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  • Betting Against The House

    The latest casino project in Las Vegas is going to cost seven billion dollars. That is an incredible gamble (*1), but there are reasons that investors make it. The first is that in the long run, the house always wins. But the second is equally important: in the short run, anyone can win. If that wasn’t true, nobody would go to the casino, and there would be no reason to invest.

    Mike Pelfrey, who the Twins will be signing for $11 million over two years, is an investment too. In the long run, he’s averaged out to a 4.48 ERA return, but that's like saying a roulette spin will come up blackish-red. He’s thrown about five-and-a-half seasons in the majors, and only once (4.74 ERA in 2011) has he ever come anywhere near that career ERA. Instead, he’s crushed it twice (3.72 in 2008 and 3.66 in 2010) and been crushed three times (5.57 in 2007, 5.03 in 2009, 5.19 last year). It doesn’t take a lot of advanced analysis to tell you that the Twins are betting against the house.

    But the advanced stats tell us the same thing. Pelfrey’s success or failure each year has been almost entirely based on how many home runs he has given up. Home runs are highly dependent on whether or not a pitcher tends to be a ground ball pitcher or a fly ball pitcher, and Pelfrey is the latter. It’s hard for any pitcher to control what percentage of those fly balls turn to home runs, but there is some long-term trend to it, and Pelfrey has been very good at keeping fly balls from turning to home runs. Every year he has pitched in the majors, Pelfrey has been in the top half of pitchers in home run to fly ball ratio (HR/FB).

    But the two years he was really good, he was elite in HR/FB, ranking 4th among qualified pitchers in 2008 and 9th in 2010. The other years, he wasn’t bad, but merely slightly above average. When Pelfrey has been successful, he’s been elite at doing something in which pitchers have very limited control. I don’t like to call that “luck,” but I also don’t like to call a good run at a blackjack table “luck.” I go with “secret sauce.” But whatever I call it, I don’t rely on it.

    If this was a one-year deal, I could say that the Twins won’t need to rely on it either. But a multi-year deal changes how teams react. If Pelfrey isn’t effective, whether it’s luck or skill or the wind blowing out in Target Field (*2) this spring, it’s going to be hard to push him out of the rotation. Nobody is going to be anxious to give up on a player with that contract, especially given that Pelfrey is by all accounts a good guy and hard worker.

    So the Twins are making a bigger bet than they should have against the house. They might have been emboldened to do so by their success with Kevin Correia, who paid off handsomely in his first year. The Twins have responded by doubling down instead of walking away with their winnings.

    That’s a natural, human reaction. It’s also why they still keep building casinos.

    ~~~

    *1) We tend to read numbers and blow right past them, but think about what it means to build a seven BILLION dollar casino. That’s the value of thirteen of MLB teams, including the Twins, combined. And that money needs to be raised and paid UP FRONT in cash. And it’s not like casinos never go bust – several of them have over the last decade or ended up being partly built and then stalled out. Just what kind of return do you have to anticipate to make a seven billion dollar bet like that?

    *2) Target Field is probably worth addressing. HR/FB rate is also influenced by ballpark, and it would make sense that Target Field would help pitchers, especially right-handed pitchers, in that regard. But it’s worth noting that Pelfrey’s team, the Mets, also have a home ballpark that has suppressed home runs. For instance, in 2010, the Mets and their opponents hit 110 home runs in CitiField, but 153 home runs on the road.
    This article was originally published in blog: Betting Against The House started by John Bonnes
    Comments 48 Comments
    1. jokin's Avatar
      jokin -
      Quote Originally Posted by JP3700 View Post
      The signing itself isn't the problem. In fact, I think there's a good chance that he's worth his contract. In the five years where he pitched a full season, Pelfrey has averaged between 1.1 - 1.8 WAR a year depending on if you use BR or FG. If he is somewhere in the middle and is worth 1.5 WAR each of the two years he's signed, then he is worth every penny.

      The problem is that I don't know what direction the team is going.

      Pelfrey at his best takes the team from 76 to 78 wins, and that win projection may already be optimistic. This is assuming that Pelfrey will be at his best and the other options are replacement level. Both of which aren't even close to being a given.

      More important is that Pelfrey isn't an asset. Teams aren't lining up to acquire 30+ year old below league average starters. You can find those guys every year on the free agent market. However, teams will give you a call about young, cost controlled pitching and possibly offer some real value.

      If the team were in need for a back end starter to fill out the rotation on a contending team, then this move would make perfect sense. But in the position they are in, it makes more sense to give innings to Gibson, Worley and Diamond. Go for it or build for the future. Attempting to reach mediocrity shouldn't be the goal.
      If Correia gets moved (I know, a BIG if!), there's plenty of room for Gibson, Meyer, et al to fill the mid-rotation spots and for Pelfrey to take his "mediocrity at a cheap price" to the backend of the rotaton. But you're right, signing basically unflippable guys like Pelfrey and Correia make no sense for a team looking to rebuild. The original Plan A, now morphing into Plan B, still has the same lack of clarity from this type of signing. I'm still puzzled that a Winter Meeting roster-space-creating trade didn't transpire and that they walked away from JP Arrencibia for only $2M, people got on him for a low BA, but he has legit power and can frame pitches at a very high level (they probably were afraid that his "habits", hitting-wise, would be a bad influence on Pinto). The Rangers got a steal in Arrencibia in their ballpark.
    1. Thrylos's Avatar
      Thrylos -
      Quote Originally Posted by jokin View Post
      I'm still puzzled that a Winter Meeting roster-space-creating trade didn't transpire and that they walked away from JP Arrencibia for only $2M, people got on him for a low BA, but he has legit power and can frame pitches at a very high level (they probably were afraid that his "habits", hitting-wise, would be a bad influence on Pinto). The Rangers got a steal in Arrencibia in their ballpark.
      .194/.227/.365, 59 OPS+: Arencibia in 2013
      .198/.270/.279, 53 OPS+: Butera in 2012
    1. TheLeviathan's Avatar
      TheLeviathan -
      Quote Originally Posted by Thrylos View Post
      .194/.227/.365, 59 OPS+: Arencibia in 2013
      .198/.270/.279, 53 OPS+: Butera in 2012
      There are plenty of examples of former top talents floundering and then rebounding to have solid careers. Chris Davis had a 51 OPS + when he was dealt. They threw a few bucks towards getting a steal. I'm all for more of that from the Twins.
    1. Dman's Avatar
      Dman -
      Quote Originally Posted by TheLeviathan View Post
      There are plenty of examples of former top talents floundering and then rebounding to have solid careers. Chris Davis had a 51 OPS + when he was dealt. They threw a few bucks towards getting a steal. I'm all for more of that from the Twins.
      I agree the thinking has to be that the guys they got have a better then average chance to rebound and be valuable to the team currently and possibly to trade if that makes sense.
    1. USAFChief's Avatar
      USAFChief -
      Quote Originally Posted by Thrylos View Post
      .194/.227/.365, 59 OPS+: Arencibia in 2013
      .198/.270/.279, 53 OPS+: Butera in 2012
      .233/.275/.435 , 90 OPS+: Arencibia in 2012
    1. spycake's Avatar
      spycake -
      Quote Originally Posted by Thrylos View Post
      .194/.227/.365, 59 OPS+: Arencibia in 2013
      .198/.270/.279, 53 OPS+: Butera in 2012
      I really don't care much about Arencibia, but Butera's "comparable" OPS+ in 2012 was almost entirely due to 9 BB in 122 PA, about double his career MLB rate and even higher than his career AAA rate.
    1. Rosterman's Avatar
      Rosterman -
      No one can say Correia or Pelfrey or anyone is unflipable. Time will tell. It's just thinking of moving IF the time is right. Seemthing the Oakland A's seem to do very well, although their return is not always stellar.
    1. jokin's Avatar
      jokin -
      Quote Originally Posted by Rosterman View Post
      No one can say Correia or Pelfrey or anyone is unflipable. Time will tell. It's just thinking of moving IF the time is right. Seemthing the Oakland A's seem to do very well, although their return is not always stellar.
      Yeah, but put yourself in the shoes of every other GM. Terry Ryan was the guy who signed these two a year ago- both of their previous teams were happy to move on, and TR was virtually unopposed in bargaining with them- likely for good reason- PTC is a desirable trait in a SP FA to virtually no other GM than Terry Ryan- and unless someone is absolutey desperate, the Twins really can't expect much more than a Pedro Hernandez-type or "C +"- level prospect in return.
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