Tuesday, November 09, 2004

Another friend hits the blogs 

Many years ago I met an economist through one of those Usenet newsgroups that are mostly now a legend of the internet. John Palmer and I were not only economists but baseball nuts, and he was living a life I could scarcely imagine, doing radio announcing for the London Tigers in Ontario. We've stayed in contact throughout the time largely by email -- I don't think I've actually seen him at any conference since the ASSA meetings in 1994 or 1995 in Anaheim -- but I still consider him one of my professional friends. This was more true when I was doing more sports economics than I do today.

John writes me today to tell me he has a blog, The Econoclast. He calls my attention to this post on how to develop a measure of the MVP for baseball.

It seems to me that MVP ought to answer the question, "Who contributed the most
revenue to the team?" This criterion, by itself, is probably controversial, since, on the one hand it seems terribly crass in that it relates value to something measured in dollars; and on the other hand, it ignores cost in its definition of value.

In my mind, there is no doubt that Barry Bonds displayed the most "units of playing ability" of anyone in the majors during 2004. But that doesn't necessarily mean he contributed the most to his team's revenue.

... When the Giants came to town (well, not my hometown of Clinton, Ontario [pop. 3200]) or were on tv, people wanted to watch. And so he probably contributed a great deal to his and other teams' revenues.

But put him on a slightly better team, and his contributions would have been worth a great deal more to the SF Giants. His team would probably have made the play-offs and would have had a better chance of advancing to the league play-offs or World Series. So maybe someone else (Beltre? Edmonds?), who is not as good a player as Bonds but who had the good fortune to have better teammates, actually had a larger incremental impact on revenues for their teams.

That emphasis on team production is admirable though very difficult. The good folks at Baseball Prospectus attempt to make such measures through things like Value over Replacement Player to measure what a player contributes over what would be available in the free agent market. Think of all the different places this thought could be used (I'm thinking about college administrators -- yes, VORP could be negative.)

If this kind of thinking interests you, visit John's site, along with Craig Depken at Heavy Lifting (who is currently incensed over stadium issues) or Skip Sauer's The Sports Economist, who is almost as econoclastic as John.

UPDATE (11/10): I wrote to John later in the day about his post:
You're right that there's an implied mapping from runs to wins, from wins to attendance, and from attendance to revenue. There are several places for slippage in that mapping. What if you play at Fenway? The place will sell out for the next five years even if they finish behind the D-Rays for the next four. It reminds me of a paper about 20 years ago in which it is argued that economics implies the best teams (in terms of making efforts to win) will have fickled fans. Is this the source of the Cubs curse?

To which John replied:

What is the [marginal revenue] of an additional win for the cubs? Well, it's greater than zero, considering the expected revenue from the playoffs. But if the sell out and if they get good tv ratings anyway, they have less incentive to hire more talent and win.

That having been said, back in the summers of 66 and 67 when I lived in Chicago, the cubs were often lucky to get as many as 5000 fans at a weekday afternoon game. The team was awful, and baseball was boring.

Your same analysis applies in spades to the Toronto Maple Leafs. They haven't won the Stanley Cup since, when? 1964? I have argued often that this results from hard-headed profit maximizing, and that it would be a sign of bad management (or random luck) if they actually did win something.

I believe actually it was 1967 when the Leafs beat the Canadiens for their last Stanley Cup. But John's the Canadian, so what would I know?