Tuesday, February 24, 2004
Monday, February 23, 2004
Revenge of the Scout?
Dave Pinto has a post on what will happen when other teams start to use Sabermetrics to identify undervalued players. Of course, once these players are identified, they will no longer be undervalued as more teams will be willing to pay for their services. But Pinto argues that many clubs will actually not follow through with a complete sabermetric strategy, but will probably just identify players with high OBA. He believes Beane will be able to identify undervalued players that other clubs, who only follow the perceived strategy, will continue to overlook.
I’m not so sure. There are a lot of uses for sabermetrics that go beyond the importance of OBA. But I would argue that OBA is the one aspect that gave Beane and others their biggest advantage. So while there are other players with certain characteristics that will remain undervalued, I don’t think they will have the impact that OBA advantage does. I’m also not so sure that they will be able to keep finding new types of undervalued players that will go unnoticed by other ballclubs.
I think it is informative to look at how undervalued assets are found in other markets. You can either look for market inefficiencies on a macro level or meticulously analyze individual assets looking for market mispricings.
Lets say an investment manager is able to earn significant abnormal returns (higher than a market model would suggest) by investing in small cap stocks. This manager wouldn’t even need to hire many analysts, as he would just need to put his money into a diversified portfolio of small cap stocks to beat the market. His hardest work will be in trying to keep this market inefficiency a secret from his competitors (I guess Joe Morgan was write – Billy Beane shouldn’t have written Moneyball).
But once this market inefficiency is discovered by the public the advantage will disappear. Everyone gets in on the game and the price goes up. So what does the investment manager do? Well its real hard to find new market inefficiencies. It is tautological that this would be very hard to accomplish, because for the market inefficiency to exist, it would have to go unnoticed by all other investors. How often can you realistically expect find a new one? And when you do, how long will the advantage last until the rest of the market picks up on it?
It’s more likely that the investment manager will need to increase the number of analysts to try and find individual assets that are being mispriced. Unfortunately, this is a lot harder and quite more expensive (and the returns aren’t nearly as fantastic).
So what does this mean for baseball. Well as the basic logic of sabermetrics is used by more teams, the advantage from using it will disappear. The next step would probably to do more research to try and find the type players who can develop into the desired profile. In other words, don’t be surprised if big scouting budgets return in the near future.
I’m not so sure. There are a lot of uses for sabermetrics that go beyond the importance of OBA. But I would argue that OBA is the one aspect that gave Beane and others their biggest advantage. So while there are other players with certain characteristics that will remain undervalued, I don’t think they will have the impact that OBA advantage does. I’m also not so sure that they will be able to keep finding new types of undervalued players that will go unnoticed by other ballclubs.
I think it is informative to look at how undervalued assets are found in other markets. You can either look for market inefficiencies on a macro level or meticulously analyze individual assets looking for market mispricings.
Lets say an investment manager is able to earn significant abnormal returns (higher than a market model would suggest) by investing in small cap stocks. This manager wouldn’t even need to hire many analysts, as he would just need to put his money into a diversified portfolio of small cap stocks to beat the market. His hardest work will be in trying to keep this market inefficiency a secret from his competitors (I guess Joe Morgan was write – Billy Beane shouldn’t have written Moneyball).
But once this market inefficiency is discovered by the public the advantage will disappear. Everyone gets in on the game and the price goes up. So what does the investment manager do? Well its real hard to find new market inefficiencies. It is tautological that this would be very hard to accomplish, because for the market inefficiency to exist, it would have to go unnoticed by all other investors. How often can you realistically expect find a new one? And when you do, how long will the advantage last until the rest of the market picks up on it?
It’s more likely that the investment manager will need to increase the number of analysts to try and find individual assets that are being mispriced. Unfortunately, this is a lot harder and quite more expensive (and the returns aren’t nearly as fantastic).
So what does this mean for baseball. Well as the basic logic of sabermetrics is used by more teams, the advantage from using it will disappear. The next step would probably to do more research to try and find the type players who can develop into the desired profile. In other words, don’t be surprised if big scouting budgets return in the near future.
Friday, February 20, 2004
New Cubs Site
If you are looking a well designed, intelligent blog about the Cubs, I highly recommend the Rooftop Report. But hey, if you were looking for anything intelligent or well designed, I don't think you would be here.
Wednesday, February 18, 2004
Cubs Make Great Marketing Move
In business, when a company wins a contract they usually have mixed feelings. They're happy that they won the contract. But they also realize that they probably overpaid for it. This would certainly be the case if the Cubs were only bidding on Maddux's pitching abilities.
The details are not yet public, but the Cubs have paid $7.5 million+ for a fifth starter in their rotation. Maddux had his worst year since 1987 and his numbers will probably continue to fall over the next two years. I doubt any other teams were seriously considering signing Maddux for this amount.
However, this is not a bad investment for the Cubs. Even though he left the Cubs high and dry over a decade ago, Maddux remained popular with Cubs fans. And while Wrigley would have remained at capacity with or without Maddux this year, the Tribune Company will be able to recoup their investment through higher television ratings and advertising dollars. Maddux going for his 300th win will be icing on the cake.
So this move actually makes perfect business sense. Assets should be employed by the companies to which they have the most value. And Maddux adds more value to the Cubs than any other baseball organization.
The details are not yet public, but the Cubs have paid $7.5 million+ for a fifth starter in their rotation. Maddux had his worst year since 1987 and his numbers will probably continue to fall over the next two years. I doubt any other teams were seriously considering signing Maddux for this amount.
However, this is not a bad investment for the Cubs. Even though he left the Cubs high and dry over a decade ago, Maddux remained popular with Cubs fans. And while Wrigley would have remained at capacity with or without Maddux this year, the Tribune Company will be able to recoup their investment through higher television ratings and advertising dollars. Maddux going for his 300th win will be icing on the cake.
So this move actually makes perfect business sense. Assets should be employed by the companies to which they have the most value. And Maddux adds more value to the Cubs than any other baseball organization.
Tuesday, February 17, 2004
DePaul On A Run
Things didn't look good for DePaul last month. They were 7-6 overall and dropped their first two conference games. But they turned things around and now stand at 15-7, 8-3.
More importantly, Joe Lunardi, the expert bracketologist, projects them as a tourney team. According to Lunardi, they just need to beat Louisville (on the road) or Cincinnatti (at home) to make a strong case for the tournament.
I'm still not convinced. The only impressive win DePaul has is over Memphis, and that is when Memphis was still working out some problems. But if Joe Lunardi says that DePaul has a good chance of making the tourney, you better believe it's true.
More importantly, Joe Lunardi, the expert bracketologist, projects them as a tourney team. According to Lunardi, they just need to beat Louisville (on the road) or Cincinnatti (at home) to make a strong case for the tournament.
I'm still not convinced. The only impressive win DePaul has is over Memphis, and that is when Memphis was still working out some problems. But if Joe Lunardi says that DePaul has a good chance of making the tourney, you better believe it's true.
Friday, February 13, 2004
Kenny Speaks (To The Hearing Impaired)
After we put the baby to bed at night, I often turn on the TV in the living room with the sound really low and the closed captioning on. Unfortunately, the baby is currently sleeping right next to our living room and there is no other way to watch the boob tube.
My wife can't stand it and usually heads off to bed. We could watch on another TV, but we only get cable in the living room. I suppose I could read a book instead (I'm currently reading Tides of War by Steven Pressfield - highly recommended) but after a long day at work and taking care of the baby at home I can't wait to veg (sp?) out.
Anyway, I was watching South Park on Wednesday night in closed captioning and it was still pretty enjoyable. It had Karl Reiner stuffing his fat ass while trying to ban smoking in South Park by any means necessary.
And midway through the show I notice that the closed captioning is giving Kenny complete, ungarbled dialogue. So if anyone out there is dying to know what Kenny is saying you can turn on the CC and find out. But it's probably not worth it as you can get the jist of what he says through the context of the show anyway.
My wife can't stand it and usually heads off to bed. We could watch on another TV, but we only get cable in the living room. I suppose I could read a book instead (I'm currently reading Tides of War by Steven Pressfield - highly recommended) but after a long day at work and taking care of the baby at home I can't wait to veg (sp?) out.
Anyway, I was watching South Park on Wednesday night in closed captioning and it was still pretty enjoyable. It had Karl Reiner stuffing his fat ass while trying to ban smoking in South Park by any means necessary.
And midway through the show I notice that the closed captioning is giving Kenny complete, ungarbled dialogue. So if anyone out there is dying to know what Kenny is saying you can turn on the CC and find out. But it's probably not worth it as you can get the jist of what he says through the context of the show anyway.
Thursday, February 05, 2004
Fading Illini
Illinois’ big win at Bloomington the other night has momentarily smoothed over Bruce Weber’s rocky start down in Champaign-Urbana. The Big Ten campaign started off with a bad loss at home against Purdue and even worse road loss at Northwestern, stopping a 14 game win streak against the Wildcats. Illinois was also lucky to pull out an OT win at home against a very bad Illinois State team just prior to conference play. To top it off Illinois fell out of the AP Top 25 leaving them unranked for the first time in 64 polls. It wasn’t long ago when a national championship just seemed a matter of time at Illinois. Now they will have to win a couple more road games just to ensure an NCAA berth.
Their record at 13-5, 5-3, in not as good as it looks. They have not had a tough schedule and 5 of their first 8 Big Ten games were at home. Two of their remaining three home games are against conference leaders Wisconsin and Michigan State. They currently have an 39 RPI ranking and will probably need to win one of those games to make it to the tourney.
Back in the late nineties it looked as though Illinois might break through to become one of the elite national programs. They had successfully recruited the top three players from one of the best high school basketball teams in state history, Peoria Central, who won three consecutive state titles. It was thought the nucleus of Sergio McClain, Marcus Griffin & Frank Williams would lead Illinois to the promised land. Add to the mix Big Ten freshman of the year, Corey Bradford, Lincoln HS (IL) recruit Brian Cook, tremendous role players such as Damir Krupalija, Lucas Johnson, Robert Archibald and Sean Harrington, and it wasn’t hard to imagine multiple trips to the final four.
Finally, after Lon Krueger left to coach the Atlanta Hawks, Bill Self took over the reins of the program in 2000. While Krueger put the program in good shape, Self seemed to take them to the next level. Coming off an Elite Eight appearance at Tulsa there was no telling how far he could take the Illini.
The 2000-01 season saw Illinois make it to the Elite Eight, where they lost a tough game to the eventual runner-up Arizona. It was the third game against Arizona and the teams were pretty evenly matched. Illinois ended up losing 2 out of the 3 meetings, but I do not doubt that if Illinois could have gotten past the Wildcats in the rubber match they very well could have won their first national championship.
Yet after the loss, there was still reason for optimism. Both McClain and Griffin were gone, but two new recruits Luther Head and Roger Powell were supposed to bring new life to the club. And Frank Williams, Brian Cook, Robert Archibald, and Corey Bradford still made up a solid nucleus. Alas, 2000-01 would be the closest Illinois would come to the Final Four for the foreseeable future.
The last players from that 2000-01 season, Brian Cook and Sean Harrington, have now graduated. Bruce Weber is already taking heat from disgruntled fans. But the problems of the Illini are not entirely his fault. Bill Self left the frontlines without a lot of muscle. Charlie Villanueva may have helped but he bolted along with Bill Self. So after years of pounding people inside with Griffin, Archibald, Cook, Krupalija, and Johnson, Weber is trying to make due with a tall but perimeter oriented player Nick Smith and a talented but young forward James Augustine. After that, the frontcourt is basically made up of swingmen such as Powell, Head and freshman Brian Randle.
The weakness upfront could be overcome with some better guard play but Illinois' talented guard duo of sophomores Deron Williams and Dee Brown have both had problems. Williams, their best defensive player and an improving offensive presence, suffered a broken jaw in the early season. Dee Brown, the “human fast break” is not living up to the potential he flashed his freshman year. Most likely, he was a bit overhyped by the fans, media, and most importantly himself. He will definitely need to work on his outside shot before he can be considered one of the nations top point guards.
I think the Illini will be able to make it to 9-7 in Big Ten play and make it to the tourney. But with a suspect frontline I would look for another second round exit. As for the future, I think it will be a while before Illini fans can again daydream about the final four.
Their record at 13-5, 5-3, in not as good as it looks. They have not had a tough schedule and 5 of their first 8 Big Ten games were at home. Two of their remaining three home games are against conference leaders Wisconsin and Michigan State. They currently have an 39 RPI ranking and will probably need to win one of those games to make it to the tourney.
Back in the late nineties it looked as though Illinois might break through to become one of the elite national programs. They had successfully recruited the top three players from one of the best high school basketball teams in state history, Peoria Central, who won three consecutive state titles. It was thought the nucleus of Sergio McClain, Marcus Griffin & Frank Williams would lead Illinois to the promised land. Add to the mix Big Ten freshman of the year, Corey Bradford, Lincoln HS (IL) recruit Brian Cook, tremendous role players such as Damir Krupalija, Lucas Johnson, Robert Archibald and Sean Harrington, and it wasn’t hard to imagine multiple trips to the final four.
Finally, after Lon Krueger left to coach the Atlanta Hawks, Bill Self took over the reins of the program in 2000. While Krueger put the program in good shape, Self seemed to take them to the next level. Coming off an Elite Eight appearance at Tulsa there was no telling how far he could take the Illini.
The 2000-01 season saw Illinois make it to the Elite Eight, where they lost a tough game to the eventual runner-up Arizona. It was the third game against Arizona and the teams were pretty evenly matched. Illinois ended up losing 2 out of the 3 meetings, but I do not doubt that if Illinois could have gotten past the Wildcats in the rubber match they very well could have won their first national championship.
Yet after the loss, there was still reason for optimism. Both McClain and Griffin were gone, but two new recruits Luther Head and Roger Powell were supposed to bring new life to the club. And Frank Williams, Brian Cook, Robert Archibald, and Corey Bradford still made up a solid nucleus. Alas, 2000-01 would be the closest Illinois would come to the Final Four for the foreseeable future.
The last players from that 2000-01 season, Brian Cook and Sean Harrington, have now graduated. Bruce Weber is already taking heat from disgruntled fans. But the problems of the Illini are not entirely his fault. Bill Self left the frontlines without a lot of muscle. Charlie Villanueva may have helped but he bolted along with Bill Self. So after years of pounding people inside with Griffin, Archibald, Cook, Krupalija, and Johnson, Weber is trying to make due with a tall but perimeter oriented player Nick Smith and a talented but young forward James Augustine. After that, the frontcourt is basically made up of swingmen such as Powell, Head and freshman Brian Randle.
The weakness upfront could be overcome with some better guard play but Illinois' talented guard duo of sophomores Deron Williams and Dee Brown have both had problems. Williams, their best defensive player and an improving offensive presence, suffered a broken jaw in the early season. Dee Brown, the “human fast break” is not living up to the potential he flashed his freshman year. Most likely, he was a bit overhyped by the fans, media, and most importantly himself. He will definitely need to work on his outside shot before he can be considered one of the nations top point guards.
I think the Illini will be able to make it to 9-7 in Big Ten play and make it to the tourney. But with a suspect frontline I would look for another second round exit. As for the future, I think it will be a while before Illini fans can again daydream about the final four.
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