Visiting Column #7 -- Declining Value of WAR

If you are a baseball fan -- and if you are, you already know this is to be a piece on baseball -- you have hear the term "WAR."  You may know what it means, or not, but you know it is something important.

A very quick explanation: WAR stands for "Wins Above Replacement", and is a fairly recent metric used to evaluate major-league players.  Essentially, it boils a whole bunch of evaluative factors -- hitting, base-running, defense -- into a single number that represents how many more wins a player's team achieved with that player on the field, vs. what the team would have had with a "replacement player", i.e., a player brought up from the minors.  There is also a version for pitchers, but let's ignore that for the moment.

WAR is cumulative; you can speak of the number of WAR earned during a season, or over a career.  So a player with skills exactly those of a rookie brought up from AAA would be rated at a 0.0 WAR, while a player with a 10-WAR season (or even more) has had a historically phenomenal year.  For example, two position players -- Mookie Betts (10.9) of the Red Sox and Mike Trout (10.2) of the Angels -- had WAR over 10 in 2018.

Finally, there are several versions of WAR out there, depending on which source's formula is used; primarily we use either bWAR or fWAR, named after the site that computes it.  They differ in minutiae regarding the value of things like base-running, but regardless, both use the currency of wins, boiling their analysis into number of wins a team earns vs. a replacement player in the position.

I bring all this up not for statistical purposes, but for a monetary one.

We of an analytic bent couldn't help but try to take WAR a step further.  Major league salaries are always an interesting topic, at least to me, since I write about them a great deal.  And as I write this, there is a fascinating dual case of two outstanding free agent players who are both excellent, young and, as the equipment trucks are already en route to Florida and Arizona for Spring Training, without a job.

We are talking, of course, about the shortstop Manny Machado, late of the Dodgers but mainly an Oriole throughout his career, and the outfielder Bryce Harper, a National through the expiration of his contract this past October.

Fans have been anticipating this offseason for several years, when it seemed that both would be free agents in the same season.  Machado toiled for the low-budget Orioles, who couldn't afford him, and Harper played for Washington, which could afford him and offered a huge contract while he was still a player there, but he is represented by Scott Boras, an agent who insists his players go to free agency.  So this was coming.

Needless to say, countless words have been written in the press about the gargantuan salaries each would get, and where they would fit into the small number of teams which could actually afford such numbers -- and had an actual opening.  And those numbers were huge -- multiple articles had forecast Harper getting $400 million over ten years, even though no player has ever gotten close to an average annual value of $40 million.  Machado was not far behind.

They had projected these numbers based on WAR, of course.  They used very common schemes that in recent years have put a dollar value on one point of an arbitration-eligible or free agent player's WAR -- four or five million or so, although I really can't tell you what the current analysts use.  I can't tell you because I really don't care; salaries to me are based on such varied criteria that I think such ratios are of no real value.

But they're out there, and they were used liberally by players, agents and teams.  More importantly, they are used constantly by the media to project ludicrously-high salaries -- and, as they say, "sell papers."

That, friends, is a mistake.

The mistake is that, even if you concede that a ratio could hold for players in the lower echelons (i.e., for whom all 30 teams could financially compete), it is not a linear relationship.  That is, once you are talking about a top-rank player in the $20 million/year or higher bracket, the parameters change.

There is a finite supply of those players, but the demand dips accordingly.  In the case, say, of Harper, more than half the teams simply can't afford him; they can't afford to tie up that high a percentage of their payroll in one player.  At least two of the big-money teams, the Yankees and Red Sox, have full outfields and simply don't need him. 

As I have written, it isn't whether (in this case) Harper is "worth" $40 million to such teams, but whether the upgrade over whichever outfielder would be replaced is worth the difference in salary, and in those cases, he simply is not.

From what can be believed in the latest press accounts, the actual salaries are going to be much less.  Machado has only 3-4 teams even negotiating with his agent, including the White Sox, Phillies and maybe the Padres, while Harper is talking with Washington, the Phillies and maybe the Dodgers.  But for now, it is just talk.

And the numbers we're hearing are nothing at all like the talk -- we hear that Machado was offered "only" $175 million over six years from the White Sox and may not even have another offer, while Washington appears to have confirmed that the ten-year, $300 million offer to Harper they made last year is still on the table -- or maybe not. 

The potentially 10.0-WAR players simply are not seeing the dollars-per-WAR curve apply to them -- and Machado has never had over 7.0 WAR in a season, while Harper hit 10.0 in 2015 but has not been not over 7.5 since.

I believe that is because the ratio, so touted by the people who create it and swear by it, is not a linear but an asymptotic one, that is, it flattens as salaries approach the ridiculous levels.  It has to, since the demand factors that are maximized when we're talking about an "average" or "good" player, are minimized when only a few teams can participate.

WAR, from whichever source, is an excellent way to ascribe value to players, both seasonally and over a career, expressed as wins added.  But salaries are simply not proportional, and while arguably they should be, or at least should approximately be, absent a salary cap and present enormous greed (and a hyperactive media), they simply won't be what people think they are.

Owners learn, too.

Copyright 2019 by Robert Sutton
Like what you read here?  There are over 1,000 posts from Bob at www.uberthoughtsUSA.com, and after four years of writing a new one daily, he still posts thoughts once in a while as "visiting columns", no longer the "prolific essayist" he was through 2018, but still around.  Appearance, advertising, sponsorship and interview inquiries cheerfully welcomed at bsutton@alum.mit.edu or on Twitter at @rmosutton