Roster Construction Theory
Before you ask, yes, the off-season plan post is coming. Patience.
Today, I want to spend a few minutes talking about a little bit of theory of roster construction that kind of gets lost when we begin to discuss the positives and negatives of certain moves. The concept is that of the escalating value of wins – is a four-win player more valuable than a pair of two-win players? Most people would say yes, and they base their conclusions on transactions around a paradigm that reflects that belief.
There is some real logic behind the theory. Regardless of resources, every team has to fill 25 roster spots. If you have a significant financial advantage, you don’t get to buy more players – you still only get to go into each game with 25 guys. So, in order to maximize competitive advantage, rich teams try to consolidate as much value as possible into the spots on a team that mean the most – the nine everyday players, three or four starting pitchers, and a couple of late-inning relievers. These 14 or 15 roster spots take up a bulk of the payroll, and the quality of a team is generally decided based on how much value you can cram into those 14 or 15 spots.
With a limit on how many good players you can have, the way for one team to beat another is to maximize value from those players. That constraint then serves to inflate the value of premium players. If you have a six win player at the same position your opponent has a three win player, he can’t make the two teams equal again by just adding a three win player, because those six wins cost him two roster spots. Your six win player and open roster spot is still a better arrangement for win maximization than his pair of three win players.
There’s also a scarcity of real premium players in baseball. There are perhaps a dozen or so guys who could be expected to put up six win seasons on a regular basis, so if you have one of them, the odds that your opponent also has one go down as well. Without a true superstar, you simply can’t build a roster that has as much upper-end potential. Even if you were able to fill out all 15 important roster spots with above average players and avoid any glaring holes in the 10 role player spots, you’d still be looking at a ceiling of something like 95 wins.
So, based on that, it should be fairly obvious that premium players are exponentially more valuable than combinations of lesser players, even with equal total win values, right?
Not necessarily. The potential upside is certainly higher, but value is not just derived by best case outcomes. In reality, value comes from the expected return and the inherent risk of not receiving that value. If you’ve ever invested in the market, you’ve certainly been told about the value of diversification, and how the best way to build wealth is to spread your investments around in order to avoid losing too much due to the failure of any one asset. The value of diversification is true in baseball as well, and works against the increasing value of wins for premium players.
Just as the upside of a team that has consolidated value into premium players is higher, so is the downside. If you have one six win player who hits the disabled list or suffers a significant drop in performance, you can lose the entirety of that value in a single blow. Ask the New York Mets about how quickly a few injuries can destroy a season – they lost double digit wins off their roster when Jose Reyes and Carlos Beltran missed huge chunks of the season this year. The fact that the Mets had two players of that quality was one of the main reasons the team was expected to be a force in the NL, despite some glaring problems with the rest of the roster. However, when they lost those guys, they took a massive hit from which they weren’t able to recover.
Premium players offer both more reward and more risk. For many people, they look at the increased reward and conclude that star players are more valuable, but they do not also account for the increased risk as well. Major League teams do, however.
The linearity of the value of wins is one that has been studied quite a bit by folks like Tom Tango (Mariner employee, noted statistical wizard). Over time, we simply do not see evidence that teams have been more willing to pay premium prices for premium players. Instead, teams have paid for wins on a linear scale at the current market rate. If you are a one win player in free agency, you’ve generally received the market rate for wins. If you’re a two win player, you’ve received double the market rate. Three wins, triple the market rate, etc…
Major League teams have looked the increased risks and rewards of consolidating value into a single player and decided that they’re basically an even trade-off. When faced with a choice of how much to pay for one six win player or two three win players, the dollar values are generally equal. The premium players get one tangible payoff that non-premium players do not, and that’s contract length.
The best players get really long deals – anywhere from six to ten years. Good but not great players get paid on the same linear scale, just for three or four years instead. In order to secure the rights to a premium player, teams are willing to give out longer guaranteed contracts, but not go significantly over the market rate in terms of wins added. If you’re a five win player, you’re going to get $20-$25 million per season, and all you’re really fighting for in negotiations is guaranteed years and perhaps some perks like a no-trade clause.
That teams see the risk/reward trade-off as mostly equal is interesting. I don’t think most fans do. You’ll remember that the people who liked the Erik Bedard trade from the M’s perspective were also those who were critical of the J.J. Putz deal – in both situations, they sided with the team that consolidated their value into the “best player” in the deal. There’s an old fantasy baseball cliche that you’ll still hear repeated from time to time – the team that gets the best guy wins the deal.
It’s just not that simple. Even if Erik Bedard had stayed healthy and pitched well over the last two years, the M’s would have still been big losers on that trade, because they paid a price far beyond what he was actually worth. They overestimated the value of having a star on the roster. The reward wasn’t as large as they thought it was, and they undervalued the inherent risks of tying your cart to one injury prone horse.
Premium players are great. But you have to be careful not to ascribe more value to them than they actually have. Building a team around a few really good players is one way to build a winning team, but it also introduces a higher level of risk than diversifying equal value over the entire roster. One way is not necessarily better or worse than the other. You can win with a core group of stars surrounded by competent role players (the 2009 Cardinals, for instance) or you can with a whole lot of good players and few great ones (the 2009 Angels).
Either way can work, as long as you execute it correctly and value players the right way. You can either bet on a few great players or a bunch of good ones, and both roads can lead to success. The key is correctly discerning how good a player is and what kind of value they really add.
The M’s hit home runs by diversifying last winter, turning one overvalued player into a bunch of undervalued ones. This winter, they might do the exact opposite, turning a collection of decent players into one better player. Just remember that, regardless of what kind of move they make, we still need to judge it on the merits of the individuals involved, and not on some big picture theory that doesn’t hold true. The team that gets the best player doesn’t always win the deal. One six-win player may not be more valuable than a pair of three win players. It all depends on the context.