Case 2: Assessing the Value of
Alex Rodriguez
Teresa Sonka
Gail Bernstein
Alex Rodriguez
•First overall pick in the 1993 Major League Draft at age 17
•Played with the Mariners for 5 years
•Set the American League record for home runs by a shortstop
•Became a free agent in 2000
Year
Team
Batting Avg.
Home Runs
RBI
Stolen Bases
1996 Seattle
0.358
36
123
15
1997 Seattle
0.3
23
84
29
1998 Seattle
0.31
42
124
46
1999 Seattle
0.285
42
111
21
2000 Seattle
0.316
41
132
15
Texas Rangers
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Owned by the Southwest Sports Group
The strategy of the founder, Tom Hicks,
was to spend considerable resources on
talent
The Texas Rangers were one of the main
teams interested in Rodriguez
Needed to determine the incremental
benefits of Rodriguez
Wanted to determine an offer price that
would attract Rodriguez without
overvaluing him
Hitter is the Center of Attention
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All eyes are on the hitter and no one notices
the other basemen and outfielders until the
ball comes their way
We don’t notice the third baseman until a
hitter smashes a ball down the third base
line and the third baseman makes a diving
stop to throw the hitter out
o Runs win games and
hitters create runs
o There are more significant
offensive than defensive
statistics
What is the most important offensive
statistic for a baseball player?
A.
B.
C.
D.
E.
RBI
Batting Average
Home Runs
On-base percentage
Slugging average
Important stats according to Moneyball
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Slugging Average: Total Bases/At Bats
Each base is weighted differently
SLG = (1B + (2 x 2B) + (3 x 3B) +
(4 x HR))/ AB
For example, if in 1 inning a team sent 4
people to the plate and 1 got a home
run but the other 3 struck out, the
slugging average would be a 1.0
Rodriguez 2000 Mariners’ season
slugging average: .606
On-Base Percentage
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Measures how often a batter reaches a base
OBP= (H+BB+HBP)/(AB+BB+HBP+SF)
H= home run, BB= walks, HBP= times hit
by pitch, AB= at bats, SF= sacrifice fly
An on-base percentage of 1.0 for a team
would mean that every hitter got on base;
theoretically a team could then score an
infinite number of runs because they would
never get an out
On-base percentage is given a higher weight
than slugging average for this reason
Rodriguez 2000 Mariners’ season onbase percentage: .420
On-base Plus Slugging
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Weighted addition of on-base and
slugging percentages
Convential baseball wisdom assigns
on base percentage a weight of 1.5
and slugging a weight of 1
Paul DePodesta, Oakland A’s
statistician, assigns on-base
percentage a weight of 3
Rodriguez 2000 Mariners’ season
statistic according to the Oakland
A’s weight: 1.866
Runs Created
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According to Bill James:
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Runs Created=(Hits +Walks) x Total
Bases/(At Bats + Walks)
Used to determine how many runs a
team will score
Batting average and stolen bases,
two traditionally important
statistics, not included as factors
AVM Systems
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Founded in 1994 by two former
derivatives traders
Wanted to find the “derivatives” of runs;
to value the worth of each tiny event in a
baseball game and extract luck
Aimed to assign values to the minute
components of a baseball player’s
performance by analyzing the value of
these events on average in the past
Turned every major league diamond into
a mathematical matrix of location points
They did not reference any traditional
baseball statistics
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For example, hits were defined by their
velocity and trajectory
How do these statistics relate to
Rodriguez?
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Rodriguez had both great traditional and
unconvential stats for his 5 years with the
Mariners
The key to the Oakland A’s (a team with
one of the lowest player salary budgets in
MLB) success is recruiting based on
performance statistics
Performance statistics are especially
important when paying huge salaries
Was the Rangers decision to sign
Rodriguez based more on his outstanding
statistics or the glamour factor?
References
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Lewis, Michael. Moneyball. New York, NY:
W. W. Norton & Company, 2004.
Cohen, Randolph B. and Jason Wallace. ARod: Signing the Best Player in Baseball.
Boston, MA: Harvard Business School
Publishing, 2002.
http://www.baseballreference.com/r/rodrial01.shtml
http://www.latinosportslegends.com/stats
/baseball/Rodriguez_Alexcareer_stats_highlights.htm