Tuesday, October 17, 2006

the one-year turnaround

with the anticipated announcement of lou piniella as the cubs new manager upon us, this page sets its gaze upon what his hiring means and what to anticipate going forward.

the situation was evaluated from a political perspective by this writer all along, and it would now seem that jim hendry has succeeded in carving a significant slice of operational freedom from newbie team president john mcdonough. mcdonough demonstrated his ignorance of the on-field aspects of the cubs almost immediately, and he has since said nothing to indicate that he is anything but a baseball lightweight concerned (as fits the company he works for) with marketing and profits. as such, he is (unlike former general manager andy macfail) completely reliant on hendry to run baseball operations, which is perhaps an inherently tragic place to be; and hendry would seem to have used that advantage to wrangle a free hand, the first manifestation of which is piniella.

how piniella fares as an on-field manager in 2007 will be in large part determined by hendry's ability to address a national-league-worst roster in a single offseason, and it must be implied now that he will have "complete creative control" over that process. fiscal control is of course denied him -- those numbers are handed down from tribune tower -- but rumor is afoot about an increase in total payroll to $115mm for 2007, a rise that would correspond to an effort to reverse the abandonment of the club in the second half of this year which this page took as one of the few positives of a dismal season.

this page will believe that payroll expansion when it sees it for reasons having to do with tribco's much larger financial problems above and away from baseball. it should be remembered that radical payroll expansions catch the wind every year around this time. but even such a payroll level -- while perhaps an absolute necessity for this club if it is to harbor any significant hope of pulling off what would appear to be hendry's essential plan since much earlier last season -- may well not be enough.

if the idea in the mind of the current general manager is that he will be given the kind of resources in 2007 that it would take to make this club a winner from what it is now, good old cruller jim is in for a massive surprise. he genuinely seems to think he's going to be given what it would take -- and his dreamy stupidity in this direction in part explains his insane idea of holding his cards instead of folding right now before the 31st in an effort to go much younger and start the sincere rebuilding this club obviously needs.

the other part of the explanation, of course, is that hendry was inked to a two-year extension through 2008 before the start of the year. he has to win soon or not at all.

this page has agitated for months in favor of a deep rebuilding reliant on young pitching and prospect development, and it remains the opinion here that this direction offers by far the more probable, indeed perhaps the only real chance of a long-term turnaround of this sickly franchise. but it has also been noted that has never been the likely course of a general manager with a very questionable track record and only two years left on his contract. that truth puts the tragedy into the inability of tribco to completely clean house and give hendry his walking papers along with baker and macfail.

instead, piniella's hiring would seem to signal another retreading of a shopworn offseason plan -- the one-year crash program with the intention of catching lightning in a bottle.

whatever the final tally of resources marshalled to that cause, the hard truth is that such single-season turnarounds are impossibly rare -- and that in part because, where a meaningful core of inexpensive young talent does not exist, the market all but puts beyond reach the quantity of talent needed to make a winner of a club. the cubs fielded a team at the start of 2006 with a payroll some 21% higher than the major league average, even further above the national league average, and that club won just 66 games -- a radically low (33.6%) efficiency in translating payroll into winning percentage. why? because the team carried very few good players that were still controlled contracts and several free agents who weren't worth a plugged nickel.

that situation is extremely unlikely to meaningfully change in 2007 and in fact will likely aggravate itself. aramis ramirez will be marked-to-market if he stays; if he doesn't stay, the push is apparently on for a-rod, a deal that will not only cost the cubs a similar amount of money as ramirez but likely at minimum a young starting pitcher as well. derrek lee is already very well paid; carlos zambrano stands to be raised to $10mm or more in his final arbitration year if he isn't outright offered a multiyear quasi-free-agent contract. none of these players represents the sort of payroll-efficient production that good teams not playing in the bronx are built upon.

in this page's preseason discussion of payroll efficiency, the cubs were estimated to harbor a probable win total of 79-85 games. the club in practice obviously fell well short of that mark with just 66. why? it is here posited that two reasons dominated: 1) random variation in the correlative between payroll and winning percentage; and 2) inefficiency inherent in the cubs makeup that is a product of having too few young talents and too many derelict free agents on the roster.

the general correlation between team total value over replacement and winning doesn't require a great deal of proof beyond this chart, and won't receive more examination here. previously, this page has discussed payroll efficiency -- that is, winning percentage divided by normalized payroll -- but will disdain that in favor of a vorp efficiency analysis here -- that is, team vorp normalized over the nl divided by payroll normalized over the league. it is felt that this analysis is somewhat more direct and reduces some variation in the correlation.

examining each national league team in particular, however, begins to reveal what factors differentiate teams and offer a window onto how successful teams can be successful. the cubs finished dead last in the league in team total vorp -- meaning that their payroll (approximated with some inaccuracy from hardball dollars) bought very little indeed in 2006. this results in a vorp efficiency of just 54% -- which is to say that the cubs returned about 54 cents of value on the dollar relative to the league as a whole. that is a signal of either some terrible luck or some apocalyptic management.

some of that inefficiency is almost certainly bad luck. but when the disparity between expected returns and actual is so vast, there is almost certainly also a significant component of poor management -- particularly when that inefficiency is persistent over seasons.

examining an extreme case like the marlins is not difficult but yields an important insight. a near-replacement level team (team vorp < 100, for example) with a payroll of only pre-arbitration contracts (team payroll ~ $13mm) would garner a vorp efficiency of 150%. it would also probably be the worst team in the history of baseball. the trick of winning baseball is, from this perspective, not only to be more efficient than your competition but more efficient than a regression curve would predict for your payroll size.

the relationship between normalized payroll and vorp efficiency approximately follows an inverse power law -- which is to say that efficiency becomes harder to obtain the more one spends and generally the better the team is. lucky, well-run clubs with young cores of productive talent fall over the regression line; unlucky, poorly-run clubs with ageing and expensive players and/or unproductive players fall under it.

the cubs underperformed the regression expectation by the greatest margin in the league in 2006, managing just 70% of the vorp total that their payroll would imply, while four of the top five clubs in winning percentage were also top five in outperforming expected vorp efficiency. it seems to this page that the problem of winning baseball is similar to if not the same problem of maximizing vorp efficiency.

how? by finding players who are cheap and good -- some revelation, that, but it carries radical implications. it means that the cubs are already spending as much or more than the team should need to be successful -- and that spending marginally more is not necessarily a formula for reaching the playoffs. it means that a player like ryan howard is immensely more valuable to his team than a player like albert pujols. and it means that free agent rebuildings are, while perhaps palliative, all but worthless in terms of playoff pursuits without an emergent core of young, inexpensive, productive players to underpin them.

if there is an example in the league this year of a team commonly perceived to have bought their way to success, it is either the new york mets or the los angeles dodgers. but both clubs in fact got tremendous production from inexpensive players that truly drove their seasons. the mets particularly reaped the benefits of jose reyes (age 23), david wright (23), john maine (25), aaron heilman (27), pedro feliciano (29) and duaner sanchez (26) in 2006 -- all contributing vorp of 18 or more, none of them making more than half a million dollars. the dodgers, with the press obsessed with high-profile acquisitions like nomar garciaparra and rafael furcal, rode to the nl wildcard on jonathan broxton (22), andre ethier (24), russell martin (23), chad billingsley (21) and minor league signee takashi saito (36) -- again, all contributing vorp of at least 16, none making over half a million.

the cubs, on the other hand, found themselves with only ryan theriot, rich hill and matt murton offering comparable levels of production for the price -- with hill and theriot playing less than half the year. compounded with the previously described problems of clearly below-replacement-value players of any size contract being allowed to languish for far too long for this club, and it is little wonder that the cubs finished at the bottom of the national league in both value over replacement and wins.

the latter affliction is the more easily resolved -- simply removing ronny cedeno and glendon rusch and replacing them with... well, just about anyone will do the trick. but the former -- how does a team come up with a david wright? and just how much of that kind of production would it take to make the 2007 cubs the kind of vorp efficient team that wins in major league baseball?

one can analyze the 2006 model while assuming some changes to guess at the magnitude of what may need be done. presume (as seems likely) cedeno to be substituted by cesar izturis -- himself a (-8.7) vorp player last year and (-4.5) in 2005, but better than cedeno anyway -- and rusch and neifi perez to be substituted by replacement level minor leaguers. further presume derrek lee to have contributed as the 35 vorp player he has long been, and the cubs would have added about 55 runs over replacement while only slightly lessening payroll -- raising team vorp efficiency to 64%, still the worst in the national league. the team would further have had to have added 80 runs over replacement without adding to payroll to raise team vorp to 400, a level which corresponded to 105% expected vorp efficiency outperformance in 2006 -- which is where the division-winning cardinals performed. (for perspective, that is the approximate difference between the mets' reyes and cedeno last year.) and to get to an expected vorp efficiency outperformance level of 126% (the minimum of the other three playoff clubs) the cubs would need to add quite a lot more.

on this view, the plan for a one-year turnaround with the expansion of payroll to $115mm as part of a free-agent buying binge -- presuming uncritically for a moment that it comes to pass -- is fraught with difficulty. a $115mm payroll will normalize to something like 145% of the nl average, which would reduce our regression expectation of vorp efficiency to 72%. in order to become a playoff caliber (125% outperformance of expected vorp efficiency) club, the cubs would have to use that $15-20mm to purchase -- even presuming the conditions set forth in the previous paragraph -- something like 160 runs over replacement, which would drive the projected team vorp up to about 480. of course, that $15-20mm expansion would also have to feed raises for both carlos zambrano and ramirez -- so perhaps it is more realistic to talk about $10-15mm of available cash to go to market with.

consider the elite free agents soon to be on the market this winter, most or all of whom are likely to cost upwards of $12mm a year or more.

jim edmonds20.944.782.6
jason schmidt50.419.467.7
alfonso soriano49.839.431.0
barry zito50.138.126.4
moises alou28.342.440.8
carlos lee47.424.938.7
ray durham48.525.734.5

it should be apparent that what the cubs would need to be assured of adding some 160 runs over replacement in 2007 isn't one of these free agents but three or four, in a buying splurge of not $15mm but $50-60mm.

in short, dear reader, the idea that the 2007 cubs are going to pragmatically solve the problems that beset the 2006 version of the club in free agency is all but ridiculous. even if the 2005 version of mark prior should reappear, his 40 vorp contribution above and beyond the likes of angel guzman would only serve to reduce the shopping list from schmidt, lee and soriano to merely lee and soriano. to be sure, spending more money correlates well with winning -- but without access to an inexpensive core of productive talent that affords the efficiency which allows a club to focus the resources it takes to market, it takes a lot more than $115mm to win.

as this page has said before and now hopes to have shown at least in comprehensive outline, jim hendry has with piniella has undertaken to play a fool's game if they purport to turn the franchise around so quickly using free agency. the only mitigating factor that could redeem 2007 and the years forward would be a flowering of the youthful pitching in which this page has invested its imperiled hope for the future of the club. while that is sincerely hoped for come what may, it would certainly be unexpected so soon. instead, this page is reduced to warily praying that hendry and piniella do not conspire to use the best young assets in trade, bringing in expensive established players on the brink of or well into free agency -- thereby once again setting back the hopes of a long-term revitalization in favor of ephemeral delusions of immediate gratification.

No comments: