Sunday, October 7, 2012

Current Salary Efficiency in the MLB

In recent years, WAR (Wins Above Replacement, read more HERE) has become one of the most discussed statistics in player evaluation. With the release of Moneyball last November and another amazing success story of the Oakland A’s (and the lowest payroll in the MLB, $49 Million) winning the AL West on the final day of the season statistical analysis could not be more in vogue.

In order to earn a playoff berth this year, the A’s had to beat the Los Angeles Angels of Anaheim. At the conclusion of the 2011 season, Albert Pujols was easily a top-5 player and the main contributor to the team that just had won the World Series. Deservedly so with this status, he signed a mega contract that will pay him $240 Million dollars over 10 years. The Angels, as can any team that spends a substantial amount of money on one player can argue that by adding a star caliber talent, it will ultimately make the whole team better and provide an opportunity to win a World Series. The question raised is how much is that argument worth? In a time where people and professional sports teams alike are looking for creative ways to save money, perhaps a new way to plan for success in baseball is to answer that question better and buy free agent players accordingly.

Taking two statistics, annual salary and WAR, we can easily determine a value that a player earns for their team by comparing it to the league average. In 2012, Albert Pujols earned $12 Million and his WAR was 4.6 (career low). Teammate Mike Trout, who as a rookie MVP candidate, posted a 10.7 WAR while earning the MLB minimum salary of $480,000 is on the opposite end of the spectrum as truly being the most valuable player (not the award, but rather the cheapest player). Under this logic, Trout 58 times more valuable to the Angels than Pujols. Think about this with your company’s sales team. If there are two sales people that are equally as talented and successful with earning revenue, yet the salary for person one is 24 times higher than person two. Whatever manager allowed for that to happen would be fired and this happens in baseball everywhere and gets amplified by front-loaded contracts. In 2021 when Albert Pujols is 40 years old and in the final year of his contract, he is set to earn $30 Million dollars.

Taking another player that sets precedence to Pujols is Alex Rodriguez. Rodriguez is in the decline of what has been a remarkable career. When he signed his contract with the New York Yankees prior to the 2003 season, General Manager's had to answer the same question that they did with Pujols last offseason. Remarkable talent that if acquired would make the whole team better, but probably not for the duration of the contract. Playoff appearances have continued to mount for the Yankees since including another World Series win in 2009. However, what the Yankees currently face is exactly the problem for paying prime players big dollars over long term contracts. As their decline steepens, their value to the franchise becomes negative and can cripple a team for those years from lack of payroll flexibility. Rodriguez made $29 Million in 2012 and had a WAR of 2.0 – this makes Trout worth 323 times Rodriguez.

Under this theory, a team that limits the number of players on their roster with negative contributions to payroll will experience the greatest amount of flexibility and have the best opportunity to improve their team in an offseason by making the right additions (again, at the right price). If all key decision makers across the sport were to agree, it would mean for a decided end to mega contracts. Unfortunately, in an environment where payroll inequity exists, this explanation offers further rationalization as to why some teams are unable to sign Albert Pujols. All teams should be aware of the risk and reward.

The innovative way of solving this issue would be to treat players like a sales team by incentivizing them with substantial incentives for good play – for instance $200,000 per home run; $10,000 per hit; $20,000 per stolen base; 20,000 per RBI. This could create a true reward system based on performance because Mike Trout is the one that deserved $30 Million this season, not Alex Rodriguez. Unfortunately, the MLB Players Association would never allow because it takes away from the guaranteed high salaries to players like Pujols and Rodriguez. What can be done is teams that are committed to payroll efficiency should take a closer look at WAR versus salary and stay away from albatross contracts.

Sunday, May 6, 2012

Baseball Roadtrip: Denver, Colorado

It has been a while since my last blog entry, since the last time I wrote, I have crossed off many new baseball stadiums and am down to the last few to see before making trips back to see repeat teams with new stadiums. What got me thinking about writing again was this weekend's trip to Denver, Colorado. This experience was so incredible that it needed to be written about. Over the course of three days, I saw Coors Field, crossed off a new state to visit (Wyoming), visited three of over one hundred local breweries and spent a day in one of the most amazing and unique tourism spots that I have ever seen - Rocky Mountain National Park. While planning various trips to MLB stadiums across the country, Denver was never high on my list. Turns out, Denver may end up near the top because of the other activities that I was able to experience while in the area.

Amazingly, I learned that Coors Field, built in 1995, is the third oldest stadium  of all National League teams. Only the Chicago Cubs and Los Angeles Dodgers play in older stadiums. Fitting in with the retro fit parks that Baltimore pioneered with Camden Yards, this was a very intimate stadium, despite it's huge capacity. My favorite thing about a ballpark is an open concourse so that if you need to get up, you can still feel part of the game. The lower level of seating had this and I was able to do a lap around the stadium without missing much. From a service perspective, there wasn't much unusual offered for food that made Coors Field stand out, however as you might expect, they did offer many different beers that I had never seen before, including two that were brewed inside the stadium. Colorado, known for their micro breweries, was well represented inside the stadium. Not often would I notice customer service, but the Rockies overwhelmed me with their vendors. When I got up to purchase a beer, I was impressed with the service by JoAnne in section 135. When I returned, she remembered my name and when I complimented her for being extremely good at her job, she came outside of her booth to give me a hug to thank me. This was definitely a unique person, but all vendors I interacted with were smiling and making me feel special.

Something else that really stands out about Coors Field that made it unique is the firs growing in centerfield. Fans are not able to get close to the trees or the fountains that erupt after a home run hit by a Rockies player, but they add to the natural feel that the entire state gives.

Fans at Coors Field were very cordial to me, even though I was wearing an out of town jersey. I grew up expecting the opposite in Boston or New York, so this was worth mentioning. The fans were very much into the game and made a good bit of noise. The stadium is open in left-field, so sound does escape. It is not as loud as Rangers Ballpark in Arlington or Fenway Park, but it does have loud engaged fans. After the game was over, the Lower Downtown area is alive. Unlike most stadiums I have visited, the bar and nightlife scene is within one block of the stadium. It was a simple walk across to the street to be able to enjoy another micro brew alongside hundreds of other Rockies fans. Cab rides back to the hotel were cheap and beat having to pay as much as $30 to park.

Overall, this stadium deserved more credit from me. I underestimated the city and the entire state of Colorado, it is an incredible place and not all that expensive to pull off a weekend trip. If I learned anything from this trip, it would be to take advantage of Rocky Mountain National Park! Located about 2 hours away from downtown Denver, this was the highlight of the trip even though it was only for about 90 minutes. There, I saw the top of the Rocky Mountains, took photos of the snow capped peaks, and was able to do some brief  hiking. With more time, there would have been so much more to experience. The views of the mountains are lifetime memories and very much different from the Appalachian Mountains and their rolling hills. The sound was even different. For a few minutes of silence after some of the other tourists disappeared, a sound almost like ocean waves crashing into the sand became apparent. This was the wind whipping across the peaks and into the valley's and back up again. On the way out of the park, the best panoramic view becomes apparent and then it is back towards civilization with the majority of the mountains on the way back to Denver not as impressive as what was just witnessed, albeit hard to live up to. Other places I saw were Fort Collins and Cheyenne, WY. Fort Collins is the home to Colorado State University and is a great little college town. New Belgium Brewery is located about 10 minutes away from the campus and has an awesome tasting room. The place was packed at 1:30 in the afternoon and the Home Plate Stout was fantastic. They have coaster postcards that they will mail for you, which I participated in. Cheyenne, WY served its purpose of being another state checked off my list. There is not much to the state capital of Wyoming, but the people there too seemed to share the same sense of pride in their teams. The two places I stopped saw people wearing Rockies and Broncos gear and posters in the door with the local High School football team's schedule or the schedule for nearby University of Wyoming.

Definitely do not sell Colorado short. Plan on having many other activities available on a trip besides baseball. The stadium gets an 8/10; the trip gets a 9/10.

Next up: Oakland (5/12) and St. Louis (6/10)