The Payoff Pitch

By Mel Duvall  |  Posted 2004-05-21 Print this article Print

The Payoff Pitch

In addition to finding and developing talent, one of the key uses of a statistics system for personnel is figuring out how much to pay people.

The Red Sox, and for that matter any major league team, will not reveal exactly how they decide a players worth. Market forces certainly play a major part, but teams must also decide whether paying tens of millions of dollars to a player will generate appropriate returns. Oakland As GM Beane said recently at the conference in Chicago that he knows exactly what a player is worth to him based on how many wins hell contribute to the team in a season. "But Im not going to tell you it," he laughed. However, the fact that the Sox hired Bill James provides some insights into how they may be tying their analysis to their checkbook. James has created several methods to estimate the value of a player, including a formula he published in 2002 called Win Shares. Win Shares takes a mathematical approach to evaluating the contribution of an individual player to a teams overall performance. It considers a variety of statistics, including pitching, hitting, walks and defensive contributions, and adjusts them for a particular ballpark and the league. Some parks are more hitter-friendly, such as Coors Field, home of the Colorado Rockies, where the thin air allows batted balls to carry farther.

At its basic level, a single Win Share is one-third of the credit for winning a game. So if the Red Sox win 95 games this year, there will be 285 Win Shares to spread among players. Spread across the 25-man roster, an average player might wind up with 10 Win Shares.

But consider the Sox acquisition in the off-season of star pitcher Curt Schilling. According to James system, Schilling achieved 24 Win Shares in the 2002 season and 15 in 2003, for an average of 19.5. To get Schilling, the Sox had to assume his $12 million salary. Other pitchers with similar Win Shares in 2003 were the Sox Pedro Martinez (20 Win Shares, $17.5 million salary), the Yankees Mike Mussina (19, $16 million) and Seattles Jamie Moyer (18, $7 million). Schillings $12 million price tag is at the low end of the range.

Alex Rodriguez led the league with 32 Win Shares in 2003 and the Sox would have loved to sign him, admits GM Epstein. The bottom line, however, is that the team would not cross its threshold of $20.25 million a year, and had to walk away from the table.

Corporations play out their own version of Win Shares every day. A new salesperson isnt hired unless it is calculated that he or she will bring in more revenue than the cost of that persons compensation. Boards of directors must determine whether paying $28 million for a new chief executive will provide an appropriate return in shareholder value. There just isnt the level of sophistication with business statistics as there is in baseball.

And the Sox are using all the data at their disposal and applying statistical analysis to find the best and brightest. Its how they decided to cut Jose Offerman and John Valentin, two underperforming infielders with combined salaries of $6 million, and were able to pick up sluggers David Ortiz and Kevin Millar for a combined $3.25 million. Together, Ortiz and Millar contributed 162 runs in 2003, while Offerman and Valentin had contributed 66 runs in 2002.

Indeed, stereotypes and conventional thinking are being tossed aside, unless the numbers back it up. As James states, the goal is to let the data take on the power of language— to let it determine what is true and what isnt.

The guidelines are being set because the data says its the key to winning.

The baseball season is underway, and most Red Sox fans dont know or care what kind of computer or software Epstein and his crew are using behind the scenes. Its the results that matter. And only one is truly acceptable: a World Series title.

Contributing Editor
Mel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.


Submit a Comment

Loading Comments...
Manage your Newsletters: Login   Register My Newsletters

Rocket Fuel