Wednesday, July 20, 2016
I still wish teams could trade draft picks.
Major league teams have spent a record $267.95 million on signing bonuses for players drafted last month, a 7.4 percent increase from last year’s final total of $249.38 million.
Spending initially declined when restraints were put in place ahead of the 2012 draft, but has gradually risen under the five-year labor contract with the players’ association.
Atlanta spent the most this year on amateur draft signing bonuses at nearly $15.6 million, followed by Philadelphia ($15 million), San Diego ($14.9 million) and Cincinnati ($14.7 million).
The Chicago Cubs were last at $2.96 million.
Posted: July 20, 2016 at 04:38 PM | 2 comment(s)
Wednesday, June 22, 2016
Owners pay more money for high-revenue clubs. High-revenue clubs also generate more money for low-revenue clubs in national broadcast packages. They also send money via luxury taxes and penalties for exceeding the international bonus pool. How much more help do they need to give low-revenue teams?
Low-revenue clubs, in particular, continue to express frustration that high-revenue clubs use their financial might to exploit the international market, as well as the major-league talent pool. The Dodgers also paid a record $43.6 million luxury tax on their record $291 million payroll last season.
Posted: June 22, 2016 at 09:19 AM | 27 comment(s)
Over the course of his career, the total return earned by the Yankees on their investment in Babe Ruth was 1254 percent. Because of its volatility, the stock market returned a net gain of only 17 percent during the period. Bonds did much better at 205 percent, but still fell far short of Ruth. It turns out that Babe Ruth was indeed a wise investment for the Yankees. It would have been difficult for Jacob Ruppert to find any other investment that could have done nearly as well.
Despite the riches the Yankees were earning from Ruth, Yankees general manager Ed Barrow wasn’t particularly appreciative of the Babe in the waning years of his career. In a letter addressed to sportswriter F.C. Lane in March of 1933, Barrow complained that Ruth “is greatly overpaid.” Adding that he hoped “the Colonel will stand pat on his offer of $50,000 and call the big fellow’s bluff about retiring.” The Colonel did not stand pat, eventually offering Ruth $52,000 plus 25 percent of the net receipts from exhibition games, though ultimately only paying him $42,000. It was not one of the Babe’s better years, though he did return a nice profit of about $45,000 for the Colonel’s investment. This was certainly better than Ruppert could have done by investing in the stock market, which lost 17 percent that year. The 45 percent return also outperformed the bond market that year by a substantial amount.
The return on Ruth fell the next year, his final season in New York, to its second lowest, returning the team just over $32,000 in net profits. This was at a much reduced salary of $35,000, however. The Yankees, because they were able to reduce Ruth’s salary toward the end of his career, were able to ride him for a couple of final years of profitable employment before finally shipping him off.
When he was ingloriously dispatched to the Braves in time for the 1935 season the Yankees received nothing in return. Their records indicate that he was sold to the Braves without monetary consideration. It was indeed a quiet ending to the most famous financial investment in Yankees history.
Posted: June 22, 2016 at 08:42 AM | 2 comment(s)
Monday, June 13, 2016
This overestimates Clayton’s value. Teams don’t pay $8 million per win. They pay $8 million per win on the free agent market.
Clayton Kershaw, even at $32 million, is a giant bargain. And this goes well beyond the raw amazement he generates, though any opportunity to showcase Kershaw’s line is one gladly taken. Look at this. It’s like fine art sketched out in number form: 100 2/3 IP, 59 H, 18 R, 17 ER, 6 BB, 122 K, 1.52 ERA. That belongs in the MoMA.
So, how does that translate to a bargain? Well, we need to use the concept of marginal wins above replacement. While I’ve spat on WAR in the past, it comes in handy for an exercise like this, because free agency gives us a decent sense of what teams are willing to pay for a win above replacement, as calculated by FanGraphs or Baseball-Reference.com. And that cost, these days, is in the neighborhood of $8 million.
Currently, FanGraphs has Kershaw at 4.6 WAR on the season and Baseball-Reference at 4.1. That means Kershaw has generated somewhere between $33 million-$37 million already for the Dodgers this season. Meaning everything Clayton Kershaw does from this point forth is surplus value. And considering he’s got 20 starts left, that’s a lot of surplus and a lot of value. In the end, it may not quite stack up to the …
Posted: June 13, 2016 at 09:57 AM | 3 comment(s)
Friday, May 27, 2016
Wednesday, May 18, 2016
Ahh, because teams are part of the process. Free agency is collectively bargained and is not some inherent right for players.
My question is this: Why should teams that lose players to free agency receive any sort of compensation whatsoever?
Edit: Link fixed. Sorry, Jim.
Wednesday, April 20, 2016
So, having a better idea on how well a player will perform in the future will make projections of value better?
Ahh, thanks for the insight.
Most of the assumptions tended to have relatively limited effect on the approximate value of the opt-out. The key parameter is the standard deviation of forecasted WAR, which affects that last term reflecting the expected value post-opt-out conditional on not opting out. Further research into how projections change over time as the year in question gets closer could shine more light on that term, but I believe 0.7 WAR for these types of players is probably a pretty good estimate. Individual players’ opt-out values also varied based on initial WAR forecast, time until opt-out.
This shows the importance of the variance around a player’s projection—players’ talent levels are not their mean projections. As contracts get more sophisticated, the concept of players’ talent levels consisting of a variance (in addition to just their mean projection) is essential to pricing. Furthermore, using more proper pricing methods than simple dollars per WAR analysis becomes very important as well. These opt-outs are the latest stage in baseball player contracts, but knowing how to measure variance and price options is likely to be essential for many of these deals.
Posted: April 20, 2016 at 09:33 AM | 0 comment(s)
Wednesday, March 16, 2016
Wednesday, March 02, 2016
for his generous support.
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