Diamond Dollars Case Competition 2014

Finding A Home For The Panda

Diamond Dollars Case CompetitionNYU 2014

Matt Filippi, Brandon Lane, Jeremy Losak, Zack Potter, Matt Russo

Syracuse University

Player Profile: Pablo Sandoval

• Position: 3B

• Age: 28 (Born August 11, 1986)

• Bats/Throws: S/R

• Height/Weight: 5’11’’/245 lbs

• Signed: International Free Agent by Giants in 2002

Suitors

• Tend to bring back players from World Series teams

• No obvious in-house candidate to replace him

• Homegrown and fan-favorite player

• 2015 contender

• Reported mutual interest in a re-signing

• Obvious hole at 3B

• Traditionally big spenders in free agency

• Power & counting stats could improve in Fenway Park

• 2015 contender

• Reported strong interest in Sandoval

OffenseSeason G HR BB% K% wOBA wRC+ f.WAR

2009 153 25 8.2% 13.1% .399 146 5.1

2010 152 13 7.6% 13.1% .316 96 1.4

2011 117 23 6.9% 13.5% .383 149 5.5

2012 108 12 8.6% 13.3% .338 118 2.6

2013 141 14 8% 13.5% .331 116 2.3

2014 157 16 6.1% 13.3% .323 111 3

Steamer 2015 146 21 7.4% 13.6% .344 120 3.8

Trends:• Remarkably consistent high floor, low ceiling offensive player• Relatively average walk rate, low strikeout rate• Low power numbers for a top third baseman

*stats via Fangraphs

DefenseYear Rdrs/yr UZR/150 1-10% 10-40% 40-60% 60-90% 90-100%

2009 -13 -5.7 -- -- -- -- --

2010 1 -0.5 -- -- -- -- --

2011 20 19.3 -- -- -- -- --

2012 -7 1.4 25% 7.7% 52.4% 88% 96.3%

2013 -5 -6.3 0% 42.9% 60.9% 83.3% 94.3%

2014 4 3.5 3.3% 15% 71.4% 89.4% 96.5%

Trends:• Numbers indicate that Sandoval is a slightly below-average to

average defender• 2011 ratings most likely an outlier due to noise, small sample size

“…defense is good enough for the near future but a combination of his age, weight, and lack of range may turn him into a ‘step and a dive’ third baseman”

– BP Hot Stove Scouting Report

*stats via Fangraphs

Makeup/Miscellaneous• Sandoval’s popularity, fan-

friendliness, and “Kung Fu Panda” persona may seem silly, but baseball is a business and this could positively effect the bottom line

• .344/.389/.545 slash line in 39 career postseason games

• No on-field or off-field altercations or incidents that we know of

• Might have to switch to 1B or DH as he ages into his 30’s

Weight/Durability• Listed at 5’11”, 245 lbs.

• Has been asked to slim down multiple times in the past

• Mixed results, at best

• Four DL stints in the past four seasons

• Two broken hamate bones (wrist)

• Left hamstring strain

• Left foot strain

• 190 professional games at catcher which could play a factor in future durability

• Are his knees “older” than 28?

Comparable: Juan Uribe

• Signed 3 year/$21 million contract with Los Angeles Dodgers after 2010 season

• Entering his age 32 season

• Big bodied 3B similar to Sandoval?

6771 75

115

102

96

149

118 116 111

0

20

40

60

80

100

120

140

160

5 4 3 2 1

WR

C+

YEARS BEFORE FREE AGENCY

OFFENSIVE PERFORMANCE LEADING INTO FREE AGENCY

Uribe Sandoval

Comparable: Aramis Ramirez

• Signed 5 year/$73 million contract with Chicago Cubs before 2007 season


• Last “big-name” free agent 3B to hit the open market while still in his 20’s

Stat Ramirez - 2006 Sandoval - 2014

WAR 3.9 3.0

ISO .269 .136

wOBA .381 .323

wRC+ 125 111

Comparable: Adrian Beltre

• Signed 5 years/$80 million with the Texas Rangers before the 2011 season

• Option for 6th year at $16 million


Stat Beltre – 2010 Sandoval - 2014

WAR 6.6 3.0

ISO .233 .136

wOBA .391 .323

wRC+ 140 111

Comparable Extensions

• Evan Longoria – Signed 6 year/$100 million extension with Tampa Bay Rays before 2013 season

• Signed extension at age 27

• Extension kicks in for the 2017 season, extends through 2022

• Club option for 2023 worth $13 million

• Ryan Zimmerman – Signed 6 year/$100 million extension with Washington Nationals before 2012 season

• Signed extension at age 27

• Extension kicked in for the 2014 season, extends through 2019

• Club option for 2020 worth $18 million

Current 3B Market

• Hanley Ramirez, 31

• 13th highest projected WAR among 3B

• Chase Headley, 30


• Mark Reynolds, 31


• Alberto Callaspo, 30


*All projections via Steamer

Payroll Inflation Since 2006

• Market inflation rate has increased greatly since 2009, especially following MLB’s new broadcast contracts with FOX, Turner, and ESPN

• Major TV deals were signed in 2012

• New money has entered the market, and teams have adjusted for it

• 2014 inflation rate will be between 5-10 percent

-4

-2

0

2

4

6

8

10

12

2004 2006 2008 2010 2012 2014

Inflation percent

*Data via ESPN

Market Value Of A Win Methodology

• Dependent Variable: Market value of a win

• Compensation Variable Included To Adjust – more guys who get compensation picks indicates more top heavy free agents (would increase market value of a win)

• Dummy Variables For Years (since we do not know 2014 coefficient, take average of years in model)

• WAR_1_ indicates previous season’s WAR and WAR_2_ indicates WAR from two seasons ago (proxy for projected WAR)

• Provides us a model to determine market value of a win.

• Plug in our 2014 values: compensation (.125 of available FA), the aggregate dummy for year, average age of players on the market (32.7 years), average of WAR_1_ entering the market (0.85) and WAR_2_ entering the market (1.12). WE CALCULATE THE VALUE OF A WIN TO BE $7.8 MILLION.

Variable Coefficient

C 37134586***

Compensation 11506674***

Seven 4178805

Eight 2483586

Nine -3495581

Ten -3584401

Eleven 3040002

Twelve -455993.7

Thirteen 6501531

Age -1316098***

WAR_1_ 8309560***

WAR_2_ 3721281***

t-stat values adjusted for heteroskedasticity and autocorrelation

Market Value Of A Win Methodology (Cont.)

• Dave Cameron projected the market value of a win: $6 million

• Seems slightly conservative given recent spending in the market (see cost per win via LewiePollis)

• $7.8 million seems too steep

• We decide to average the two values to put us at A FINAL MARKET VALUE OF $6.9 MILLION PER WIN

Dave Cameron’s Win Curve

• Up to age 30: 90% of previous year’s WAR• Ages 31-35: 85% of previous year’s WAR• Age 36 and up: 80% of previous year’s WAR

“...I’ve tweaked the aging curve assumption so as to hopefully represent player contribution a little more fairly, rather than just knocking half a win per season off everyone’s forecast in perpetuity…These results line up quite well with our general understanding of how players age, and produce results that are similar to what systems like ZIPS produce when creating long term forecasts”

– Dave CameronThe Cost of a Win in the 2014 Off-Season

Depreciating Value Of Future Win

• Do we pay the same market value for a win year after year?

• Risk plays a huge role in depreciating market value of win

• What if a player gets hurt? Big risk he does not produce even in accordance to the aging curve.

• Dave Cameron suggests 5% to be the deflation value

• Money is worth more today than it will be worth in the future

Projecting the Contract

• Using Dave Cameron’s aging curve and market value deflation:

Year Proj. WAR Value of 1 win Total player value

2015 3.8 * $6.9 million = $26.22 million

2016 3.42 * $6.56 million = $22.44 million

2017 3.08 * $6.23 million = $19.19 million

2018 2.62 * $5.92 million = $15.51 million

2019 2.22 * $5.62 million = $12.48 million

2020 1.89 * $5.34 million = $10.09 million

2021 1.61 * $5.07 million = $8.16 million

4 year contract: $83.36M $20.84M AAV5 year contract: $95.84M $19.17M AAV6 year contract:$105.93M $17.66M AAV7 year contract:$114.09M $16.30M AAV

Adjusting the Aging Curve

In order to get a better estimate of how Sandoval might age, we looked at specific clusters of players that he fits into, including:

• Third basemen

• Players with bad bodies

• “True Total Contact Rate”

“We’re in an interesting era for age curves because of the skew of performance-enhancing drugs. We are trying to re-evaluate aging curves because they were taken way out of whack because of the influence of performance-enhancing drugs”

– Pittsburgh Pirates GM Neal Huntington

“True Contact Rate”

• Combines the aggressiveness/patience of swing% with the ability to make contact of contact%

• Which players have the best natural hitting abilities to make contact with any pitch regardless of type or location?

• You would want these guys up in hit-and-run situations for sure

True Contact

Rate= Swing% X Contact% =

# Of Pitches Made Contact

# Of Pitches Seen

True Contact Rate – 2014Name Top Five TCR

Pablo Sandoval 0.503

Salvador Perez 0.477

Justin Morneau 0.472

Jose Altuve 0.470

Adeiny Hechavarria 0.463

Name Bottom Five TCR

Lucas Duda 0.307

Giancarlo Stanton 0.307

Carlos Santana 0.305

Matt Carpenter 0.298

Adam Dunn 0.277

.

.

.

.

.

.

Aging Curve Methodology

• Dependent Variable: Delta WAR – change in WAR from previous season to current season (regression in aging curve)

• Body_Ratio: Weight/Height (data from Lahman database and fangraphs)

• _3B: Adjustment for how 3B regress compared to other positions

Pablo Sandoval: ages (between 28-34), Body_Ratio = 3.45, TrueContactRate = .503

Variable Coefficient

C 0.728843

Age -0.046198***

Body_Ratio 0.067925

_3B -0.190476

True_Contact_Rate 0.550094

Sandoval’s Adjusted Aging Curve

Year Change in WAR

2016 -0.24

2017 -0.29

2018 -0.34

2019 -0.38

2020 -0.43

2021 -0.47

Projecting the Contract

• Using our final aging curve:

Year Proj. WAR Value of 1 win Total player value

2015 3.8 * $6.9 million = $26.22 million

2016 3.56 * $6.56 million = $23.55 million

2017 3.27 * $6.23 million = $20.37 million

2018 2.93 * $5.92 million = $17.35 million

2019 2.55 * $5.62 million = $14.33 million

2020 2.12 * $5.34 million = $11.32 million

2021 1.65 * $5.07 million = $8.37 million

4 year contract: $87.49M $21.87M AAV5 year contract: $101.82M $20.36M AAV6 year contract: $113.14M $18.86M AAV7 year contract: $121.51M $17.36M AAV

This Projection Still Does Not Take Into Account…

• Positive Makeup (+)

• Popularity and Marketability (++)

• Postseason Performance (+)

• Wear and tear on knees from catching experience (-)

• Possibility (probability?) of position switch (--)

• Value of Draft Pick (-)

Final Projections

• 4 years: $89 million

• 5 years: $102.5 million





AAV: $20.5 million AAV: $18.67 million

Draft Pick Value

“Now, because the flow of cash into the draft is restricted, draft dollars are worth more than their face value. Any team wanting to acquire draft pool allocation has to pay more than $1 for $1 in order to do so, since draft dollars are a limited resource relative to a team’s access to capital.”

“In conversations with people in MLB front offices, the general consensus has ranged around a 3X valuation for draft pick dollars, so a pick with a slot value of $2 million would be worth $6 million in open market dollars.”

- Dave CameronThe Pointlessness of Signing After the Draft

Not Receiving Qualifying Offer

• Cost of a qualifying offer varies significantly from team to team

• Pick #10 is different from Pick #12 which is different from Pick #30

• Giants and Red Sox happen to be two teams that are relatively unaffected by Sandoval’s qualifying offer

• Not receiving qualifying offer would increase his offers by a small, but nonzero amount…Our guess: $2 million

• Giants: 5 years/$104.5 million

• Red Sox: 6 years/$114 million

• Both teams are trying to win now

• Slot values of both picks are between $1-2 million

• Pablo Sandoval is a good enough player where losing the pick barely matters to organizations high on the “win curve”

Diamond Dollars Case Competition 2014

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