Analytics and the Trade Deadline
Let’s take a break from politics and discuss what happened at the baseball trade deadline. If you are a Dodger fan, you are probably concerned about the Dodgers’ bullpen, which in many respects, has underperformed this season. These bullpen issues are sufficiently problematic to suggest that a bullpen failure may prevent the Dodgers from winning the World Series or perhaps even getting there.
The Dodgers had the opportunity to trade away prospects for a good relief pitcher — most notably the Pirates’ closer Felipe Vazquez. But Vazquez is a valuable player and the Pirates wanted a high price for him. The Dodgers would have had to give up at least one top prospect to get him.
The Dodgers loathe giving up prospects with true major league potential. In recent years, the Dodgers could have surrendered top prospects to rent players who would have enhanced their chances of a World Series title. Those prospects have the last names of Seager, Bellinger, Urias, Buehler and Verdugo. The Dodgers would have gutted their future for a potential, but not guaranteed, World Series win.
The prospects needed to obtain Vazquez or a comparable relief pitcher this year are likely to be Dodger stars in the coming years. So the Dodger dilemma is whether it makes sense to sacrifice the future to enhance your chances of winning the World Series.
Winning a championship makes fans happy, but from a financial perspective, it makes more sense to invest in a team that will make the playoffs every year. Playoff success is much less predictable. Many years a playoff team gets hot and wins it all. Consequently, dollars spent at the trade deadline have a less certain value.
That’s where financial analytics
come into play. Most fans realize that on-the-field performance is driven, in large measure, by data analytics. Statistical probabilities determine who will play on a given day, whether to shift the infield, etc. But an increasing trend in the business world is using analytics to optimize financial performance.
Those analytics demonstrate that the greatest financial return is from enhancing regular-season performance. The incremental dollars spent to maximize a team’s chances of winning the World Series by renting a player or two generates a lower expected financial return than building a competitive team around players who won’t become free agents for several years.
Delivering financial performance to their investors is as important to the Dodgers to as it is to deliver on-field performance to their fans. This ensures sustained success from both an economic and athletic perspective. The current ownership is affiliated with Guggenheim Partners, an established Wall Street firm that has a long history of strong financial performance. These types of firms typically use data analytics (i.e., they mine financial data to identify trends that allow them to amplify economic performance) as a key tool to achieve sustained success.
For example, those analytics probably dictated what improvements will be made to Dodger Stadium this coming off season. They also predict demand for tickets and allow the team to obtain the maximum price for each ticket sold.
Based on the decisions made by Dodger management in recent years, data metrics must also suggest that spending lots of money on a bullpen does not significantly enhance the chances of making the playoffs. Again, statistically, the playoffs are more of a crapshoot — particularly in the bullpen. Arms that are reliable in the regular season sometimes get tired in October. Clayton Kershaw is proof of that.
Fan anxiety levels have increased because the Dodgers did not make a big trade at the deadline. But big deals at the trade deadline don’t always pan out in the World Series. Yu Darvish is a prime example.
The Dodgers are disciplined and don’t appear to worry about what the press says. Some sportswriters have suggested that Dodger management did not do what needed to be done at the trade deadline. But when you consider the Dodgers’ long-term perspective and need for sustained competitiveness, their actions at the trade deadline make sense.
Like many, I am disappointed that the Dodgers have not won a World Series in over 30 years. I am 66 years old and have sometimes wondered whether I will see another Dodger championship. The game has changed a lot in my lifetime, but the Dodgers have adapted well to those changes.
Analytics are based on probabilities but do not guarantee certainty. This might be the year they win a championship, or maybe we will have to wait until another year. Whether they win this year or not, we can reasonably look forward to years of exciting Dodger baseball.