Archive for October, 2007
Pete Boettke saw my contest for predicting Alex Rodriguez’s contract, and he wonders if there is some useful information gathered from these predictions. Is there a wisdom of crowds result here?
Independently, a poster (“Hairps”) at Sons of Sam Horn wondered the same thing and gathered information from all of the predictions. He aggregated the predictions on the graph below.
Thus he infers:
OK, so I’m not really into making cool charts, but you should get the idea. The “crowd” seems to foresee an 8YR/$261M deal (AAV = $32.6M). Pretty interesting to see how constant the AAV (green, secondary axis) of any deal stays pretty constant throughout, hovering around the $30M AAV marker Boras laid down at the onset.
Nice work, hairps.
I’ve told you how much I expect A-Rod to get, and now that it looks like the Yankees are out of the picture, I wonder where he will go. No, this isn’t a contest—there are only so many places he can play—I just think that most of the predictions by the media are a bit too focused on big markets. For example, Bruce Jenkins lists his candidates in the San Francisco Chronicle: Giants, Angels, Dodgers, Mets, White Sox, Cubs, Tigers, and Red Sox. All of these clubs have relatively large payrolls (all over $90 million in 2007) and play in relatively large markets.
Why are we assuming that only big-market teams can purchase A-Rod? Small-market teams still do quite well, and the boost in revenue from having the talent and star-power of A-Rod could mean quite a lot to a team. I’m looking at a young teams on the rise with low-payroll stars who make far below their contributions to team revenue thanks to the CBA rules. In the latest ESPN Magazine, Buster Olney suggests that the Marlins may be in the market for A-Rod. The Marlins have a new stadium on the way (supposedly), some good young and cheap players with a farm that seems to keep producing them, and a payroll so low that adding A-Rod would double the team’s total salary expenditure yet still keep the team below the league average. I like Olney’s reasoning.
I’m not saying that Rodriguez will necessarily sign with such a team, but I think his list of suitors is less limited than most people think. After all, it was Texas, not the Yankees, who inked A-Rod to his first record free agent contract.
Yesterday, the Braves traded Edgar Renteria to the Detroit Tigers for Jair Jurrjens and Gorkys Hernandez. I don’t think anyone was surprised to see Renteria dealt after Yunel Escobar handled shortstop during Renteria’s injury.
I like the move. Though Edgar is not overpaid—in fact, I won’t be surprised if the Tigers pick up his 2009 option as I have his 2007 valued at $16-$17 million—the Braves want to free up some payroll. The big test is going to be if Escobar plays below his 2007 major league numbers. His minor league numbers don’t lead me to believe that he is quite ready to produce at that level yet; however, I believe he will be an adequate replacement. I wonder how tolerant the fans will be.
Jurrjens is the better prospect in this deal in my mind. He’s the kind of prospect the Braves have needed: a young arm that will be cheap for years to come. He still hasn’t “made it” as big leaguer yet—if he had the Braves wouldn’t have been able to snag him with Renteria—but it’s a gamble the Braves need to take. They need pitching and payroll flexibility. Hernandez is a highly touted prospect, but I don’t know what to expect. I don’t see anything special about him in his stats, but he is quite young. We will see.
A side story is that Renteria returns to the AL, reminding everyone of his down year in Boston. And of course, this comes after one of the best seasons of his career. So, when Renteria’s performance “drops” are we going to hear that “he’s an NL player” garbage again? I hope not. I’ll be cheering for him just so I don’t have to hear people complain about random fluctuations as if they reflect deviations in true ability. A change might reflect this, but I doubt it.
Like week I suggested that Scott Boras’s reputation is partly a function of his ability to attract clients, and that his success begets more success in attracting the best players. Today, Tyler Cowen offers his own reasons why Boras may be exceptional.
Here is a summary of his hypotheses.
1. The super-agent manages an otherwise incompetent or unruly player.
2. A super-agent, especially if he has repeat business with teams, may credibly certify the unobservable qualities of players, even star players.
3. Boras may be very good at marketing his players to management and getting owners to open up their pocketbooks.
4. If Boras represents multiple stars, clubs will be reluctant to cross him.
5. Robert suggests that some (non-super) agents may in fact be in league with the owners, not the players.
He also asks for other suggestions in the comments.
I just returned from my visit to Washington, DC where I gave a talk at George Mason University on economics in baseball. I would like to thank the GMU Econ Society for organizing the event. It was well attended by students and Sabernomics readers. Thanks to those of you who came, especially those who asked questions and purchased books. I had hoped to post a podcast of the talk, but the battery died in the recorder….Oh well.
I also enjoyed a nice lunch with several members of the GMU economics department and another visiting speaker. During the conversation someone remarked about being among bloggers, and then I realized that I was sitting at the table with two other bloggers Bryan Caplan and Alex Tabarrok. As is typical with most lunches with GMU economists the conversation was quite stimulating, with economic discussions of non-traditional topics: rogue Mormon polygamist and Amish customs, law versus economics journals, and performance-enhancing drugs in sports. Maybe that’s why so many GMU economists have become bloggers.
Yesterday, I took advantage of being in DC by visiting a few sites. I like all of the he war memorials. The Vietnam memorial is by far the best, and could not even be spoiled by loud high school kids who didn’t seem to comprehend the reflective, deepening wall of departed soldiers names. I made a brief stop at the Museum of Natural History, and spent the remainder of my time in the National Gallery of Art. The Turner exhibit was enjoyable. I tried out a few of Tyler Cowen’s tips for enjoying an art museum, and it enhanced my visit. Though I have been to the museum several times, I left wanting to return again soon.
The Yankees have ten days beyond the World Series to sign Alex Rodriguez to an extension, so there is a decent chance that this will get settled very soon. (I think that the Yankees and A-Rod will part ways, but I will not be surprised if he stays.) So, I thought it would be a good time to go ahead and make a prediction as to what he will get. And I invite you to do so as well in the comments.
I’ve run a few numbers based on his performance over the past few seasons, his expected aging decline, and the anticipated rise in revenues over the course of the contract.
My prediction: 7 years, $244 million; approximately $34.8 million/year.
What do you think? The person who gets the closest wins a signed copy of The Baseball Economist. If you want to brand it with an asterisk, I don’t care, you can do so upon delivery. 🙂
Contracts can vary along a few variables;therefore, determining who is “the closest” is a bit difficult. All predictions must include a contract length, total value, and approximate annual value, but I will decide the winner based on the per-year prediction. Ties (or near-ties) in per-year predictions will then be broken by length and total value of the contract predictions.
- One entry per person.
- You must submit a valid e-mail address, which will not be published, so that I can award the prize.
- Contract predictions are limited to contracts that have not yet been submitted to the contest in millions of dollars to one decimal place for per-year estimates and to zero decimal places for total contract value.
- Predictions should include only the specified dollar values listed above (see the format of my prediction). Commentary is not allowed.
- Entries must be submitted prior to the end of the World Series.
- I reserve the right to exclude the participation of anyone.
- Because these contracts can get complicated, I am the final judge of the winner and I reserve the right to adjust for contract complexities and unforeseen events as I choose.
Addendum: Predictions are for 2008 and beyond. If he signs an extension with the Yankees, the total value will be the sum of the rest of his original contract plus the additional compensation he receives with an extension. The annual salary will be this sum divided by seasons after 2007.
Further Addendum: Please, do not include commentary in your prediction. It slows down the moderation.
Even Further Addendum: Remember, let’s keep this simple. No team options, no backloading, no “plus incentives”, etc. Three numbers based on the dollars guaranteed to A-Rod if he signs the deal.
UPDATE: Do not e-mail your submissions to me. You must submit your entry in the comments. Your entry may not show up immediately, because I have to moderate the comments but they will show up eventually. Also, PLEASE no commentary; submit three numbers and that is it.
This Wednesday evening I’ll be speaking to the George Mason University in Fairfax, Virginia. The event is sponsored by the GMU Econ Society, and it is open to the public. The talk begins at 6pm, and I will stick around afterwards to talk with anyone in attendance.
If you live in the D.C. area and would like to attend, feel free to stop by. Here is the e-flier.
The Baseball Economist
The Real Game Exposed
Why are there more hit batters in the AL? How good is Leo Mazzone?
What happened to the left-handed catcher? How have steroids affected the game? Is MLB a Monopoly? What are players worth? Do big cities really dominate small cities? What are the best (and worst) managed organizations in baseball?
To learn all of this and more, come to Enterprise 80
On October 24, 2007
From 6:00 p.m. – 7:20 p.m.
Refreshments and Pizza Provided
WHO SAYS ECONOMICS IS ALL ABOUT MONEY & POLITICS?
firstname.lastname@example.org & gmueconsociety.blogspot.com
In Sunday’s AJC, Thomas Stinson profiles Scott Boras. The article provoked a thought that I have been having for some time: is Scott Boras really that much better than other sports agents? He is not bad at his job, but I’m not certain that he is really any better at negotiating than many other agents.
I’d love to do a study on this, but data on who represents whom in sports is too annoying for me to aggregate. But, after thinking about this, I suspect that Boras gets so much flack simply because he represents the top players in the game. Of course, his clients are going to get big salaries. His negotiation tactics are often reported to be shrewd, but what negotiation isn’t contentious? When I read about negotiations involving other agents, teams are often bitter with the other side.
I think the real difference with Boras is that he has built up a reputation that allows the best to be drawn to him. And he doesn’t seem to hide from the press. In fact, his best talent may not be negotiation, but in convincing players to hire him. And if I’m a player who has no idea what my talents will bring, having a familiar name with a reputation for snagging big contracts is going to be a big comfort.
I have also wondered if Boras offers players guaranteed minimums in order to get them to be his client. For example, he might say, “I know you will take $5 million, but this team will pay you $7 million. Let me play hardball, and I will give you $5 million myself if the contract falls through.” Over a period of time, if he wins out he wins enough to payback any losses he incurs.
R.J. Anderson posts an interview with me over at DRays Bay. We discuss various topics such as the Devil Rays, Scott Boras, and the book-writing process.
Thanks to R.J. for arranging this. It was a lot of fun.
The St. Louis Cardinals interim GM John Mozeliak has wasted no time in signing talent for next year—which makes me think he’s going to lose the “interim” tag soon—signing pitcher Joel Pineiro to a two-year, $13 million deal. Most of the chatter I have read thinks this is a little high.
I have not calculated the 2007 player values yet—I am just about to do so—but looking at 2005 and 2006, this doesn’t look to be a bad signing. I have him valued at $9.08 million in 2005 and $7.28 million in 2006. Pineiro may not be flashy, but he’s better than a lot of other alternatives.
Remember, Jason Marquis signed a three-year, $21 million deal last year. …And will you look at that: Joel Pineiro is Marquis’s most comparable pitcher according to similarity scores. (I promise that I didn’t look before I brought up Marquis.)
Baseball revenues are growing, and players are going to reap some of the windfall. This is just the first of many contracts that are going to drop some jaws this offseason.