You’re committing ($/Win * Wins * #years) in both cases, so the two three win players are likely getting less total money than the one six win player.

Well written post.

However, the point about linearity in terms of $/win…. I’m not sure you’re correct there. Have you got a link for Tango’s work? I did some work (on my CPU in storage… yikes) that came to the conclusion that the inflation of 2004-2007 was driven largely by mid market guys…. as in, the Pujols’ and Manny’s and Jeter’s of the world did not experience nearly the amount of inflation during that period as did the Carlos Lee and Paul Konerko types. It’s an important point.

Also, have you seen the Guttridge-Wang trade model? http://www.hardballtimes.com/main/article/applying-the-guttridge-wang-trade-model-to-this-years-deadline-trades/

Eminently relatable stuff.

–Adam

My question is: Is this the correct strategy, or are the baseball general managers collectively making a mistake?

If I had the option of a 6 win player and 0 win player, or for the same cost I could have two 3 win players, I would prefer to have the 6 win player. This is because I have a good chance of finding an undervalued 1 win player to replace the 0 win player with, who I can get for essentially free. (For example, see the Mariners acquisition of Ryan Langerhans). The club with a few stars and a bunch of replacement level players is easy to upgrade. The club with a lot of 3 win players is hard to upgrade. I would rather pay a lot for my stars, and then try to fill in other spots with undervalued bargains.

I hope this doesn’t seem like nitpicking, but the premium players absolutely are getting paid more per win added via the contract length mechanism. When you give A-Rod a contract that guarantees to pay him like a 6-win player for his age 39 season ten years in the future, it’s not because you think he’s going to defy aging and/or the vagaries of injury. It’s because you can’t just pay him $4 million per win for the total wins you expect him to produce and get the deal done. Heck, when you give any pitcher a 5-year contract, year 5 can be seen largely as a deferred signing bonus and applied to the $/win of years 1 to 4. Ok, that’s an overstatement, but clearly the projected wins in the out years for a 6-win player decay from the baseline. Yet, the contracts usually guarantee payment at a fairly steady level. The difference is deferred premium for the added value of the concentration of wins in the early years.

I’m not going to argue against your main point, Dave, but your example didn’t work for me:
The best way to build wealth actually is to put all your eggs in a very few baskets if your goal is to be wealthy, and you’re willing to accept the consequences of poor performance. Arguably, this is exactly the situation in Major league baseball (especially before the playoffs were expanded). Winning 88 games doesn’t actually get you much closer to a world series pennant than winning 58. As the Indians have proven, sustaining long, gradual rebuilding phases is about as easy as maintaining a world beating offense of exclusively singles hitters.

The M’s braintrust is better equipped than most to execute a stars-and-scrubs strategy (they recognize the hidden value needed to get almost-average production for peanuts). As you posted weeks ago, the team needs stars.