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November 17, 2010

Prospectus Q&A

J.C. Bradbury, Part II

by David Laurila

In Part II, baseball economist J.C. Bradbury, the author of Hot Stove Economics: Understanding Baseball’s Second Season, talks about the economic value of managers, the free-agent value of Carl Crawford and Jayson Werth, the Tampa Bay situation, and other topics. You may view Part I of the interview here.

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David Laurila:
What is the economic value of managers?

J.C. Bradbury: I didn’t value managers in my new book, but in retrospect I probably should have. “What are managers worth?” is something I’ve been interested in for a long time and I’m just now finishing up a study on managers that I’ve been sitting on for about three years. What I’m finding is that managers don’t really seem to matter a lot to the success of teams.

When I first started doing my Leo Mazzone study, people would say, “Hey, you should hire him and make all of your pitchers better; he’s a lot cheaper than what you’d have to pay to get a player.” But that’s generally not the case, even though I identified cases where some managers are better. A team might say, “If we can’t replace a player, maybe it makes sense to go out and get a good manager; Cincinnati went out and got Dusty Baker, so we should go out and get Dusty Baker.” But the thing is, Cincinnati’s success probably had a lot more to do with Joey Votto and the other players they‘ve acquired.

DL: That said, if a team like Pittsburgh were to hire a Joe Torre, would they not increase fan interest and, as a result, sell more tickets?

JCB: I think that can help, and I have looked at fan responses to manager hiring. One of the things I found was that when teams hire a new manager—and this is in the middle of the season, so we can hold the talent as being pretty constant—it increases attendance by about 1,000 per game. So if the Pirates wanted to signal to their fans that they want to try to get better, and they said, “Let’s pay Torre $3 million a year; that gets us 1,000 more fans per game so we can sell more tickets and more concessions,” it might be worth it even if it doesn’t make the team any better.

On the flip side, you can also ask, “Is that money better spent in player development or going out to get a player who can help us win?” One of the things we know is that winning matters, so I would err on the side of trying to get better players, but there certainly is an aspect where you can excite the fan base with a manager, especially a big-name manager. I think that’s one of the reasons we see so many of these retread managers who are constantly getting fired and then rehired. They have a reputation, so fans know the name and go, “Oh, we must be trying to win, because we spent a lot of money to hire this guy.”   

DL: A lot of money gets spent every year on Type-A free agents. Are there teams that should essentially never sign them?

JCB: If you’re a winning team, I always say, “Go for it,” because what might happen is what just happened in San Francisco. If you think that you can get there—get to the World Series—go ahead and do that. But certainly, teams that are average and below average can’t expect to sign themselves out of the doldrums of losing. What you’re going to do is end up spending that money, and if you make a mistake—if you end up with a bad contract—it is going to be hard to get out of it. That’s especially true if you’re a poor club. If you sign a Type-A free agent and give up draft picks, not only are you spending money on someone who may not be as valuable as if he were on a winner, you also don’t have those draft picks to fall back on.

DL: Jayson Werth is a Type-A free agent. How do you view his value?

JCB: Jayson Werth is a great example of how unique individual players are. He sort of puttered around for much of his early career before finally having his best year at the age of 31, in his walk year. So age-wise he’s sort of on the downside of his career—he’s at his peak—so if he wants to sign a seven-year deal, he’s getting into an area where injuries are going to start creeping in and his performance is going to decline. He’s not a 27-year-old coming into free agency.

In terms of what he is going to get, he’s obviously been playing very well since he got to Philadelphia, so I think that his situation is actually pretty close to Cliff Lee’s. Each is somewhat of an older guy who as a prospect looked like maybe he wasn’t going to pan out, so did Werth have a blip year or is he going to continue to play well? To me, Werth has demonstrated that he’s a pretty good player, and he’s probably going to get somewhere between $15 million and $20 million a year from some team. He may or may not end up living up to his contract. Who knows, but given his age and his past performance—he’s a good player—it’s worth the risk that some team is going to take with him.

DL: What about Carl Crawford?

JCB: Carl Crawford is more of your younger model. He’s a few years younger than Werth, so he may be able to sign a longer-term deal that works better long-term. As he plays through his peak years, in his late 20s and early 30s, his performance probably isn’t going to diminish all that much. I think that he’s going to be a little more valuable than Werth.

Crawford also has more cache in that he has always been thought of as a very good player, while Werth hasn’t always been seen that way. People are always going to have that doubt in the back of their minds about Werth, particularly when compared to Crawford.

DL: What about the team Crawford has been with, the Tampa Bay Rays? The franchise is seemingly at a crossroads.

JCB: With the Rays, a lot of people were upset at the end of the season with David Price and Evan Longoria having ripped the fans. “How dare these millionaires.” But I think that a lot of people missed what they were saying. [Stuart] Sternberg went in and spent some money to get some good players, and no one came anyway. Their television ratings went up, so they did have some people watching, but if you put a winner on the field and can’t get fans to come to the ballpark, there are some issues.

In estimating average-revenue function—and it doesn’t always have to hold for individual markets—the question has to be asked: “Why are you going to keep the team there?” I think the players were saying, “Look, we have a good team, and if you guys aren’t going to come out and see a winner, we’re not going to be here long.” They’ve had a good team for three years and there hasn’t been that much of a buzz, so I don‘t know how it‘s going to turn out.

As a comparison, look at Atlanta. I grew up as a Braves fan and they were awful my entire childhood. Then 1991 came around and Braves fans were consistently going to games; they didn’t turn it around and have crowds that looked like Marlins or Rays crowds. They turned it around and had a much more vibrant atmosphere. Tampa Bay just doesn’t seem to have been able to translate that, and part of it might be their awful stadium.

DL: Can you elaborate a little on your Rays-Braves comparison?

JCB: The comparison of the early-1990s Braves to the present-day Rays is that they were historically bad teams that became good. MLB was concerned that low attendance in Atlanta might force a move, but when the team started winning, Braves fans came out to the park. In Tampa, we haven't seen a similar response. Attendance has been up from what it was, but there is still concern that the Rays cannot survive in Tampa Bay, especially in their current stadium. However, the Rays Regional Sports Network telecasts had the fifth-highest ratings among MLB teams, so maybe not all is lost in Tampa Bay.

DL:
The Minnesota Twins are regarded as one of the best franchises in the game. Why?

JCB: The Twins win without spending a lot of money. While their success on a budget hasn't gotten the notoriety that Oakland's did, it has been nearly as remarkable. Three years ago, the Twins traded away one of the best pitchers in the game, Johan Santana, to the big-spending New York Mets. Since that time the Twins have been to the playoffs twice, and the Mets haven't made it even once. I don't know the specifics of what the Twins do, but they know how to scout players and find bargains. If you can identify good players early, then you can exploit the collective bargaining rules to hire good players while they are young and cheap rather than wait for them at full price on the free-agent market.

DL:
With hindsight being 20/20, what if the Giants had just missed making the playoffs because they didn’t call up Buster Posey earlier due to arbitration-eligibility concerns?

JCB: That would have been a huge story. A lot of fans in Atlanta said the same thing about Jason Heyward, that they were idiots and should have waited, just like the Giants did with Buster Posey. Well, the Braves would have missed the playoffs if they hadn’t brought up Jason Heyward. He was the most valuable player on that team; he was worth almost $15 million.

But you don’t know how these things are going to turn out, and if you look at the Giants at the beginning of the year, I don’t know that they necessarily thought they were going to be a playoff contender. I’m sure they ended up kicking themselves a little bit along the way, but hey, it ended up working out.

DL:
A criticism of the Cardinals—a team that fell short of expectations—is that they are a team with stars but insufficient supporting players. How do you view the economics of their roster?

JCB: I hate to pigeon-hole what any team is doing, but one of the reasons the Cardinals have stars is that they’ve made some good moves to get stars. And some of them have come cheaply. Albert Pujols is one of the few players I’ve found who is past his free-agent prime and is still a bargain; he’s that valuable. Chris Carpenter is a guy they got cheaply. There’s Adam Wainwright.

It’s easy to say, “Why can’t you go out and get role players?,” but I look at it this way: What you want is good players, and in terms of St. Louis, if a few of those guys don’t get injured and have good years, I don’t think they’re in a bad situation at all. What you don’t want is a situation where you’re losing a lot of games and paying big contracts.

DL: What is the value of most replacement-level players?

JCB: I'm not sure of what a replacement player is or where that designation begins outside of theory. If there is one idea that I could banish from sabermetrics it would be the concept of replacement level. Baseball players have rare skills that are scarce. These skills, even among the worst players in the league, are valuable and worth far more than the league-minimum salary.

Because teams own the rights to non-major-league players deep into their minor-league systems, it's not easy for teams to go out and pick up players from other clubs' minor-league rosters. No GM ever says, "Oh, we're not using this guy, and you guys really need him; please, take him from us." That conversation never happens. The worth of the bottom of baseball's talent pool fluctuates with the supply and demand of the labor market. A glut of available talent—even inferior talent—may hold down wages among baseball's marginal players—something economist Simon Rottenberg noted in his seminal 1956 paper "The Baseball Players' Labor Market"—but there is no constant and unchanging dollar value that we can put on these players. The worth of the final player on a team is going to differ by the circumstances of the hiring teams and players available.

DL:
To close, do you think that much of your work mirrors what organizations are doing in-house?

JCB: I think that in some ways it is backwards engineering in terms of what they’re doing. I think that organizations do a lot of different things, but when I go and test my model in terms of how well it is predicting, it’s predicting decently well given how players tend to vary from year to year. That is something that can be hard to predict, because a good player might have a bad year in a given season. Baseball players are highly variable compared to a sport like basketball, where the players tend to have similar points scored and rebounds year to year. Baseball players are more variable, and part of that is just the nature of the game.

When I compare average to average—which isn’t perfect because some players are on winning teams, so their value is a little different—the variation in salaries is pretty similar to the variation in performance from year to year. It does a decent job.

Do I think that teams do exactly what I do? No, I don’t and that’s because every individual team has its own individual revenue functions, which they’re not going to share with me. So part of my exercise is to say, ”You won’t share your numbers with me; how can I figure out what this is?”

But let’s say you are able to figure out a particular revenue function. The Yankees are in their war room, and they’re going to put a dollar value to what Cliff Lee is worth to them. It’s probably through a situation analysis of: “What does winning mean to us in terms of revenue and what is Cliff Lee going to mean to us?” At the end of the day he may mean more to Texas than he does to the Yankees, and that’s how they go about making these calculations. They may look at other things like, “What is his star value?” and “What is his reputation value?” and other factors, but I think it’s pretty similar to what I’m doing.

1 comment has been left for this article.

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