Archive for April, 2010

If Ryan Howard Gets $25 Million, Then Albert Pujols…

The Phillies recent extension of Ryan Howard seems to be hated by everyone except Howard, his agent, and Jon Heyman. Keith Law commented, “If Howard is worth $25 million, Pujols is worth $50 million a year.”

So, how much is Albert Pujols worth if commands a salary in line with what Ryan Howard received? Yesterday, I estimated that Howard was worth about $19.5 million per year over the term of his contract, so $25 million is approximately 28% more than his projected worth. If Pujols signed a deal for the same timespan, I estimate that he would be worth $40 million per year. Thus, if Pujols received a premium similar to Howard’s, he would be worth $51 million per year, almost exactly what Law estimated.

This also speaks to how good a player Pujols is, and how much more valuable he is than Howard. Because the financial returns to winning are increasing, the marginal runs that players produce should command higher salaries on the free-agent market. I’m not sure Pujols will get the Howard premium, but whatever contract he receives will blow away Howard’s deal.

Ryan Howard’s Extension

So, out of nowhere, it’s being reported that the Phillies and Ryan Howard have agreed on a five-year, $125 million contract extension. This appears to be on top of his current deal that pays him $19 million in 2010 and $20 million in 2011. My first thought upon hearing of this deal was that it’s too high, and my numbers seem to confirm my suspicions.

I project Howard to be worth about $97 million over this span, or between $5-6 million less per year than what he will be getting in his contract. My projection assumes that he will be playing on an average team, so he may be worth a bit more to the above-average Phillies than my basic estimate, possibly enough to put his salary in line with his marginal revenue product. The contract could reflect the front office’s confidence the organization is primed for a continued run of success. However, I think it’s unrealistic to assume that the Phillies will be as good as they are now for the next seven years.

But even if Howard will generate the production to justify the contract under the right conditions, I still question if this is the right move. In the context of the free-agent market with many good teams making bids for his services, a contract of this magnitude may make sense. But, a lot can happen before this contract kicks in. I’m all for signing players before they hit free agency, but it should be for a discount. If I’m the Phillies I take my chances that he walks in two years, because I think he’s ended up with a deal that is about as good as he can expect in two years.

Hit Batters and Home Runs

Yesterday’s New York Times has an article by Stuart Miller on the rise and decline of hit batters in baseball titled Plunking Parallel: Steroid Use and Hit Batsmen.

The so-called steroids era produced plenty of pumped-up statistics. Everyone talked about the home runs, but few noticed the soaring number of batters hit by pitches.

I did, and I even discussed this in The New York Times. So, I was curious about what’s new on the subject. The article looks at the recent rise in home runs and notices the co-movement of home runs and hit batters. It is true, the variables appear to be somewhat correlated, which could mean that one (home runs) is causing the other (hit batters) to move with it. In this case, Miller posits that one explanation for the recent moderate drop in HBPs is that decline of steroid use by players has caused power to decline.

Most significant was the artificially enhanced power surge. To prevent batters from extending their arms and launching moon shots, pitchers came inside with a vengeance.

“You were just trying to survive,” said Orel Hershiser, who hit more than 11 batters a year from 1996 to 2000, more than double his average from 1984 to 1988.

Hershiser, now an ESPN analyst, said pitchers traditionally worked outside because mistakes inside usually equaled a double or homer. But once players became so strong that “the outside mistake was of equal value” because beefed-up hitters could flick it over the fence, “people started pitching to both sides of the plate equally.”

Although many beanballs were not intentional, he said, “I’d think, I am really mad that this guy is so strong, so I am just going to bury the ball inside.” With guys crowding the plate — and so armored they would stay in longer — chances increased for an H.B.P.

Since 2006, however, the trend has reversed — with H.B.P. per team dropping 13 percent, to 59, then 56, then 53 last year. The shift mirrors the supposed decline in steroid use and home runs.

HBPs may be down since 2006, but they are still 40-percent above the 1992 HBP rate. The graph belows shows the home run and hbp-allowed rates (per batter faced) in the modern era.

HR and HBP

The first vertical dashed-line marks 1993, the year when home runs jumped in baseball; and I have argued that this dramatic rise is evidence that steroids are not the main cause of baseball’s present high-offense era. Players just didn’t get together and start using all at once.

Drug testing with suspensions for first offenses began in 2005 (also represented by a vertical line on the graph). Yet, the decline in home runs and hit batters peaked around the turn of the century. Home runs and hit batters were declining before testing came onto the scene. Furthermore, after testing, the observed decline in home runs is difficult to distinguish from random fluctuations. And even we grant that testing has reduced power it is very clear that the 1990s-2000s power surge hasn’t come close to returning its previous level.

Home runs and hit batters do move together, but it’s difficult to know if one causes the other or if a third factor influences both variables while they move independently of each other. (Indeed, I have spent much of the morning boning up on cointegration, which has left me with a terrible headache.) Given simultaneous jump in home runs and hit batters in 1993, the peak several years prior to testing, and the minimal decline after testing, I think there is another factor at work here explaining their movements. The article does mention a few of them, but only steroids makes it into the title, and I find this disappointing. A change in the ball, expansion, or a widening strike zone are all potential explanations. If we want to understand how hit batter and home run rates vary, we need to explain the big change in the early 1990s before analyzing the smaller and more recent fluctuations.

How Have Pitch Counts Changed in the Past 20 Years?

Last week I asked the following question:

From 1988 to 2009, by how many pitches did the median number of pitches thrown in a game by starters change?

The answer: the median number of pitches declined by one, falling from 100 to 99. As the box plot below shows, the median has remained close to constant over the past two decades. The line in the middle of each box marks the median, the edges of the box mark the 25th–75th percentile range, and the whiskers mark the 5th–95th percentile range. If you are wondering how the mean changed, it declined from 97.4 to 96.5.

Median Pitches Thrown

Does this means that despite all the lip service paid to pitch limits teams aren’t paying any more attention to pitch counts than they used to? Not at all. The average may have stayed the same, but the extremes have fallen on the high and low sides. Pitchers aren’t just throwing fewer long outings, they are also pitching fewer short outings. The diagram below graphs the maximum pitches thrown in a game by year, and it shows a significant drop.

Max Pitch Count

So, congratulations to Dan for correctly guessing the decline. Dan wins a copy of Stumbling on Wins by David Berri and Martin Schmidt.

The Bullpen Gospels (a Review)

Last week, I mentioned that I had ordered The Bullpen Gospels by Dirk Hayhurst and that I would soon write a review. I found a copy at my local Borders on Thursday, and I was done by Saturday. I normally read books slowly in my spare time, but I had trouble putting this one down. That was from my Twitter feed on Saturday afternoon:

@jc_bradbury

Just finished The Bullpen Gospels, one of the best personal narratives I’ve ever read.

The Bullpen Gospels is better than it has to be. I expected no more than a fun and straightforward account of life in minor-league baseball: first-hand stories of pranks and celebration, boredom and failure, maybe even some dirt. The book does contain those things—with one notable exception: dirt—but they are just the backdrop for a bigger and more interesting story about a particular minor-league player. The baseball content alone should make The Baseball Gospels a good book, but Hayhurst takes his story deeper to write a great book.

I expected the book to be a minor-league Ball Four, but it has more in common with Zen and the Art of Motorcycle Maintenance. Baseball serves as a backdrop for a deeply personal narrative that almost anybody can relate to. It turns out that the inner struggles faced by baseball players are not much different than struggles we all have. But through the lens of a minor-leaguer with a less-than-perfect life—this is a guy who’s living a dream denied to so many die-hard fans—the reader sees how a young man struggles to battle his “what am I doing with my life?” daemons that trouble us all.

At the beginning of the book, Hayhurst hasn’t come to terms with his own status of being worshiped and hated by others. Handing out autographs to people who don’t know who he is becomes hollow after a while. He’s got an alcoholic brother, a crippled father who can’t accept his fate, and a mother who tries to hold it all together by pretending that everything is fine. To Hayhurst, baseball has always been an escape, but moving from prospect to roster-filler status has soured his love for the game. He keeps his family at a distance, yet desperately craves their approval. Baseball seems to be his only life-path.

Hayhurst is an interesting character, a 26-year-old virgin who doesn’t drink, but appears to be right in the middle of all the people you’d think he’d avoid. He lives in the heart of a raunchy world where young men have a lot of time to kill and need more than mild entertainment to cure their boredom. Yet, Hayhurst appears to fit right in, embracing the lifestyle without booze or sex, shocking most teammates when they learn he’s sober. It’s as if they didn’t notice that he was the only one with a soft drink at the party. Yet, Hayhurst revels in the misbehavior of others, as he laughs along with drunken binges, slump busters, practical jokes and kangaroo court that fans aren’t privy to. Yeah, it looks like good time.

Yet, in the middle of all this fun Hayhurst is confused, even as he begins to figure things out. Caught between having too much and too little self-confidence, he slowly begins to find a balance. If he’s going to make a run for the big-leagues, might as well do it now. He cares about winning, but he can’t win unless he stops caring about winning; it’s a koan where he finds peace. He eventually finds his chief enemy in a vision akin to Luke Skywalker’s visit to the Dark Side cave on Dagobah (there are several Star Wars references in the book). He doesn’t believe in the baseball gods, he has to appease his personal baseball reaper.

What makes this book work is not the baseball, psychology, or philosophy; it’s the writing. Most athletes who hire ghostwriters to pen their “autobiographies” don’t get writing as good as Hayhurst’s. He leads the reader to the inevitable only to reveal the unexpected. I frequently laughed out loud as a joke appeared from nowhere. His speaks fondly of his teammates and coaches, empathizing with them. And he disguises names to keep potentially embarrassing moments private. This book isn’t about dishing out dirt. And even as the book ends with great success—Hayhurst makes it to the big leagues—the success is an afterthought. It’s as if he said, “Oh yeah, I made it; but, that’s not important.”

A good book is one you that can’t wait to finish but fear its end, and that is how I felt about this book. I especially recommend this book to young adults trying to find their place in this world. Living on little for the hope of so much more is frustrating, and Hayhurst accurately documents the experience. If you are looking for a description of life in the minor leagues, you’re going to find it here, but you’re also going to find so much more. The Bullpen Gospels is a soon-to-be classic, and should be coming to a movie theater near you.

Cleveland’s Glory Days Are Over, But That’s To Be Expected

Looks like people are concerned about the declining attendance of Cleveland Indians games this year.

Just for fun, let’s rewind even further, to another weekday night game in April at Jacobs/Progressive Field. This one on April 23, 1996. The game-time temperature that night was 38 degrees, with a 20 mph wind, which computes to a wind chill factor of 17 degrees. According to the official box score, that game started in a drizzle.

Oh yeah, and there was one other factor that night. The Indians’ won-loss record: 12-6.

The attendance that night: 40,770.

Hmmmmm …

Now we have tonight’s game. A weekday night game in April. The Indians will go into the game with a record of 2-5.

In other words, plenty of good sections are still available.

All of which does not bode well for Cleveland’s American League Baseball Club. You know, the one that is so dependent on ticket sales in order to bolster the talent level.

As the Indians embark on their first homestand of the season, and moving forward through this season as a whole, what we have here is a perfect storm for attendance infamy. You have a bad team off to a bad start coming off a bad season, playing in frequently bad early season weather, in a bad economy.

The fears became reality Wednesday night when Progressive Field drew its smallest crowd in history of 10,071. The graph below shows the trend of Cleveland’s attendance and winning since 1996.


Attendance Graph

There is a strong association between winning, attendance, and revenue; however even when the Indians were winning a few years ago, they weren’t drawing crowds consistent with those in the 1990s. That attendance has not hit the levels it had in the 1990s does not surprise me. The late-90s Indians had the perfect storm of a good team and a new stadium—the latter quality is key. Economists have identified that new sports stadiums typically experience a “honeymoon effect,” which lasts between 6 to 10 years. During the honeymoon phase, fans go to the park for the park, not to see the team. That’s something that the Indians aren’t going to get back.

Looking at the recent past, when the Indians have been good fans have responded. In 2005, when the Indians won 93 games, attendance increased by 11% over the previous year. In 2007, when the team won 96 games, attendance increased by 14%. It’s also interesting to note that after these good season, attendance doesn’t drop off as much as the teamed gained from improving. But if you don’t stay good you can loose fans. In 2009—two years removed from the their AL Central title—attendance was down 19% when they won 68 games.

While low attendance isn’t a good thing, I don’t think the club should be disappointed because it’s attendance isn’t what it once was. The Indians shouldn’t expect numbers comparable to the 1990s, even in winning times, because those numbers were influenced by the honeymoon effect, which can’t be improved without a new stadium. But please, don’t even think about it.


What Do Economists Have to Say about Racial Discrimination in MLB?

Plenty. Economists have long used sports to analyze racial discrimination in labor markets because sports offer good measures of worker productivity that are difficult to find in most occupations.

I bring this up in response to a claim put forth by Orlando Hudson as reported by Jeff Passan.

“You see guys like Jermaine Dye without a job,” Minnesota Twins second baseman Orlando Hudson said Monday. “Guy with [27 home runs and 81 RBIs] and can’t get a job. Pretty much sums it up right there, no? You’ve got some guys who miss a year who can come back and get $5, $6 million, and a guy like Jermaine Dye can’t get a job. A guy like Gary Sheffield, a first-ballot Hall of Famer, can’t get a job. …

“We both know what it is. You’ll get it right. You’ll figure it out. I’m not gonna say it because then I’ll be in [trouble].”

What Hudson wants to say: He believes there is a racist element to the free-agent market in baseball, and that it’s paralyzing the 36-year-old Dye’s ability to earn what non-blacks with commensurate numbers received in the offseason.

In terms of the current market, I cannot say whether or not race is playing a role in player salaries; however, past studies of racial discrimination in baseball do not support the racism hypothesis. A survey article by Lawrence Kahn reveals that economists have found little evidence of salary discrimination in baseball. (Here is a more-recent article which contains similar information.)


(Click image to enlarge)
Literature Review

Analyses of racial bias are tricky, because omitted variable bias may hide existing racism or identify non-existent racism. Indeed, in a study I conducted using the baseball card market to examine consumer racial preferences I found that employing inferior performance metrics can lead to erroneous declarations of racism. Another problem with studies of racial discrimination is that data on the race of players is not widely available. Just determining the races of players is difficult.

I cannot say that the current market is free of racism; in fact, I would be surprised if it was racism-free. However, given the quantity of studies done that have found little to no effect, the burden of proof regarding racism rests on those who claim racism exists in baseball to provide evidence. Given the length of time since such studies have been conducted, I would welcome further study of the subject. If someone is willing to provide the racial classification to me, I’d be happy to estimate the impact of race on player salaries.

Why Does the MLBPA’s Labor Chief Work for Cheap?

The Sports Business Journal ($) is reporting that the current executive director of the Major League Baseball Players Association Michael Weiner is taking a salary of $1 million per year. He is continuing a practice started by Don Fehr, who drew a $1 million salary for his services as union head since the early 1990s. While $1 million is a nice gig if you can get it, it’s far below what the heads of other player unions have received. The late Gene Upshaw earned over $6 million per year to lead the NFL players union, and Billy Hunter received $3.4 last year heading the NBA players union.* What I find so amazing about this discrepancy is that Fehr was the most effective of the executives. In comparison to Upshaw, it’s not even close.

And it’s not that baseball players were unaware of Fehr’s worth, which was far in excess of his salary in terms of bargaining on the players’ behalf: Fehr refused pay increases. In real terms, Fehr took annual pay cuts. After accounting for inflation, $1.7 million would be required to keep the purchasing power of $1 million in 1990. Now, Weiner seems to be continuing the practice of working for a reduced wage. Why would Fehr and Wiener take so little?

I believe it has to do with sending a signal of solidarity during work-stoppages. In a bilateral monopoly market—monopsony buyer (league) and monopoly seller (players) of talent—bargaining strength is the way to best your rival. The threat of not playing or the threat of not opening the gates are the main weapons that the owners and players have against each other. And during such times, owners and players are on the edge of cracking. Team owners lose revenue and players forgo wages when regularly scheduled games aren’t played. Owners and players have expenses to cover, and when funds get tight, people start to look for compromise. Players are particularly prone to cave because they typically don’t have another source of income.

The benefits of a labor stoppage to either side are long term, and may not even be realized by the current participants. The union head is like a general who must rally his troops, possibly standing like a stone wall in the face of mortal peril. Fehr, who has a better grasp on labor negotiation strategy than players, cannot act without the support of players. If he can’t convince them that he knows what he’s doing, all could be lost. And owners can sniff out weakness, largely because scared players have a history of blabbing to owners. How can Fehr keep his troops loyal? Taking a below-market salary is a good way to convince players that the stakes are greater than their short-run losses. “Hey, I know you’ve got three mortgages to cover, but this is about the long term. I could earn ten-times my salary working on Wall Street, but I work here because I believe in this cause. Don’t you believe? We’ve got to do what is right.” If you’re earning as much or more than most players can expect to make, it’s hard to find a sympathetic ear among players about sticking to principles.

When Fehr announced his retirement, former union leader Marvin Miller said the following.

“When I was there, there was always a signficant cadre of players who had personal experience in how bad things were before the union — how horrible the conditions were,” Miller said. “That’s a powerful factor in players understanding what the union means. Almost from the beginning of Don’s tenure, he had a membership where not a single player had played one game of baseball without a union. That could be a challenge at times, and he faced it quite successfully.”

Miller was an old union guy and a smooth talker, and he led players who had seen what listening to Miller would bring them. Supposedly, Fehr didn’t have the rhetorical skills that Miller had, so he may have had to use other means to persuade players to stay the course. And the players held firm under his leadership during the 1994-1995 strike when owners desperately wanted a salary cap. Taking less has to be a powerful signal to men who intensely want more.

But then how does taking less now help the union leader in the long-run? I assume that union leaders are no less self-interested than other individuals. The payout comes at the end. In his final year, Fehr received $11.8 million in compensation, which included back expenses and retirement. It’s not clear to me if this figure includes an $11 million gift that the players voted to Fehr as a parting gift or if this was part of his planned retirement package (I believe the payouts are separate). But even this isn’t a huge payout. The real benefit is that Fehr has established himself as a master of his craft. He can hire himself out as a speaker or consultant, or go work anywhere he wants for a big wage. It’s the same reason top macroeconomists lobby to accept a $200,000 salary to chair the Federal Reserve. Rumor has it that Fehr is going to be the next head of the NHL players union, where he won’t need a low salary to establish credibility with the players. He led the best-run union in professional sports for 20 years, he doesn’t have anything to prove to anyone else.

My guess is that Fehr set up a good system to produce a powerful union, and Weiner knows that to be successful he’s going to have to establish his credibility among the players just as Fehr did. If he fails, he’ll be unemployed quickly, possibly earning less than his current salary. If he wants to build a legacy to gain that big payday, he has to establish trust with the players, and taking a low salary is a good place to start.

* Hunter’s salary included a significant one-time payout for unused vacation time, so it’s unclear how representative this is of his normal salary. But, if we assume his salary has remained stable, he’s been receiving over $2 million per year outside of the payout.

Pitch Count Contest

I haven’t done a contest in a while, and I’ve got a copy of Stumbling on Wins by David Berri and Martin Schmidt to give away. If you’d like to win a copy, answer the following question correctly.

From 1988 to 2009, by how many pitches did the median number of pitches thrown in a game by starters change?

Put your answer in the comments. One entry per person. First commenter with the right answer wins a free copy of the book. As with all contests here, I reserve the right to arbitrate unforeseen circumstances as I see fit.

The Bullpen Gospels

I’ve just run across a new book that looks quite interesting, The Bullpen Gospels: Major League Dreams of a Minor League Veteran by Dirk Hayhurst.

From the publisher:

From the humble heights of a Class-A pitcher’s mound to the deflating lows of sleeping on his gun-toting grandmother’s air mattress, veteran reliever Dirk Hayhurst steps out of the bullpen to deliver the best pitch of his career—a raw, unflinching and surprisingly moving account of his life in the minors.

I enjoyed the visualizations, maybe a little too much, and would stop only when I felt I’d centered myself…or after one of my teammates hit me in the nuts with the rosin bag while my eyes were closed.

Hilariously self-effacing and brutally honest, Hayhurst captures the absurdities, the grim realities, and the occasional nuggets of hard-won wisdom culled from four seasons in the minors. Whether training tarantulas to protect his room from thieving employees in a backwater hotel, watching the raging battles fought between his partially paralyzed father and his alcoholic brother, or absorbing the gentle mockery of some not-quite-starstruck schoolchildren, Dirk reveals a side of baseball, and life, rarely seen on ESPN.

My career has crash-landed on the floor of my grandma’s old sewing room. If this is a dream come true, then dreams smell a lot like mothballs and Bengay.

Somewhere between Bull Durham and The Rookie, The Bullpen Gospels takes an unforgettable trot around the inglorious base paths of minor league baseball, where an inch separates a ball from a strike, and a razor-thin margin can be the difference between The Show or a long trip home.

Looks like a Ball Four of the minor leagues. I ordered it earlier this week and will write a review when I’m done.

For those of you who want to know more about the book, I interviewed one of Hayhurst’s former teammates Brent Carter several years ago. Here is a sample.

JC: Tell me what it’s like to be a minor league ballplayer. Is it fun, or does it get old?

BC: Being a minor leaguer is not what it’s made out to be. You hear stories about the long bus rides, crappy hotels, etc. But it’s really a blast. The friendships you make, playing against the stars of tomorrow, being only a couple of levels away from your childhood dreams unfolding in front of you. I would not trade this for anything.

Carter now has the distinction of playing with two famous subjects of baseball literature. He was a college teammate of Moneyball‘s Jeremy Brown.