Sunday, December 02, 2007

The Economics and Production Difference of Johan Santana, One Look

Click spreadsheet entry to ENLARGE

Let's presume, for the sake of argument, that the Yankees have the right mix of players and dollars to acquire Johan Santana. What's the economic impact, the win impact, and the relative differential over a six year period?

I'm no economist, but I'll try.

Every economist has to make projections, and these have plenty of room for error, on both sides. They don't account for injury, for the increased cost to insure contracts (let's say the Yankees might have to pay an additional twenty percent to insure the contract...I have no idea if this is right), and projecting performance is tough. As Yogi might say, "making predictions is hard, especially about the future."

Bob Gibson averaged 20 wins a season, in four man rotations, from age 29-34.
Roger Clemens averaged 13 wins a season from age 29-34.
Pedro Martinez averaged 13.5 wins a season from age 29-34.
Greg Maddux averaged 17 wins a season from age 29-34.
Curt Schilling averaged 15 wins a season from age 29-34.

So, I've presumed that Santana will win more games than any of some of the best pitchers of his era, and as many as one of the best of all-time in a different era using four man rotations.

I also haven't adjusted the revenue difference for the New Yankee Stadium, and I have projected Philip Hughes to be a very successful pitcher over his next six years, just as I have projected Santana to have success.

What is one possibility is that the Yankees spend an additional 154,700,000 for the next six years, and get an additional 30 wins, 24 of those coming in the next three years. The extra thirty wins amount to about five million dollars per win, not including post season play. That also doesn't account for replacement cost differential or production by any other players in the proposed deal (e.g. Melky Cabrera).

How this would be resolved in dollars per win share, dollars per win share differential, and differential revenue (luxury box costs, replica merchandising, and so on) goes far beyond my capability. But I do think it extends the analysis of the Winner's Curse, and shows how far out on the limb teams can go for the illusory pursuit of greatness.

2 comments:

ctupsrich said...

don't you have any real work to do?

Anonymous said...

wow thats really cool


thanks





the sox will get santana
They will pick lester lowrie and crisp