Sunday, April 14, 2013
Profit Wins
?I like this analogy from Bill:
The "average" is a nothing point, an imaginary line which has no real-life consequence. Suppose that a player creates 100 runs, whereas an average player would have created 80 runs and a replacement player would have created 60 runs. The 100 runs is analogous to "gross receipts" for a store, for example. The +40 (100 runs over 60) is analogous to "profit". But what is the +20 analogous to (100 runs over 80)?
It's not analogous to anything; there is no such concept. It's a non-existent line. The real-life consequences center on whether or not you are good enough to play--which means, better than the replacement level. If you drop below THAT line, there are real consequences.
That's really fantastic. Jeff Francoeur maybe have created say 300 runs in the last five years, but if the absolute minimum that a team will expect is 300 runs over that playing time, then Francoeur has generated zero profit.
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Bill also shows what the zero-baseline means to him:
You don't measure from the average, because that is not a point of no value.
The average household makes 50,000$ a year. If your household makes 90,000$ a year, you COULD accurately say that you make +40,000$ relative to average. And if your household makes 40,000$, you COULD accurately say that you make -10,000$ relative to average. No one is suggesting that making +0$ relative to average has no value. The ONLY thing it's saying is that you are making the same as average.
When you compare to average, when you set average = 0, you are no longer talking about value. You are talking about something else. But, Bill sees the comparison to average as still a comparison above value. And read in that light, he argument makes sense, that the baseline is silly. But, we don't set average to 0 to talk about value. We are doing it to simply take an intermediate step, on our way to... something else. You make the comparison to average first, then you can take the second step to compare to replacement level, to figure out the "profit". You don't HAVE to compare to average to do that first, but it's much easier and clearer to do so.
This is why the WAR replacement level that I champion does it that way. It compares every single component to what an average player would do. Once that's been established, we take that last step to compare to the replacement level.
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Anyway.... Profit Wins... love the analogy. So simple, and clear, and has real-world understanding.
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