Adding Value

Free agency started 10 hours ago, and as of today, teams are free to spend money in the market to upgrade their rosters. A lot of teams will do just that, selecting from the available pool of free agents to fill holes on their roster or replace players that don’t live up to their standards. This is the traditional way of improving the organization’s odds of winning – get better players than you already have. It’s generally a really good strategy if you can pull it off.

However, I think there’s an alternate path that may see some gains in popularity as teams attempt to keep their costs down during a tough economy. Rather than focusing purely on maximizing the potential positives, there is value to be had in minimizing the potential negatives. Let me use pictures to explain this better.

Here’s a sample win curve of the probable outcomes for a +1.8 win (roughly league average) player – the probabilities are made up to demonstrate the theory, though I’d bet they’re in the neighborhood of reality.

You’ll notice that this is not a normal distribution. The chance of injury make a disappointing outcome more likely than a breakout, so its not a traditional bell curve, but there are possible outcomes on both sides of the player’s actual talent level. The traditional replace-with-a-better-player method would lead a team to look for a guy who is closer to a +3 or +4 win player, pushing the entire curve to the right. However, +3 to +4 win players are expensive, and if you already have a +1.8 win guy on the roster, the marginal cost is probably going to outweigh the marginal benefit. In turn, you will not be willing to pay full price for those extra wins, and that good player will go sign with a team that has a giant hole at the position, thus receiving the full benefit of their talent level.

But there are a decent amount of teams that don’t have glaring holes on their roster, yet still want to improve their chances of winning. Rather than paying full price to upgrade from a +1.8 to a +3.5 win player, only netting +1.7 marginal wins in the process, perhaps there’s a more efficient way of buying wins, focusing on minimizing risk rather than maximizing return. Or, in graph form, doing this.

Rather than replacing the average player with a superior option, this new graph represents the result of simply having more options. This is a strategy to pursue depth rather than premium talent. It is the baseball version of diversification. Rather than pursuing a single, high-end player with a big contract that still leaves them vulnerable to total loss in case of an injury or inexplicable drop in performance, pairing different types of players can offer similar upside and risk at a reduced cost.

At 5 pm, we’ll look at some teams that may be in the position to do just that this winter