Washburn and the Winner’s Curse
We’ve mentioned this around here before, but the Winner’s Curse is one of the most important concepts to grasp around baseball valuation. In short: the person who wins an auction is most likely wrong, because they have the highest opinion of the value of the object. Take an oil field, probably the most common example: if ten companies survey it and make a guess at the value, how much oil they can extract from it, of what kind, and how much it would cost, the one that offers the most came up with a set of assumptions that deviated the most from everyone else’s expert consensus, and while they’ll win the auction, they’re probably screwed in how well they’ll do.
Or take Tejada — the M’s thought he was worth x, the Orioles thought he was worth x+y. The Orioles were much less likely to get a good return on their investment.
So here’s the problem with Washburn. One of the arguments about keeping Washburn is that his $10m next year is a bargain in this market, he’s a left-handed innings eater, and so on.
Here’s the problem with that… no one else believes that Washburn’s next year is worth giving up a decent prospect. If they did, someone would have made a deal before the trade deadline. If $10m was a bargain, every team in baseball with a remotely malleable rotation would have lined up to bid.
So we know at least that the remainder of Washburn’s contract isn’t valued highly enough by the rest of the league that many teams will offer a nice package for it.
Moreover, we also know that teams in a pennant race who could use Washburn, where Washburn’s remaining potential contribution could have an enormous return in getting into the playoffs instead of missing them, still didn’t line up to offer prospects for Washburn before the deadline.
So in the mind of 29 other teams:
Washburn 2009+2010 = not worth a decent prospect
Washburn 2009+2010+increased chance of playoff contention = not worth a decent prospect
If the Twins were indeed willing to give up Bonser, that would make them the team outside the M’s with the highest opinion of Washburn’s potential value.
At this point, a rational organization, or one with some kind of internal variety of opinion, would stop for a second and think “I wonder if we’re over-valuing his services. After all, 29 other teams, almost all of which are more successful than us, are coming in far lower than we thought, and that includes teams that we know are really smart and have more to gain from Washburn’s services than we do.”
They might even consider whether this disparity ties into the horrible contracts they’ve been handing out to pitchers for years and years. They might rethink their assumptions, look ahead to next year, and realize that the default option of letting Washburn go for nothing helps the team in the long term.
Not the Mariners. The M’s can manage to lose bidding wars to themselves. And it’s us, the fans, who are going to pay for this continued incompetence until there are massive organizational changes, including those who represent the team’s owners.
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is there an emoticon for plugging ones ears while saying nahnahnahnahnah?
I think the Ms need to use it in their press releases.
Hey Derek, you know those guys who travel around the country giving motivational speeches? Yeah, well, this is the opposite of that.
I’m getting more and more depressed the more this gets analyzed. I can only hope it is being done with the thought that someone within the M’s front office will read it, have a light bulb go off, and do something that doesn’t suck.
When does the free market correction kick in, that should take care of this sort of lunacy?
I’m afraid it’ll be the same sort of correction that we saw with the Sonics, where incompetent ownership results in the loss of the team.
I couldn’t agree more with this post. I also believe that boycotting the stadium and team stores is the only meaningful thing most of us can do. Some posters like to say we are still near to turning it around, we really don’t have that much of a gap to close, yada yada…NO, this team, with this leadership, will suck ad infinitum.
I am just counting the days until a Pirates fan comes along and laughs in my face.
smb –
Already happened to me. My friends from Pittsburgh have been laughing for a couple years now.
I have to say, I’m done rooting for this team until they can start making logical decisions. This mismanagement has been going on for too long.
Is a competent, competitive pro team too much to ask for?
I’m not the biggest Hawks fan but I might have no other choice.
Go Hawks!
Well, look on the bright side…at least the Sounders FC will be in MLS by next summer, so they should at least be worth watching.
A little inaccurate – the winning offer was highest but may not have deviated the most. There could be low bids that deviated more.
This is the first season of baseball where I can honestly say I am proud that I haven’t been to a game at Safeco. I was actually thinking of going to one, but that’s only because we were playing the Rays, a well-run team that is playing great.
I just know that something really needs to happen. Losing Bavasi and McLaren were steps in the right direction. I know we’re stuck with Lee P. and Riggleman now, but you have to start with small steps, right? Obviously, I’d like to see Lincoln and Armstrong go, since I think they are the start of everything that is wrong with the organization. Like they say, shit rolls downhill.
One other thing, and I don’t want to sound to ominous here, but do you think that, if upper management stays the way it is, this will all eventually lead to pre-1995 days again? I remember all of the “baseball is dead in Seattle” talk.
Yes.
I think I’ll print out a few choice USSM posts and save them for November. Then, when the M’s send out the bill for renewing my season tickets, I’ll enclose the printouts with my rejection.
Aren’t we there already? 4 out of the last 5 seasons in dead last?
Excellent post by Derek. The M’s have consistently overvalued their own players, particularly gritty veterans with a club house presence.
For example the M’s look at a veteran’s career year and assume that is the expected level of performance you will get from him. This goes all the way back to Jeff Cirillo, and up to and including Jose Vidro.
The real discouraging aspect is not that the M’s could be wrong in a player evaluation, but their response has always been that “no one would have guessed/imagined that Vidro, Sexson, Silva,
Washburn, etc. would suck. In fact nearly all of the players acquired by trade or free agent signings have been terrible, and this was or should have been known by every hardcore baseball fan.
The USS Mariner has been “right on” in every analysis of the moves by the M’s front office in recent years. I have become an A’s fan because at least fans of the A’s know that their front office is working as hard as possible to implement a plan to make their team a winner.
The M’s can only hope to be lucky while most every other team has a plan to make them a good/better/or competitive team. I agree with others that nothing will change until the M’s blow up not just their team, but the entire front office.
you know, when I first read that header, I took it to mean being cursed with a FO that values the notion that a player is ‘a winner’.
And yet, sad to say, the M’s are still outdrawing the Rays on the season, 1.8 million to 1.3 million. Thus, it can be deduced that: (a) the Puget Sound region has an above-average number of sports fans with masochistic tendencies; (b)
Nascar season has not yet ended in Floridathe snowbird baseball fans have not yet returned to the Sunshine State to catch the Rays awesome pennant run; or, (c) both of the above.This concept brings to mind the current state of the housing market. Some sellers struggle mightily to realize that their house is now worth substantially less than they think, and buyers are becoming more discerning about how they spend their money.
On the other hand, house values will rise again at some point. Washburn’s value… not so much.
Of course, this situation is exacerbated by the M’s approach to player evaluation.
Other teams are using advanced 3-D seismic and magnetotelluric mapping of entire geologic structures, while the M’s are merely smelling and tasting the surface soil at the drill site.
While I agree with your conclusions, I think you overlooked certain aspects of the analysis that would impact valuation. The “Winners” you described can have unique circumstances that cause them to value more their target than other bidders. For example, I think Ichiro is more valuable to the M’s than any other team because of the ties to Japan, Marketing, and…just having a good player on the team. So while Ichiro might only be worth $50 Million to other teams, he might be worth $75 Million to the Mariners.
So what does that mean for the Washburn situation? Sorry…I’m not as smart as others on that. Do the M’s feel they have no other option to replace him in their rotation next year and so JW is more valuable to them? Do they think the market for pitching will be even higher next year so they’re just as good keeping him than trying to replace him?
So I guess what I’m trying to figure out is what is it about Lee that he values JW more highly than other teams?
Generally, attendance lags by a year. 2008 attendance, particularly in the first half, reflects 2007 records.
What were their records last year?
In short: the person who wins an auction is most likely wrong, because they have the highest opinion of the value of the object.
This is true, but only to a point. A logical extension of this is that every free agent contract signed is a bad deal for the signing team (unless you get a player to take a “home town” discount). The sealed bid for Ichiro was a steal; everyone missed the boat there. While the risk is there, sometimes the winning bidder is the one who had the best analytical methods and valuation.
I don’t bid on major league players, but I spend a lot of time bidding in auctions (usually charity auctions, sometimes on EBay). When the Mariners were good, I used to buy lots of Mariners tickets at these events at 50-70% of face value and turn around and sell them for face value or more (and these included Yankees and Red Sox tickets). Heck, I even bought Knicks tickets once. I actually think I was most right about the value of the item rather than being most wrong.
The free agent market is different, but the biggest difference is that so many of the teams are working on really, really bad information. The Mariners mistake isn’t so much winner’s curse as it is being wildly off in valuations.
That’s really the definition of the winner’s curse, though: if you won, you’re likely operating on incorrect assumptions or methodology that led you to overvalue the item.
17: BTW, I wasn’t criticizing the Rays or their front office (who’ve both excelled this season) as much as I was scratching my head as to how the M’s are still somehow outdrawing teams playing way better than them. In theory at least, HowChuck should still only be able to get so much mileage out of the “Experience of baseball at Safeco Field” factor when the team is performing as piss-poorly as it has this year.
Already got my season tickets. That closed my open Sonics wound, but it can’t help with my broken baseball heart. I have Husky tickets this year, too, but that’s like distracting yourself from back pain by burning your fingers with a Zippo.
My last bastion for loser’s retreat has long been the Rangers…as in, thank God there’s a team with a comparable tenure that is more historically inept than ours, and it’s even in our division. Now I think that tide is changing. The M’s have a giant kick-me sign on their back, and the worst part is they paid to have it tattooed there with ticketing revenue.
What has really exascerbated this situation is the FLUKE of 2007. The M’s played above reality and led to an additional year of Bavasi, Sexson, Vidro, Washburn, and to the disaster of the Bedard deal. All of the house clearing should have been done last year instead. If the M’s don’t play above expectations, we clear house last year and still have Adam Jones and a new front office this year.
2007 should forever be known as the Disasterous FLUKE!!
S/B…exacerbated
Though I agree that most Mariner talent evaluations have been wrong over the years, it is also true that anyone can make a mistake. Most everyone, for example, was in favor of Jeff Cirillo at the time. This year, the Bedard trade has blown up in their face but it isn’t as though there wasn’t some rationale for it.
Lee P. just wasn’t going to make many trades unless they were overwhelmingly favorable to the Mariners. This year’s roster and much of next year’s are sunk costs. There is only a marginal benefit to getting rid of Washburn for the rest of this year. Over the winter a better market for him may develop. A one year Washburn cotract at $10M isn’t that big a deal. Heck, weren’t people saying that Weaver at $8M for one year wasn’t that big a deal?
BTW I haven’t seen any posts regarding the Indians, an organization that is admired in these parts. They now seen to be in the middle of yet another rebuiding effort. Doesn’t this show that even when you apply the right tools and front office knowledge the results may not match? Do you think knowing that the right methods were used make the Indians fans feel better?
This year, the Bedard trade has blown up in their face but it isn’t as though there wasn’t some rationale for it.
Nobody could possibly have seen this outcome happening.
[ot]
Probably a career year in ERA sometime in the last 5 years. He probably learned that player evaluation technique from Bavasi.
I’m thinking of Lee P as a robot on Star Trek (TOS) that, when confronted with a logical paradox, would cease to function (sometimes with smoke).
I guess that would be an upside for us. Instead, the Lee robot ignores the paradox and continues to blindly follow its programming.
Well of course, Sometimes you stay on 13 with a dealer showing 6, and the next card is less than 9 and you kick yourself when you lose to the dealer. But it was the right move, and doing that move a dozen times in the course of a few hundred hands will benefit you more than it hurts you. I can’t speak specifically to the Indians, but they are presumably striving to make good moves, understanding that sometimes they are going to be a 2nd-5th place team in their division- and sometimes they’ll be 1st, even though they know on paper they shouldn’t.
If you use the right process, then yes you’ll have some bad breaks or periods of lessened success. Paul DePodesta was linked to from this site recently, talking about that very topic: that the most successful players/organizations are the ones that work on perfecting their process. These organizations know that they can make the right moves… and have them not work out. They understand rebuilding years happen for most teams not called the Yankees. The danger is exactly what happened in 2007: you have bad process but a good outcome, and end up repeating or magnifying the mistakes you’ve been making.
Oh, it was always a possibility but this is clearly the worst outcome expected. Just look at the community projections for Bedard.
Really, its sad but the Washburn contract this year and the Bedard trade last winter are far from the worst mistakes made by this organization in their run to their current situation.
Safeco is still one of the best palces to watch a ballgame despite the home team’s record. Kind of like Wriggley that way.
This looks like a good blog.
What if the party that is outbidding has information that is not available to other bidders?
If there’s an art auction, and everyone thinks that they are bidding on an average 15th century painting and I know that it’s a lost Da Vinci masterpiece and can prove it, wouldn’t I, outbidding the others at any cost, end up the winner?
Certainly I’m not saying that the Mariners have some insider info on Washburn, I just find the Winner’s Curse hypothesis flawed.
Utis,
No one expects any strategy to produce the best possible outcome every time. That doesn’t excuse the need for an organizational strategy that seeks competitive advantage through talent evaluation, which with the Mariners one of just a handful of teams not doing this, it is actually a competitive imperative. The M’s have one of very few FO’s that can’t seem to find its head for its ass in this sense, consistently making moves in areas of high risk (free agent pitching) from a position of weakness (poor talent evaluation). It’s maddening to see them with the resources they have at their disposal not leveraging a real strength (cash resources) into opportunities (build up the farm system to produce talent from within).
If through ten seasons the M’s and Indians had the same cumulative losing record and neither made the playoffs in that entire span (worst case scenario for a team run like the Indians, status quo for the M’s), you could probably chalk up the Indians’ failures to remote factors beyond their control, fiscal constraints, and a few subpar outcomes from informed personnel decisions, but you could chalk up the M’s failures to an incomprehensible set of trades and free agent signings that make any passionate fan want to vomit. For this reason, with their records the same after ten years, I would still rather root for the team using the best evaluative methods to make decisions.
Yes, yes, yes, all true. And yet, argh.
It’s not a hypothesis at all. It’s a concept, a frequent occurrence, whatever you want to call it.
The application here is that the M’s have put an item that they think has an intrinsic value of 100 up for auction, and the highest bid by a team that should by all rights find the item much more valuable is way below 100.
That’s valuable information.
The Indians analogy is a little crazy, but yes, I’d rather be an Indians fan right now and know my front office was competent and could recover. What evidence do we have that the M’s have learned anything from the mistakes they’ve made evaluating pitchers?
Beyond which, Cleveland’s won eight more games than the Mariners this year. That’s worth something.
I hate this team. I hate this team. I hate this team.
[see comment guidelines]
Here’s a link to Baker’s blog regarding Washburn and how upset he is over this non-move.
Sorry about forgetting the comment guidelines.
Despite trading their best pitcher away and having injuries to Pronk and Martinez, too. Even in the midst of a lost season, Shapiro and team took steps to build for the future with the Sabathia trade, whereas at best, the M’s took far too long to make just the obvious moves, and have little to show for the season aside from slightly less overall suck on the roster.
Maybe that trade even looks bad for the Indians a few years from now, but at least their fans know Carlos Silva’s agent will never walk out of a meeting with their GM with a shiteating grin on his face. That alone is almost priceless.
Washburn, via Larry Stone from Baker’s blog (linked in 37:
Yikes. Even Washburn is smarter than the Mariners…
Hopefully the M’s front office views that as a slap in the face and trades him now. Much like they did to Nelson in 2001, I believe.
I am by no means defending the acumen of the Mariner’s front office. I am also not challenging the desirability of a competent GM (BB was demonstrably the worst in MLB). I do beleive that we often over analyze moves. Luck plays a major factor in a team’s ability to be competitive (look at at the 2007 M’s). It is possible to get by with a “traditional” front Office that catches some breaks (e.g. Chicago White Sox). In the meantime, given the current state of our team, our only solace is the game itself.
Actually, I think Nomad would probably make a better FO executive than some of these guys would.
Though I think I’d rather have a Dalek from Dr. Who as a GM. One of those guys would definitely take care of business! 😉
Washburn for Mariners GM!!!!!!!!!!
I highly doubt that’s true.
Unfortunately, both USSM and BP don’t appear to have archives from that off-season.
The Max Five for GM!
What’s the possibility Washburn is labeled a Type A or B free agent and worth a draft pick or two after next season?
Could the M’s management actually be holding out because they see that as possible?
Most everyone, for example, was in favor of Jeff Cirillo at the time.
I highly doubt that’s true.
Unfortunately, both USSM and BP don’t appear to have archives from that off-season.
I remember plenty of “blah blah blah Coors Field” and “blah blah National League”…of course, I didn’t believe it at the time.
Since then I’ve been very skeptical of any hitter coming over from the NL, and it’s a pretty safe position to take.
“Since then I’ve been very skeptical of any hitter coming over from the NL”
Although, in the case of Cirillo, he also put up solid numbers in Milwaukee — which, at the time he was there, was an AL park at that oh-so-stratospheric altitude of about 670 feet above sea level.
I just think that, for whatever reason, JC just completely dropped off the face of the earth when he got here. (Rumor has it that it was more his wife’s idea for him to come to Seattle than his, but I can’t substantiate that.)
Cirillo was hitting .250-ish at sea level the year before he came to Safeco, and his best OPS against RHP from 2002-2007 was .720.
It’s pretty clear that Pat Gillick, God bless him, bought Cirillo as he was hitting his after-30 decline phase.