The two most bedeviling questions in my life are, what should I buy my wife for her birthday and what is the value of anything? The birthday present conundrum is insoluble, I know. The second question, at least in comparison to the first, seems almost manageable.
Why is a share of Twitter worth $50 one day then $39 a couple days later? Why is bacon $3 per pound but pancetta is three times as much? (Pancetta is a pork belly that can speak Italian.) Why was Jonny Gomes worth $1 million per season to the A's but worth $5 million per season to the Red Sox? Why was Nate Freiman not worthy of the inferior Padres or Astros yet, somehow, worth a spot on the superior A's?
Is it all about perception? Bankroll? Serendipity? Boneheadedness? What's going on? To a great extent, the value of anything depends on your method of valuation.
Over the years, I have been fascinated by the discussions on this website about the metric of WAR (Wins Above Replacement) and its implications for the A's roster and payroll. (I prefer WAR over VORP simply for the sound of the acronym. Vorping brings back too many bad memories of college drinking binges.) Though I believe WAR, and the dollars associated with it, are a noble attempt to establish intrinsic value for a price, I am unclear on the concept.
I have read the going rate for one unit of WAR is, what? $5 million? If that were true, Gomes, who produced 1.0 WAR in 2013 according to Fangraphs, earned every bit of his pay this year. Is that true? Personally, I would have preferred playing tonsil hockey with a reef shark to paying Jonny Gomes $5 million. To be fair, though, that WAR/$ rate correctly suggests the Angels ownership and management should be put on medication for the contracts they gave Josh Hamilton and Albert Pujols (Hamilton, 1.9 WAR /$25 million; Pujols, 0.7 WAR/ $24 million).
Bud Selig should get his Blue Ribbon committee to study what dosages to administer.
I am also a tad skeptical the $5 million per Win standard has any practical meaning for the A's. That's an average figure that has to be skewed because the Yankees and the Dodgers and the Angels are running up the free agent tab. The A's have to do much better than $5 mill per to triumph against the Big Boys, don't they?
But what do I know? I recognize I am not qualified to debate WAR. (I've seen "Saving Private Ryan" a couple times. Does that count?) Your average rotisserie league devotee could knock me on my ass with a single equation. Still, I have my pride.
In a (probably) futile attempt to keep up with the baseball eggheads this off-season, I picked up a book called, "Hot Stove Economics: Understanding Baseball's Second Season" written in 2011 by J.C. Bradbury. Bradbury is a sabermetrician and an economist who analyzes baseball according to free market economic principles. That, of course, makes him my kind of guy. (For some odd reason, every time I read the word, "sabermetrician," I picture Mickey Mouse in "The Sorcerer's Apprentice.")
Bradbury punctuates the main discussion of his book with a series of sidebar features he titles, "Hot Stove Myths." Some of his myths are well-known (as myths) by now: "Some Players Are Clutch," "Players Peak at 27," and "College Players are Better Draft Bets than High School Players." Others of his myths are more intriguing: "The Size of the Free-Agent Pool Affects Players' Salaries," "Players' Salaries Raise Prices at the Gate," and "General Managers Can Buy Low and Sell High." My particular favorite is, "Every Trade Has a Winner and a Loser." This is what he writes:
"Commentators who begin by asking "who won?" aren't starting in the right frame of mind for analyzing the trade, because trade is not a zero sum game. ... Some people like to look backwards to evaluate a trade to see what ultimately happened. I disagree; the future is difficult to project, and I believe that trades should be evaluated according to what the parties knew at the time of the trade. [The bold-face type is my doing.] In the long run, every trade will likely turn out to be better for one of the participants. Just because someone wins the lottery doesn't mean that the winner should be praised for his/her investment acumen."
Wow! That is how I've always viewed the Milton Bradley-Andre Ethier and the Matt Holliday-Carlos Gonzalez trades. I've just never seen that perspective expressed in a baseball context before. (I'm sure there will be a few contrary opinions on this.)
The Bradbury Myth I wanted to bring to your attention is, "Replacement Players are Cheap and Abundant." If Bradbury is right, that replacement players are NOT cheaply or abundantly available because they do not exist, then I am really confused about the value of WAR.
"A supposed advantage of replacement level metrics is that they offer quick insight into the financial value of players," Bradbury writes. "A player who is near replacement level can theoretically be replaced by a player from a large talent pool of players who are no worse than each other. Therefore teams ought to be able to acquire this level of talent cheaply paying no more than the league minimum to low service-time substitutes."
Bradbury asserts this pool does not exist. Since he is a Ph.D., he bolsters his point with performance/frequency graphs of OPS and ERA that I cannot reproduce here. Just picture the usual bell-curve configuration with most of the players clustered in that big bump in the middle, like a boa constrictor digesting a Smart Car. The number of superior players who achieve above average performance trails off dramatically, but so too does the number of inferior players. What I think he's getting at is: Talent distribution in the minor leagues varies so dramatically, the development of talent is so unpredictable, and the weeding out process is so severe, it is almost impossible to find even minimal producers for the league minimum-wage. Players like Nate Freiman are so rare, apparently, it is risky to base any meaningful metric on his existence. Not that I doubt the existence of Big Nate.
Converting replacement-level metrics into real dollars is tricky, too. Since minimal producers at minimum wage are close to impossible to find, general managers are almost forced to invest higher dollar amounts in players like Gomes. Indeed, that appears to be the case.
"The league is well stocked with talent that falls well below standard replacement level thresholds," Bradbury writes. "Value estimates posted on the popular website Fangraphs, based on WAR, reports that 32% of major-league players were below replacement level in 2009. That would mean that nearly 1/3 of the league's players cost their clubs money, because they [the teams] employed players who were inferior to a large population of players available for the league minimum. If there is a large group of equally capable players willing to work for the league minimum, then employing eight players per team that cost their teams money is quite a failure of management. General Managers make mistakes, but not this broadly or consistently."
So, I think what I've learned is, replacement-level players do not exist to any great extent so basing a valuation method upon them is flawed. League minimum wage makes replacement decisions murkier, especially since the minimum is rising. A startling number of players are not worth what they're paid which means the method of valuation is off, or baseball is really, really hard, or MLB has more money than it knows what to do with.
Ah, jeez. Does anybody know what I can get my wife for her birthday?