Net Win Shares Valueby Dave Studeman
October 13, 2004
Note: this article was updated on October 14th, in response to some excellent feedback I received from a Baseball Primer thread.
Now that the regular season is over, I'd like to return to something we discuss a lot during the offseason: multi-million dollar player contracts. Back in March, I used Win Shares to look at the economics of player contracts and, specifically, Eric Chavez's contract. Here's a recap:
- Wins are directly related to team revenue, so Win Shares are a highly appropriate stat to use in contract evaluation.
- Building on the late Doug Pappas' fine work, we approached Win Shares and salaries from a replacement basis. The key to salary analysis is to start at the minimum MLB salary ($300,000) and the performance level of a good bench or AAA player ("Replacement level").
- Clearly, a club will obtain the most value from good players who are not yet eligible for arbitration. But a more sophisticated analysis will examine the value of a player's contract based on the "market" in which the contract was negotiated: Non-Arbitration (NA), Arbitration-eligible (A) and Free Agent (FA).
That's the recap. If none of this rings a bell for you, I'd highly suggest you read the article before going on, because I'm basically going to pick up where I left off last time. Specifically, I'm going to do the same thing with 2004 contracts and Win Shares.
So first, I defined Win Shares Above Replacement (WSAR) as Win Shares minus 75% of Expected Win Shares. Last March, I used 50%. After reviewing many of the excellent analyses that have been written about replacement level and checking Win Shares against their methodologies, I think 75% is much closer to the correct level. Admittedly, I've got more work to do on the replacement level thing.
Next, I downloaded 2004 player salaries from Doug Pappas's site. Doug had maintained salary data for the past twenty years on his site, and it is still there for all to use. Thanks to whoever is keeping Doug's superb work alive (SABR?).
Finally, I classified all players into the three "market" buckets: A, NA and FA. This wasn't easy, and I'm pretty sure I didn't get every single player right. But my guesses are probably 99% correct, and the mistakes shouldn't be material.
The end result is this table:
|Status||Total WSAR||Total Sal>Minimum||Salary per WSAR|
|Not Arbitration Eligible||325||$12,559,483||$38,678|
Just like in March, a WSAR has a different cost in each market. Free Agent WSARs still cost about twice as much as each WSAR from an arbitration-eligible player, and WSARs from non-arbitration players are the least expensive by far. The main difference from last year's data is that the cost of a WSAR is much higher, due to the higher threshold being used to determine WSAR (75% vs. 50%).
So at least I'm consistent. Really, I think the analysis is solid enough to ask the next key question: which players represented the best values in 2004?
First of all, any player with a positive WSAR who is not yet eligible for arbitration is a good deal for a team. For instance, TTO Hero Adam Dunn contributed 17.5 WSAR and was only paid $400,000. Across all markets, a single WSAR cost $844 thousand each, which means Dunn's 17.5 WSAR's would cost about $14,765,000 on average. The Reds got a good deal from Mr. Dunn.
But to field a competitive team, you've got to sign arbitration-eligible players, and even free agents. After all, non-arbitration players only contributed 325 WSAR's last year. So let's evaluate each player's contract with a metric that is based on the "market" context of the negotiated contract. And let's call it Net Win Shares Value.
You can calculate Net Win Shares Value in two steps:
- (Salary minus $300,000) divided by Salary per WSAR, as determined by the player's status, equals Expected WSAR.
- WSAR minus Expected WSAR times the overall average salary per WSAR ($843,725) equals Net Win Shares Value.
In 2004, at least, Ivan Rodriquez was quite a deal for the Tigers. But he wasn't last year's best deal. Here is a list of the top Net Win Share Values in 2004.
Name POS Status WS WSAR Salary Net WS Value Bonds B OF FA 53 41 $18,000,000 $23,442,804 Rolen S 3B FA 38 26 $7,780,956 $16,991,505 Beltre A 3B A 37 23 $5,000,000 $14,731,599 Dunn A OF NA 31 17 $445,000 $14,599,468 Pujols A 1B A 40 26 $7,000,000 $14,581,339 Loretta M 2B FA 33 19 $2,500,000 $14,390,627 Edmonds J OF FA 36 23 $9,333,333 $14,039,279 Drew J OF A 34 21 $4,200,000 $13,520,013 Santana J P A 27 17 $1,600,000 $13,332,433 Abreu B OF FA 37 23 $10,600,000 $12,763,203 Tejada M SS FA 30 16 $4,788,958 $11,057,058
I'll admit that I was stunned when I saw this list. Barry Bonds is not only baseball's best player, he's the best value in baseball -- despite one of the richest contracts in the majors. He is simply that good.
The second-most economically valuable player in the American League was Miguel Tejada, who signed a high-profile contract with Baltimore this offseason. In its first year, that contract was a good deal for Baltimore.
You may be surprised that Tejada's listed 2004 salary is so low, which brings up an issue with salary analysis. There are several different ways to account for salaries -- let's use Tejada's contract as an example. If you click on the link, you'll see that Tejada signed a $76 million contract in the offseason, but only made $3 million in salary this year, with a $4 million signing bonus. The typical accounting practice for salaries, used in Doug's figures, is to spread bonuses over the life of the contract. All told, Tejada is scheduled to make $14 million in bonuses over eight years, or $1.75 million a year. Add that to his $3 million salary, and you get $4.75 million altogether, which is just about the figure we received from Doug.
Over at Dugout Dollars, however, there are a couple of other ways to account for Tejada's 2004 salary. In particular, there's the straight cash flow approach ($7 million) and the luxury tax approach, which straight-lines the total value of the contract over the length of the contract ($12 million in 2004). This is terribly confusing, and I have decided to consistently use Doug's figures for this analysis. But you should be aware that different ways of accounting for salaries will lead to different answers for specific players.
You also might have noticed the difference in Net Win Shares Value between Scott Rolen and Adrian Beltre. That's because Rolen was effectively signed as a free agent (he was about to become one when signed by the Cardinals), while Beltre's deal occurred while he was only eligible for arbitration. Different markets, different expectations, different definitions of value.
Just for kicks, here's a list of the worst values in 2004:
Name POS Status WS WSAR Salary Net WS Value Hidalgo R OF A 11 -1 $12,500,000 ($13,837,879) Morris M P A 7 0 $12,500,000 ($13,402,208) Nomo H P FA -6 -9 $9,000,000 ($13,052,076) Ordonez M OF A 8 4 $14,000,000 ($11,513,421) Mantei M P A -2 -3 $7,000,000 ($9,617,221) Jenkins G OF A 14 0 $8,737,500 ($8,965,517) Milton E P A 8 1 $9,000,000 ($8,742,274) Park C P FA 4 0 $13,879,164 ($8,440,131) Piazza M 1B FA 12 2 $16,071,429 ($8,330,022) Sexson R 1B A 3 1 $8,725,000 ($8,306,456)
Half the players on this list are pitchers, which highlights the risks inherent in signing a free agent pitcher. Also, replacement levels for pitchers and catchers may be lower than the 75% I used for everyday players, as suggested by this table of Net WS Value by position:
POS WSAR Net WS Value C 57 ($31,316,862) 1B 245 ($19,039,305) 2B 139 $41,714,306 SS 113 ($370,417) 3B 161 $22,800,870 OF 578 $145,007,444 P 591 ($155,625,079)
So Win Shares replacement level needs more work. The other issue is that free agent contracts were signed in different "market conditions," if you will, depending on which offseason the player was a free agent. Today's owners probably pay 25% to 30% less for free agents than they did several years ago -- witness the difference between Manny Ramirez's and Vladimir Guerrero's contracts. These two issues, proper replacement level and the timing of free agent deals, require further work for this approach to be complete.
Still, this is a pretty good system. Good enough, in fact, to be included in The Hardball Times Baseball Annual, which will be available in early November. The THT Baseball Annual will be a retrospective look at 2004, and it will include the best of our web articles, new content, and over 100 pages of stats and graphs, including the Net Win Shares Value of virtually every player. Be sure to look for it on this site soon.
In the meantime, we've put together this handy calculator for your use.
The Net Win Shares Value Calculator
To calculate a player's Net Win Shares Value, you need just a little bit of information. Specifically, you'll need his Win Shares and Expected Win Shares, as well as his contractual status (free agent, arbitration-eligible or not arbitration-eligible) and his salary. For salary information we recommend Doug Pappas's download or the USA Today Salaries database. For a player who is not eligible for arbitration, the calculator will compare his contract to all contracts.
Dave was called a "national treasure" by Rob Neyer. Seriously. Comments about this article can be sent to him through the miracle of e-mail.