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THE BOOK--Playing The Percentages In Baseball

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Friday, July 11, 2008

Why the split between AL and NL?

By Tangotiger, 02:19 PM

Darren Everson takes a look.  He says:

This season, the average AL opening-day payroll was $97 million, $14 million more than the NL average.

I’ve already talked about this, but let’s do it again.  The minimum payroll is around 400K per player times 28 players, or 11MM.  Let’s take that out of each team.  The average AL team is spending 86MM above minimum, while the average NL team is spending 72MM above minimum.

If they played each other all the time (i.e., as many intra and inter league games), the win% of the AL team would be .525 and the NL team would be .475.  Presuming that a replacement level team is .300, that means the AL is +.225 wins per game above minimum, while the NL is +.175 wins above minimum.  Over 162 games, that makes the average AL team as 36 wins above replacement (WAR) and the NL team is 28.

AL teams spend 86MM for those 36 wins, or 2.4MM per win.  NL teams spend 72MM for those 28 wins, or 2.6MM per win.

So, that’s your answer.  AL teams: a) spend alot more, and b) to a smaller degree, are a bit more efficient in how they spend it

If I had used a .250 replacement level they both be spending right around 1.95MM per win. 

Because of this, I don’t see this as “cyclical”.  As long as teams continue to spend as they do, the AL will continue to be the dominant league (or at least the one that spends the most money, which one would hope would bring in better players).


#1          (see all posts) 2008/07/11 (Fri) @ 17:38

Because of the DH, to some extent, the two leagues are apples and oranges.  So we have to be careful to define what we mean by “dominant” or “better”.

One definition would be what would happen if (which they do, of course) they played each other with and/or without the DH. 

Another, but similar, definition might be, how different is the average pitcher and average hitter in each league (if they played in exactly the same context).  Or even the median (rather than the mean or average) player.

The reason comparing the two leagues is apples and oranges to some extent, is because of the DH.  Comparing pitching is easy.  If they faced the same hitters in the same park, which league’s pitchers, collectively, would do better.  For the last several years, the AL has had a gigantic advantage.  Then again, if the AL has to spend more money on position players because of the DH, the should have worse pitching.

However, when comparing hitters, do we compare the NL hitters, collectively, with the AL hitters?  That is not fair, as the AL should have better hitters, even if they spent the same amount of money (again, because of the DH).  Do we compare NL hitters with Al hitters who are position players (and not DH) only?  Which players and which PA do we include in that for the AL, since there are very few exclusive DH’s in the AL?

The NL uses more pinch hitters, and even though those pinch hitters have a true talent of X, because of the pinch hit penalty, they perform at X-y, where y is substantial.  That throws a monkey wrench into the analysis as well.

And what about defense?  Because the AL has more DH type players (of course) their overall defense, including these DH-type players, should be worse.  Does that make the pitchers worse, as players like Ortiz and Frank Thomas have to occasionally play the field, especially in IL games?

Basically because of the DH, it is difficult to compare the leagues on an equal footing.

But, as Tango says, if one league spends more than the other, there is a real good chance that any way you slice it, that league will be “better.”

In the article, he says something like, “Despite the fact that the AL is clearly better these days, the attendance is not disparate.”

Why would it be?  People seem to think that if one league is “better” that there will be an observable difference in the quality of the play. 

That is ridiculous.  There is no way that you could tell the difference between the AL and NL by watching them play.  For one thing, if the pitching and hitting in one league were better, everyone will have the same stats (parks and DH not withstanding).  Or if the pitching in one league is better, but the hitting is the same, it will make it look as if the hitting might be bad in the better league.  Etc.

It is not like you are going to be able to tell that pitchers in one league have “better stuff” than in the other league.  You won’t.  Or that hitters in one league swing the bat better.  Without the All-Star game and IL play, you would NEVER be able to tell which league’s pitching or hitting (or defense) was better.


#2    tangotiger      (see all posts) 2008/07/11 (Fri) @ 22:19

I’m pretty sure the level of play in the NFL is higher than that in college football.  And same for the NBA.  The level of play is not the only reason fans attend games. 

And as MGL said, no one can tell the difference between a .475 team (a true 77 win team, that will win 64 to 90 games 95% of the time in 162 games) and a .525 team (a true 85 win team that will win 72 and 98 games 95% of the time).  I’m sure someone here can tell me the chance that a true .475 win team will have a better record than a .525 win team over 162 games.


#3    tangotiger      (see all posts) 2008/07/11 (Fri) @ 22:22

"NEVER “

Actually, as long as players are traded or move from one league to another you can ALWAYS tell.  See, for example AA, AAA, and Japan.


#4    Colin Wyers      (see all posts) 2008/07/11 (Fri) @ 22:59

Look at it from the other side, though. If AL teams aren’t seeing higher attendance (which is a proxy for revenues), why are they outspending NL teams?


#5    tangotiger      (see all posts) 2008/07/11 (Fri) @ 23:04

Local revenues is one thing, but TV revenues is another.

Can someone go to the Forbes site, and find out the average revenue and market cap of AL and NL teams?  I wouldn’t be surprised that they are 20-25% higher in the AL.


#6    Colin Wyers      (see all posts) 2008/07/11 (Fri) @ 23:30

Here you go:

http://spreadsheets.google.com/pub?key=pMzjQGUNv8cpb0kMvCD3LRw

AL
Revenue: $185.79 mil
Current Value: $482.79 mil

NL
Revenue: $180.5 mil
Current Value: $461.88 mil

The Yankees and Red Sox dominate the AL in revenue - they pull in 13 and 10 percent of league revenues, respectively. The top NL teams (Mets and Dodgers) pull in 8 percent apiece.


#7    MGL      (see all posts) 2008/07/12 (Sat) @ 09:38

Actually, as long as players are traded or move from one league to another you can ALWAYS tell.  See, for example AA, AAA, and Japan.

Yes, I meant that too of course.

It is not si much that you can’t tell the difference between a good and bad team when they play one another (which you can’t, within reason).  It is that the average team in all leagues is .500 (duh), and you can’t “see” that the average team in the AL is a little better than the average team in the NL.

I would also love to conduct an experiment whereby we choose random games from a team’s schedule and let serious baseball fans watch those games with the identities of the teams and players somehow obscured.  Then the viewers would have to guess the overall quality of the teams.  I would guess that they would not be very accurate.  A bad team probably looks good 40% of the time and vice versa, or something like that.

In fact, if you threw in some AA or AAA games, and the viewers didn’t know it, I doubt that they could tell the difference either.


#8    tangotiger      (see all posts) 2008/07/12 (Sat) @ 09:57

Well, well, well.  The Yanks+Sox seem to be generating about 140MM in revenue over what we’d expect based on their comparables (Mets and other high fliers).  If we take out that (average of 10MM per team), the average revenue of the AL team would be a bit below the average NL team.

(I would take them OUT of the league as some people would do.  Just strip them a bit to get them in a reasonable shape.)

Similarly, take out about 560MM in market cap for those two teams, or an average of 40MM per AL team, and again, they’d be below the NL.

However, if you strip part of their salaries, they average AL team would still be above the average NL team.

This would seem to suggest to me that the Yanks’ overspending is causing a cascade effect that forces the Redsox, then the Angels, then the Tigers, etc, to continue to overspend a bit (though efficiently, as seen by the marginal $ per win).

So, this COULD be cyclical if the Yanks’ spending can be reigned in.

To continue the farce, I would create a division of big spenders, the Yanks, Sox, Mets, Dodgers, etc.... put 8 of them in there.  I would then send 3 teams in the playoffs for them.  The bottom division would send 1 team, and the other 2 would send 2 teams each.

This IS what happens already (i.e., of 8 playoff teams, you have 3 big spenders every year anyway).  All I’m doing here is forcing the issue, without forcing all the other teams to become big spenders against their will.


#9    tangotiger      (see all posts) 2008/07/12 (Sat) @ 09:59

I meant: I would not take them OUT


#10    Colin Wyers      (see all posts) 2008/07/12 (Sat) @ 10:35

I’m almost wondering if we need to look at this similarly to replacement level. All teams have guaranteed sources of income that come into play before they even print a ticket - revenue sharing, merchandising, TV deals with Fox, ESPN and TBS, etc. A replacement-level team doesn’t have zero revenue.

We of course don’t know how munch money that is. The good news is that we have a franchise that has operated close to that for pretty much every year of the Forbes data - the Florida Marlins. So I think instead of looking at a team’s revenues, we should look at a team’s revenues above and beyond the Florida Marlins.


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