Archive for Moneyball

Catching Up on Recent Trades

I enjoy watching the players market during the offseason, which is why I’m disappointed that I haven’t been able to comment more on recent moves due to other commitments. So, I offer a post to catch up on some of the recent deals that I haven’t had time to post on.

— The A’s acquired Matt Holliday from the Rockies in return for Huston Street, Greg Smith, and Carlos Gonzalez.

Matt Holliday is a good hitter, even after you account for playing half his games in Coors Field. Baseball-Reference’s Neutralizer tool shows that his career neutralized batting line is .303/.368/.523/.891 compared to his actual performance .319/.386/.552/.938. Yes, I understand his home/away splits are large, but I think it’s wrong to view his away stats as neutral. In addition to his excellent hitting, he has a few other positive attributes. He is an excellent defender: Plus/Minus has him as the fifth-best left-fielder in 2008 with 11 plays above average. He’s also a good base-stealer, swiping 28 in 30 attempts in 2008. That was his best year, but his career stolen base success rate is 80%.

I have Holliday valued around $20 million. He’s owed $13.5 million in 2009, so there is significant surplus value there. What are the the players the Rockies got worth? Huston Street is a good relief pitcher, but he pitches so few innings that he’s barely worth the salary he’ll receive in arbitration. Though he’s the big name going to Colorado in the deal, I think he’s the least valuable of the three. In the minors, Gonzalez walked too little and struck out too much. He appears to be a good-enough defender to play center field, and he’s young. Smith is on a path to be a back-of-the-rotation starter. Gonzalez and Smith could blossom into much better players or wash out of the league within a few years. The trade appears to be good match for both teams, which is no surprised to this economist.

— The Nationals acquired Josh Willingham and Scott Olsen from the Marlins for Emilio Bonifacio, Jake Smolinski, and P.J. Dean.

This is one of those deals that shakes my confidence in everything I think I know about the baseball labor market. Willingham and Olsen are bonafide major-league ballplayers entering their first year of arbitration. I have Willingham valued at around $12 million and Olsen at about $8 million; both generating significantly more then they will cost to employ. Smolinski and Dean aren’t yet at a level where their stats contain much meaningful information—I don’t put much stock in numbers below High-A ball. Bonifacio has played a small amount in the big-leagues, but he’s still mostly a prospect. His minor-league stats don’t appear to be all that impressive either. What on earth are the Marlins doing?

When I call out teams for making mistakes, it’s mostly for fun. Baseball decisions are complicated with big stakes involved. I think every team in baseball has smart people making decisions that are mostly correct. I don’t buy into the “stupid non-saber GM” model of the world. And to add to this, I think the Marlins have one of the most capable front offices in the league. In my book, I rated Marlins as the best franchise in baseball. If there is one thing the Marlins understand, it’s how to get good young players who are cheap. Instead of asking why the Marlins are doing something crazy, I should be asking “what am I missing?”

On possible explanation is that this is a salary dump. The Marlins don’t want to pay for Willingham and Olsen, even though they are valuable players. Plus, Willingham will be 30 before the start of the season, and Olsen is a bit of a head case. But, this isn’t a satisfying explanation. Why did the Marlins have to settle for the Nationals’s offer? There are 28 other teams who could use an outfielder and a starting pitcher. Teams should have wowed the Marlins with better offers; or, maybe this is the best that Washington would do and the Marlins really wanted these players.

Given the prospect status of the players involved, I have to think that major-league baseball scouts—especially the Marlins scouts—must think highly of the prospects involved. In the past, Florida has picked up guys at low-levels who turned into good major-league players. Dontrelle Willis wasn’t out of short-season ball when he the Marlins acquired him. Hanley Ramirez was stinking up the Boston farm system when he came over in the Lowell-Beckett trade.

I admit it’s not a terribly satisfying explanation, and it is contrived to fit the facts. Maybe my worldview deserves to be shattered This trade could go down as a horrible deal for the Marlins; however, I plan to keep my eye on these young guys.

Peavy for Braves GM

As a Braves fan, I’m happy that Jake Peavy seems to understand the opportunity cost of giving up an everyday player versus a prospect.

The subject of Escobar came up Thursday morning between Peavy and his agent, Barry Axelrod. Less than 12 hours earlier, Axelrod had met with Padres General Manager Kevin Towers to get an update on trade talks that had taken place the previous three days at the GM meetings in Dana Point.

“Escobar’s a pretty good player,” Axelrod said. “To be honest, Jake and I have said, ‘If that kind of trade gets made, who plays short for them?’”

“One of the things we will want to look at some point is, ‘Who are you giving up? How much are you weakening your team to make this deal?’” Axelrod said. “If Team X trades three starting pitchers and a starting shortstop to get Jake Peavy, that lessens their chance of being a successful team.”

I don’t like the idea of trading Yunel Escobar or Kelly Johnson for Peavy. You improve your pitching, but at the expense of your hitting. It sounds like Peavy wants to play on a winner. Maybe these players can be replaced with free agents in a way that Peavy cannot be, but I am wary of a team that isn’t yet competitive giving up major-league players.

Stuart Gray

I hadn’t planned this theme, but it’s time for another Charlotte Hornets related post.

I’ve been reading some whispers about potential Royals interest in trading for Jeff Francoeur from DOB.

By the way, I had someone who’s close to the KC organization ask me just this morning what it would take to get Francoeur. He told me that if Dayton and his assistants had a list of the guys they’d like to trade for, Francoeur is atop it. Seriously. They don’t view him in light of this past season so much as they do for the years he was in the minor league system when Dayton was with the Braves, etc. They LOVE his mental makeup and physical talent. Hey, just telling you what I hear.

Seriously? They LOVE his mental makeup, after the juvenile tantrum he threw last year about his being sent down while being the worst everyday player in baseball?

But, that’s not the point of this post. Dayton Moore appears to be fascinated with the farm system he used to oversee. Since moving to the Royals he’s acquired former Braves products Odalis Perez, Tony Pena, Kyle Davies, Brayan Pena, and Horacio Ramirez. It’s not that acquiring these players were necessarily bad moves, but I think that fans should have a right to be worried when a GM seems attached to things that he once saw as great in his mind’s eye. Jim Bowden seems to have a similar fascination in Washington, bringing in Reds products Wily Mo Pena and Austin Kearns (there may have been a few others, but I’m not going to investigate).

This brings me back to the Charlotte Hornets. Dick Harter was the first coach of the Hornets. (Funny aside: I knew a reporter who was involved in breaking the story that Harter would be the first coach. He found what he thought was his home phone number, and called the number in the late-evening to get a comment. A woman answered the phone and the reporter asked “May I speak to Dick Harter.” The woman, who heard “Dick Harder”, screamed and hung up the phone.) Harter felt that the Hornets could be competitive if they could get a good big man, and that big man was Stuart Gray, a man Harter felt was being underutilized by his former team, the Indiana Pacers.

The Hornets eventually did acquire Gray, I believe for a second-round pick, for the 1989-1990 season. Gray came to town and was nothing less than the pure embodiment of a “stiff.” His signature moment involved going berserk against the Lakers and attempting to rip Michael Cooper‘s head from his body by holding him in a death-lock on the floor for a minute or so. Pat Rilely was actually on the floor pulling and kicking Gray to release Cooper. Stuart played in only 39 games for the Hornets. I can’t recall whether he was released or injured, but it was the beginning of the end for Harter who was fired during that season.

This is just one data point in my memory. I’m sure plenty of GMs have used their past experiences to acquire good talent. Still, I would be worried to see such strong attachments to past players who really are not that good. Just remember Stuart Gray.

UPDATE:It turns out that Stuart Gray was not stiff.

Robert Parish

For most fans of a sports team, the fact that the general manager has a large free agent budget is a good thing. The Braves supposedly have $40 million of payroll to add free agents. I agree that bigger budgets are better than smaller ones, but this offseason I’m feeling a sense of anxiety that I haven’t felt in 14 years.

I used to be a huge basketball fan. I devoured college and NBA games. I find the game a bit boring these days, but my passion for the Charlotte Hornets was once strong. I actually skipped class to wait in line for playoff tickets, and was disappointed when I didn’t get any.

Before the 1994-1995 season, the Hornets were on the edge of something great; or at least, fans of the team felt that they were. The team needed another big man, and the front office let the fans know that they would be in the market for the best big-men in the league. That year, Horace Grant and Danny Manning were considered to be the prizes of the big-men free agents. But it seemed that before the free agent signing period had even started, Grant had signed with Orlando and Manning with Phoenix. What were the Hornets to do?

The team seemed to be on the verge of success after advancing to the Eastern Conference Semifinals in 1992-1993. The 1993-1994 team didn’t make the playoffs, and my memory is fuzzy as to what exactly went wrong. But, the nucleus of the team was still in tact, and the front office promised that they would fix the problems and make the team into a contender. With Grant and Manning off the market, there was nowhere else left for the Hornets to turn…. Or, so we thought.

The Hornets weren’t going to leave the market empty-handed, and so they signed 41-year-old Robert Parish. Robert Parish was once a good player, but not from 1994-1996. How devastating. I remember sitting with a friend at a game later that season and he turned to me and said, “Robert Parish is the worst player in the entire league.” He would also embarrass the team off the court with allegations of spouse and drug abuse.

My impressions of his play are probably exaggerated, and maybe Parish wasn’t as bad as I remember. But, the point is that sometimes GMs spend money because they can, and the results aren’t always good. Though more money is preferred to less, sometimes the best strategy is not to spend. Don’t be afraid to put that money in the bank and earn some interest. What you get in return could be a lot better than zero—think double-zero.

Evaluating the Angels’ Recent Moves

Whatever happened to the moratorium on major announcements during the World Series?

Yesterday, the Angels announced three player moves: they picked up the options on Vladimir Geurrero and John Lackey, and they declined the option on Garret Anderson. I like all three moves, and I don’t think any of them were surprising. But, let me comment on the value of each player.

Vlad continues to be an excellent player as he enters the decline phase of his career. The good news is that aging declines aren’t cliffs and Guerrero has always been a good player. I have him valued at $20 million for next season, making his $15 million contract a good deal.

Lackey is an underrated player; at least, I don’t hear much about him from the media. From 2005–2007—before his injury troubles to start this year—Lackey was one of baseball’s top-5 pitchers. He’s near the peak of his aging curve, so I expect he’ll heal well and be a bit better than his 2008 campaign, which really wasn’t bad. He’s worth about $15-16 million and his option was for $9 million: another good deal.

Garret Anderson will turn 37 half-way through the 2009 season. His most recent contract wasn’t a good one for the Angels, and it should have been expected that the Angels would chose the $3 million buyout over his $14 million option. Still, he’s a useful major-league player; and major-league players, including the non-stars, are valuable. I expect he’ll end up with a two-year deal that averages $8-9 million a season.

Who Gets Jake Peavy’s Surplus?

It turns out that Jake Peavy thinks he does, and I think he’s right.

Last week
, I discussed how the Padres’ ownership of Peavy’s contract rights for the next four seasons would allow the team to reap the benefits of the difference between his expected income generation and his salary. But, it turns out that Peavy and his agent Barry Axelrod plan to exercise some rights of their own to ensure that the Padres don’t capture the entire surplus.

“It’s not that far of a stretch to say this is a free-agent situation,” Axelrod said, “and if there is a guy like Sabathia out there, we would have to look at what any given team is going to pay Sabathia, because he and Jake won the Cy Young award in the same year, and we’re going to put Jake on the same plane as this guy.”

He added that “there might be some places where it is a more palatable deal to Jake than any other places.”

Axelrod already has said that whatever club would trade for Peavy, 27, likely would have to extend his full no-trade powers through contract’s end. …

“Making this about money is not my style, nor Jake’s style,” Axlerod said. “I think we proved that. But at the same time, I don’t think Jake should have to sacrifice anything.

“Jake signed an under-market deal with San Diego because he wanted to stay in San Diego. It was worth it for Jake to take less.”

Translation: if you don’t give us cut, we’ll exercise the no-trade clause. Peavy can use his veto power to make sure that he captures a good portion of the economic rents generated by his contract. And it sounds like he’s negotiating for more money, possibly through an extension or a salary supplement (I’m not sure if the latter is allowed under the current CBA). When it’s all said and done, the prospects the Padres can expect might be so bad and few—as his salary demands rise—that the Padres decide to keep him on the roster. And hey, if he likes playing in San Diego so much, maybe the Padres should reconsider their desire to trade him. Jake Peavy didn’t agree to a below-market contract so that the Padres could enrich themselves by trading him.

Thanks to MLBTradeRumors for the pointer.

The Peavy Salary Myth

I keep reading that one reason that teams want to acquire Jake Peavy is because he makes only $15 million a year. David O’Brien is the latest offender.

Among other pitchers available, Peavy is the most accomplished and would have a lower salary than comparable free agents.

The logic seems simple. An ace like CC Sabathia will get $20+ million;therefore, Peavy’s $15 million contract represents a big savings over the free-agent alternative. (Peavy actually isn’t quite as valuable as Sabathia, but let’s just assume they are for simplicity.)

But the $5 million difference in salaries does not represent savings to the acquiring club. Peavy and Sabathia are assets who represent future income streams to their employers. Teams ought to be willing to pay salaries equal to the discounted present value of these revenue streams. As a free agent, Sabathia will capture all the returns of his expected value, and so would Peavy if he could be signed as a free agent. Instead, the Padres own the right to an annual income stream of greater than $15 million which they gladly lease for $15 million a season for the next four years. The fact that Peavy only gets $15 million doesn’t mean that’s all he costs. The Padres must be compensated for that additional lost income stream—a price that his new team will pay.

The only team who benefits from Peavy holding a good contract is the Padres, and this is likely a big factor in the team’s decision to move him. They hold a valuable asset and plan to cash it in.

Valuing Mark Ellis

I’m going to join the chorus in calling the A’s signing of Mark Ellis to a two-year, $11 million deal a steal for the Athletics.

I have Ellis valued at around $35 million for the next two seasons. $11 million is quite a discount, and I have to wonder what is going on here. Could my model be wrong? That’s certainly a possibility, but you don’t even need a fancy model too see that he’s worth a good bit more than $5.5 a year to his team. Just check out his previous contract with the A’s.

Prior to the 2006 season, Ellis signed a three-year that paid him $2.25 million, $3.5 million, and $5 million. At this time, Ellis was a first-year arbitration eligible player with the bargaining strength slated heavily in favor of the A’s. He agreed to a long-run contract that would void his opportunity to seek arbitration raises to potentially higher salaries in return for a guaranteed salary. Ellis missed the entire 2004 season with an injury, so I suspect he was quite aware of the risk-reward tradeoff. And with that contract heavily affected by the A’s superior negotiating position, the A’s agreed to pay him the exact salary in 2008 that it will pay him in his first post-free-agency contract in 2009: $5 million. $5 million is a lot of money, but it’s a lot less than he could have earned on the free agent market. Some people may laud Ellis for not just caring about money; but, the money he’s not collecting isn’t going into third-world hunger relief, it’s going to a wealthy American businessman.

And to top it all off, Ellis agreed to a club option for 2011 at $6 million. If his play drops off after two years, the A’s can simply cut him loose. If he plays the same as he has or he improves, then he cannot test his value on the free agent market until he is 35.

Ellis must really like playing in Oakland or his shoulder injury is quite serious. At double the wage he accepted the A’s would still be getting a bargain. The contract is so low that the A’s almost have to be suspicious that he might pull an Al Czervik from Caddyshack (.wav).

Addendum: As Tim points out in the comments, I am being a bit too harsh on Ellis. My point is that if this is a hometown discount, this is one hell of a discount. It shouldn’t necessarily follow that this was a discount; instead, a more plausible explanation is that his shoulder is in really bad shape.

More on Peavy

Paul DePodesta of the Padres front office comments on the team’s reason for trading Jake Peavy.

We are looking to get better.

It’s really that simple. We’re not trying to trade certain players, and we’re certainly not looking to move players just to move them. As with any off-season or trading deadline, we’re assessing the market value for our players to see whether or not that value surpasses their value to the Padres. If you have something you value at one million dollars, it would be foolish to refuse to consider selling it for twenty million dollars. On the flip side, it would also be foolish to sell it for anything less than one million. The thing that makes the market work is that each player has a different value to virtually every Club.

I have found that the market value for Peavy’s services for the average team exceeds what the Padres are paying him. And given the state of the team, it is likely that several teams value Peavy more than the Padres. DePodesta also doesn’t dismiss the idea of acquiring major-league players.

Is Manny Worth $150 Million?

Tim Dierkes links to a few stories stating that Scott Boras is floating the potential of a six-year, $150 million deal for Manny Ramirez.

Projecting the value of a player Manny’s age is somewhat difficult, because we don’t have a good sample for estimating age effects. Yes, many players have played past their 40th birthday, but many more players have hung up their spikes so that we can’t see how they would have played. And in most cases, many of those players were no longer capable of playing at the major-league level. I think the biggest danger to signing older players is that they are more likely to be permanently hobbled by an injury, and have no financial incentive to rehab the injury to get back on the field. But, I’ll take a stab at it using a continuous aging curve based on an increasing decline in performance.

For the next six years, I estimate Manny to be worth about $128 million, which is just over $21 million per year. I like Manny, and I enjoyed watching him play in person for the Triple-A Charlotte Knights. He is truly a gifted hitter who will go into the Hall of Fame, and I think he has plenty of good baseball left in him. However, I cannot see any team shelling out $150 million over the next six years. Even if he remains healthy, he’s not worth it. And, there is a decent chance that age force him to quit playing before the contract would be up. I think four years at $80 million is about the best deal he can hope for, and consider that to be just an educated guess.