from Amazon
Friday, December 09, 2011
How you can make numbers lie
This time, straight from Harvard Sports Analytics.
On average, top first basement start to decline precipitously after age 32. Using this trajectory, we can expect Pujols to contribute approximately 47 WAR over the rest of his 10-year contract, assuming he won’t have any wrist issues and will be able to bounce back to a high level this year like his counterparts from the past.
Good.
So how much is 47 WAR worth? Some writers cite a value of $5 million for a marginal win on the market today, implying that Pujols’ remaining years should be worth approximately $235 million.
Ok, sort of.
However, looking at the 2011 salaries and performance of all non-pitchers in the league (excluding those who did not play), teams will pay, on average, $600,000 for a replacement level player (WAR = 0) and $3 million for each incremental win above replacement.
Oh boy.
That’s because this fellow is likely looking at players that are arbitration or pre-arb. I can’t tell, because he doesn’t explicitly say. He also gives a 2.7% annual increase for the next 10 years, based on the one data point of last year. He ignores the basically 0% of the bad economy, and the 10% of the normal baseball economy. That’s not to say that 2.7% is a bad estimate. It can turn out to be a reasonable estimate.
Now, what’s another way to do this? How about you start at 6.5 wins for 2011, and drop him by 0.5 wins each year. In 10 years, that comes out to 42.5 wins (LESS than the 47 he cites). So, I’m being pessimistic relative to his valuation of wins. Then, we give him 5MM$ a win in 2012, and increase that by 5% each year. That gives us 255MM$.
So, we can throw in whatever numbers we want out there, making seemingly reasonable choices, and then coming up with THE NUMBER.
Now, you can actually make say 3.5MM$ a win as something more reasonable than 5MM$. If you went the free agent route for a team of 25-30 players, and paid them 5MM$ a win, a 90-win team will cost you over 200MM$.
Given that today, we have many teams that don’t spend 200MM$ on salaries and player development (draft, minors, etc), and are 90-win teams in true talent, then the 5MM$ is over-inflated. This is simply an argument that ALL free agents are overpaid. This no longer becomes an Albert Pujols issue.
But, with respect to the free agent market being rational, then Albert Pujols’ contract is right in line with rational expectations.
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