Congratulations to MattS - Baseball Prospectus Idol Finalist!
by WholeCamels on May 18, 2009 8:12 AM EDT
Email
Print
via www.baseballprospectus.com
Our very own Matt Swartz ("MattS") has been selected as one of the ten finalists in the inaugural BP Prospectus Idol competition!
Think "American Idol," but with only half the garish costumes and only about two-thirds as flamboyant as Adam Lambert.
Finalists were selected from entries submitted last month and reviewed by a panel of BP editors. Matt's audition piece, "Why Teams Do Not Spend More on the Draft," is viewable here.
Readers will have a chance to vote for their favorite writers/articles in the coming weeks; there's no voting this week. The process will continue as follows:
Once we get down to the ten finalists (all of whom receive a one-year subscription to baseballprospectus.com or a one-year extension for existing subscribers), we will ask each of them to submit a piece once a week around a baseball-related theme of our choosing. We will publish all of the contestants' articles for the perusal of the subscribers with the comments of the three judges, and then the voting will begin. In order to avoid ballot stuffing, and to serve our customers better, only BP subscribers will be voting for who they want to read going forward. We'll cut one writer a week based on the lowest vote total, and we'll eventually get down to a winner.
So if you want to support Matt, and you haven't done so already, I highly recommend you head over to Baseball Prospectus online and register today.
Again, Matt, congratulations. My only advice to you is to show lots of leg... it seemed to work for Carrie Underwood.
25 comments
|
0 recs |
Do you like this story?
Comments
Matt
Are you allowed to get outside proofreading and editorial assitance (not that they could enforce a prohibition anyway…)?
Plenty of good writers here if you want any help.
By the way
I don’t mean to imply that you need the help.
That would be great. I may not finish in time to actually email it and get comments back and I do have some help from my wife and my friends in editing, but by all means, I’d love more comments. My email is swartzm@econ.upenn.edu, so please feel free to email me if you want to help but don’t feel obligated. My article for this week’s topic should be done before the deadline. Thanks so much!
Some thoughts on the PD article and some fodder for the future
You presume that the goal of all the participants is to win. This may not be true, and the motivations are therefore more complex. Some owners and groups may be interested primarily in rent seeking as opposed to absolute victories, playoff appearances, etc.
New owners, for instance, get highly favorable tax deductions when purchasing a team — the assets are essentially a bunch of contracts and goodwill. The presumption is that no more than 50% of the purchase price of a franchise can be allocated to intangible “contract” rights: http://www.irs.gov/businesses/article/0,,id=174885,00.html.
A highly simplified example excluding stadium rights, concessions, and media rights follows: Even so, if you buy your team for $500,000,000 and you have 25 players under contract for an average of 3 years, you can allocate $250,000,000 in value to those rights and depreciate them over the lives of the contracts. In other words, you can get about $250,000,000 in deductions over 3 years, allowing you to offset income that is likely at exceptionally high marginal rates (given the economic profile of your average nouveau riche owner). That is an extraordinary benefit (and one lost once the team is sold, since recapture will be murder, but still will occur at relatively favorable capital gains rates).
Perhaps an idea for Matt to evaluate down the road might be the behavior of “new ownership groups” compared to stable ownership groups.
Back to his point, though — some owners may view the team as an opportunity to (1) shelter several years of income with offsets followed by (2) a chance to create a cash cow in transfer payments from MLB for salary luxury tax and (3) develop enough talent to push out the door as free agents to get draft picks, allowing a low-price champ strategy to emerge. Following the generation of enough young talent in this practice (along with perhaps some choice slot busting of signing bonuses) the team may be viewed as valuable enough to generate actual capital gains on resale as well as coverting that ordinary income to long term capital gains, taxed at favorable rates.
Is there a team profile that matches this strategy? I can’t think of one, but it would be very rational. The point is that a simple analysis of wins/losses as the end goal may miss the point in some areas.
Matt: I am aware that you are likely limited by length of article, and in other important ways. You can’t really present a global, all-inclusive view. OTOH, it might be interesting to summarize the MLB teams to (1) ID the main strategies being followed as well as to (2) ascertain which strategies each team appears to be following, and (3) compare the respective degrees of success within the category.
Remember the Phitans
by RememberthePhitans on May 18, 2009 11:31 AM EDT reply actions
F/U re Section 197 property and recapture
Looks like contracts are Section 197 property that is subject to recapture at ordinary rates per Section 1245, so tax arbitrage can’t be part of the equation here, at least for the amortized portion of the purchase price, unless more complicated assumptions come into play (changes in tax rates, etc.). There is the time value of money, however.
The F/U in the subject line is therefore “follow up” or the classic Philadelphian riposte. Either way, it is apropos today.
Remember the Phitans
by RememberthePhitans on May 18, 2009 11:39 AM EDT up reply actions
Upon reflection
“traditional” would have been a better fit, but it still worked. And I actually meant “up” more than “you”. Anyhow, I couldn’t resist. Thank you, thank you.
Remember the Phitans
by RememberthePhitans on May 18, 2009 12:23 PM EDT up reply actions
You definitely seem to have some sort of training in stuff that I don’t really know about, and I appreciate the comment. The way that you phrase your argument is similar to arguments in common squabbles between economists and MBAs, and between economists and lawyers. Basically, you are absolutely right that there are a million and one other things to consider when evaluating this kind of thing. Economists generally work in the abstract to highlight certain tradeoffs. While there are a million other factors at play, if you can isolate a general principle, you can learn about the world without getting lost in the exceptions. Here, there is a clear tradeoff: pay below market value for talent now versus decrease the incentive for your competitors to forego paying below market value for talent later. While individual teams may or may not subscribe, this is the tradeoff that needs to be highlighted. Individual teams will consider a number of factors, but there is certainly a clear benefit and a clear cost to cooperating, along with other costs and benefits that vary from team to team and player to player. Thanks for the comment though.
The draft question is one I've pondered though
This is one area, FWIW, where there is an economic point to be made (and this seems like a good application of game theory).
An interesting question might be how can the “game theory-ness” of the analysis be measured?
I have always wondered why teams didn’t just bid for talent if they could afford it, which, IMHO, the Phillies can. If they can, and they derive no real benefit from it (and arguably they do not, other than lower cost).
Your article is, of course, BP-perspectived, rather than Phillies perspectived. From the standpoint of those others here, a reasonable question might be “Why do the Phillies not pursue higher value draft talent?”
I’m guessing that the reason is that the ownership cabal has placed constraints on the budget. More or less, the position of the owners here is not “win at all costs” (and why should they take that position, honestly — they have no obligation to bankrupt themselves in pursuit of my happiness). It is rather: have an efficient means of fielding a competitive team.
There are clearly limiting economic considerations for each team. Your article has me thinking about what those are (market size, revenue sharing, reserve clause, free agency pros and cons, draft pricing, etc.) and how each team is faring within its class and within the market-imposed constraints and self-imposed constraints that exist.
Just thinking out loud here. There’s no destination yet.
Remember the Phitans
by RememberthePhitans on May 18, 2009 4:47 PM EDT up reply actions
Factors
I think the gist of what I would like to see ultimately is sort of an Ownership OPS+: take major factors that can be tracked, remove chance as best as possible, and determine which teams over (say) the last 7 years have really been effective at winning games.
Distilled to its essence, I suppose that’s it. It’s hard not confuse that with “effective at making money” or “pursuing some other goal” that might add noise. After all, profit maximization may not provide for winning, but if ownership wants PM, then judging the effectiveness of how the team operates by looking at win/loss might not make sense.
I need to go do some googling and collect my thoughts a bit.
Remember the Phitans
by RememberthePhitans on May 18, 2009 4:52 PM EDT up reply actions
i see what you’re saying. my general point, more or less, is that it’s not just about total budget. the teams determine their major league payroll by figuring out a budget that makes sense given the players on the market and everything. but they determine their draft budget differently, suppressing it below what would be rational looking only at individual resources and talent available, because there is an effect on the behavior of others.
Way to go Matt! Well deserved. I’ll be pulling for you.
p.s. I didn’t realize you went to Penn. So do I.
i assume you never had me for econ, right? i taught a whole bunch of wharton students in your graduating class when i TA’d for howard pack. a whole lot of other wharton people came to my recitations too that year. you and i probably know some of the same people! :)
Nope. Never have had econ…and don’t plan on it hehe. I did take Stat 111 with Shane Jensen freshmen year. I am sure you know him/know of him. He mentioned that he had been doing some interesting stuff with statistics and baseball—don’t remember the specifics.
I do know a bunch of Wharton kids so it would highly improbable that we DON’T know some of the same people. Small world.
regarding Manny
Accepting MattS’ premise, that the Phillies and Mets are both “good boys” in the eyes of MLB vis-a-vis cooperating with the loosely defined slotting arrangement, one wonders if both front offices were “tipped” by somebody at MLB regarding the investigations of Manny Ramirez and his PED problem. Both teams were rumored as possible destinations for Ramirez, with the Mets need at that position (and ability to pay!) glaringly obvious.
Further to that point, Minaya probably still has lots of friends at the league office from his time as Steward GM of the Montreal Expos, and the Phillies with the Giles connection and reputation for toeing the line are probably friends of MLB as well.
http://www.thegoodphight.com
Quite an accusation there! Still, I wouldn’t be surprised. The league may have additional enforcements mechanisms like that. It is absolutely bizarre that the Mets didn’t sign Manny or at least try. It seemed like such an incredibly obvious way for them to get better, especially late in the offseason. Then again, there is the alternative possibility that Minaya is a moron. He could have been tipped off or a moron, really.
far afield
Yes, it’s an outrageous accusation in the vein of the Fox News School of Journalism, and predicated on nothing but circumstantial evidence, but it still seems very weird to me that not only did the Mets not pursue Manny, they were extremely adamant about not even being interested. You’d think they’d at least feign interest to drive his price up…
http://www.thegoodphight.com
Comments For This Post Are Closed
Secondary Sidebar
User Tools
FanPosts
Community blog posts and discussion.
Recommended FanPosts
Recent FanPosts
Next Game
Philadelphia Phillies
@
Chicago Cubs
Thursday, May 17, 2012, 8:05 PM EDT
Wrigley Field
Mostly clear. Winds blowing from right to left field at 5-10 m.p.h. Game time temperature around 65.
In Association With
Big League Stew - MLB - Yahoo! Sports
- Gary Sinise’s first pitch was not worthy of an Oscar
- Photo: Yu Darvish gets a big head, lowers his ERA to 2.60
- The Juice: Another Albert Pujols home run sighted, Orioles beat Royals in 15
- Will Rhymes faints after getting hit in arm with pitch, but he’s OK
- Jamie Moyer legs out infield single, drives in two runs
