Gleeman - Vlad (November 4, 2003)
How much to pay Vlad? He's essentially a +5 wins above average (or +7 wins above replacement) kind of player. He still probably has not peaked. There's insurance/premiums/injuries to consider. A marginal win is worth about 2 million $. So, I'd give him 14 million$ / year. If more than 3 years, I'd drop that down a little. 5 years? 60 million seems right. Though, I'll guess the market will overpay like with Thome and Glavine.
--posted by TangoTiger at 10:32 PM EDT
Posted 3:03 a.m.,
November 5, 2003
(#1) -
Aadik
Tango, Im curious, but I would think that paying him more than that is still not overpaying. I would give him 5 years 80 mil- he provides other benefits for a team,be it in marketing or in the kind of deal Hicks pulled off after signing A-rod (or what the Phillies did when they signed Pete Rose, way back when) in media rights. Vlad's not underrated anymore- he's a genuine star, and I would rather a team overpay for quality (a la Vlad) then mediocrity.
Posted 7:56 a.m.,
November 5, 2003
(#2) -
Tangotiger
I'll defer to the A's braintrust when the cited their market research saying Giambi was worth 119 million$ for 7 years.
I've done very very little in terms of establishing a player's worth to a team long-term. And if Vlad is more like a +9 replacement guy, then he shoots up to 18 mill per year.
The market will always overpay, in any case, because we don't have the shorts to keep them honest. If 29 teams think he's worth 12 million, and 1 team think he's worth 15, how much is he really worth? Unless you can account for the extra 3 for that last team through something unique to that team, he's probably worth 12.1 million.
Posted 12:13 p.m.,
November 5, 2003
(#3) -
J Cross
Isn't a marginal win worth more like $3M for the Yankees? So Vlad might be worth $21M/yr. to them?
Posted 12:27 p.m.,
November 5, 2003
(#4) -
tangotiger
I would think so, and had thought so.
Voros' look at this issue should little to no relationship to the market size.
Frankly, I'm skeptical about this. The "rule of thumb" that I use was first put forth by Pete Palmer in the Hidden Game of Baseball. Each marginal win accounts for 2% increase in attendance. Assuming that you can extrapolate that 2% to ALL revenues, then a 110 million revenue generating team will have 1 marginal win = 2.2 million $ (similar to the 2.6 that Voros found). And so, you'd probably give 1.5 of that to the player.
If we DO make the relationship to revenues, then the Yanks, who generate at least double the revenue of the average team would double the marginal win to over 3 million $ / win.
As well, increasing the chances of your team getting into the playoffs also adds even more to the marginal $ / win.
As you can see, the margin of error here is pretty large. There is *alot* of variables in-between the performance of the player and the eventual revenue generated. The more variables, especially those unreliable variables, the more shaky ground you are on.
Posted 12:29 p.m.,
November 5, 2003
(#5) -
tangotiger
Also note that revenue sharing decreases the marginal $ / win. Sometimes, I think that economists and not baseball writers should be the ones covering labor negotiations.
"Wow! Look at all that money! There's millions there! Can't they agree on something?"
Posted 2:36 p.m.,
November 5, 2003
(#6) -
Andrew Edwards
At the same time, there's something to be said for overpaying for extreme talent.
It's certainly a better strategy than what I like to call GordAshonomcis, which is paying $5-6 million for a whole mess of decent-but-not-great players and fielding a $70 million decent-but-not-great team year in and year out.
Posted 4:00 p.m.,
November 5, 2003
(#7) -
J Cross
(homepage)
This study (reviewed in homepage link) came up with a different result that Voros:
Next, Burger and Walters use their estimated revenue function to compute the marginal revenue of a win for all 30 MLB teams. The results show that the value of an additional win for a New York team ($3.62 million) is approximately six times the value of an additional win in Milwaukee ($0.59 million).
Posted 4:01 p.m.,
November 5, 2003
(#8) -
J Cross
Yet somehow the Brewers are the most profitable team in baseball. Go figure.
Posted 4:24 p.m.,
November 5, 2003
(#9) -
tangotiger
(homepage)
You guys are great!
The above link shows the complete study in question. The interesting aspect there is the split between the teams that are in contention against those teams that are not in contention.
Essentially, a team not in contention has a marginal $ / win of under 0.5 million $ / win, while a team in contention is all over the place, depending on which team it is.
Pretty interesting stuff, though with only a few years of data, I'm not sure of its reliability (and the same applied to the Voros study).