Monday, February 26, 2007

Predictions vs. Bids

I'm going to work through yesterday's concepts backwards, so today's topic is a more detailed review of predictions vs. bids.

There are three types of dollar amounts that exist in the world of Roto:

Earnings refer to what a player earned in a previous season. A prediction refers to what you or an expert believes a player will earn in the current season. A bid is what you are willing to pay.

Many experts try to build a valuation system that says that earnings = predictions = bid. This is wrong. This is so utterly incorrect that is you take nothing else away from this blog, please take this: A prediction and a bid are two separate things.

In one of my first posts, I compared Alex Patton's 2006 earnings to Rototimes' 2006 earnings for the Top 10 hitters. The results, though slightly different, were close enough that I came to the conclusion that both Alex and Rototimes were correctly calculating earnings based on a $3120 budget for a 12-team A.L. Recently, I bought a publication that had "dollar values by John Benson." Perfect. I'll swap out the Rototimes prices, add Benson's prices and compare.

Top 10 A.L. Hitters 2006 (5x5)

AP RankPlayerPatton $Benson $
1Derek Jeter$39$31
2Carl Crawford$38$34
3Ichiro Suzuki$35$28
4Vlad Guerrero$34$32
5Jermaine Dye$32$34
6Alex Rodriguez$30$26
7Justin Morneau$30$27
8David Ortiz$30$36
9Vernon Wells$29$30
10Grady Sizemore$29$30

I used 5x5 because this is what the publication I purchased used.

I'm actually much more impressed with John Benson's values than I have been in the past. Remember, this isn't a prediction value, this is a pricing battle between Alex and John Benson. Alex is working with a $3120 budget and, in theory, so is John Benson. Alex "buys" six of these players (Jeter, Crawford, Suzuki, Vlad, A-Rod and Morneau), while Benson "gets" Dye, Ortiz, Wells and Sizemore. Still, Alex spends $18 more than Benson. If this continues, that means Benson's earnings aren't high enough.

11-20 A.L. Hitters 2006

AP RankPlayerPatton $Benson $
11Miguel Tejada$29$26
12Carlos Guillen$29$26
13Chone Figgins$28$20
14Johnny Damon$27$27
15Travis Hafner$27$29
16Paul Konerko$27$25
17Corey Patterson$27$24
18Joe Mauer$26$22
19Gary Matthews Jr.$25$22
20Jim Thome$25$28

It gets worse here for Benson. He only "buys" Hafner and Thome, and ties on Damon. Dollar for dollar, he's now behind $39. If he's not careful, he's going to have a lot of money left on the table.

21-30 A.L. Hitters 2006 (5x5)

AP RankPlayerPatton $Benson $
21Manny Ramirez$25$25
22Raul Ibanez$25$26
23Brian Roberts$24$20
24Michael Young$24$21
25Torii Hunter$23$25
26Lyle Overbay$23$19
27Orlando Cabrera$22$20
28Robinson Cano$22$16
29Mark Teixeira$22$23
30Michael Cuddyer$22$21

Again, Benson's picking up some players (Ibanez, Hunter and Teixeira, with a tie on Manny). But he's hemmoraging value, losing another $16, and is now down a total of $55.

Maybe he's spending more of his $3120 on pitchers than Alex.

Top 10 A.L. Pitchers 2006 (5x5)

AP RankPlayerPatton $Benson $
1Johan Santana$39$36
2Joe Nathan$28$28
3Jon Papelbon$27$28
4B.J. Ryan$27$28
5Roy Halladay$27$27
6Francisco Rodriguez$26$30
7J.J. Putz$26$27
8Francisco Liriano$25$??
9Mike Mussina$23$24
10Mariano Rivera$23$25

That's a serious possibility. Since Liriano is out this year, there's no listed value for him. But Benson's now up $7 on pitchers. Not as radical as the hitting numbers, but it could explain some of the difference.

Top 11-20 A.L. Pitchers 2006 (5x5)

AP RankPlayerPatton $Benson $
11C.C. Sabathia$23$22
12Jered Weaver$21$17
13John Lackey$21$21
14Curt Schilling$20$20
15Huston Street$20$23
16Dan Haren$20$21
17Chris Ray$19$21
18Akinori Otsuka$18$20
19Jeremy Bonderman$18$18
20Chien-Ming Wang$18$19

I might have to start giving Benson credit where credit is due. He believes five of these pitchers are worth more than Alex. However, Benson's still only up $11 on pitchers. He needs to say that the earnings of the next cluster of pitchers are signficantly higher. Does he?

21-30 A.L. Pitchers 2006 (5x5)

AP RankPlayerPatton $Benson $
21Kenny Rogers$17$18
22Ervin Santana$17$18
23Scott Kazmir$17$14
24Justin Verlander$17$16
25Erik Bedard$17$16
26Bobby Jenks$17$21
27Kelvim Escobar$17$17
28Nate Robertson$16$17
29Randy Johnson$15$17
30Freddy Garcia$15$17

That's another +6 on earnings values for John Benson. And +17 for the Top 30 pitchers. But that's nowhere near the $55 gap on the comparable group of hitters.

Remember, this isn't a prediction exercise, this is an earnings exercise. And the only requirement here is that each tout use a $3120 budget for the draft rosters (since, after all, that's what we're using).

So what happens if the earnings fall short?

At the very least, you should be using 2006 earnings to put together your 2007 predictions (Frankly, you should be looking back two or three years; one year is the bare minimum). If your earnings fall short, your predictions will fall short as well. And you'll wind up chasing players at the end of the auction to make up for the fact that you underestimated the entire auction.

Tomorrow, I'll look at an historical example of how a poor understanding of earnings led to an even poorer series of predictions.


Slugopie said...

Understand earnings, prediction and bid. However, what are you using for your comparision? It appears you are using Patton and Benson's predicitions?
However, you then compare them as if they are earnings? So you assumed the predictions turned out to be earnings. Even though in real life, that is not true. What am I missing?


Slugopie said...

After reading again, I am not sure you are comparing the same thing between Alex and Benson. Since everything is 2006, are these predictions or earnings? That might explain Liriano?
I have not used Benson's stuff, but not sure he computes players earnings (for 2006), but just does predictions for 2007.


Mike Gianella said...

Hey Joe.

First of all, thanks for visiting.

The tables list Patton's 2006 earnings for 5x5 using his software. For Benson, the dollar amounts come from The Sporting News 2007 Fantasy Baseball Guide. They are also earnings; predictions for 2007 are listed next to earnings for 2006 for all players predicted to earn $4 or more in 2007. This explains Liriano's absence: he is listed at $1, so his 2006 earnings were not listed in the magazine.

Sorry if this was confusing.