the ‘expertise’ of their GM’s. In such a position, you would think that an owner would have some way to use other experts to audit their GM’s. However, since conventional baseball wisdom is so skewed, whatever ‘experts’ the owners tend to turn to will probably be equally clueless about any of the tougher aspects of baseball analysis. So, at heart, there is an epistemic barrier that prevents most teams from spending money in a way that maximizes profits.

So even if sabermetricians come up with the super-great model for allocating marginal payroll/expenses, that doesn’t mean that all or even the majority of GM’s can go along with it. DePodesta showed he was pretty saber-savvy, but even if he had really maxed out the potential of a ‘Moneyball with Money’ scheme, a horrible year of injuries made it moot. Conversely, somebody in Detroit’s front office didn’t know a damn thing about the relative value of players, but they’re going to have every chance to implement their plan. (Not to pick on Detroit, since I think they probably are doing an outstanding job of player development, though I really can’t be sure.) Since random variance is a staple of sabermetric analysis, it’s got to be annoying to be a GM with an owner who doesn’t understand that a .550 TTL team can finish .480 or .620 pretty easily.

If you had decided to buy a baseball team and knew next to nothing about sabermetrics and only knew the junk the mainstream media puts out, it would be pretty difficult to hire both the personnel to run your team and the personnel to advise you on what decisions you should make vis-a-vis your GM and/or whom to hire/fire. Some people come into it with a background that lends itself to saber-friendly decisionmaking (generally) - Red Sox and D-Rays owners come to mind. Others enter the business with a totally different mindset, and that’s why Austin Kearns is a National, inter alia.

Tom, nice post.  Epistemic?  “Inter alia” is only used by lawyers and law students!

What a great team the posters on this site would make running or at least advising the braintrust of a real team.

Wow, I did not realize how poorly Casey hit this year. -14 lwts!

I also did not realize how poor their contracts were.  Casey is getting paid 8.5 mil on an option that was picked up.  He was projected at around 1.5 wins above replacement (basically sucks as a hitter for a 1B, and can’t run at all), so he is being paid almost 6 mil per.

Ordonez is even worse - a typical overpay for a “slugging” corner OF.  If I had a dollar for every one of them, I’d have…

many dollars.

He was projected at 2.5 wins above replacement and is being paid 15 mil.  That is also 6 mil per.

Both of these not horrendous I guess, but not good either.  I would think that Casey would NOT be overvalued as most teams do not like non HR hitters at first base.  Ordonez, on the other hand, is typical of a FA who gets overvalued.  All it takes is a player with 25+ HR and 100+ RBI, usually in their prime years, and they get to strike gold, regardless of their defensive position, usually regardless of their ability within that defensive position, and definitely without regard to their actual “value” as compared to other players at that position.

There are so many FA who get 6 mil or so per win, and since the average is apparently 4 mil, there must be a whole lot of players who are paid and can be had for well under that 4 mil.  I don’t know if they are concentrated in any particular defensive positons or not, and I don’t know who they are off the top of my head.  Probably Brian Giles is one, and guys like Eckstein and Everett (among many others).

You can count on one hand (maybe half a hand) the GMs who can go beyond a player’s HR and RBI.

To see how uch teams abstractly value WARP shouldn’t you look at what teams pay their draft picks per WARP or marginal win adjusted for inflation. 2.5 million per win doesn’t sound like the actual scale used. Also as top the original post, Tango why do you think people will stop bugging him if he signs away the contract. He’s been marked and it won’t stop.

Yankee fans are brutal.  Rather than targetting him for 162 games, he’ll be targetted for zero to 6 games if he signs in the NL .

***

Dave, the Expos never winning a championship is spurious.  1994 to begin with.  (BTW, I hate Braves fans who claim the consecutive-division-winning streak, forgetting about 1994, because Selig said so.) In any case, neither have the A’s in 30 years, and that doesn’t mean anything.  What counts is if you field a competitive team, unless you live in NY.

I’m sure it’s quite possible to field a team if
either all your players are under 30, or the rest are over 30, but paid no more than double the league average.  (This is a rule of thumb, as a shortcut of saying not to pay anyone more than 2.0-2.5 million$ per expected marginal win above replacement.  When I gave my “english-sounding” rule, I mean the more technical 2.0-2.5 million/win rule.)

Mike, yes of course player development costs have to count.  I think Studes had a great article a couple of years ago that also included that cost component.  If it didn’t then I may be remembering an unpublished article of mine.  Regardless, it’s all part of the equation.

"In any case, neither have the A’s in 30 years”

Nit picking, but the A’s did win in 1989.

No nit, good call!  The main point of course is winning once or none at all isn’t a test.

Then again, that A’s team was a young team!  The oldest guy was Dave Parker, Eck, and Honeycutt, and they would basically fall into my “don’t overpay for over 30s”.  MLB average was around 0.50 million, and they topped out at around 1.1-1.2 million or so.  The rest were 32 and younger.
The oldest guy on the 94 Expos was Jeff Fassero.

I just don’t see the need to pay 20-25 million$ for two guys giving you 6 win over replacement guy, when 20-25 million$ is what is likely spent on the annual player development budget.

Even if the player development process has been tapped out, if there’s teams that are that inefficient that they think they need to spent 3-4 million$ per marginal win, then leverage that.  Trade against it.  Give up your 26 yr old for a 24 year old, and sign long-term deals.  There’s a host of things to do.  Signing a top FA is not one of the requirements.  Filling out with a David Eckstein is a better gamble.

Going back to the intent of this blog, I’m calling ARod out on his happiness.  He *cannot* state that he is happy or unhappy when he has almost complete control into where he wants to play.  And, that involves him giving up alot of money.  He can’t talk to SI, saying that he’s only got 3 friends on the team, of which only one of them is a teammate.  While perhaps factual, it comes with a message.  If you ain’t happy, get out, or, at least, don’t tell us, or convey to us, that you are not happy, without being part of the solution.

Jeter was a selfish jerk, two years ago, for talking to the media, stating that ARod was here to play 3B (I heard it with my own ears, and I’m not mistaken).  But, A-Rod’s attitude is terrible.  And, his media persona is even worse.  He is the epitomy of how not to talk to the media.

Wayne Gretzky is a master.  I’ve seen interviews of him as a 16-yr old, and his maturity, honesty, and humility was shining through even then.  Even on a team of major league all-stars, Gretz was always the centerpiece, but you’d never know it hearing him talk.

ARod:
2008: +5.0 WAR
2009: +4.5 WAR
2010: +4.0 WAR

Free Agent million$/win:
2008: 4.4
2009: 4.84
2010: 5.32

Total ARod is worth as a free agent, starting with 2008 season, for 3 seasons: 65 million$.

His contract has 81 million$ left, of which the Yanks only pay 48 million$ of it.  (If I’m reading the reports correct.  Someone can correct me.)

If all this is true, then ARod is getting 16 million$ more than he deserves, and the Yanks are paying 17 million$ less than they should.

Sounds like equilibrium to me.  Both sides should thank Tom Hicks.

If ARod tries to negotiate with the Yanks, he can ask for an extra 20MM per year for 1 to 3 years.  Another more than that, and Yanks fans should let him have it.

He should invoke his free agency clause, leave the 81MM on the table for 3 years, and sign a 5/105 deal somewhere else.

I don’t want to hear him complain how he’s unhappy.  He can always leave.

ARod is having his best year ever.  Coming into this season, he was probably a +3.5 WAA hitter, or +5.5 WAR.  So, coming into 2008, we figured he was a +5.0 WAR.  Which is what post #35 above is about.

But, we now think his hitting is even better, and his fielding might be a bit better too.  We may now have to revise our estimate of his true talent level all the way to +6.0 WAR going into 2008.  That makes his 2008-2010 salary forecast 80 million$.

Now, this is where it gets interesting… that’s how much his contract has left (81 million$)!  His 2008-2010 is now at fair market value.

However, I think ARod could command a 6yr contract, if not more.  Using my Salary scale that I’ve been using in other threads, his fair market value is 6/157.  For an 8 year contract, it’s 8/201. 

Let’s say that he signs an 8/201 deal.  If the Yanks want to preempt that talk, they could extend his contract for a 5/120 deal.  That is, he’s currently under a 3/81 deal, and he simply signs an extension for 5/120. 

To the Yankees, this works out great, since the Rangers will continue to pay a total of 27 million$ under the original deal.  That is, can we presume that the Rangers will continue to pay off in the event of a contract extension?  Where are the reporters on this one?

If that’s the case, the Yanks will pay 8/180, while the Rangers pay 3/27.  Since the Yanks are playing with Rangers money, they could technically up their bid all the way to 8/228, and still end up paying the same amount as say the Angels.

The entire deal rests on whether the Rangers’ 3/27 is still on the table, and how can the Yanks and ARod exploit that.  It is a virtual impossibility that ARod declares free agency if the 3/27 is on the table.  If ARod does declare free agency, this means that the 3/27 was out of bounds on a contract extension.

Can a NY reporter followup on this?

It took almost two months, but finally we have confirmation from the man himself:
http://www.sportsline.com/mlb/story/10298502

If Alex Rodriguez opts out of his contract after this season, the New York Yankees insist they won’t try to re-sign him. “How can we? We lose all our money from Texas,” Yankees general manager Brian Cashman said Thursday.

And John Brattain echoes the same thing:
http://www.hardballtimes.com/main/article/not-that-theres-anything-wrong-with-that/

The Yankees may have the inside track due to the Rangers’ subsidy of A-Rod’s deal. However if he opts out, the subsidy is gone and the Yankees have no advantage. If they wish to extend the current deal and retain the Rangers’ money, what they have to do (according to a inside source with knowledge of the contract) is simply this: keep the current deal in place and sign Rodriguez to a three or four year deal beginning in 2011 and hope the commissioner’s office OKs it.

Interesting stuff about A-Rod.

I wanted to bring up the fact that the Red Sox just brought up Bobby Kielty because, as he said on the Red Sox website, “They want me to hit off lefties.” Even the Red Sox, with some of the most intillgent front office members in the game, still don’t understand the whole platoon concept that was brought up so well by you guys in the book.  This really isn’t brought up enough.  You guys clearly found that unless a right has a ton of PA’s against LHP (like 3,000 or something really high), you can assume for him to have an average platoon ratio.  What do you guys think about all this?  I mean teams still sign and use RHB specifically for LHP.

Mike, I think you’re on the right track, but Kielty is a switch hitter, not a pure RHB, and he has been a terrible hitter from the left side. I haven’t watched the A’s recently, but certainly in 2004 when he joined Oakland he was an entirely different hitter depending on which side of the plate he was on. I don’t know if Epstein et al have read The Book or to what extent they would have understood or accepted it, but I think it’s accurate to regress Kielty differently than a typical switch-hitter. They are crazy if they think his TTL is .296/.379/.509 against southpaws, but Kielty is a good platoon partner for Drew.

ARod’s 2007 hitting is really changing his forecast.  I now have him as being +4.5 WAA as a hitter, going into the 2008 season.  His fielding seems to have also recovered from his lapses last year.  3B gets no positional adjustment.  That puts him as +5.0 WAA as a player, or +7.0 WAR.  My salary scale (add 10%, since that was for 2007) has him…
http://www.tangotiger.net/salary.html
...as an 8/252.  However, the typical signings for that chart likely really break down for an extreme player at extreme years.  After all, in 2015, ARod will be 40 years old.  And I presume a 0.50 aging per year.  In 8 years, his 7.0 WAR will be 3.0 WAR (i.e., still above average).  You’ve gotta figure his chance for injury/attrition makes that unlikely.  If I give him a more severe aging (0.75 instead of 0.5 wins per year), that brings us to an 8/201 valuation.

Assuming he’s got a 3/81 deal left (with 27MM to be paid by the Rangers), he will sign a 5/120 to 5/171 extension with the Yanks.  It all depends on how well you can forecast ARod.  The problem is that with even just a slight difference in aging (0.50 wins, or 0.75 wins), it makes an enormous difference in the final contract (51 MM).  And, since the Yanks have 27MM of free money to play with, it’s possible that the Yanks can fairly evaluate him (8/201), decide to give him the free money from the Rangers (27MM), and still be outbid by the Cubs or Angels, because the Cubs/Angels forecast of ARod’s aging will be slightly more optimistic.

I’m also assuming a 10% payroll increase every year.  If we make it 7% instead, all of a sudden, the 8/201 becomes 8/180, meaning he’d get a 5/99 extension.  The amount of uncertainty is enormous as the number of years goes out.

I’m glad I’m not Cashman.

Brian Cashman has once again publicly reiterated that the Yanks won’t pursue ARod, if ARod opts out because of “basic economics”, which readers of this blog understand to mean “we’ve got 27MM$ of Rangers money to play with here”.

Let’s assume ARod has 3/81 left on his deal (of which 27MM is Ranger money).  Here are the scenarios:
1. Yanks sign extension for 5/120 (total Yankee payout for the 8 years is 174MM).
2. Yanks sign extension for 5/170 (total Yankee payout of 224MM).
3. ARod opts out, signs with Sox/Angels/Cubs (SAC) for 8/180.
4. ARod opts out, signs with SAC for 8/220.
5. ARod opts out, signs with SAC for 8/260.

What does Steinbrenner do in each case to Cashan?  In case 1 and 2, we have no idea what the market will actually do.  Without a real point of comparison, then any extension can be justified, and therefore, Steinbrenner will be happy, or at least not unhappy.

Scenario 3: Assuming that option 1 is the minimum that the Yanks offered, and ARod turned it down hoping for a bigger market, all he finds is 8/180.  The Yanks could have had him for 8/174 plus the 27MM from the Rangers.  Steinbrenner will blow a fuse.  While Cashman properly valued the market, he wants the Yanks to keep the 27MM and not give it to ARod.  ARod wants some of that 27MM Ranger money double-dipped to him.  You see, if the true market for ARod is 8/180, he wants the Yanks to pay him 8/207, because he knows the Yanks will only pay him 180, with the other 27MM coming from the Rangers.  That is, he wants to unleverage the Yanks from the Rangers, so he gets the Rangers money double-dipped to him!  He’s hoping the Yanks treat the money as house money, and simply gamble it away.

Scenario 4: this is the tough scenario for Cashman. It all comes down to how much the Yanks (and Steinbrenner) think that ARod is worth, and if they will give ARod the extra 27MM that the Rangers have on the table.  Steinbrenner can blow a fuse here.

Scenario 5: under scenario 2, the Yanks were prepared to give ARod 224MM of their own money, plus give him the Rangers 27MM, and even that wasn’t enough for scenario 5.  Steinbrenner will simply say that the other teams grossly overspent.

It’s the 27MM question: how much of the Ranger money will the Yanks let ARod double-dip on?

I just realized that ARod has optout rights after 2008 too.  Since any deal the Yanks sign will be an extension, and cannot touch the original deal in place with the Rangers, the Yanks have no hope in removing that opt-out clause.  Though in reality, ARod would have no reason to.

***

Doesn’t Boras sound like the pathetic ex-boyfriend pleading with the girlfriend that she’d be much better off with him?

I think the Yanks have figured out ARod’s worth.  They don’t need Boras’ unbiased impartial research. 

What Boras is doing is tantamount to pleading with the mother-in-law.  Uggh.

The mother-in-law being the media.

Wisdom of the Crowd on ARod (8/240):

http://sonsofsamhorn.net/index.php?s=&showtopic=24421&view=findpost&p=1198458

In this case, I’m not sure it’s so “wisdom” as in regurgitating Boras.  I would have preferred to see this BEFORE Boras spoke.

As per the link in #45: “8YR/$261M”

As per my post in #42: “8/252”

Well, well, well.  I constructed, while not elaborate, at least a fairly decent model.  And what do fans, out of their seat of the pants say?  Almost exactly the same thing.

Fantastic.

Yet one more case where we can tell people to keep their single opinions to themselves, while sharing it with a group.

After 119 votes from SOSH readers: 7.5/240.  The way they did their poll, they kinda forced in the 32MM per year:
http://sonsofsamhorn.net/index.php?&showtopic=24421&mode=show&st=20