Saturday, February 21, 2009

Dustin Pedroia 2009 (and regression to the mean)

Anonymous doesn't have a good feeling about Dustin Pedroia this year.
I play in a 4x4 keeper...Pedroia is available in this year's draft. I can't see him climbing past $30.
My raw, uninflated bid for Pedroia in the CBS Sportsline auction was $31. As my regular readers already know, Pedroia went for $40. Way too much.

As far as what Pedroia's price should be, I'm inclined to agree with Toz
In a keeper league, with inflation, at 2B, I'll be paying $30 or more for Pedroia.
My "regular" A.L.'s inflation rate is typically 20%, so if I get Pedroia at $30, it's a no-brainer, and probably a bit of a bargain. It's when a look at that $31 raw bid again that I start to feel a little clammy.

Thirty-one dollars with a 20% inflation rate puts Pedroia at $37. That sounds...wrong. Or - right or wrong - it sounds like an amount I'd never be willing to pay for Pedroia, inflation or no.

Why would I have any kind of bad feeling about a player who earned $34 last year, nearly put up a 20/20 season, won an MVP award, and hit .326?

Top 10 Gainers 2006-2007, 2008 Hitters
#
Player$Sal
+/-
AP
SW
2007
2006
1Carlos Pena
$21$26-5
$23$26$31$1
2Ryan Braun
$33$37-3$29$37$26
3B.J. Upton
$31$33-1
$34
$37$30$4
4
Hunter Pence
$22$28
-6
$28
$25
$25

5
Troy Tulowitzki
$7$27-20
$26$26$25$1
6Chris Young
$19$29-10$24$23$24$2
7Jose Guillen
$18$13+6
$15$12$24$3
8Corey Hart
$26$28-2$26$25$30$10
9Magglio Ordonez
$28$25+3
$28
$26
$42
$22
10Alex Rodriguez
$38$47
-9
$42
$43
$53$33

Average
$24$29-5
$28$28$31$8

The chart above lists the 10 Major League hitters who made the biggest gains - in Patton $ - from 2006 to 2007. Their prices - while not absurd - were a little too high
in retrospect.

The market tries to compensate for this on the seasoned veterans. Pena, Guillen, Ordonez, and A-Rod all take pay cuts. Guillen and Ordonez's pay drops seem a little silly looking back. Conventional wisdom suggested that both of these players would fall, but the market turns their back on both of these guys until they're as certain as they can be - in March - that they'll turn a profit.

But the rest of these hitters are young up-and-comers. Of this subset of this grouping, only Hart gets a slight pay cut. The rest of these guys get raises, and all of them lose money.

Again, it's not a significant amount of money across the board. But it's enough to make you want to temper your bids just a little bit on the young up-and-comers in 2009.

Inflation makes this a tougher game to play. If I pay what I believe is par for Pedroia ($31) in a non-freeze league, and he provides the same ROI as the players above, I've got a $26 player. I don't want to lose $5 on Pedroia, but I can live with a $5 loss - particularly because I can count on one hand the American League middle infielders I expect to earn $25 or more.

If I pay inflation par, though, I've now sunk $37 into a $26 player. The return on my investment drops from 82% (26/31) to 70% (26/37), and it's going to be that much harder to field a competitive team.

Maybe I shouldn't be too worried; Pedoria doesn't make the list of the Top 10 gainers from 2007 to 2008.

1) Carlos Quentin ($28 gain from 2007 to 2008)
2) Joey Votto ($26)
3) Jorge Cantu ($25)
4) Alexei Ramirez ($24)
5) Evan Longoria ($22)
6t) Jacoby Ellsbury ($21)
6t) Josh Hamilton ($21)
6t) Ryan Ludwick ($21)
9t) Mike Aviles ($19)
9t) Manny Ramirez ($19)

3 comments:

Frank said...

I've been wondering lately whether you, Mike, apply inflation strictly by the numbers when you set your bid prices, or you finesse the numbers a little bit by employing some subjective judgement about a player's worth. Based on the fact that you would limit your bid on Pedroia to $31 even though inflation par says the price is $37, I think, gives me my answer. That's the approach I take, too.

I've had Pedroia at $10 in one keeper league for the past two years, and now I have to either cut him, freeze him, or extend his contract ($5 increase in salary per year for one or two additional years). With this particular team, I have an excellent keeper list, and I'm questioning whether I should extend Pedroia for one year or two. I'm not hung up on whether Pedroia will be worth $20 per year for the next three years because, barring injury, I think he will be, but because I think I can win the league this year, I wonder if I should settle for two more years of Pedroia at $15 in order to save that extra $5 for the auction. When you have a legit shot at your league title, does it make sense to sacrifice some future value in order to maximize current value?

Eugene Freedman said...

Frank- two questions you have to ask yourself-
1) Will the extra $5 matter for you at the draft?
2) Will adding years to Pedroia's contract offset the $5 b/c he has more dump value?

If a 3 year Pedroia contract at $20 means that you can get upgrades over a lot of your roster, but a $15 Pedroia means fewer upgrades, then by all means extend him and trade him as soon as someone with enough quality upgrades is willing to dump.

Frank said...

Great thought, Eugene! I do think the $5 would be useful at the auction, as every dollar typically is, but you make a good point about the longer-term contract possibly increasing Pedroia's value to a rebuilding team willing to dump. I definitely need to weigh one against the other. Thanks!