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July 2, 2010

Ahead in the Count

Why Baseball Needs a Draft Lottery

by Matt Swartz

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The nation’s capital is filled with hope about brighter futures for their teams, thanks to some exciting No. 1 draft picks who appear primed to buoy Washington's frustrated sports scene.  Last year’s No. 1 overall pick in baseball, Stephen Strasburg, has been setting the league on fire for five starts now, and the Nationals added a second consecutive No. 1 pick in a row in the 2010 draft, as they now must only work out on a contract with power-hitting mega-prospect Bryce Harper.  Baseball is not the only sport where Washington has gotten the first overall pick recently. The NBA’s Wizards were lucky enough to pick Kentucky point guard John Wall last week. Of course, when I refer to them as lucky, there is a reason that I use that word.  The NBA draft uses a weighted lottery drawing to determine who gets the first pick among the 14 teams that did not make the playoffs the previous season. The famous “Olajuwon draft” of 1984 forced the reactive implementation of this system, as teams reportedly intentionally tried to lose games in an attempt to increase their chances of getting in on the glut of superstar players in that year's draft, led by Hakeem Olajuwon.

With two straight terrible seasons, the Nationals are primed to improve their lot after grabbing such talent, and teams are bound to notice.  Unfortunately, what it could make them notice is that the current system creates the incentive to lose games.  I am not saying that the Pirates and Orioles are going to start throwing fastballs down the middle on every pitch to give their opponents a better chance to help mash them to the front of the draft, but it is not hard to see the incentive to avoid calling up their best players.

Everybody has heard the rumors that the Nationals might have just possibly waited until Strasburg would presumably no longer be eligible for salary arbitration in 2013 before they called him up, but what if they were shooting themselves in the foot by bringing him up even for the last four months of the season?  The Nationals may no longer have a bad enough team to get the first pick again in 2011, but every time they win a game, they are moving further and further down in the draft.

Using Sky Andrecheck’s draft pick value calculator, adjusted to find the first six years of WARP instead of career WAR in the same way I did when creating the new MORP, I found some WARP3 values for the first six years of the first round of the draft.  Then I figured the gain in WARP3 from moving between each pair of adjacent picks in the draft (with some minor adjustments for opportunity cost of signing a higher pick).

 

Pick Number

WARP3 added above next pick

Average Record of Team with this pick in 1998-2009

1

3.90

58-104

2

1.73

63-99

3

1.04

64-98

4

0.71

66-96

5

0.52

68-94

6

0.41

69-93

7

0.33

70-92

8

0.27

72-90

9

0.23

73-89

10

0.20

74-88

11

0.17

75-87

12

0.15

77-85

13

0.13

79-83

14

0.12

79-83

15

0.11

81-81

16

0.10

82-80

17

0.09

83-79

18

0.08

84-78

19

0.08

85-77

20

0.07

87-75

21

0.06

88-74

22

0.06

89-73

23

0.06

90-72

24

0.05

91-71

25

0.05

92-70

26

0.05

94-68

27

0.04

96-66

28

0.04

97-65

29

0.04

100-62

30

0.03

103-59

As you can see, there is a lot of incentive to get the first pick.  The first pick adds nearly four wins above the second pick in the draft, while the team who gets that pick loses nearly five games more than the second-worst team in the league.  Of course, the difference of those five games is pretty minimal and the Nationals certainly hope that the four wins that they get out of their top draft picks come primarily when they are on the playoff bubble.

Even for other high first-round selections, the gain of receiving those picks is a little bit less than a win in most cases, while about one current win separates the teams receiving those adjacent picks.  Yet the gain from those draft picks comes later when a team can hope to use them towards a playoff run.  The relative value of wins later is so much higher for a non-competitive team that plans to be competitive later that throwing away three wins now to get two wins later is probably a good move.  This is only added by the fact that if one’s team is not competitive later, they can trade away those players at a premium and get prospects for yet another time when they might be competitive.  In fact, trading away those drafted players later when it turns out development requires more time would even help them get higher draft picks in addition to the prospects returned from the trade itself.  Basically, they have a built-in hedging option.

The Nationals certainly have an extremely talented pitcher on their hands in Strasburg, and he is adding to their win column right away.  Odds are that even a regressed performance from Strasburg adds three wins between now and the end of the season, but the problem is that those three wins are not going to help the Nationals make the playoffs.  The most recent PECOTA version of the Postseason Odds gives them only about a 1-in-1,000 chance to make the playoffs.  However, if the Nationals improve three games in the standings and move themselves three slots down in the draft, they might cost themselves two wins later when they might be competitive.

What if Strasburg were on the Orioles?  Currently the Orioles are just a couple games “ahead of” the Pirates for the worst record in the majors.  If the Orioles had the opportunity to call up a prospect like Strasburg, it would not be in their best interest to do so.  Adding four or five wins from a superstar like Strasburg would decrease their chances of getting that first pick by about 30 percent, and could even move them all the way down to third or fourth in the draft.

Major League Baseball is already going to need to start thinking about changing its approach to arbitration, whereby suspiciously five of Kevin Goldstein’s top nine pre-season prospects were all suddenly to be promoted to the major leagues at once last month. The NBA created its current system retroactively in response to suspicious behavior by teams that already compromised the integrity of individual games.  Now, MLB should be proactive and create a lottery system where losing one game more than another team does not automatically give you a win in the future.  A weighted lottery likes the NBA’s would lower the marginal benefit from losing enough to do the trick.

Only eight baseball teams make the playoffs every year, meaning that most of the league has an incentive to avoid playing their best players at the end of the year.  There are already 13 teams with less than a 3 percent chance of making the playoffs, according the PECOTA version of Postseason Odds.  As teams are getting more and more savvy, MLB should step ahead of the curve and create a system that wouldn't tempt teams to try to lose.

Matt Swartz is an author of Baseball Prospectus. 
Click here to see Matt's other articles. You can contact Matt by clicking here

Related Content:  Draft,  The Who,  Incentive

23 comments have been left for this article. (Click to hide comments)

BP Comment Quick Links

gtgator

Completely faulty premise based on no actual facts and wherein the only actual facts in existence refute that this is even needed.

1) The NBA has a draft lottery. It has NOT stopped teams from trying to tank. As long as there is any weighted system used, there is incentive to tank. Period.

2) Where is the "proof" of MLB teams actually tanking or trying to tank or even hinting at tanking being a good thing? If this solution is designed to solve a problem, where exactly is the problem? Which team can be accused of actually trying to tank to get the #1 pick? Can't focus on payroll - teams can still win even with lowest payroll. Can't focus on playing rookies - most teams do so using the same general guidelines. So, again, exactly where is this tanking issue?

And I understand that the premise included a "might start to tank" based on this #1 draft value information. Yet it has been well established for years the higher value of the #1 overall pick and teams have had SABR analysis for quite a few of them. So, again, teams should have already started doing this if they wanted to try and get #1 overall. They haven't.

3) Lastly, what matters more than getting the #1 overall pick is actually having talent evaluators who make the right call. The Braves have Chipper in lieu of Van Poppel. The Twins have Mauer in lieu of Prior. Only once every few years is it "obvious" who the #1 pick should be the year BEFORE the draft. That two such years have been back-to-back does not mean changes need to be made - especially one so asinine as to enable teams with winning records to have any chance at #1 overall pick - which is what happens when "non-playoff" teams are included in any lottery.

Right now, there is no obvious #1 for 2011. Teams in the top 5 are all likely to get a player they like and with the success rate of top picks as low as it is, there's also no incentive to tank just to try and move up a spot to likely get the same player. Until that has been shown to be an incorrect premise, it ain't broke. And if it ain't broke, no need to try and fix anything (especially when said fix hasn't "fixed" tanking in the NBA).

Jul 02, 2010 07:10 AM
rating: 0
 
BP staff member Matt Swartz
BP staff

So your entire point is that since teams haven't been caught tanking yet (even though we see tons of talent traded away at the deadline every year), there is not a problem, and that since basketball teams still have some incentive to tank, you don't realize how much worse it would be if they had more incentive to tank. And you also seem to think that even though I have an actual table laid out for you showing that on average higher picks do better, you don't believe this is an issue because sometimes lower picks do better than higher picks and that you are unable to figure out the number one pick eleven months from now.

There is less incentive to tank when the payoff to tanking is lower. If that is not evident to you, I don't what I can do to show it to you. If each game you lost now, gained you 0.8 games in the future when you might be competitive, that would be more of an incentive than if there was a lottery an that was lowered to an expected gain of 0.2 games.

You also seem to think that since sabermetrics has already existed for many years in front offices, that means that they won't realize the value of higher draft picks in the future? Teams are learning things all the time. They're getting better at forecasting talent, too. This is about preempting teams from making decisions that appear to be in their best interest.

Also, "you can win with the lowest payroll" is laughable. The correlation is high between winning percentage and payroll, and getting higher. Simply noting some counterexamples of smart teams does not change the fact that winning with a low payroll is hard. Having good talent evaluators helps too of course. That does not change the fact that having a higher draft pick helps in addition to having money and good talent evaluators. It's like you have decided that a few examples of other ways that teams have been successful changes anything about a backwards incentive structure.

And you conclude with "if it ain't broke, don't fix it" when I conclude with being proactive rather than reactive. I like mine better. I've shown the incentive to lose, and now suggested a way to counteract it. That the NBA still has some problems with tanking does not change the fact that the race to the bottom is less valuable than before.

Jul 02, 2010 07:23 AM
 
Shkspr

Hell, your entire point is that even though a draft lottery won't stop tanking, and nobody's tanking anyway, and there's no guarantee that tanking gets you a better player anyhow, we should change the system in case these problems come up in the future, Matt. On that basis, gtgator sounds positively Solomonian.

Jul 02, 2010 08:50 AM
rating: 0
 
BP staff member Matt Swartz
BP staff

No, my point is that the lottery would lower the incentive to tank and that this incentive is starting to become more obvious.

Jul 02, 2010 11:08 AM
 
TheRealNeal

I am still confused by how a system that allows a player worth roughly half a win per year more than the guy behind him going to a team that has lost four more teams than the team behind it is a problem.

Doesn't your data actually indicate that the worst team should get the first two picks in the draft?

Jul 04, 2010 06:23 AM
rating: 0
 
BP staff member Matt Swartz
BP staff

The table has three columns. The first is the pick number, the second is the value added of the pick above the subsequent pick, and the third is the average record of that pick. So the average first pick is worth 3.90 wins more than the second pick, and the worst team wins 5 fewer games (58-104 vs. 63-99) than the second worst team. The average second pick is worth 1.73 wins more than the average third pick, and that team wins 1 more game (63-99 vs. 64-98). The average third pick is worth 1.04 wins more than the average 4th pick and that team wins two games fewer (64-98 vs. 66-96), and so on.

Jul 04, 2010 06:42 AM
 
Drungo

You're always going to have suspicious behavior when you incentivize losing. That's what the draft, or even a draft with a weighted lottery does, it rewards teams for being the worst.

Like the competitive balance tax - it incentivizes teams to have a lower payroll no matter what the results are on the field.

If you want all teams to always try to win all the time you have to incentivize that. European soccer leagues do this with huge cuts in revenue if you finish in the last few places in the league (i.e. relegation). Another method could be to do away with the draft altogether, although that's obviously full its own set of problems.

Or you could change the draft structure. You could devise a scheme where picks go first to the teams with the best record that didn't make the playoffs, down through worst record, then through the playoff teams.

Jul 02, 2010 09:21 AM
rating: 1
 
BP staff member Matt Swartz
BP staff

Right, you still want to lower those incentives. There are a number of ways to do it, but the current system is incentivizing teams to lose a little too much.

Jul 02, 2010 11:11 AM
 
Michael Bodell
(89)

I agree that the right order for the draft is the teams that didn't make the playoffs starting with the team with the best record, not the one with the worst. Then you have teams trying desperately to make the playoffs, and you are very unlikely to have a team tank to get a #1 pick because it means they miss out on the playoffs. And at least currently the playoffs are worth more than a #1 pick.

Jul 02, 2010 17:44 PM
rating: 1
 
BuzzingThalami

"Or you could change the draft structure. You could devise a scheme where picks go first to the teams with the best record that didn't make the playoffs, down through worst record, then through the playoff teams."

Our rotisserie league has done this for years, and it really seems like a good system. It helps keep people trying for the "money spots" (sort of akin to the playoffs), instead of tanking for its own benefits.

I wonder if MLB could change the competitive balance tax to a more straightforward luxury tax based on inherent metropolitan-area market size, and replace this incenting-to-lose draft structure with the one you describe (and our fantasy league has).

Jul 03, 2010 12:34 PM
rating: 0
 
garethbluejays2

What about a playoff between the worst 4 or 8 teams, 3 to 5 game series where you have to win to get the first pick. you might see some of the top talent given some time earlier than at present.

Jul 02, 2010 11:14 AM
rating: 1
 
BP staff member Matt Swartz
BP staff

I love this idea. I wonder if the league would ever implement it. Maybe you could have the same types of rules with playoff rosters where players need to be on your roster on August 31 to play in this series. That would certainly be interesting!

Jul 02, 2010 11:25 AM
 
jake726

I fully understand that an incentive to tank exists. But, there is marginal value in winning extra games too. To do an analysis of whether tanking is something baseball should be worried about, you would have to compare the marginal value of the extra wins that club would be foregoing to the marginal value of the long term wins they are gaining. Merely pointing out the value of a higher pick without addressing the opportunity cost of getting there does not create an argument that tanking is a valid strategy for MLB teams. Strasburg is making money for Washington now. Is that money worth more or less than the future WAR they are sacrificing by playing him? Baseball is ultimately a business, so this should be the fundamental question. Wins still have value to non-playoff teams and an analysis that ignores that value is pretty value-less itself.

Additionally, bad teams trading talent is not about losing games this year to seek a higher draft pick. It is about trading away veteran talent for younger talent. A draft lottery would have zero impact on this phenomenon.

As a final point, the arbitration eligibility argument is specious, at best. Given the organizational nature of talent development in baseball and the fact that to sustain that structure, teams need guaranteed control periods of their developed players, there will always be some sort of cut off date at which top prospects get called up. We could change that date by changing rules, but you cannot eliminate the existence of an optimal calendar time to call up your best prospects. If you remove the financial incentive, that date will just relate to service time requirements as they affect future FA eligibility.

Jul 02, 2010 13:28 PM
rating: 0
 
BP staff member Matt Swartz
BP staff

After playing with some numbers, I realized how arbitrary it would be to be specific. I've made some approximations of the breakdown of the marginal value of a win before (last July's Roy Halladay articles, based on some updates to earlier Nate Silver work), but I just didn't see a way to come up with a precise way to do it. But regardless of the way you do it, the win now is worth less than a large fraction of a win later, which is really what the table above shows-- that it's a larger fraction of a win that you gain for losing a game now. So the marginal value is going to create this incentive regardless of how exactly I break down the numbers. Play with some numbers, and you'll see that just about any realistic numbers you pick show the incentive for certainly the bottom four or five teams to lose, but that picking any ones on my part would have drawn away from the general point.

I'm not talking about the Mariners trading away Cliff Lee for an elite prospect to help themselves. I'm talking about the Orioles trading away Kevin Millwood and Ty Wigginton because they are risking winning too many games by having them on board. It would certainly put a slightly higher price tag on them, because they would be more valuable to the Orioles.

The arbitration argument is easily correctable-- a fixed number of years based on either age or draft year or signing year where you have them under control. If the Nats had Strasburg from the time he signed until eight years after they signed him regardless of when they called him up, they'd have called him up sooner?

Jul 02, 2010 19:32 PM
 
R.A.Wagman

I usually am more prone to agreeing with you, Matt, but I think your last statement here, : "The arbitration argument is easily correctable-- a fixed number of years based on either age or draft year or signing year where you have them under control. If the Nats had Strasburg from the time he signed until eight years after they signed him regardless of when they called him up, they'd have called him up sooner?" is more feasible than the suggestion of adding a draft lottery.

Jul 02, 2010 22:09 PM
rating: 0
 
tfierst

As a Timberwolves fan just shoot me in the head if another sport goes with a draft lottery. Yes I'm still bitter about getting Christian Laettner in the Shaq/Alonzo draft and never once moving up despite being in 13 lotteries. No thanks.

Jul 02, 2010 15:53 PM
rating: 1
 
R.A.Wagman

A draft lottery in the NHL isn't doing much, if anything, to prevent so-called "tanking". I'm not buying here either.

Jul 02, 2010 15:54 PM
rating: 0
 
KevinS
(961)

I have seen no evidence of teams tanking for the 1st pick.

This isn't the NBA, where you can potentially draft 20% of your starting lineup for the next 10 years.

Of all the potential issues that need addressing in MLB, the draft order is not one of them, imo.

Jul 04, 2010 16:25 PM
rating: -1
 
hyprvypr

Baseball can follow the example of the other 'big sports' in a lot of ways. 'More Instant Replay'. Salary Caps(The Yankees ransom of the best players is ridiculous and bad for the sport), the lottery-draft, 'pooled TV and radio packages with equal income to all teams', etc.

Baseball's great but has a lot to improve and by in large has stood pat while the other sports have stolen allegiences because of Baseball's faults.

Jul 04, 2010 18:05 PM
rating: -3
 
TangoTiger

Matt, just to make sure I understand: the difference between pick 1 and pick 30 is 10.92 wins over 6 seasons?

I agree that there is incentive to tank (Mario Lemieux v Kirk Muller), and in some sports, there is a huge gap in how much more value the #1 player has over #2 or #4. But, as your numbers are showing, this is not the case in MLB. It's alot more subtle. Given that, the kind of tanking-type efforts MLB teams engage in are also subtle enough in return. No MLB team will get into a big tanking, because there will hardly exist situations where tanking is going to give them the returns.

In any case, I agree on changing the draft just on principle, because of the unAmerican principle of it. If subtle incentives to tank is one reason, then I'm happy to add that to the arsenal.

Jul 04, 2010 22:23 PM
rating: 0
 
BP staff member Matt Swartz
BP staff

Yes, it's 13.18 wins out of the top pick and 2.32 out of the 30th pick using Sky's formula with the proper adjustments (rWAR to WARP, fraction of WARP out of first six seasons).

I do think that it's subtle but I have to think that if there was a clear cut #1 pick again, the Orioles would be thinking long and hard about calling up a superstar prospect that might make up the difference between themselves and the Pirates, and I could really see the incentive for the Pirates to trade some veterans like Octavio Dotel just to do it. Once something like that happens, it's more dangerous. I'm not saying they are tanking yet, but when the incentive is clearly there, I don't see why the league should wait. Teams eventually do pick up on a lot of things like this, especially when there is a precedent in another sport or two.

Jul 05, 2010 06:43 AM
 
TheRealNeal

You have I think identified the risk - I think it's probably blown out of proportion by the early sucess that Strasberg has had, but you have forgot a huge part of why teams trade veterans.

They don't just trade veterans to shed salary, or in your theory here to draft 17 year olds. They also trade veterans to open up playing spots for their prospects, to try to get a feel for what they are going to do next year.

If they were to put the lottery in, I don't really see it affecting anything. There are 5 good reasons to trade these players, and then way down there at the bottom of the list is that it may improve your draft position - except that the Pirates and the Orioles and the Cubs and the Nationals are all going to be dumping some salary, so it will basically even out anyway.

I have a hard time imagining that the good Orioles fans would rather watch Wiggington bat in some meaningless August game than Bell.

Jul 05, 2010 15:44 PM
rating: 0
 
BP staff member Matt Swartz
BP staff

It can have an effect for teams on the margin, unsure whether they want to trade veterans. There are a bunch of veterans practically guaranteed to be traded at the deadline every year, a million veterans who won't ever be traded at the deadline, and then a few guys on the margin. I think it can have an effect on the margin because the incentive is there, as I have mathematically highlighted above.

Jul 05, 2010 18:40 PM
 
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