THE BOOK--Playing The Percentages In Baseball

Good numbers.  And good evidence to use against all those crotchety columnists who think amateurs should still sign for $20k.

When I generated values a couple of years ago using WARP I got:

#1: 38M
#2-15: 11.3
#16-20: 9.8
#21-25: 9.6
#26-30: 6.0

Those figures included slot signing bonuses, but not salaries (I don’t think).

My values are about half as much.  I’d have to think about why that might be.

One criticism of Erik’s post is that you cannot combine the #1 pick with #2-5 and say that’s the top 5 average.  The #1 overall picks are real outliers and have to stand alone.

What I found was that results are pretty flat between #2 and the middle 10.  I cut mine off at #15 just because that ends the protected top half of the round. 

Then there was a slow decline into the 20s before a pretty big drop off.

And now looking again at Erik’s post although his groups are a little different it looks like his data has a flat middle and steep drop at the end as well.  So the shape is very similar and the basic take home message as well.

There’s a good comment in the Fangraphs thread about teams having varying levels of risk aversion, and about the median vs. mean WAR.  Any idea what the median WAR would be?  Or what pct of picks #2-10 didn’t amount to say, 2 WAR or more?

I’ve got these percentages for the 1987-1996 drafts.

Picks #2-10

DNP: 25%
<10 WAR: 32
<20: 6
<30: 16
<40: 10
40+: 12

Those are career numbers.  What I’ve found is that those <10 WAR players tend to be valued more highly by these system than in reality.  Many of these players average fractions of 1 WAR per year prior to free agency and I don’t believe those player are correctly valued at (X fraction of WAR) x 4.5M or whatever.

I’d say the median player from these elite slots is not too far above replacement level on a per year basis.

I don’t buy the risk aversion at all.  It’s like buying a basket of uncorrelated stocks or bonds.  That diversifaction reduces the risk substantially.

Thinking about it, yes, I guess that’s right.  The other thing that’s wrong about it is how else would a small revenue team bring an all-star quality talent into the system.  Yeah, I guess they could get lucky with later round picks, but a first round bust is cheap compared to a FA bust.

Thank you, Philly, for posting the numbers.  So basically what we have with these “elite” draft picks is a 1-in-4 chance of a complete bust and a 1-in-3 chance at getting back a small fraction of your investment.  I don’t know exactly where the breakeven point would be.  But it looks like you’ll lose 2/3 to 3/4 of the time.  (It might be even worse than that for small market teams if their scouting isn’t as good as that of the big guys.) You don’t think that makes some teams risk averse?

No, it doesn’t make teams risk averse, since EVERY team is in the same boat!

It’s not like the teams have a choice here to go in the draft or not.  It’s still the best game in town… extremely undervalued assets.

I think it’s easy to look at draft results and become risk averse and want to somehow adopt a stretgey that benefits from that risk aversion.  Michael Lewis spent so much time in the Moneyball draft chapters deriding team’s that took HS players because those guys are nothing but lottery tickets.  So much of the college uber alles crowd seemed to think it was possible to minize the risk with college players and “beat” the draft.

But you can’t.  For one, as Tango said the draft as is is the best game in town.  More importantly the odds of success are so low for any pick (or even for a team’s entire 50 picks) that there just is not an easy way to really minimize the risk inherent in the process.

Roughly 1500 players will be drafted.  I used to say that about half will be signed, but the last couple of years I’ve noticed teams signing more picks so maybe 800-850 players will sign.  From that pool probably onnly 15-20 will have 10 WAR careers.  If it’s 20 players out of 800 that’s a 2.5 success rate.  I don’t think you can approach a process with a 97.5% failure rate but massive value from the 2.5% hits and primarily try to minimize risk in the draft.

I think you have to be willing to accept and even embrace risk in the draft.

This is interesting and totally defies one of my long-held beliefs which I didn’t just pull out of the air.

In the 80s when I was really into this kind of stuff, I actually sat down with my Baseball America yearly publication and looked at 5 years of drafts (all that I get at the time) and made note of how many players made it to the big leagues as everyday players. I believe it was 1981-1985.

During that period, only 8% of players became everyday players and that was giving the benefit of the doubt to guys like Buddy Biancalana and Al Pedrique.

Back then players were not so expensive and it wasn’t so hard to sign a guy but they still seemed like they were not worth what they were getting.

Maybe it was just a bad period for MLB at the draft board or maybe the economics were still worth it. No way I would have been able to figure that one out.

But that idea was only reinforced in my mind by the “sure thing” failures of Todd Van Popple and Brien Taylor.

To be clear that was 1st round picks with an 8% success rate and included any pitchers that made any valuable contribution at all.

Looking back at those drafts though, it looks like I had a lot tougher standards than I remembered because it was definitely higher than 8%. More like 25% or maybe higher. With the benefit of so much hindsight, this argument seems pretty solid.

Of course it’s true that even the most risk averse clubs can’t afford to sit out the draft.  (But if it weren’t for MLB’s rule against trading away draft picks some of them would try.) But there are other risk averse strategies, such as “I’ll never go near a Scott Boras player” or, as already noted, “I’ll never pick a high school pitcher”.  All such strategies are sub-optimal if you only look at expected value.  But they make sense if you are risk averse.