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Wednesday, April 20, 2016

How to Value Opt-Outs – The Hardball Times

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.

Jim Furtado Posted: April 20, 2016 at 09:33 AM | 0 comment(s)
  Beats: economics, opt-outs

Wednesday, March 16, 2016

The Teams With the Most Dead Money in MLB | FanGraphs Baseball

Money is dead.

Jim Furtado Posted: March 16, 2016 at 08:38 AM | 0 comment(s)
  Beats: economics

Wednesday, March 02, 2016


Monday, February 15, 2016

Not every baseball team that’s rebuilding should be accused of tanking | FOX Sports

Two changes could help this issue: 1) allow teams to trade picks (and decide how much of the pool money to include), and 2) equalize the amount of money given to the team with the highest draft pool with everybody else by increasing the luxury tax threshold for the other teams to match the difference.

The union historically has opposed the concept of a payroll “floor,” believing teams should be free to go up or down. The problem now is that the weighted bonus pools in the current CBA created an even greater motivation for teams to seek the highest draft position.

Jim Furtado Posted: February 15, 2016 at 07:06 AM | 24 comment(s)
  Beats: cba, economics

Thursday, February 04, 2016

Scott Boras, other baseball minds propose anti-tanking measures - Buster Olney Blog- ($Insider$)

How do these changes actually help bad teams return to contention?

In no particular order, here are some of the suggestions mentioned by evaluators and agents:

1. Prevent teams from picking at or near the top of the draft in successive seasons:
(snip)

2. Reduce the difference in draft dollars attached to the highest picks under the current system:
(snip)

3. Have a draft lottery:
(snip)

4. The E system: Agent Scott Boras presented a multifaceted idea that would allow the worst teams to extract proper value from their picks in the years in which elite talents (like Stephen Strasburg and Bryce Harper) are available in the draft, but also would push the worst teams to compete to the best of their ability.
Call it the E system. As in “Elite.”

Boras spoke with admiration about how the science of scouting has developed, how much more precise the evaluators and their evaluations have become, and his suggestion places a lot of power in the hands of scouts.

Some years, no special talents like a Ken Griffey Jr. or a Joe Mauer or a Harper emerge in the draft. But when they do, those players can be undervalued under the current system. If Harper had been available in last year’s draft, by rule he could not have gotten more than what the Diamondbacks had available in draft dollars, without substantial penalty to the team.

So Boras proposes a special E draft. Ask teams to submit a list of possible E talents, players they deem to be worth more than the dollars allotted to the top slot in the draft. Any player listed by 15 or more teams as being one of those elite talents would become eligible for a special E draft. “You let the industry decide who those players are in a given year,” Boras said.

Griffey, Harper and Strasburg certainly would’ve been in that category. Some years, there might be four or five, Boras explained, some years there might be only one or two. For as many players who are selected for the E draft, there would be a matching number of teams eligible to participate, according to which clubs finished at the bottom of the standings.

Here’s the catch: Under Boras’ proposed system, in order for a team to participate in the special E draft, it would have to win at least 68 games, a threshold that, according to Boras, distinguishes teams that are simply bad from those that are tanking and trying to lose. This would provide incentive to bad teams to do as much as possible to win down the stretch, and eliminate a lot of the incentive for teams to tank seasons.

For example, let’s say there were four players deemed worthy of the special E draft in 2016. The four teams participating could bid openly on those four players, with the option of trading their picks, selling their picks, etc., to ensure they would receive proper value. Each of the teams participating in the E draft would be assured of one player, either to sign or trade or sell.

The system also would ensure that the very best players eligible for the amateur draft would be paid like the players from Cuba and other countries are paid, with offers that reflected their actual value to clubs. Boras believes that this would help attract the best athletes in the U.S. and Canada who might otherwise play other sports.

After the players were selected in the E draft, the remaining players would be eligible for the standard draft process, with the worst teams picking first.

Jim Furtado Posted: February 04, 2016 at 10:07 AM | 71 comment(s)
  Beats: economics, scott boras

MLB’s qualifying-offer system is stacked against low-revenue clubs | FOX Sports

Sorry, I don’t even know where to start on this article. I really like Ken Rosenthal and generally enjoy his stuff but this piece is a mess.

Jim Furtado Posted: February 04, 2016 at 08:03 AM | 10 comment(s)
  Beats: draft, economics, qualifying offers

Tuesday, February 02, 2016

Owners are worried about tanking. Which is something they themselves created. – HardballTalk

Tanking as an issue is much ado about nothing. Teams already pay a price for tanking. Attendance and ratings drop.

Now, however, there is a lockstep relationship between losing and the draft. If you’re not going to make the playoffs, it’s clearly better to lose 105 games than 95. at a certain point it’s in a club’s best interest to simply wave the white flag and position itself for three years from now. Unless and until that relationship is reduced in strength, that incentive will persist.

If, as Olney says, owners are angry about taking, which one of them is going to propose that they chuck draft slotting and bonus pools first? And if mid-range veteran free agents are going to be miffed that they’re still unsigned in February — or if they’re going to be upset with how an allegedly tanking team goes about its business — which union representatives are going to go back to what Michael Weiner thought about the topic back in 2009 and go back to the business of opposing salary caps in all forms?

Gentlemen: start your negotiating.

As Buster Olney noted in his column , “Some of the concerned teams link the question of tanking to the ongoing conversation about revenue-sharing, according to sources. Owners of large-market teams believe small-market teams should allocate funds provided to them to improving their on-field product. Instead, in some cases, those dollars have been used for debt and for partner and executive payments. Some small-market owners believe they should be able to use the revenue-sharing funds as they see fit.

The possibility that some teams which get revenue-sharing dollars might be taking the money and still structuring their rosters to lose rather than spending it to improve has inflamed the ire of some big-market clubs.”

So, the issue isn’t really about tanking or the draft, it’s about money big market teams give to small market teams.

Jim Furtado Posted: February 02, 2016 at 09:58 AM | 42 comment(s)
  Beats: draft, draft pick compensation, economics

Monday, January 25, 2016

Milwaukee - Baseball Prospectus

And it happens over and over and over again.

If the billionaire Pohlads had been willing to take a short-term loss, they could have made their way out of the Metronome years earlier without taking the public for such a ride. Instead, Pohlad and Selig played games with the public to service their own greed. The threats of contracting the Twins were never about Minneapolis’s “growth potential” or any of Selig’s typical economic concerns. Those threats were about bullying the people of Minneapolis and creating a culture of fear outside of the untouchable cities like New York, Los Angeles and Chicago. And in that sense, even though the contraction plan never went through, the gambit worked perfectly.

Jim Furtado Posted: January 25, 2016 at 03:29 PM | 20 comment(s)
  Beats: economics, twins

Thursday, January 14, 2016

Toronto Blue Jays would prefer to keep spring training in Dunedin but require new ‘state-of-the-art’ facility, team president says

Talks have dragged on for years in a bid to improve and expand the facilities, but to date have been fruitless.

“The plan would be this: to articulate what our needs are (and) to do everything humanly possible to work a deal out with Dunedin, because I think that’s still in our best interests,” Shapiro said. “I think if you look geographically in the state of Florida, that’s still the best place to be.”

Shapiro said he and Matthew Shuber, the Jays’ vice-president of business affairs and in-house legal counsel, have met with Dunedin officials in Florida. Meanwhile, the Jays are preparing a detailed outline of their requirements.

Presumably, Dunedin taxpayers would be expected to cover part of the costs, although Shapiro did not address that issue in his radio interview.

RoyalsRetro (AG#1F) Posted: January 14, 2016 at 12:01 PM | 34 comment(s)
  Beats: blue jays, dunedin, economics, spring training, subsidies, taxpayers

Tuesday, January 12, 2016

Lawyer: More than 1,100 current and former minor-leaguers have signed onto lawsuit - Sports - providencejournal.com - Providence, RI

I can’t see how these players will win this suit. Would any of our lawyers like to comment?

Jim Furtado Posted: January 12, 2016 at 09:07 AM | 36 comment(s)
  Beats: economics, minors

Friday, December 18, 2015

Could the luxury tax divide MLB owners in labor talks? - LA Times

Maybe Moreno shouldn’t talk to the press.

With players concerned that large-market teams can use the CBT as a self-imposed salary cap, and with baseball’s revenues approaching a record $10 billion per year, the threshold would figure to rise in the new labor deal that would take effect in 2017.

“There’s a possibility it could go down,” Moreno said.

Jim Furtado Posted: December 18, 2015 at 06:46 AM | 0 comment(s)
  Beats: cba, economics, luxury tax

Monday, December 07, 2015

Astros’ payroll doesn’t measure up to market size - Houston Chronicle

The fact MLB ranks Houston as the league’s 15th market is no small matter. That slotting has actually hurt them.

It’s not a well-publicized segment of the collective bargaining agreement, but half of the 30 major league teams will not receive revenue-sharing money in 2016.

A provision referred to as “market rank disqualification” was put in place in the most recent labor deal, which began with the 2012 season. All clubs in the top 15 markets - and only those clubs - have slowly seen their revenue-sharing intake disappear.

Twenty-five percent of the cut disappeared in 2013, then 50 percent in 2014 and 75 percent in 2015. This upcoming season, it’s all gone.

“It affects our economics,” Astros general manager Jeff Luhnow said at the GM meetings earlier this offseason. “There’s certain teams that are getting a benefit, and there’s certain teams that don’t, and we’re not receiving a benefit.”

Revenue sharing is pooled from two primary streams, one of which is a 34 percent share of every team’s local revenue.

The logic behind market rank disqualification is twofold. First, there’s a belief transferred money should go to clubs that need it, meaning those in markets insufficiently sized to generate enough revenue otherwise. Second, it follows that clubs in larger markets should be able to stand on their own.

Still, no team is ever going to enjoy losing money - particularly not one standing at the cutoff point. Had they been No. 16 - that’s the Seattle Mariners - the Astros would have retained a full 100 percent of revenue sharing throughout this CBA.

But the Astros are No. 15. One notch on the list has ostensibly meant millions. That hurts.

“Yes it does,” Luhnow said. “Because it’s a cliff. Any time you’re at a cliff and you’re on the wrong side of the cliff - you just missed - it hurts you more than it hurts a team that’s all the way at the very bottom or all the way at the very top.”

The money forfeited by teams in the top 15 markets goes back proportionally to clubs paying into the revenue-sharing system.

Jim Furtado Posted: December 07, 2015 at 11:02 AM | 17 comment(s)
  Beats: astros, cba, economics

Monday, November 16, 2015

Braves CEO: “Baseball is not a widely profitable business” | HardballTalk

Franchise values wouldn’t be going up so much if teams weren’t profitable.

Jim Furtado Posted: November 16, 2015 at 11:17 AM | 65 comment(s)
  Beats: braves, economics

Monday, November 09, 2015

Why This Free Agent Class May Hit the Jackpot | FanGraphs Baseball

Dave Cameron explains why free agents are going to get paid overpaid this off-season.

Jim Furtado Posted: November 09, 2015 at 09:47 AM | 4 comment(s)
  Beats: economics, free agents

Sunday, November 08, 2015

Minoring in Business: Towson University economist Thomas Rhoads writes the book on Minor League club proximity | MiLB.com News | The Official Site of Minor League Baseball

Looking for some light reading?

In both content and price ($99.99 for the hardcover version), The Call Up to the Majors is not geared to the casual reader. But Minor League fans and executives might find Rhoads’ arguments and methodology interesting (or at the very least, worthy of debate). I had the opportunity to interview Rhoads during the 2015 season while attending a game at the Class A Advanced Potomac Nationals home of Pfitzner Stadium. What follows are excerpts from our conversation.

Jim Furtado Posted: November 08, 2015 at 07:46 AM | 25 comment(s)
  Beats: books, economics

 

 

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