Introducing Expected Contract Value Part 5: Frequently Asked Questions

How large is your sample size?

The initial sample size used to run the regression analysis was approximately 1,500 “contract seasons.” Each contract season is a single input record. So if a given player’s contract covered five seasons from 2005-2009, this resulted in five different contract seasons for the purpose of creating input records (even if the player was released after three seasons).

Introducing Expected Contract Value Part 4: Salary Cap Budgeting

In addition to enabling the valuation of a contract from the perspective of the amount of money that the player can expect to earn, Expected Contract Value also enables teams to budget for the contract from the perspective of the amount of salary cap space that the player can be expected to account for. This objective can be accomplished by applying the expected outcome to the scheduled cap number in the relevant contract season, rather than to the amount of money that could potentially be earned by the player.

There are two conceptual ways to approach this exercise. The simpler way, what we will refer to as “Either/Or Cap Budgeting,” involves looking at the expected outcome, rounding up or down, and then selecting either the player’s cap number or his dead money number, whichever is applicable. For example, let’s take a look at Trent Cole’s contract from the perspective of Either/Or Cap Budgeting.

Introducing Expected Contract Value Part 3: Contract Comparison

In order to expand upon Part 1 and Part 2, and demonstrate how Expected Contract Value can be helpful in comparing contracts, let’s take a look at an article from overthecap.com in June 2014 in which Jason compared the recent large contracts of centers Maurkice Pouncey, Alex Mack, and Ryan Kalil. This article is the archetype of the insightful subjective analysis we identified in Part 1 that could be enhanced by Expected Contract Value.

Jason first correctly points out that the face values of contracts can be misleading, and that they should not be determinative in the comparison at hand. He then goes on to refer to “dead money protections” for the various deals. This is a concept addressed by Expected Contract Value through the inputs Save:Cap and Save:Avg. Jason goes on to refer to Kalil’s three-year payout as “virtually guaranteed.” While that may be true, Expected Contract Value allows us to assign a numerical value to the descriptive term “virtually.”

Introducing Expected Contract Value Part 2: Inputs And Outputs

 

As we described yesterday, Expected Contract Value is an objective metric that enables valuation and comparison of contracts, as well as team salary cap budgeting, by using regression analysis to identify the influence on team-decision making of the relationships among various contract characteristics. Today, we will describe both the inputs and outputs of the metric.

Save:Cap: This input is a ratio of (i) the amount of cap savings that the team would realize upon releasing a player to (ii) the player’s cap number if the team does not release him. A team may be more enticed to save $1 million in cap room by releasing a player who will count $3 million against the cap than it would be by releasing a player who will count $10 million against the cap. Furthermore, a team may be dissuaded from releasing an overpaid and underperforming player if doing so would result in a larger cap hit than refraining from doing so. This input can be thought of in the following way: How beneficial (or detrimental) would it be from a salary cap perspective to release this player?

Introducing Expected Contract Value Part 1: Justification, Theory, & “Contract Analytics”

NFL contracts are extremely difficult to accurately value, compare, and budget. This difficulty arises primarily from two factors: (1) the generally non-guaranteed nature of the contracts and (2) the variety of types of components which comprise the contracts (signing bonus, roster bonus, base salary, etc.)

Because NFL contracts are generally not guaranteed, the face value of a contract is largely irrelevant, as it is not determinative of either (i) the amount of money that the player will earn under the contract or (ii) the amount of cap room that the team will allocate to the player over the life of the contract. Because NFL contracts may contain a variety of types of components, each having different salary cap implications, NFL contracts lack uniformity of style, as NFL teams are able to structure contracts in many different ways.

Super Bowl Live Analytics from numberFire

If you are looking for live, in-game analytics for Super Bowl XLIX, numberFire has you covered. Our friends over at numberFire have developed an app that will deliver live analytics from the big game, including win probability, expected drive outcome, and much more. This app, available for both desktop and mobile devices, will allow you to track some of the most important football analytics as the game progresses. Come game time, be sure to check it out using the following link:  live.numberfire.com

A Game for the Ages: Super Bowl XLIX Preview

On Sunday, the New England Patriots will look to unseat the defending Super Bowl champion Seattle Seahawks in Glendale, Arizona, the site of Super Bowl XLIX. The Patriots, 12-4 in the regular season and the #1 seed in the AFC, are coming off an easy win against the Indianapolis Colts in the AFC Championship while the Seahawks, also 12-4 in the regular season, are coming off an incredible comeback victory against the Green Bay Packers in the NFC Championship.

The Seahawks are the more flashy team, with a young star quarterback who have taken the league by storm. Trying to repeat as champions, the Seahawks are also trying to become the next dynasty in the NFL. The Patriots, on the other hand, are looking to get Tom Brady and Bill Belichick their elusive 4th Super Bowl ring that will cement their legacy as the greatest quarterback-coach combination to ever exist in the NFL.

The Effect of Attendance on Team Spending

MLB teams often proclaim that attendance affects team payroll. In recent years, fans have heard everything, from Rays’ owner Stuart Sternberg saying lower attendance will decrease payroll, to Pirates team President Frank Coonelly indicating that the team’s increased attendance in 2011 would add additional financial “flexibility.” But is this relationship actually true? In this article, I analyze the extent to which attendance affects payroll.

Brady’s Moment: Observations from the Patriots vs. Ravens

In the AFC Divisional Round of the 2015 NFL Playoffs, the New England Patriots defeated the Baltimore Ravens by a score of 35-31. Tom Brady had to bring the team back from a 14-point deficit twice. The Ravens proved once again that playing at Gillette Stadium did not faze them. I took a look at the All-22 film to see what went wrong and what went right for the teams.

3 Possible MLB Offseason Trades

The deal: CLE Indians get: Mark Trumbo and Trevor Cahill

ARI Diamondbacks get: Nick Swisher, Lonnie Chisenhall, and a high level pitching prospect.

Why this deal could happen: There are a lot of moving parts to this deal and no clear centerpiece. What is clear is that the Indians need to move the 34 year old Swisher immediately, and the D-Backs are a potentially interesting team that could absorb his enormous contract. A cursory glance at Arizona’s depth chart tells you that they are at least 2-3 years away from contention, if not more. If Swisher wants to prove that he can be a consistent hitter again (.208 average in 360 AB in 2014, 111 K to 75 H), it will have to be for a team with at bats to give away. After botching the Justin Upton and Adam Eaton trades, the Diamondbacks have no pressing outfielders to develop and what appears to be a barren farm system for the immediate future. There is no harm in letting Swisher swing away and lumber around in right field in the hopes that his World Series experience and leadership rubs off on some of the younger players. In the best case scenario, Swisher rebounds well enough in 2015 so that the D-Backs could flip him to a desperate AL contender looking for a veteran bat to help out at DH. The worst case is that Arizona pays him $30 million over the next 2 seasons while the new front office regime acquires young talent and then rids themselves of Swisher right as their window of contention comes into focus again.