Taking stock of the value of players on trade block
Posted: Wednesday July 26, 2006 12:11PM; Updated: Wednesday July 26, 2006 2:26PM
At PROTRADE.com, the stock market for sports, the end result of their real-time performance analysis is a metric called "moneyball runs." Moneyball runs are derived from how well each player performs in each game against the historical league mean for the exact situation, plus current situational variables like wind speed and direction.
It is one of the best, if not the best, methods to measure an individual player's contribution to winning. Factored into dollars, the moneyball salary shows fans what a player's salary would be if it was tied to his current performance. (See below for a Moneyball FAQ.)
Stats are through games of July 21. Negative salary contributions are in parenthesis.
How do you calculate a Moneyball salary? First, using our Moneyball Valuation system, we sum production of all MLB players across a full season. Everyone is ranked on a curve by the number of Moneyball Runs they produced.
Second, we distribute the rankings to correspond with the league. In baseball, we mark the 40th percentile as "failing." Some 40% of players appearing in the major leagues in a given season earn the minimum salary ($327,000 in '06) and thus bring with them the minimum expectation of production. We call it "replacement level" because it is the minimal cost that a team would incur when replacing one of their players. In our Moneyball terms, this "replacement level" is below average expectations (0 runs), which equates to a player earning -2.5 runs. Therefore, any seasonal performance below -2.5 runs is considered at the "replacement level".
Next, we sum all the runs produced above the replacement level for the remaining (non-"replacement level") 60% of players. We also examine all the payrolls in the league and sum up all the salary dollars paid above the replacement level of $327,000. This normalizes the cost of runs across all teams, which allows you to make accurate, league-wide comparisons. From these two sets of figures we can determine how much teams are paying for each incremental run, as measured by the Moneyball Valuation system.
A player's Moneyball salary is then determined by multiplying this cost by the number of runs the player produced, or the runs they produced over the minimum "replacement level." Players who don't play at all in a season, or whose performances fall below the 40th percentile, are given a salary equal to the league minimum. In the majors, that's as low as you can go.
If you're comparing how a player performs against a perceived 'value' of a play, how do you determine what each play is worth? This is done through PROTRADE's expected scoring system. Expected scoring examines every possible play combination in a given sport and assigns a value to the specific play, based on what happened in that play combination historically. Then, in real time, the game-specific, expected score of that play is assessed through a detailed regression analysis. The analysis also considers variables that could affect the play in question at that moment in time. In baseball, the ballpark, inning and which bases are occupied are among the many variables considered. Basketball and football have their own separate sets.
Why are so many baseball players at $327,000? $327,000 is the major league minimum salary. In our analysis, we found that between 35% and 40% of all players who play in a given season in the MLB make the league minimum. An accurate projection needs to conform to real world salary distribution. We have modeled our Moneyball Salary similarly, where 35-40% of players make the minimum.
What does it mean to have negative runs? Negative runs means a player actually hurt his team's scoring expectations. This is extremely important. Historically, player performance has been measured by what they add to a game, not what they detract. For a batter on a single play, this means the hitter's performance lowered his team's overall chances of scoring runs in the inning. For a pitcher or fielder, negative runs means their actions actually helped the hitting team raise their chance to score runs. We sum up all the plays over the course of a season. If a player's contribution totals to negative runs, this means they are below historical average. Their performances, in total, were worse than if an "average" player had been in his shoes.
Does the Moneyball salary adjust for players' historical hot streaks and slumps? In real time, the projected salary is not adjusted for whether a player historically heats up in July, or typically slumps in September. It measures performance to date, within the current season.