One of the best measures, in my opinion, of a player's value is VORP (value-over-replacement-player). This statistic captures the key economic feature of the baseball market - how much one is willing to pay to not use the cheapest (and most readily available) replacement. Anyway, I'm sure many of you have a better grasp of the VORP than I do, so lets leave dicussions of VORP for another time. For the uninitiated check out - (http://www.stathead.com/bbeng/woolner/vorpdescnew.htm)
2005 VORP date from Baseball Prospectus:
Hitters - (http://www.baseballprospectus.com/statistics/vorp_player_by_team2005.php)
Pitchers - (http://www.baseballprospectus.com/statistics/vorp_pitcher_by_team2005.php)
[SKIP TO THE BOTTOM TO SEE THE RESULTS]
What are teams willing to pay for a certain line of stats? The most recent free agent acquisitions should tell us what the current value of baseball production is. Free agents expected to decline are underpaid (except by the Yankees) and free agents expected to blossom are overpaid (Beltran). Free agents with Bradleyesque issues tend to underpaid as well. So who are the remaining 2006 free agent hitters expected to simply duplicate their 2005 stats?
Furcal (27, $13M annually)
Damon (32, $13M annually)
Matsui (31, $13M annually)
Konerko (29, $15M annually)
Jones (30, $5M annually)
Encarnacion (29, $5M annually)
Their 2005 VORPs were 49.4(Furcal), 49.2(Damon), 52.0(Matsui), 56.4(Konerko), 17.7(Jones) and 28.3(Encarnacion) respectively. I omitted Ramon Hernandez since he was injured last year and because Orioles' management has to overpay to attract free agents!
Assuming that the marginal cost of VORP is fixed, i.e an extra $1M buys you the same additional VORP whether you are considering a player with $2M salary or a $10M salary, here is the VORP-to-dollars exchange rate for each of the contracts:
Furcal (49.4/$13M) = 3.8 VpM (VORP per million dollars)
Damon (49.2/$13M) = 3.8 VpM
Matsui (52.0/$13M) = 4.0 VpM
Konerko (56.4/$15M) = 3.8 VpM
Jones (17.7/$5) = 3.54 VpM
Encarnacion (28.3/$5M) = 5.6 VpM
Other than the Encarnacion contract, it looks like the exchange rate is stable at around 3.8 VORP to every $1M for the big ticket free agents. There are plenty of flaws in assuming that the 3.8 exchange rate is constant for all salary levels, but lets just go ahead and assume that and see what we get!
The 2005 Indians offense had a team VORP of 340.1 or a 2006 free agent value of $89.7M.
Here's how the rest of baseball (offense only) stacks up:
That was fun..... Here are the main flaws I intend to fix and the analyses I intend to add after some input:
1. Accounting for defense
My first instinct is to use UZR, but we'll see.
2. Figuring out the marginal cost of VORP
Is the excange rate constant? Do initial increments in salary buy you more VORP?
3. Normalizing the salaries
Clearly the above salaries cannot possibly represent what teams would pay if ALL MLB players were made free agents all of a sudden. KC's offense can't possibly be worth $40.1M! Free agents get paid more in the current system only because every team can rely on cheap production from young players in the players' first six years.
4. Fiding out the 2006 free agent value for pitchers
This is a lot harder because pitchers' stats tend vary a lot from year to year. I need to figure out what a team's statistical expections are when they pony up the money. I'm considering using a weighted 3 year average or going with the latest fantasy stat projections (whose should I use?) to get a feel for what the A.J Burnetts of the world are being paid to produce. I'm guessig the Jays are expecting better than a 1.30 WHIP for $11M a year!
Oakland and Toronto had lower VORPs and lower equivalent salaries but produced nearly as much offense as the tribe. The Tribe clearly had 'sexier' stats, but equivalent production.