Dex linked to my last post yesterday and had some interesting thoughts on valuing players. What I tried to do yesterday was simply estimate what Bradley should make based on his established talent level and how free agents are paid these days. Dex brings a whole set of other things into the picture (like how much each win is actually worth for the team, how much revenue players bring in that isn’t counted in wins, etc). Anyway, it got me thinking about one of the favorite chapters in Baseball Between the Numbers (note: there are no “affiliate links” in any book links at this point). Nate Silver (fwiw, one of my favorite baseball writers) wrote a chapter called, “Is Alex Rodriguez Overpaid,” where he discusses a lot of these issues.

For now, though, I’ll ignore most of the stuff about player value, as another part is more interesting to me. Luckily, if you don’t have BBTN, a lot of Silver’s research is available in this article at BP. If you don’t have a BP subscription, then I guess you really are out of luck …. or not, because you can read the rest of this post ; )

Since it is behind the paywall, I’m just going to take one graph and a few of Nate’s points and put them here (I hope that isn’t disrespecting any copyright stuff). Here’s the relevant graph (click for a better view):

Silver uses some mathematical techniques that I don’t fully understand to get these playoff probabilities for a team that is predicted to win a certain amount of games. This version adjusts for the fact that predictions are inevitably tough and a predicted 88 win team could win 80 games or 95 due to luck, randomness, and many other factors.

But notice the sweet spot, as Silver calls it, that exists from about 82 to 87 wins. Teams in this area can add a few wins and do wonders for their playoff chances. Take a predicted 83 win team. They have a ~23% chance of making the playoffs. If the add a 5 win player, their probability jumps up to about 40%. That’s a 17% gain due to adding a 5 wins over what’s already on the club. Now look at a 65 win team. If they add 5 wins, they are adding 2-3% to their playoff chances. On both sides of the extremes (high and low win projections), it’s not very helpful to add a few marginal wins to your roster. You likely aren’t going to make the playoffs and even when adding a borderline star player, you still are going to have to get very lucky to creep in. However, teams in that mid-80s range have a ton to gain from adding a few wins to their projection.

So where do the Padres fit into this? Well, without running any actual projections, I think it’s fair to say that they are in that mid-80’s range right now, whether that be 83 or 87, I’m not so sure. But I’m going to venture a guess that it’s somewhere in that range with this current roster.  So what should they do? Silver’s advice:

Category II. Fringe Contender: 82-87 projected wins.
Optimal Strategy: Buy or Sell
Examples: Cubs, Mets.

Teams in this group have a natural tendency to stand pat. The thinking seems to be: we’re fielding a reasonable baseball club, and we think we can contend with a couple of good breaks. Look what happened to the White Sox last year. We certainly aren’t about to break the bank.

In fact, however, standing pat is the worst alternative for these clubs. Whether to buy or sell is conditioned on some of the same factors that we’ve described above, but either strategy is superior to holding. Buying is likely to produce a reasonably good return; although a team with 85-win talent will make the playoffs occasionally, a team with 90-win talent will make the playoffs more often than not. On the other hand, if buying isn’t feasible, then selling needs to be considered. Going from 85 wins to 80 doesn’t hurt as much as going from 85 to 90 helps, and there is nothing worse for a baseball team than to be caught in the 84-78 netherworld.

Silver makes it pretty clear that it’s probably silly to stand pat here. If you do, there’s a pretty good chance you’ll miss out on the playoff while still spending some pretty good dough. If you add talent, it is in a sense more valuable to you at this point, as it can have a tremendous impact on playoff probabilities (and thus, revenue). If you sell, you can go into a little bit of a rebuilding mode and not spend so much on a borderline playoff club (and, at the same time, you won’t completely kill playoff aspirations).

Due to stuff like this, comments like, “a marginal win added for any team is worth the same,” are probably incorrect in a economic sense. A marginal win for the Royals may be worth very little, while a marginal win for an 88 win team is worth quite a bit (because of it’s increased chance of reaching the playoffs … and because the playoffs are the goal, both in an economic and baseball viewpoint).

Back to the book: In Silver’s chapter, he attempts to put an actual value on this in a chart called “Marginal economic value of 1 additional win.” For a 60 win team all the way up to a ~78 win team, the value is around $750k. He had previously calculated this number using a variety of variables like concessions, merchandise, gate receipts, and so on. On the other hand, a marginal win for an 88 win team is worth over $3.5 million. It peaks at about 90 wins and almost $4.5 million. Looking at the Padres as say a 84-87 win team, their marginal win value ranges from about $1.5m to almost $3m, depending on what their actual projection is. And that’s of course due to increased chance of a playoff appearance, which Silver estimates is worth around $30m.

Each extra win right now is worth more to the Padres than it is to many teams. Therefore, they could (and perhaps should) bid more for the services of someone because they “know” they are going to get extra returns over, say, what the Red Sox or Royals will get from the same player. He’s worth more to them because of their current situation.

From all of this, I’ll infer that the Padres are at a critical point this offseason. They could go one of two ways. They could spend the extra money and look to cash in on a playoff appearance. Or they could sell off some players and go into mini-rebuilding mode. With Peavy extending, Wolf coming in, and seemingly constant rumors about this guy or that guy, it looks like they aren’t going into rebuilding mode. At the same time, they haven’t added a ton of projected wins yet and the Peavy extension doesn’t do anything for the current team (he was already here), so they may not be going into the spend direction either.

Of course, there really is one more direction they could go that I haven’t mentioned yet. That’s standing pat. Hopefully, they’ll choose one of the former methods. For this team, standing pat is likely the least optimal thing they could do.