Player valuation is an important factor in baseball considering the megabucks involved in the league. According to 2008 estimates the minimum salary of a MLB player was 3,90,000 US Dollars (source: www.mlb.com). Sabermetricians have often tried to determine models for player valuation in baseball, but there is a still a long way to go in terms of arriving at more accurate and parsimonious models. A key aspect of baseball is based on the fact that it is both an individual and a team based sport. Tennis is completed an individual based sport while football is more team based compared to baseball. Without getting into the technicalities of the process involved, I would like to briefly state that two types of additional dependencies were considered: players within a given team are more likely to have certain similarities compared to players from other team and time variant characteristics of a player are likely to be related (eg: current compensation will be related to previous compensation). The other aspect is related to non-baseball attributes. It is interesting to understand the impact of non-baseball attributes on player valuation (eg: superstar effect). Non-baseball attributes largely fall in the domain of brand equity.
Several interesting results emerged from the study. Among the performance related factors only batting average of the batter and number of stolen bases by the batter were found to influence player compensation. As expected increase in the batting average was found to increase player valuation. However stolen bases was found to have a negative effect on valuation for certain players and a positive effect on valuation for certain others. This can be explained due to the fact that certain players may have characteristics like build, speed which may be considered to fit in well with ability to steal bases. In the case of such players increase in stolen bases would increase the player valuation. Certain other players may be deemed to fit in better with the concept of big hitting. Stolen bases in the case of such players may be an indication of poor form or lack of core competency. In the case of such players increase in the number of stolen bases may have a detrimental effect on the valuation.
This can happen with switch hitters and designated hitters in the team. Stolen bases is an important factor which serves to explain a lot many things. Stolen bases encapsulates both tangible factors (speed, response time) and intangible factors (judgement, communication ability on the field). Many of the fielding and pitching characteristics may have been captured by the stolen bases itself. Player weight and experience were other parameters that were found to have a positive effect on player valuation.
However the effect of experience on player valuation depends on the age of the oldest player in the team. Greater the age of the oldest player in the team lesser will be the effect of increase in player experience on valuation. A team where the age of the oldest player is greater, would value experience lesser compared to a team where the age of the oldest player is lower. Intangible player related characteristics (Eg: temperament, playing style) and intangible team related characteristics (Eg: revenue realization philosophy of a team) were also found to influence player valuation. In the case of superstars the brand equity attached to their name adds a premium to their valuation.
There is scope to develop better metrics for player compensation by considering player characteristics over a great time duration. Team revenues, marketing and sponsorship data might be useful to develop more accurate metrics for player valuations.
The quest will continue….
- Padmanabhan Ramaswamy
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