Big Red: Chewed Up and Spat Out

There was an interesting article written recently by Jeff Passan of Yahoo Sports on the well-known sabermetrician Voros McCracken.  Voros, who I found out his real name is Bob, was the inventor of the DIPS - Defensive Independent Pitching Statistics - concept, the revolutionary theory that any ball in play is independent of the pitcher, i.e. the pitchers have no effect on the batted ball (and, of course, there have been various follow-ups by others that cover qualifications on that, particularly Tom Tippett's study of the effect over the history of the game and the types of pitchers who DO have an effect on the batted ball), which brought about a revolution in the direction of sabermetrics that still reverberates and dominates discussions today.

Unfortunately, it is not a happy story.  If anything, it is a cautionary tale of what happens when you have a great idea which you shared with everyone but did not make much money on it (and really, the $30,000 the Red Sox paid him was not much), and becomes the old story of "what have you done lately?" 

He apparently is at least slightly bi-polar, which is a really bad condition to have, and that could be a reason he is in the position he currently is in.  I have read about how this can ruin some people's lives, and from personal experience, a family friend's son had that and it did not end well.  This could make it hard for people to work with him or, frankly, to rely on him, if he does not have it completely under control.

OGC Thoughts

I feel bad for Voros. I'm surprised none of his "buddies" at that internet chat site who went on to create Baseball Prospectus and probably other sites, don't give him some sort of job, kind of honorary, like how the Giants have had Willie Mays on the payroll, to help repay the debt owed him from the industry that he spawned with his discovery.  Might not be much, but at least enough so that he is not under threat of losing his apartment.

Of course, maybe he just doesn't manage his money very well, but it does not seem like he has gotten enough money to even think about doing that.  The Red Sox certainly didn't, they just signed him for a year at $30,000, don't know what they were hoping to get out of him for that small a salary.  Plus giving him just a year too, though I suppose that him being bipolar might have made him tough to manage as an employee.

MLB are Skinflints
That is one thing that really bugs me about baseball.  MLB teams appear to be penny-wise and pound-foolish from what I have seen about how they run their operations.  I thought the Red Sox was more atuned to the sabermetric community, but they didn't really give him much of a chance with a one year job at $30,000, disrupting his other plans.  Or was he just that bad?

In the article, he claims to have helped them with the draft with his analysis of the amateur players, as their first round selections were good:  Clay Bucholz, .Jacoby Ellsbury, Craig Hansen, Jed Lowrie, and Michael Bowden.  It was noted that he felt proud that they all made the majors.  And while Hansen and Bowden have not been that good, Ellsbury, Buchholz, and Lowrie have been pretty good in the limited time they have played in the majors, excellent returns for the Red Sox's draft dollars.

Annual Annuity Returns

And that is the gold mine he should be mining now.  He says that he's not willing to talk with any team and give away another million dollar idea.  However, the article hints at his next million dollar idea, even if the columnist did not quite grasp that:  assisting teams with the draft.

Voros is missing out on a big, and more importantly, regular payday by consulting with teams on the draft.  If he is as good as he brags about in the article - and the WAR for Ellsbury, Buchholz, and Lowrie, particularly given their draft position, suggests that he is - he would have the equivalent of crack for any MLB team's front office:  finding good players in the draft, and in a more efficient and effective way.

Though as a contrary note, if Boston really thought that he contributed greatly to the selection of those prospects and provided them with an edge, they would not have let him go, even if he were fully bi-polar and very crazed by his condition.  As we can see with other distruction, yet productive, personnel, like Milton Bradley, teams will condone extremes as long as you produce.

Missing Ingredient:  My Draft Study Results
Still, the numbers are interesting once you include information from my study of the draft.  Using my findings from my draft study, I calculated the historic odds of finding a good player when picking from the 23rd pick overall to the 47th pick overall.  That is roughly 6%.

Using the binomial distribution and assuming 3 good picks (Ellsbury, Buchholz, and Lowrie) out of the 5, the odds of accomplishing this is roughly 0.2% at those odds had he been as bad as MLB teams historically, suggesting that if Voros' recommendations were utilized for these five picks, he most probably exhibited some skill (actually a lot of skill) in selecting amateur players.  To get a probability of 5% or less, where statistical significance would be, when finding 3 good picks out of 5, the odds of finding a good player with any pick would need to just under 20%.  Which according to my analysis would be picks after the 10th pick, roughly.  Small sample but very significant, nonetheless, because the odds were so low of it happening if he were as bad as teams been historically (and assuming we give him full credit for all the picks).

And at that point of the draft, the prospect to pick is already extremely non-obvious.  Even the first few picks of the draft is not always obvious, but it gets progressively worse as the first round moves on.  And by the time of the end of the first round, most teams find a good player roughly 11% of the time, even worse so in the supplement first round, averaging out to 6% to cover for all those five picks.

How Valuable is Such a Skill?

So let's go ahead and assume that he is as good as he and that one year of drafting suggests.  Further, lets say he's not even that good, that he's "only" good enough to find 1 of 3 in that pick range (33% vs. the 60% in the above), which is roughly the number of picks a contending team might have in a typical draft year, with their regular pick in the 21-30 range, plus two supplemental first round picks for Type B free agents who they let go and earned picks.

So what is his advantage for such a team?  At 6% average chance of finding a good player, they will find on average roughly 1 good player every 5 draft years (15 total draft picks over 5 seasons of getting 3 picks each season).  Voros, assuming he is as good as this one draft suggests and that these were the guys his system recommended, would get you 1 good player in each of the 5 draft years, 5 total good players in total, once developed. 

I don't think I need to get into WAR calculations or bonus comparisons or salary calculations for anyone to see that Voros, if even half as good as suggested, would be extremely valuable to any team.  Heck, you could halve it again and he would still deliver 2.5 good players in 5 seasons vs. 1 for the average team.  How much would that be worth a team? 

I would guess roughly $30-50M because when you look at the odds for finding a player and calculating the overall cost via bonuses per each good player a team drafts, MLB teams are paying roughly $15-30M per good prospect found when you add up all the misses incurred as part of the process of drafting and developing prospects.  Voros could cut that cost at least in half, if not more, if he is only one-fourth as good as indicated by that one Boston draft.

Or, showing how much more efficient he makes the draft process (as well as effective), he is cutting the cost of the team for finding a good player, from $15-30M to $7-15M, saving the team $8-15M per good player found.  If the team agrees to give him, say, 10% of that, that would be $800K to $1.5M per player, depending on how the team wants to calculate it.

So, basically, if he can deliver one good player for every three picks in the first round or supplemental first round, he would save a team millions of dollars because of the pre-free agent production of the prospects, help the team competitively re-fill their farm system so that they can keep making the playoffs every year within their budget, and if he can get a piece of that savings, he would get his million dollars, eventually.

Voros Million Dollar Business Plan

Voros basically needs a business manager to handle the details, but here is the rough business plan I would suggest he follow.  If he's really interested, just contact me and I'll be happy to smooth out the rough edges, best that I can. 

Elevator Pitch

Drastically improve a team's chances at locating good MLB player via the draft, speeding up the re-building process for a playoff contending team multi-fold, enabling it to keep making the playoffs indefinitely.

Value Proposition/Competitive Advantage

A study's results suggests that once a team is contending, their odds of finding a good player via the first round of the draft drops at least in half if not three-quarters relative to that of the first few picks overall.  The worse teams in the draft will find roughly one good player in the first round every 2-3 years, while the best teams in baseball is looking at one good player in the first round (assuming only one pick) every 9 years.  This makes it nearly impossible for a contending team to rebuild via the draft while they are winning and would doom them to an eventual re-building once the good players leave the team. 

Voros's prospect evaulation knowledge would turn a contending team's picks into as good, if not better than, the worse teams in baseball, providing a huge competitive advantage to the team and provide them with the ability to prolong their contending ways indefinitely.

Business Model

This is the perfect repeatable revenue model:  the draft is held every year, with new prospects for the most part.  There are at least the 10 or more teams contending for the playoffs, plus if he is as good as this suggests, he should be able to help all except possibly the 5 worse teams in the MLB.  And those 5 he still might be able to help, that is still a pretty good success rate (60% but small sample) vs. the usual odds for those picks (roughly 45%).  The key for Voros is monetizing that skill.

Initially, teams will be very hesitant to use this service.  This is not a get rich quick scheme, as Voros will need to demonstrate his abilities first, publicly via a blog and by hitting up friends at THT, Fangraphs, and Baseball Prospectus so that he can write about what his methodology ranked as the best prospects in the draft are, and publish thoughts there as well. 

Lots of fans and other organizations, such Baseball America and The Perfect Game, publish their thoughts - for free - on the web regarding who they believe to be the best amateurs in basball, and this information is eagerly devoured.  They also have paid areas that people subscribe to, and that money will keep Voros solvent while waiting for his big payday.  This is like giving out free samples so that the user gets hooked and eventually be willing to pay big time for his service.

Voros will demonstrate his abilities for selecting amateurs by reporting every year on his past rankings, using the various prospect ranking services, such as Baseball America, The Minor League Baseball Analyst, Keith Law, Baseball Prospectus, and John Sickels, and show where his picks fell among the top lists, plus for those who are now in baseball, provide WAR information from Baseball-Reference.com and Fangraphs.  Each year, there will be a new draft to report on, creating a history of picks over time, to show how well his ranking did. 

In addition, his ranking will be compared with the actual draft selections, to show how well the teams did.  He could use his ranking to produce shadow drafts, one for each team, 30 in all, where he acts as if he were the team and he would go through his rankings and select the player his ranking says, vs. the one the team ended up picking, and do that for, say, the first 3-5 rounds. 

However, I would probably start out by publishing only the first round picks, as those are the ones people are most interested in, but doing the work out to 3-5 rounds so that he can see how well his system is working deeper into the draft, and see how far his methodology works out to.  If those are interesting, then he can publish the shadow drafts.  Those can also be compared in future years to show how his methodology would have improved the particular team's results, had they used his ranking instead of drafting the people they did.

Initially, he will have to do this for little pay, other than via ads on his blog and perhaps subscribers to his information.  But that is cool, as he needs to do this investment in order to get the opportunity later for big money.  He can juice the ad revenues a bit by breaking up his rankings into multiple pages, which will result in more pages being viewed, and thus more ads being viewed.  He could also write on his blog on whatever projects he might be working on, and share some ideas out there with everyone, but keeping his best ideas aside to develop for future services and future million dollar paydays.

Success, which will be demonstrated with these annual ranking examination of how well he did generally and particularly versus what MLB teams have done, will get some teams interested.  Cold calls will have to be made to teams using his name as a way to get a foot into the door.  Success as shown via these blog posts will be the evidence and case studies that they need to feel some assurance that perhaps his rankings are as good as advertised.

Initially, payment will need to be fixed and probably token amount initially but still have ability to sell to other teams and to publish the list after the season ends and be able to evaluate the picks.  Teams will not be willing initially to do anything more than that.

Eventually, Voros should attempt to get payments tied to success in the draft.  Again, token amount initially but still have ability to sell to other teams and to publish the list after the season ends and be able to evaluate the picks.  Certain amount for the player starting 100 games in the major leagues, then 250, then 500, and at 1000 games.  Probably will have to negotiate individually with each team to determine how much they are willing to pay for each milestone.  As a consultant, that is the holy grail:  getting teams to pay you for the value received.

Once Voros has proven his expertise, eventually he can charge big money (his million dollar target) for the ranking itself and more still for exclusivity.  Such success could eventually lead to multi-million dollar paydays eventually if Voros can be as successful as he was with Boston on a consistent basis.  It is just a matter of time IF he is as good as he showed with Boston and if he is patient enough with the process of building a business like this.

Patience and Demonstrated Expertise Are the Keys

Because prospects take a long time to develop, up to 6 years for most (roughly 4-6 for most), there will necessarily be a long ramp up to this business, as it will take a while to establish credibility in the business.  Success as big as the Boston draft would speed up the development of business, however, perhaps cut it in half. Still, it will take a lot of evidence piled up before baseball teams will be willing to hire Voros to help with their drafts, so the goal of a million dollar payday will probably take at least 10 years to reach.  That will take a lot of patience, but unfortunately, bipolar people do not have a lot of patience, they tend to do things impulsively.

That is where a business manager comes in for Voros.  Vorus needs to focus on making his rankings and perfecting that methodology and let the business manager handle the rest of the "stuff".  The manager will have to work out the schedule for the blog posts, handle business calls from teams, handle any subscription details and ad revenue generation details, basically handle all the business operations beyond creating the product/service, which is the rankings.  He or she needs to make sure things happen and on time.

Voros will have to pay the manager some fee, but that is the price if Voros cannot handle all this by himself.  They could have a partnership and share the profits in some way, or work out some other deal with the manager.  It all depends on what Voros is comfortable paying and what the manager is willing to accept, and thus is all negotiable.  Voros will just have to understand this (and he might, he said he was studying to be a lawyer before, and the way they are paid would be similar, though not as lucrative as a lawyer) is how it works.

Nobody is going to hand you a million dollars, but it is there if he wants it and is willing to work for it.  Good luck!  And thank you for your contribution to my enjoyment of baseball!