We’ve gotten a bunch of feedback on our article Why the Bubble Burst (And Will it Happen Again?), particularly on RAS (revenues allocated to salaries). This is the key number for analyzing and forecasting the market for players. It is the context for which every deal is made.

But here’s the problem: the data is limited, somewhat spotty, and a bit inconsistent depending on the source. We did a lot of cross checking, and used multiple outlets that have freely available data: the Lahman database, Rod Fort’s site, Doug Pappas’s site, the USA Today salary database, Forbes’s annual baseball estimates, and others.

We have full revenue and payroll info going back to 1982, but even these figures could likely be improved. And before 1982, there is a lot of mixing and matching being done, with only a few seasons having any available data at all. The simplistic version of what we have so far can be viewed here:


So now we’re turning to you, whether you are an author, blogger, fan, accountant, financial analyst, plumber, waiter, man, woman, child… you get my drift. In the spirit of free data and further research, let’s try to build the best database we can. This doesn’t have to involve just salaries and revenues, it could be total player costs, specific sources of revenue,  or anything else you, the reader, can think of.

Let’s get it done, and maybe we can open up a new line of research that could completely change the way we analyze our game.

Consider the plight of a modern day general manager. His team needs pitching, but a somewhat consistent league-average starter will cost him at least $30 million in present value, and possibly upwards of $50 million. He knows this is too much to spend, but the idea starting the season with Mark Redman in his rotation is keeping him up at night. What to do?

Say a married couple of reasonable means is looking to buy a house, but the market is irrationally high at the moment (as we have already discovered the market for pitching currently is). They have three main options: 1) buy an overpriced house; 2) continue to rent, hoping that the market comes back down soon enough; 3) acknowledge that the market is inefficient, and look for alternative ways to beat it.

Viewing starting pitchers in the same manner, teams have generally acted in one of these three ways with different levels of success. Jeff Suppan, Barry Zito, and Gil Meche (among others) were, essentially, the irrationally expensive houses on the market. Greg Maddux, signed to a one-year deal by the Padres, would be the equivalent of renting, in the sense that he fills a pressing need but is not a long-term asset. […]

With baseball’s revenues growing at a blistering rate, it has become more and more difficult for analysts to accurately dissect big-money, multi-year signings. What we thought we knew just two years ago seems to be obsolete, with the market shifting upwards at breakneck speed.

Yes, we’ve seen this before. Culminating with the infamous winter of ’01, Major League payrolls rose between thirteen to nineteen percent annually for five consecutive years. Overall, teams spent almost four and a half times as much on player salaries in 2001 as they did in 1990.

With Armageddon warnings seemingly plastered on every team’s office walls, sensibility (or perhaps collusion) eventually resurfaced. Payrolls rose only moderately in 2002 and 2003, and actually declined a bit in 2004. The bubble had burst, leaving teams that had signed players to mega-deals in previous years shaking their heads, and/or calling Brian Cashman for a little relief. […]

“The market right now is kind of silly, and it may continue to be silly.”
- St. Louis Cardinals general manager Walt Jocketty (ESPN.com; November 28, 2006)

So just how silly is the market?

Quite, actually, but particularly when it comes to pitchers.

But doesn’t defense win championships? Isn’t that the idea that we’ve all been taught, weaned on, suffocated with, what have you? Shouldn’t there be a premium on pitching, if it is really that important?

Let’s consider. Wins can be broken down and credited to three major factors: runs scored, runs allowed, and luck. Pitchers have almost no effect on how many runs their team scores, but a substantial hand in how many their team allows. Substantial is the key word here. Most fans and, incredibly, team execs seem to believe that a pitcher is almost entirely responsible for the runs he lets up, hence the reliance on ERA to evaluate performance. […]

In any capitalistic society, the market is king. What are the trends? Where is it shifting? What is overvalued? What is undervalued? Every executive tries to answer these and other questions, looking to give his or her business an edge. Private citizens face similar challenges. What stock is on the rise? When is the best time to buy a house?

In baseball, like on Wall Street, the market is constantly changing, presenting enormous challenges to those in charge: stay in front of the trends, play the cards right, and, hopefully, stay in contention.

That’s where we come in. We are baseball people first and foremost. Despite tender ages (mostly early to mid-20s), everyone on our staff has experience in a Major League front office, as well as in outside businesses. Some of us also happen to be Wall Street junkies, consistently beating the stock market by staying ahead of the curve. What we hope to create with this blog is an outlet for us, and others, to look at the market for baseball talent with the same kind of thoughtful, diligent outlook.

- The Squawking Baseball Team