October 2013

Quantifying the Quality of Opponents

Many baseball analysts strive to create “context neutral” stats, so they can compare players stats, while minimizing biases. A player’s traditional stat line–batting average, home runs, OBP, slugging percentage, OPS, etc.–are a product of more than the player’s talent level and luck. For example, they are also impacted by the handedness of the pitchers they face and the ballpark in which they play . These factors can be accounted for with evaluating platoon splits or park-adjusted stats. Perhaps because it is more difficult to measure, advanced stats are seldom adjusted for the quality of opponents. Adjusting for the quality of opponents is particularly important when interpreting starting pitcher stats, since we deal with a small sample size of 25 to 35 starts per year, with a start every 5th day, regardless of who is on the schedule. Since talent tends to be clustered in certain Divisions, the unbalanced schedule produces a skewed distribution of opponents. A pitcher in the AL East is likely to be playing a different game than one in the NL East.

I use a simple measure to provide capture the quality of opponents a starting pitcher has encountered over the course of a season–the OPS of the offenses he has faced. More specifically, the OPS of the teams he has faced, against the same handed pitchers. In other words, for David Price, I take the opponents for each of his 27 starts for 2013 and use the OPS against LHP as my measure. If a RHP, faced the same teams, their opposition would be categorized based on their OPS against RHP. For example, Texas mashes LHPs to the tune of a .798 OPS, while they maintain a modest .705 OPS against RHP. On the other hand, the Cardinals hit RHP at a .753 clip, while batting only .675 against lefties. So, it’s not enough to say a pitcher faced the Cardinals or Rangers. It’s also important to distinguish his handedness.

I use a quality of opponents factor in ranking starting pitchers each year. Several years ago when I developed my SPR, I wanted to reduce the context bias that is in our everyday pitching stats, like ERA or K/9, etc. By adjusting for both the ballpark a played pitched in and the opponents he faced, we get closer to “context neutral” in evaluating how well a pitcher performed. Let’s take a look at the landscape for 2013. When we look at pitchers who faced the toughest (and weakest) competition, we find patterns. We tend to find pitchers clustered in the same division and often even on the same teams. Esmil Rogers of the Toronto Blue Jays holds the distinction of pitching against the toughest opponents in 2013. The Yankees and Astros dominate the top 20 pitchers who faced toughest opponents, for two reasons. First, they play in offensive divisions. (It is rare to see a NL pitcher near the top of the rankings, due to the lack of DH in the NL.) Second, both the Yankees and Astros were weak hitting teams in divisions with decent offensive prowess. (When was the last time we could say the Yankees were a weak hitting team? In 2013 they batted .676 against LHP and .686 against RHP, nearly 30 points below the league average.) Five Yankees populate the top 20: Ivan Nova #2, Hiroki Kuroda at #4, CC Sabathia at #11, Andy Pettitte at #12, and Phil Hughes at #19. Houston also had 5 of the top 20–Dallas Keuchel #3, Eric Bedard #6, Bud Norris #9 (including his time with the Orioles), Lucas Harrell #10 and Jordan Lyles #18.

The other end of the list–pitchers that faced the easiest competition in 2013 are dominated by NL East hurlers. Of the bottom 15, twelve are from the NL East. Mike Minor, Julio Teheran, Kris Medlen, and Tim Hudson from the Braves, along with Jordan Zimmermann, Dan Haren, and Stephen Strasburg of the Nats are all bottom 10, along with the Mets’ Matt Harvey. The Mets also have Hefner, Niese and Wheeler in the bottom 20.

So, how wide is the range in the quality of opponents? The top pitchers face offenses with OPS about 4% greater than the league average, while the bottom pitchers tend to face offenses that are 3-4% weaker.  This amounts to about 25 to 30 OPS points difference. Below is a list of the top 20 (faced toughest opponents) and bottom 20 (faced weakest opponents).

Top 20 and Bottom 20 SP Who Faced Toughest

The Yankees’ Magic Number–$189 million

The Yankees spent much of September saying goodbye to an old friend–Mariano Rivera. Perhaps they will spend November and December saying goodbye to the notion of having a payroll below the $189 million luxury tax threshold for 2014. I was among the first to infer their intentions, as I digested the implications of the trade that brought them Michael Pineda from the Seattle Mariners in January 2012. Several days later, on Clubhouse Confidential on MLB Network, I opined that the Pineda acquisition, coupled with the development track of some of their star young prospects (e.g., Manny Banuelos, Delin Betances) could allow the Yankees to do the unthinkable–have a major league payroll of less than $189 million, while maintaining a competitive, contending team. This is the baseball equivalent of re-fueling the airplane, while in flight, and doing so with discount fuel–a pretty nifty magic trick if one can achieve it. A week or so after my comments on-air, Yankees managing partner Hal Steinbrenner stated publicly that the Yankees had ambitions of tucking under the $189 million luxury tax threshold for their payroll.

Make no mistake, if the Yankees can reduce their payroll below $189 million for even one year, they stand to gain significant dollars well beyond the direct payroll saved. They would reset their luxury tax rate from its current 50% level to a step-ladder set of future rates that begin at 17.5%. This means reducing say a $210 million payroll to $188 would save $22 million in payroll dollars and another $7 million in luxury tax. Even if the Yankees payroll escalated in future years, the value of resetting the luxury tax carries forward as the tax escalates over the balance of the current Collective Bargaining Agreement. However, if this quest for efficiency comes at the expense of making the playoffs and challenging for championships, its a bad financial decision. The potential savings pale by comparison to the revenue opportunities from being a reliable participant in October baseball.

Without access to Yankee financial information, it is difficult to project the financial implications of being non-competitive vs. competitive. I have always maintained that the Yankees have more to lose (than any other team in baseball), by failing to be a perennial playoff team. Their entire business model, including their pricing structure is built around being among the best teams in baseball and having more than a fair share of the games biggest stars on their roster. Along with their storied legacy, being the the best team in baseball (or at least in the discussion) is their identity. Given my research and analysis devoted to understanding the relationship between on-field performance and revenues, as well as my experience assessing the motivations and perspectives of fans, I would estimate that a two or three-year run of winning a respectable 85 games per year could cost the Yankees between $50 and $100 million in revenue per season. Add in the impact of the decline in market value of their assets–the franchise, their stake in the YES Network, etc.–and the financial penalty for failing to maintain excellence gets real big, quickly.

There is a lagged effect to winning (or losing). Fans don’t respond immediately. The first signs of fans withdrawing their financial support for a team come in the form of declining TV ratings and the no show rate at home games. In today’s New York Times, Richard Sandomir reported that viewership of Yankee games was down more than 30% this year. No show rates from fans who had purchased tickets, including season ticket holders, appeared to be on the rise at the Stadium this season. I have no doubts that the Yankees leadership will quickly abandon ambitions of going to battle in 2014 with a payroll of under $189 million, if the strategy threatens fielding a dominant team. If Cano is re-signed to a contract with an average annual value of $25 to $30 million, even with A-Rod’s status in limbo, it will be very difficult for the Yankees to acquire the necessary talent to contend for a championship, while staying under the luxury tax threshold. Get ready for the “Under $189 million Farewell Tour”.

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