Money. It's what makes the world go round. Or at least that's what Gordon Gecko might say.
What's interesting to me is that I think money, or more specifically a player's salary, has a lot (maybe too much) to do with how we judge a player's performance than in years past. The business side of the game is more public than ever before, so every time a player making $11 million struggles, it becomes a central location to channel fan angst. Not that Jason Kendall wouldn't be the recipient of that angst even if fans didn't know his salary.
That being said, a company called PROTRADE has made it their business to weigh players true worth versus their salary. It's called their MoneyBall system. Overall, here is how the system works as I contacted them and asked for an explanation as to how they calculated these numbers:
When performance changes, a player's Moneyball salary will rise or fall, accordingly.
That said, here's how we calculate the number:
First, using our Moneyball Valuation system, we sum production of all MLB players across a full season. Everyone is ranked on a curve by the number of Moneyball Runs they produced.
Looking at theses rankings as a distribution, we mark the 40th percentile as "failing." Or, in baseball terms, we call it "replacement level." Some 40% of players appearing in the major leagues in a given season earn the minimum salary ($327,000 in '06) and thus bring with them the minimum expectation of production. This level again can be marked as the "replacement level" as it is the minimal cost that a team would incur when replacing one of their players.
In our Moneyball terms, this "replacement level" is below average expectations (0 runs) and is actually the equivalent of a player earning -2.5 runs. Therefore, any seasonal performance below -2.5 runs is considered at the "replacement level".
Next, we sum all the runs produced above the replacement level for the remaining (non-"replacement level") 60% of players. We also examine all the payrolls in the league and sum up all the salary dollars paid above the replacement level of $327,000. From these two sets of figures we can determine how much teams are paying for each incremental run, as measured by the Moneyball Valuation system.
A player's Moneyball Salary is then determined by multiplying this cost by the number of runs the player produced, or the runs they produced over the minimum "replacement level."
Players who don't play at all in a season, or who's performances fall below the 40th percentile, are given a salary equal to the league minimum. In the majors, that's as low as you can go.
Each year we readjust our calculations to take into account any changes which have occurred in the relationship between salaries and runs.
OK, so here's what the A's MoneyBall salaries look like.
Not surprisingly, two of the top three overpaid A's are Kendall and Loaiza. Somewhat surprisingly, Kotsay is second on that list. Nick Swisher is the most underpaid A. According to this system, he should currently be making $28 million a year. Now that's funny.
Many people complained about Joe Kennedy's salary if he was only going to be a reliever. But he is on the list of the most underpaid along with Ballsy Halsey.
Eric Chavez, for those who are counting, is currently making about $3 million less than he's worth. Frank Thomas, the guy who many thought would be a bargain at $500,000, is actually overpaid according to the system and his current performance. As a matter of fact, what's surprising is just how many players right now should be making the minimum salary.
Street, Saarloos, Payton, Big Hurt, Blanton, Crosby, Haren, Dan Johnson, Kendall, Kotsay, Loaiza and Kielty are all minimum wagers.
Is there any wonder this team isn't performing at an acceptable level right now?
The A's are ranked as overpaid as a team, but only by about $50,000 per player salary. By comparison, the A's next opponent in New York the average player is overpaid by about $2.8 million, the Red Sox are overpaid by about $1.2 million per player and the Angels are overpaid by about $1.6 million per player. Of course any system that has Vlad Guerrero at the league minimum has to have major flaws. The Chicago White Sox, a team that's picked up where it left off last year, has players that are underpaid by about a million dollars per player.
It's an interesting and different way to evaluate value compared to actual salary.
