A look at the markets: The National Leagueby John Beamer
June 02, 2008
A couple of weeks ago we looked at what the markets thought about the American League. Today I want to turn attention to the National League.
For a primer of prediction markets click here. If you want to look at what the markets were expecting for the 2008 season click here.
For those of you who can't be bothered to click either link (and I'm assuming that is most of you) here is a quick primer—fair play to those who experience deja vu as these next couple of paragraphs appeared in the AL article.
Prediction markets exist in many guises but the ones we're most into are the binary bet type. Binary bets have two outcomes: true or false.
Take a question such as, "Will the Yankees win the World Series?" This only has two outcomes (yes or no) and is a perfect example of a binary bet. Typically for a binary bet true = 100 and false = 0.
The price mechanism sets the real value somewhere between these extremes and reflects the collective beliefs of the market over the likelihood of the bet in question being true. For instance if the price of the Yankees bet was 15, that would mean the market thinks there is a 15 percent chance the Yankees will win the World Series. If they do end up winning, the price will move up to 100 and the punter will win 85/15 times his original stake.
In layman's terms the price reflects the probability of the event happening. I'm sure you get the picture so let's dive into each of the NL divisions.
TEAM WIN PROBABILITY Phillies 35 Mets 29 Braves 23 Nationals 2 Marlins 11
The NL East is perhaps the most competitive division in baseball right now. Four of the five teams are in with a shot, although one of those, the Marlins, are likely to fade away over the next few months.
Despite the Mets being in a slump for the past month or so, the market believes they still have a good shot at winning the division crown. This isn't that surprising as the team probably has the most talent in the division. Those of you may recall our season preview data which showed them winning an astonishing 99 games this year (after the addition of Johan Santana). Although in the warm glow of early June that looks a tad optimistic, with hitters like David Wright and Carlos Beltran, backed up with Johan Santana and Pedro Martinez a long, strong winning run is a probability at some point.
Perhaps the most underpriced team is the Atlanta Braves. They are barely a handful of games behind the division leaders (currently changing between the Phillies and Marlins at the time of writing) but have been the strongest team in the division so far. Their record in one run games is beyond shocking — they are 2-15, easily the worst record in the bigs (they've lost two close ones to the Reds over the last couple of days). Had that been a .500 clip the Braves would be on the verge of establishing a commanding lead.
It should be an exciting run in as no franchise looks like dominating. With the Phillies and Marlins also in the mix the East has a sniff of the 2007 NL West about it where going into the final week pretty much anything could have happened. Who knows, perhaps one team will rise above the others to eek out a commanding lead. On current form and talent, the Braves or Phillies are the two most likely candidates.
TEAM WIN PROBABILITY Cubs 63 Cardinals 14 Astros 14 Brewers 6 Reds 2 Pirates 1
Unlike the East, the Central has the look of a one horse race, at least in the eyes of the market. The Cubs are clear favorites to repeat their triumph of 2007. With a .618 win percentage they have the best record in baseball—only the Tampa Bay Rays are over .600 (who said there is no competitive balance?). Moreover, the Cubs are two games worse than their Pythagorean record, which means lady luck hasn't always been on their side.
The Cardinals are 1.5 games behind the Cubs, while the Astros are 4.5 games behind, but interestingly both franchises are at the same price. Why is this? Well, the market thinks the Astros have more talent while the Cardinals have been lucky. Cast your mind back to the early season predictions and many pundits had the Red Birds bringing up the rear of the division.
The Brew Crew have been a surprise this year. After pushing the Cubbies most of the way in 2007 many expected the trio of Ryan Braun, Prince Fielder and Yovanni Gallardo would anchor Milwaukee to their first crown for years. Alas it appears not be, with Fielder being especially disappointing, clubbing only six home runs so far this season.
Interestingly, in an interview with THT's Jeff Sackmann over at Chop-n-Change suggests that scheduling has played a role. That may be right, but at the moment they are seven games behind the Cubs. Six percent may be cheap but there probably isn't a ton of upside in that price.
If the Brewers are still in touch then so are the Pirates are Reds—all three are within 10 games of first. The fact that the Brew Crew price is three times the price of the other laggards is a testament to their talent. Ned Yost needs to start weaving his magic or else he may take a bullet this coming winter.
TEAM WIN PROBABILITY D'backs 67 Dodgers 29 Rockies 2 Giants 1 Padres 1
The market is calling the NL West a two-horse race, with one horse down to three legs. The Diamondbacks got off to a storming start and for most of the season had the best record in baseball. In recent weeks they've fallen back to earth but are still four games in front of the second place Dodgers.
For what was the most competitive (and probably best) division in the National League in 2007, 2008 has been a severe disappointment. Although the Torre's Dodgers are in second they have a losing record. Meanwhile, the Padres and Rockies, both making waves at the top of the division last year are sub .400.
The case of the Rockies is especially interesting. The team hasn't changed that much from the group that became National League Champions last year but they are the worst team in the game right now. It raises a question as to whether last year's performance was a fluke or whether this year they are simply unlucky. The longer this form continues the more likely that 2007 was one of the biggest flukes in the game.
Although pundits thought the Giants would be in this position, no one expected the Padres to be bottom fishing. Known for having a very canny front office that puts together winning teams, especially at Petco, many expected them to push the Snakes close. So far no cigar. The NL West of 2008 looks more like the 2006 division than the 2007 one.
That's it from me on the markets for a couple of months, but we'll check back in during mid-summer to see how the runners and riders are faring as we approach the sharp end of the season. By then things the fug should be clearing a little!
References and Resources
Thanks to Tradesports for the great data. Note all data is correct as of Saturday.
John is an unashamed glory supporter having followed the Atlanta Braves since 1991. He blogs the Braves at Chop-n-Change. He welcomes comments, criticisms and suggestions via e-mail
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