The Value Continuum I: Creating a Value Indicator

Ahhhh, a lazy Sunday. You know what would make this day better? A little baseball at 12 o'clock. Only a couple weeks to go.

The other day, I was talking about a convoluted "expected value" scale to estimate the future contract of Colby Rasmus. I have no idea if that has been done before (I'm sure it has in some form) or if it's anywhere close to being accurate (I'm sure it isn't). However, it's my blog, and the baseball topics are few and far between other than the giant Pujols in the room. I'm going to just post a running blog occasionally to work through what I'm thinking. We may get somewhere, we may get nowhere. Either way, it's your fault for reading. I apologize if similar work has already been done - simply let me know and I'll attribute it.

Picking up where we left off, I brought up a continuum of value, which can be envisioned as just a line with one arrow on the left and one on the right.

Not this:

This:


To the left is potential value (PV) and the right is realized value (RV). A player who falls on the farthest left side of the line would have no realized value, only potential. That is, he has no Major League playing experience. In contrast, a player all the way on the right has only a realized value and no potential for greater value in the future. By default, a player with Major League playing time will fall somewhere between PV and RV because he has some experience on which to base both a realized value and a potential value.

For example, Colby Rasmus, with both two years under his belt and a highly-regarded future potential, would fall somewhere between the two, probably closer to the PV side at this point. Trever Miller, however, has been in the league for a prolonged period of time and probably doesn't have much potential to improve his value, if at all. What you see is what you get, and thus he would fall drastically to the right on the scale. Shelby Miller is all the way to the left - no Major League experience, only potential which can be estimated from minor league numbers and subjective evaluation.

What's the use of a continuum? Well, it's a good way to visualize where a player is in his development. Whether he has tons of potential or little to none, he has some place on the line. These really are the two main factors that go into a contract negotiation. Of course, other things can effect PV or RV, such as a penchant for injuries or a newly reconstructed arm, but PV and RV are what drives a club to sign long-term or short-term, for high salary or low.

I think that's where I'll stop for now. The next questions to be addressed are how do we define value? PV? RV? Do we use one statistic or many? Also, what is the typical ascension and decline of a player on the Value Continuum? How does PV and RV translate into dollars? I'll be using a lot of already-researched information, so this stuff is hardly original. However, maybe it will lead us somewhere in the decision-making process of GM's and agents.

If you'll excuse me, I have to go finish up Day 13 of P90X. Bring it!