Every team has two goals: 1. Win the World Series or get closer to it and 2. Make a profit financially. In order to achieve both the team has to allocate their budget in the most efficient way. They have to treat each player’s contract as an investment and receive the best possible return for their money.
There’s one question however… how do we know exactly how good an investment each player is? WAR is the best current statistic to rate a player’s value. There’s just one problem: WAR doesn’t include the player’s salary. Where is a statistic that shows how much value a player brings to his team based on performance AND cost?
My idea is a statistic based on WAR, (I’m using bWAR specifically, because it’s better at showing how well the player’s stats actually helped the team and in this case their actual talent level. This also means that the way that luck contributed to it is irrelevant) and the player’s salary. I’ll divide the player’s salary by his WAR to find out how much a team paid for 1 WAR. Logically speaking the less a team pays for 1 WAR the better. It also makes sense to know the average player’s WAR and salary. The average player accumulates 1 WAR and receives $4 million per season. In other words on average, 1 WAR is worth $4 million. Paying less than that for 1 WAR is good while paying more than that is bad.
Of course, there’s a big difference between a player who accumulates 1 WAR in a season and a player who accumulates 5 WAR in a season. Paying $4 million per WAR for 1 WAR is paying average cost for average production, paying $4 million per WAR for 5 WAR is average cost for great production. In other words, the more WAR that a player accumulates per season the more value that his contract has. An average season is 2 WAR so anything above that is valuable to the team. On a side note, and average season for a reliever is 1 WAR for $4 million.
Let’s look at what we know:
1. $4 million is the price for 1 WAR.
2. An average player accumulates 2 WAR in a season.
This means that $8 million/1 year should be an average player’s contract. It’s also a contract for average production, since we also know that the more WAR a player accumulates, the better and that we can logically accept that it’s better to slightly overpay to have above average WAR from a position, than to pay less or average for average WAR.
What about decimal WAR? How much is 0.1 WAR worth? There are ten tenths in 1 WAR and 1 WAR = $4 million, so it requires dividing $4 million by 10, which gives us $400,000 as the value of 0.1 WAR.
Let’s take a look at how this comes into practice…
What if a player received a $20 million salary in a particular season and produced 5 WAR? After dividing the salary by WAR, we find out that the team paid $4 million per WAR. That’s exactly how much they should expect to pay per WAR, however they’re also receiving 3 more WAR than the average player produces per season. That is a +3 bonus in WAR over the average player.
What about a $30 million salary for 3 WAR? That’s $10 million per WAR, which is $6 million less than what it should be and overall $18 million less than what the team should pay. They do however get an extra WAR, so -$18 million/+1 WAR.
$4 million for 1 WAR is the standard. Whenever a team pays more or less than that, they’re either overpaying or underpaying. In other words, $5 million is then -$1 million in value and $3 million is then +$1 million in value.
$8 million for 2 WAR is on average how much a team should expect to pay for a player per season and how much production they should expect to receive from him. This obviously proves how much value pre-arbitration players bring to a team. Any additional WAR per year is added value and anything less than 2 WAR is a loss of it.
If a player accumulates a negative WAR, then no initial division is necessary and his entire salary is a negative. It also means that the team lost 2 WAR on the contract. The statistic is basically two numbers: the added or lost financial value and a value in WAR.
Another and much more simpler way of calculating all of this, is by simply assigning a monetary value to the player’s WAR based on the above and then subtracting it from his actual salary.
Let’s call this statistic: “Contract Value” or CV. Is it a perfect statistic? No, but it’s an attempt at finally estimating how much value a player brings to a team based on both his production and contract.
What do you think?