Tango on Baseball Archives

ARod and Soriano - Was the Trade Fair? (February 16, 2004)

ARod's remaining contract with Tex has a present value of 159$. In return for that, he would have given them 7 years of production. That production, today, would be paid out at about 17 million $ / year, or 106 million$ in present value.

Texas, last week, owned a house that they paid 159 million$ for, but was worth 106 million$.

Now?

First, let's look at Soriano. On the open market, he'd be worth 11 million$ / yr, but will probably be paid about 24 million$ over the next 3 years. In present value terms, they bought a house worth 32 million$ for 23 million$.

At the same time, they are going to pay for ARod. The present value of what they are paying him is 55 million$. They are paying 55 million$ for a house worth 0 dollars.

Add it up, and it's costing them 78 million$ for 32 million$ of Soriano.

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So, paying 159 for something worth 106, or paying 78 for something worth 32? That's a 7 million$ of savings.

You can change some of the assumptions around a bit, and, pretty much, you have a trade that works out pretty evenly for Tex.

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And the Yankees? Well, they're getting a bit of a break with ARod. They're paying a few million $ less for ARod than they would have to have paid on the open market. That's pretty much what they would have saved with Soriano, who would have been paid a few million $ less by the Yanks than he would have gotten on the open market.

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All in all, a fair deal.

--posted by TangoTiger at 04:17 PM EDT

Posted 4:48 p.m., February 16, 2004 (#1) - Mike Green
Don't forget about the PTBNL. If it's Dioner Navarro, as has been rumoured, the dynamic changes considerably for Texas. When he arrives (2005?), he is likely to deliver three years of average starting catcher work for a total of just over $1 million. What's an average catcher worth, maybe $5 million/yr? That's a big, big deal.

I've marked Navarro down to be an average starting catcher. He might get injured and not make it, or he might make some progression from his current state and be one of the top five catchers in the majors by 2006.

Posted 5:04 p.m., February 16, 2004 (#2) - tangotiger
The PTBNL is a goodpoint. Let's see who it is first. I think Texas has a choice of 5 players.

If it was a Joe Mauer type, then you're talking about say 45 million$ of present value for a salary of 20 million$ over 6 years. Otherwise, it could be Joe Schmoe. So, we're talking about a 0 to 20 million$ net income value of PTBNL.

Posted 5:32 p.m., February 16, 2004 (#3) - David Smyth
But this analysis doesn't really address the preferences or needs of the involved teams, not on an overall basis, but relative to time. Next year, the year after, etc..

Even if Tango's analysis had shown that, given the most accurate projections possible, it was *not* a break-even or so deal, that would not mean that it really wasn't a smart deal for each team, all things considered.

When my financial advisor comes by to re-evaluate my financial plan, he does not say that, mathematically, X is the correct path. He says that X, Y, or Z is the right path depending on my risk aversion comfort, etc.

The deal apparently makes Texas breathe easier, and makes the Yankees pant in anticipation. Who am I to try to place a numerical value on that?

Posted 6:01 p.m., February 16, 2004 (#4) - Charles Saeger(e-mail)
It's an interesting gamble. Whom would you rather have over the next seven years: A-Rod or Soriano? My guess is A-Rod, but it's just a guess. This is what Bill James likes to call a "Challenge Trade." We haven't had one this big since the Alomar/Carter/Fernandez/McGriff trade in the 1990-1 offseason.

BTW, what is George's explanation for having A-Rod at third and Jeter screw things up even longer at short? A-Rod has a Gold Glove; Jeter is possibly the worst defensive shortstop playing regularily in the majors today.

Posted 6:18 p.m., February 16, 2004 (#5) - David Smyth
---"BTW, what is George's explanation for having A-Rod at third and Jeter screw things up even longer at short? A-Rod has a Gold Glove; Jeter is possibly the worst defensive shortstop playing regularily in the majors today."

Well, you know the answer as well as I do. Some combo of attracting ARod to a good team and keeping Jeter happy. It's simply a juggling act, which may seem silly, but who among us really knows what it's like dealing with world-class super-rich emloyees? If George really believes/understands that ARod is better at short, he is probably just trying to get ARod on the team, and then let those sensitive issues resolve themselves in time in a more gentle fashion...

Posted 8:17 p.m., February 16, 2004 (#6) - MGL
I agree with David that whether a trade or acquisition is "correct" or not for one team or another does not boil down to one number. Each team, like each person in real life, has it's own unique "utility funstion." The example I like to give is if a player goes to a casino to play blackjack, must he play perfect basic strategy which optimizes his expected win/loss during his blackjack session? Of course not. It depends on the player's utility. Does he WANT to optimize his win expectancy? Maybe not. Does he want to have fun, and playing basic strategy might detract from that fun? Maybe. Does he want to avoid getting critcized by other players? Etc.

Same thing for the Rangers and Yankees. Obviously part of the Yankees' "utility funstion" is to win at any cost, and not just (or at all) to optimize their payroll and ultimately their profits.

And that's not to mention that x number of marginal wins is worth different amounts to each time. As well, a player's "marquee value" is different for different players and different teams. Etc. There are a plethora of factors unique to each team that go into optimizing their "deals."

That being said, as Tango has stated, no matter how you slice it, this trade is probably somewhere near "even" for both teams. There are bascially 3 kinds of trades, acquisitions, or contracts. Those that are obviously bad, those that are obviosuly good, and everything else (the ones in the middle). I think that there is little doubt that this one is somewhere in the middle, for both teams.

I do think however that Texas is somehow udner the impression that if they lose A-Rod and are able to pick up a quality pitcher or two, that that is somehow better than having A-Rod. As most of us (at Primer) know, many teams are under the false impression that player value is NOT fungible (especially between pitchers and hitters), which of course it is (not considering the slight influence of run environment and player "synergy").

I'm pretty sure the Rangers think and thought that they would be and have been better off with less offense and more defense (pitching), even though, as we know, "a run saved is a run earned (more or less)." I don't think that the Rangers know that. So other than the nuances of the long-term effects of this trade, what do the Rangers gain by giving up around 3 wins a year and saving around 10 mil a year? Well, if 1 marginal win is worth 2-4 mil in profit for the Rangers, as it is for most teams (I assume), then they have gained nothing. And if they expect to make up those 3 wins by acquiring better pitching, it is going to cost them that 10 mil anyway (probably more, as a win in pitching probably costs more than a win in hitting). So the problem with Texas, and for Texas fans (are there any?), I think, is not whether this trade was "good" for them or not, but the fact that I don't think that Texas managment understands what it takes to put together a good team. On the other hand, although the Yankees may not understand how to evaluate players either (Jeter has to be by far and away the most overpaid player in baseball), if you are willing to throw almost unlimited amouns of money out there, it is easy to field a 90 or 100 win team, which makes the fans ecstatic. The fans don't care how much money you spend of course, or whether you spend money "optimally," as long as you are willing to spend lots of it, like the Yankees. What we forget from time to time, is that for some owners (e.g. George), and to some extent almost all owners, their teams are in between a business (which is mostly about bottom line) and their houses, cars, and other toys, which are about spending as much money as you want and can afford, to make you happy.

To change the subject a little, BPro had 2 terrible columns lately, which shocked me a little. One was a few days ago and was about the Phillies and closers. Some "study" about whether there was a "carry-over" effect after a blown save with Mesa, Bowa, the Phillies, or teams in general. The sample sizes and the "gross" measures in that study were so obviosuly small that any results would be next to worthless. As it turned out, there was not a "noticable" difference between the Phillies (Mesa, Bowa) and the rest of the teams, but there easily could have been a different result, given the ridiculously small samples and "gross measure" (whether they won or not the next day). The article and "study" was a horrible example of trying to "prove" a point by citing some almost meaningless data (either cherry picking the data or using random small-sample data and "hoping" that the results support your hypoothesis). I was shocked that BPro (and Sheehan I think) would stoop to that level of "research").

The other article I thought was terrible, and more germane to this thread, was today's article on "the trade." They kept talking about how much money the Rangers would "save" each year, which was fine, and then almost as an afterthought, they mentioned "but some or even all of that savings might get eaten up in lower revenue." Well, isn't that how the economics of running a baseball team works?

If you lower you win expectancy, you save money, but you lower your revenue, and vicer versa. Isn't that why teams spend money to improve their teams in the first place? The BPro article's implication was that those were 2 independent things. They acted like it was a revelation that even though they dumped a great player (and got a good one) and saved money, that it might actualy affect their revenue! Well, of course it will affect their revenue, otherwise all teams would have 25 replacement players! That's why a marginal win is worth 2-4 million dollars to a team, right? The trick for a team is to try and gain as many theoretical wins as possible for the least amount of money, as well as to try and increase their "revenue per win" as much as possible.

In the article, they kept saying that the Rangers would save around 10 mil per year. That's exaclty what they should save (going along with Tango's notion that the trade was about right for Texas) given the fact that they gave up around 3 wins per year by trading A-rod for Soriano!

I didn't understand the point of that BPro article at all....

Posted 11:19 p.m., February 16, 2004 (#7) - studes (homepage)
According to a recent study I read re: incremental revenue, an extra win is worth less than $1M to a non-contending team. The Rangers weren't going to contend, so ARod's contract didn't make sense. It obviously makes a lot of sense to a contending team in media heaven, like the Yankees.

I thought both articles were very weak, too.

Posted 12:38 a.m., February 17, 2004 (#8) - Darren
Can you do the same thing for getting Manny for 5 years?

Posted 4:07 a.m., February 17, 2004 (#9) - MGL
If a marginal win is only worth 1 mil for a non-contending team, then they should all field replacement players as it is almost impossible to pick up a win for 1 mil. Of course that is a catch-22, since how do you become a contending team unless you spend some money when you are non-contending?

So Detroit signing Pudge was a gigantic waste of money?

Posted 6:54 a.m., February 17, 2004 (#10) - studes (homepage)
Yes, signing pudge was a gigantic waste of money. you knew that.

Of course, the Tigers are desperate, so who knows what the economic rules should be for them.

You're right about the economics. Build a team with young, cheap guys, then spend for free agents when you're ready to contend. Ideally.

It would be an interesting study to go back and review non-contending teams that signed big contracts with free agents, to see how many of them "worked."

btw, I put the link in homepage to the actual review of the article I wrote.

Posted 9:02 a.m., February 17, 2004 (#11) - ColinM
studes makes a lot of sense here. This basically follows what SABR types have been saying for years. Why waste money trying to go from a 65 win team to a 75 win team? When the young guys are ready, spend the money and go for the playoffs. I suffered through enough of Gord Ash to know that 83 wins doesn't feel so good as a fan. (Unless you liked the '73 Mets of course).

I guess what it boils down to is that the extra wins that Arod provides are probably more valuable to the Yankees than the Rangers, as they could be the difference between them and the Sox (or the Jays!!!). In some way, this kind of relates to the never ending debate over the definition of MVP.

Posted 10:32 a.m., February 17, 2004 (#12) - tangotiger
I never had a chance to fully go through that article, but I would be wary. I believe it only covered a period of 5 years (late 90s). I think you have tons of issues here.

I do agree that a team will (should) spend more per win as they increase their chances of hitting the playoffs, and getting all that money. I'd like to see another look at this as well.

Furthermore, there should also be a topping off at some point. NYY and Bos are already "guaranteed" of making the playoffs. Well, say they are 95% of the way there. Flipping ARod for Soriano increases that to what, 96%? It's like bringing in Mariano Rivera in the bottom of the 9th with a 6-run lead. Do you need to do that to MAKE the playoffs? Not if it'll cost you 100 million$ to do so.

However, once in the playoffs, this flip makes a world of difference.

The point is that we shouldn't necessarily rely on a 0.5 million / win for noncontenders and 1.5 for contenders (or whatever numbers the authors suggest). Even my flat 1.85 million$/win isn't good enough. There's more dynamics going on.

Posted 10:43 a.m., February 17, 2004 (#13) - tangotiger
Darren: I don't have Manny's particulars handy. Let's assume that his remaining 100 million$ (some deferred) for 5 years has a present value of around 90 million$. The market value for Manny, for 5 years, would probably be around 60 million$. (Vlad, younger, less healthy, better defensive, signed for 70/5, and Tejada signed for 72/6 I think).

So, Manny is being paid at 40 million$ over market value.

Tex/NYY, based on their trade and my back-of-the-envelope calculation, has ARod as being about 46 to 53 million$ over market value.

Boston, based on market value, should have asked for relief of around 10 million$. I think they asked for over 30 million (though Saturday they were saying "as-is").

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And, never should a player take a pay cut. Do you think the Cards will give Pujols a 10 million$ bonus for being severely underpaid? However, if ARod wanted to "buy" his way into playing for Bos, that's another story. But, that sets a precedent for an MLB team to strong-arm players. The union sees this 3 steps ahead of the rest of us, and I'd defer to their market analysis on this.

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Note that what the market thinks of a player is not necessarily what he is actually worth. The market is only right if it can properly balance all known information. The stock market has the luxury of having millions of shares of each company being traded every day. MLB does not have that luxury.

Posted 10:46 a.m., February 17, 2004 (#14) - tangotiger
"So, Manny is being paid at 40 million$ over market value."

That should read "30", and so Boston should have asked for relief of around 20. Again, change some assumptions around, and asking for relief of 10 or 30 may have been appropriate.

Posted 11:08 a.m., February 17, 2004 (#15) - dlf
Note that what the market thinks of a player is not necessarily what he is actually worth. The market is only right if it can properly balance all known information.

And the parties all act without outside constraints. Because of the unilateral negotiating rights for years 0-2, arbitration from 3-5 and FA only from 6 forward, the market, by definition, can not accurately balance actual player value. At best the FA market can only determine the value of a particular subset of players.

And because of wild swings in supply the resulting price from year to year can also change dramatically. Its easy to say that Player X and Player Y both create Z wins, both should get A dollars. But if Player X comes on the market with Players X1, X2 ... X20 all of whom create roughly the same number of wins, while Player Y comes on the market the next year when fewer similar players are available, obvioulsy Y will get more.

And when we are talking about A-Rod, there can be no real market established. He is a unique performer whose financial situation is and should be similarly unique. A Formula One racing car goes about 20% faster than a street Porsche. But the former is unique, the latter is not. You can't use the Porsche plus 20% as a fair market value for the racer. In my daughter's bedroom there is a poster of Britney Spears (god have mercy on me!), on my office wall, there is an original piece of artwork by a semi-famous artist. Because of scarcity and low turnover, it is much, much easier to establish the value of the poster than the painting.

Long and short of it is I think we can easily establish the on-field value of the performance of A-Rod and Soriano. I think we can make reasonable projections of their future performances and how that will impact their clubs. But trying to say who got the better end of the deal financially? We simply lack most of the necessary data and are making wild speculative guesses.

Posted 11:35 a.m., February 17, 2004 (#16) - tangotiger
I agree that at this level, changing the assumptions slightly can have a 20 million$ swing. Both sides can reasonably argue that it was a fair trade. A straight ARod for Sori trade (or even just ARod for nothing) would have been a bad trade for the Yanks.

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You may think ARod is unique, because of the combination of hitting, fielding and position, but that's not too important.

His 2000-2002 performance says he was 20 runs better than the best players other than Bonds:
http://www.baseballprimer.com/bodies/lichtman/200002.html

That's 2 wins, which you can value at anywhere from 2 to 6 million$ per year. Seeing that he'd be in his decline phase at some point, you wouldn't expect that over the next 7 years. So, he should be paid somewhere around 30 million$ more than the standard superstar over 7 years.

Vlad got 70/5, so we'd expect a 7 yr contrat should be around 90 to 95 million$. That's the market for a typical superstar over 7 years. ARod should be around 120 million$ for 7 years, or 17 million$/yr.

I mentioned at the beginning that That production, today, would be paid out at about 17 million $ / year.

It's not just wild speculative guesses. They are reasonable educated guesses.

Posted 12:07 p.m., February 17, 2004 (#17) - MGL
This can be analyzed and debated ad infinitum, like "replacement value" concepts. The bottom line is that for any individual team, trade, acquisition, and contract decisions should be fairly simple.

Is what I am paying for player x worth the extra wins plus marquee value that player x provides for my team?

The only reason why there is such a large gap between what a player is "worth" on the open market and what his true value is to an average team, is that not all teams use this simple decision-making process for various reasons...

Posted 12:24 p.m., February 17, 2004 (#18) - tangotiger
The biggest reason is that business practices get thrown out the window when it comes to baseball. Having bright people who understand economics like Law, DePodesta, Epstein et al can only improve the economic landscape.

We aren't at the point where players are priced optimally, but they are priced fairly (as many good contracts for players as bad).

A team economically managed by Primates would do better than every other team out there.

Posted 1:04 p.m., February 17, 2004 (#19) - dlf
Tango,

I said that Rodriguez is unique. You said no, he's just 20 runs better than the next best non-Bonds player. That assumes that those 20 runs are identical to any other 20 runs. That is an assumption that teams (with literally hundreds of millions of dollars at stake being run by folks who made billions in the U.S. and Canada marketplaces) don't make. You assume as a default option, team and league level stupidity based on some very shaky and quite limited financial information. 2+2=1+3. But that mathematical certainly may be far from a baseball or financial certainty.

Likewise, I think it incredibly naive to suggest that a player is paid solely based on offense+defense. Particularly a player like A-Rod. Based on published reports, Boras, during negotiations with the Red Sox, suggested that use of the logo *for A-Rod* was worth $7m per year. Turn it around - how much is the use of A-Rod *in the logo* worth to a team? A-Rod may be, in the batter's box, roughly equivilent to Manny Ramirez. Tell that to Radio Shack, Nike, or the folks putting on the innovative MLB adds.

Will the Dodgers on field operation be run better by DePodesta than it was by Malone and Evans? I would bet on it. The advances Sabermetrics can bring on the field are profound indeed. But in five years, Murdoch's group realized a $120m appreciation ($311 purchase price $430 sales price) in its asset from 1998 to its sale this spring. Are you telling me that they did that "while business practices get thrown out the window"? This ain't just a quaint little hobby for the independently wealthy - a hundred million here, a hundred million there ...

Posted 2:11 p.m., February 17, 2004 (#20) - Erik Allen
I think one very important factor that is neglected in the "x wins is worth y dollars" analysis is that teams cannot be value investors in the sense that one could be a value investor in the stock market. In the stock market, an individual investor has, for practical purposes, an infinite number of possible investment options. They can invest only in the best deals, and still find places for all their money (Buffett excluded). A baseball team is constrained to only 25 "investments" (i.e. players), of which only ~15 can play a substantial role in the success of the team. This constraint means that marquee players should command salaries in excess of that predicted only by a "Wins*$/Win" type analysis.

I seem to remember a study a few months ago on WS/$ versus $ and finding a negative slope. I would argue that this type of phenomenon is not a market inefficiency, but rather exactly what you expect given the value of marquee players.

Posted 2:23 p.m., February 17, 2004 (#21) - tangotiger
dlf,

I certainly don't mean to ignore the "draw" factor beyond what his performance on the field has. Certainly, Gretzky had that in hockey (witness the resurgence of the Kings and the actual creation of teams in that market) or Jordan in basketball, etc.

I think some marketing folks set Jordan's value (if he were to play at his peak) to the NBA as (and I think I'm remembering this right) 1 billion$.

I won't begin to try to figure out ARod's draw value, and I won't dismiss it either.

But, given the time, I think it would be a rather simple process to go through, to the same extent that Nike can establish Tiger was worth 60 million$ as a rookie.

Posted 5:04 p.m., February 17, 2004 (#22) - Darren
I'm way out of my element over here, so bear with me.

So, paying 159 for something worth 106, or paying 78 for something worth 32? That's a 7 million$ of savings.

Yes, but there's a lot of value in being quite sure what you're getting back. With ARod, you're getting a consistent performer, with Soriano, you've got a big chance that he tanks.

As for Manny, I have seen him at between $85 and $95 mil. Call it $90 with deferrals. I would set his value at a little higher than $60 mil (I think Vlad was a fluke because of his back), but we'll use that number.

So your comparison becomes:

Trade for Manny: pay $90 mil for $60 mil value.
Trade for Soriano: pay $78 mil for $32 mil value.
Keep ARod: pay $159 mil for $106 mil value.

You'll notice that I haven't included any cash givebacks in the Manny deal. That's because, until after the fact, all reports had ARod giving money back to the Rangers to make the deal happen. No one ever denied that. When the players Union stepped in, it would have allowed ARod to give them back $13 mil. At that point, it broke down as follows:

Trade for Manny: pay $77 mil for $60 mil value.
Trade for Soriano: pay $78 mil for $32 mil value.
Keep ARod: pay $159 mil for $106 mil value.

Texas wanted the Red Sox to add in another $12 mil (making it $5 mil towards Manny), making it:

Trade for Manny: pay $65 mil for $60 mil value.
Trade for Soriano: pay $78 mil for $32 mil value.
Keep ARod: pay $159 mil for $106 mil value.

To me, the Rangers had a chance to take the 2nd deal, and according to recent reports, had a chance to take the 3rd deal a few days ago. That they would go for Soriano out of spite or whatever, shows that they deserve what they're getting.

Posted 5:09 p.m., February 17, 2004 (#23) - tangotiger
Yes, but there's a lot of value in being quite sure what you're getting back. With ARod, you're getting a consistent performer, with Soriano, you've got a big chance that he tanks.

That we are more certain in ARod's true talent level than we are with Soriano has already been factored into their market price.

Posted 5:26 p.m., February 17, 2004 (#24) - studes (homepage)
Erik, that's an interesting way of describing the "player market". Can you elaborate a bit? How does the 15-slot constraint play out when "inflating" the salaries of marquee players?

I tend to think of it as game theory, but I think you're describing something a bit different.

Posted 7:03 p.m., February 17, 2004 (#25) - J Cross
Is there any reason to think that A-Rod's "drawing power" is greater than the drawing power of the typical mix of players that give you 12 wins above replacement? He might not get an added bonus here. I think Jeter's drawing value exceeds his baseball value b/c people think he's better than he is. Ichiro's drawing power exceeds his baseball value. Which players drawing power would be less than expected by their baseball value? There have to be some.

Posted 8:21 p.m., February 17, 2004 (#26) - Erik Allen
Studes, thanks for the response! Actually, your response reminded me that it was you who did the WS/$ study.

My point was essentially this...according to the research you did, the best values in the major leagues are cheap players. Their Win Shares per dollar spent are higher than the typical superstar, correct? So, let's say a team could have as many players as they want, and they could all contribute to the team success. The best team money could buy (in terms of win shares per dollar) is a team a barely above replacement level players.

In real life, teams are limited to 15 contributors. The strategy of picking up 15 slightly above replacement level players would be terrible. I suppose another way of saying it is that we can't talk about a players value without talking about the "opportunity cost" of that roster spot. Sure, a cheap player is the best value player, but every cheap player we have picked up has used up a roster spot.

So, what are the ramifications of this analysis. Well, say you have your choice of A-Rod versus two players with exactly half the value of A-Rod. The strict "$x buys y wins" analysis says that both of these options are identically good. When considering the opportunity cost of the roster spot, however, A-Rod should be worth more, since that roster spot is available to pick up something of value.

Posted 10:22 a.m., February 18, 2004 (#27) - Noffs
Studes, since you seem to post here, let me see if I can get you for a minute. First, awesome evolution on the website.

Second, specific comment on the Net WS value, which is a fun exercise. It's interesting to see that anyone making more than $7M (Javy Lopez), is overpaid by this metric. However, since it's relative to the younger players, this is to be expected, since players with less than 6 years of service are having their salary artificially suppressed to something below their market value.

What should happen in a perfect efficient market is teams pay free agents for their marginal revenues, and then reap profits from their young players. In this model, no one would be overpaid, but all the free agents would have negative Net WS Values.

But this isn't the case and most free agents are actually overpaid. Some notes about your methodology though:

I know you wanted to keep it simple, but players making the minimum shouldn't have negative WS value, even with 0 WS. Replacement players are expected to have 0 WS, and should have 0 value. Much like Win Shares are contributions above replacement level, salaries should be salary above minimum, since the $300K is a sunk cost, and you are paying for some contribution (above zero-level). The way to correct for this is take the minimum out of everyone's salary. This reduces the total salary from 2171950223 to 1804750223 and the "WS value" from 298796.29 to 248280.40. Then the WS Value is WS*2482480.40 - salary + 300000.

This value also sums to zero, but I believe it properly adjusts for the minimum salary.

Lastly, I wouldn't say that this is quite the value of a Win Share, because most of the minimum-salaried players didn't play a full season and didn't earn the full $300K (September call-ups were more like $50K), leading to a too-high salary total. If you could find it, you could use total salary paid out by all the teams, but then that wouldn't accurately reflect the contributions of those players with partial seasons. Without busting out service-time data, you can't really correct for this, but considering how thorough you've been elsewhere on your website, I figured I'd point this out.

Posted 10:22 a.m., February 18, 2004 (#28) - Rob S(e-mail) (homepage)
Now that the news comes out that Soriano is 28 years old, and not 26, how does that effect the value of the trade? Click on the website for the story.

Posted 10:26 a.m., February 18, 2004 (#29) - Noffs
Oh, and Manny's contract was so heavily deferred that his AAV was less than $17.5M even before taking the PDV.

I am a fan of the idea that you can entirely express a player contract with two numbers - years and PDV. This discounts options, incentives, etc, but structure really shouldn't matter to a fluid franchise. Gary Sheffield wants to make it look like he's getting $13M but we only want to pay $12M? No problem.

So many players only care about that figure in the newspaper. How many average fans know that Pudge's contract is voidable, or that Manny's AAV is closer to $15M than it is to $20M? Not many. But they do known 4/40 and 8/160.

Posted 1:00 p.m., February 18, 2004 (#30) - Stephen
A team economically managed by Primates would do better than every other team out there.

Tango,

Are you assuming that the projection and evaluation systems available to Primates (SLWTS, PECOTA, DIPS...) are as accurate or helpful as the proprietary systems of the A's or the Red Sox?

Posted 1:15 p.m., February 18, 2004 (#31) - tangotiger
I don't see why a "proprietary" system from the A's or Redsox would be any better, if they have access to the same data that we do.

The only place where they'd have a (short-term) leg up on us would be that they have access to scouting reports. However, once we have that data, then we're all on the same footing.

And, I'll stack up the collective wisdom of the Primates against anyone other there.

Posted 2:18 p.m., February 18, 2004 (#32) - dlf
Which players drawing power would be less than expected by their baseball value? There have to be some.

I would suggest that the player right at the top of the list in baseball value, would be near the top of the list in negative difference between such value and drawing power - Barry Bonds. No doubt that he is a GREAT player. But his contentious relationship with the media has fairly or not resulted in an image of a surly aloof player unloved by many fans. His lack of major endorsements speaks both to his own goals and the image Wall Street / Hollywood have of him. To a greater or lesser degree, quite a number of players like Pedro Martinez, Randy Johnson, Manny Ramirez, Frank Thomas, or other contentious personalities have similar effects. (A digression on the impact of race on "drawability" would be interesting, but beyond the scope of my abilities or knowledge.)

Likewise, there are many quiet players who shun media attention. Edgar Martinez or Bernie Williams appear to be on the down side of their careers, but I think their on-field performance has been significantly more valuable than what they are off-field.

Posted 3:20 p.m., February 18, 2004 (#33) - tangotiger
You should make a distinction between the drawing power that a team can benefit from, and once which they won't.

Bonds probably has great draw from a fan perspective that probably sends more people to see the Giants than they normally would for that win level. (Maybe.)

Will ARod helps the Yanks draw more in attendance/TV than they would based strictly on his marginal win impact? I dunno. Maybe?

I'm not sure how much of an effect a baseballball player can have here.

Posted 4:56 p.m., February 18, 2004 (#34) - Darren
On this subject, the Rovell article on ESPN estimated that attendance would go up by 3,500/game for the Yankees because of ARod. I tend to think that number's ridiculously high. They were already doing extremely well at the gate and have a ton of very popular players.

Posted 10:00 p.m., February 18, 2004 (#35) - tangotiger
I estimate each marginal win to add 2% to attendance. The diff between ARod and Soriano is about 4 marginal wins, or 8%. NYY had about 35 to 40 K fans per game. So, based only on what he brings to the field, that's about a 3,000 fan increase per game.

Tickets for NYY have been BLAZING. They might actually have tons of sellouts this year.

Posted 11:05 p.m., February 18, 2004 (#36) - Charles Saeger(e-mail)
Rob S: Well, that does cut Soriano's expected future value by about, oh, 35-40%. Quick rough math with a Brock2 spreadsheet; it cuts his Marginal Runs (RC/25 over 61% of league) by 45%, RC by 35%, R/RBI by 35%, BB by 34%, HR by 41% ... I'm sure Tom will have some better estimate. It basically means his best years instead of being immediately ahead of Soriano are immediately behind Soriano.

Posted 7:52 p.m., February 19, 2004 (#37) - f_k_a Scoriano
It basically means his best years instead of being immediately ahead of Soriano are immediately behind Soriano.

In what sense does it mean that?

Posted 10:01 a.m., February 20, 2004 (#38) - Steamer
Using the numbers posted on this site, the only rational explanation for Texas' preference of the NYY trade over the BOS trade is if they believe that Soriano is worth more as a player (stats + fan draw) to them than Manny irrespective of the contracts.

In both cases (assuming the $13 million union-approved contract cut in the BOS trade) the Rangers would reduce their payroll over the next 7 years by $38 million (assuming they'd extend Manny or Soriano's contracts at the same market value or find a similar player at market value for the years remaining on their contracts to get them up to 7).

Posted 3:23 p.m., February 20, 2004 (#39) - MGL
I don't have my other computers with me right now (I'm in transit on my laptop), but I wrote in another thread on Soriano's age how the difference between being 26 and 28 has an enormous impact on his 2004 projection, after one considers the "age adjustments." Guys like Silver and Shandler (and myslef) must have been scrambling to their computers to change Soriano's projection. Players peak at 26 overall. Batting peak is probably 27 (I don't have my aging curves in front of me). For every year after 26 or 27 the average player loses about 2 runs (RC or lwts) per year and then 3 runs per year after age 30 and 4 after age 35. Prior to age 26 or 27 they gain about 4 runs per year. So you can do the math (without James Brock systems, which BTW, doesn't use the correct aging adjustments and needlessly confuses the issue of aging).

So given that "the trade" was probably around break even for both teams with Soriano being 26, it was probably pretty bad for Tex with Soriano being 28. Then again, I can't imagine a GM, other than Beane, Epstein, or J.P., knowing, believeing, or understanding, that an average player peaks at 26...

Posted 3:44 p.m., February 20, 2004 (#40) - tangotiger
I don't think it's so much 2004, as the years beyond.

Say you have Sori following:

Age Performance
24 +30
25 +30
26 +30

(I don't know what Sori's numbers was, but let's just assume that was his performance).

So, what do you do? First, you translate his performance, each year independently, into an expected performance at age 27:

Age.... Performance.... Expected Performance at 27
24 +30... +37
25 +30... +33
26 +30... +31

You give more weight to the recent seasons, on a scale of 5/4/3. That gives you a weighted average of: +33 (assumes he had the same number of PAs each year).

Finally, assuming 1800 PAs, you regress 10% towards the mean, or a true talent of +30 at age 27.

(Just a coincidence that it's +30 btw.)

Now, let's repeat, but this team, let's adjust his age:

Age.... Performance.... Expected Performance at 27
26 +30... +31
27 +30... +30
28 +30... +29

The weighted performance is now: +30. Regress 10% towards the mean, and you have +27 as his true talent at age 27. But, he will be 29. From 27 to 29, you probably lose 4 runs total. That brings him in at +23 as his true talent level at age 29.

(I calculate age as season minus YOB. Not too important, as long as you do the same for everyone.)

So, we thought he has a true talent level of +30 at age 27, but he actually had a true talent of +27 at age 27, and seeing that he is 29, he has a true talent of +23.

That's a 7 run difference, which is a whopper.

You guys can plug in whatever numbers Sori actually had.

Posted 8:28 p.m., February 20, 2004 (#41) - MGL
Good job, Tango....

Posted 10:40 a.m., February 22, 2004 (#42) - aric cushing
it was a good trade and the rangers have millions left over

Posted 2:15 a.m., March 1, 2004 (#43) - Brad Wenban
Two points: First, you can partially avoid the difficult problem of calculating a given team's $/win function by how successful of a trade this was relative to the alternative uses of the money spent on ARod. So, a this could be a bad trade for the Yankees if (Best Alternative Player - Player Demoted) > (A-Rod + 2B promoted - Soriano - 3B demoted).

For the Rangers, the issue is more difficult because you would have to hypothesize other salary dumps (e.g. Park + Greer + Blaylock for nothing).

The problem with this is that the team could do both (get ARod and the Alternative Player, or dump ARod and other talent). Certain assumptions (like non-linearity of $/W) can be used to defeat this problem.

Second, should you apply a discount rate to future Runs, such that 10 runs now might be worth 1.07 runs a year from now? It seems irrational to assume without evidence a zero percent discount rate for the value of runs (growth in $/win exactly cancels out with the interest rate.