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 Rank	Player	Patton $	Benson $
1	Derek Jeter	$39	$31
2	Carl Crawford	$38	$34
3	Ichiro Suzuki	$35	$28
4	Vlad Guerrero	$34	$32
5	Jermaine Dye	$32	$34
6	Alex Rodriguez	$30	$26
7	Justin Morneau	$30	$27
8	David Ortiz	$30	$36
9	Vernon Wells	$29	$30
10	Grady 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 Rank	Player	Patton $	Benson $
11	Miguel Tejada	$29	$26
12	Carlos Guillen	$29	$26
13	Chone Figgins	$28	$20
14	Johnny Damon	$27	$27
15	Travis Hafner	$27	$29
16	Paul Konerko	$27	$25
17	Corey Patterson	$27	$24
18	Joe Mauer	$26	$22
19	Gary Matthews Jr.	$25	$22
20	Jim 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 Rank	Player	Patton $	Benson $
21	Manny Ramirez	$25	$25
22	Raul Ibanez	$25	$26
23	Brian Roberts	$24	$20
24	Michael Young	$24	$21
25	Torii Hunter	$23	$25
26	Lyle Overbay	$23	$19
27	Orlando Cabrera	$22	$20
28	Robinson Cano	$22	$16
29	Mark Teixeira	$22	$23
30	Michael 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 Rank	Player	Patton $	Benson $
1	Johan Santana	$39	$36
2	Joe Nathan	$28	$28
3	Jon Papelbon	$27	$28
4	B.J. Ryan	$27	$28
5	Roy Halladay	$27	$27
6	Francisco Rodriguez	$26	$30
7	J.J. Putz	$26	$27
8	Francisco Liriano	$25	$??
9	Mike Mussina	$23	$24
10	Mariano 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 Rank	Player	Patton $	Benson $
11	C.C. Sabathia	$23	$22
12	Jered Weaver	$21	$17
13	John Lackey	$21	$21
14	Curt Schilling	$20	$20
15	Huston Street	$20	$23
16	Dan Haren	$20	$21
17	Chris Ray	$19	$21
18	Akinori Otsuka	$18	$20
19	Jeremy Bonderman	$18	$18
20	Chien-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 Rank	Player	Patton $	Benson $
21	Kenny Rogers	$17	$18
22	Ervin Santana	$17	$18
23	Scott Kazmir	$17	$14
24	Justin Verlander	$17	$16
25	Erik Bedard	$17	$16
26	Bobby Jenks	$17	$21
27	Kelvim Escobar	$17	$17
28	Nate Robertson	$16	$17
29	Randy Johnson	$15	$17
30	Freddy 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.