ILRSBS Goes to Phoenix: Part I

Hello, Phoenix. Hello, SABR.

This is Part One of a three-part series following the ILRSBS Case Competition team's trip to the SABR Analytics Conference in Phoenix, Arizona.

Just two weeks ago, three members of ILRSBS were able to take part in a unique opportunity. The 2^nd annual Diamond Dollars Case Competition in Phoenix, Arizona provided a platform for Mike Parnell, Hudson Belinsky, and myself to showcase just what Cornell and the Sports Business Society is all about.

Held as part of the SABR (Society for American Baseball Research) Analytics Conference, our case tasked us with developing, answering, and presenting our recommendations for a real-life baseball operations question. Last year, the case dealt with a “buy or sell” type question surrounding the Washington Nationals. This year, the focus was all on one of baseball’s most intriguing players: Mike Trout.

Yes, baseball’s most popular, mystifying and perhaps soon-to-be loved player was the focus of our entire case. You can imagine the excitement that came over our three-man team upon learning that we would be tasked with developing an appropriate contract extension for Mr. Trout. How fitting it was that days earlier, the real life Angels decided to renew the reigning AL MVPsuperstar at just $20,000 above the league minimum. As you can imagine, our first recommendation was simply, don’t do that!

Mike, Hudson, and Gabe working on the plane.

But in all seriousness, after receiving our case on Sunday morning, Mike, Hudson and I had four days to put together a cohesive 20-minute presentation on which to be judged. In the case, which was actually set following the 2013 season, Mike Trout went off for a 8.4 WAR season in which the Angels fell to the world champion Nationals in six games. In this scenario, the Angels would have one more season of Trout under cost-control as well as three years of control in which he would be arbitration eligible. Trout would become a free agent in 2017.

Placed in a position to advise Jerry Dipoto, the Angels GM, our team had to develop a contract proposal. Our three options were to trade Trout, to extend him over the short-term, or to provide him with a long-term extension. Playing into this decision would be our expected production of Trout, the value in dollars that he would be worth, the construction of the team around him, and the risk involved in such a contract. With the facts established, we set out to develop the best decision possible.

Through the next 4 days, we slogged through the massive amounts of data and processes needed to make our case to Mr. Dipoto. I’ll spare you the details, and just hit on two of the major highlights in our process.

The first is the manner in which we decided to project Mike Trout’s production for the next ten seasons (through age 32). As a team, we developed models for players similar to Trout in the three facets of the game, hitting, base running, and defense. Our samples were different for each of these categories, but they included players that met specific criteria for a player of Trout’s caliber and production. After developing an “aging curve” for a player such as Trout, we developed a Monte Carlo simulation to help predict the results for 10,000 seasons of Trout based on the previous three seasons’ production (weighted 45%, 30%, 25%). We continued the process until we wound up with ten seasons of Mike Trout production. What we got was one of the best players of all-time. To boil the numbers down a bit, Trout put up the following WAR (Wins Above Replacement) totals for the years 2014-2024: 8, 11, 11, 8, 11, 9, 9, 8, 8, 8, 7. Wow. Just. Wow.

Yes, Mike Trout, you are that good.

After we took Trout’s production value, we then assumed each win to be worth $4.5 million on the open market. Multiplying this number by his production we determined his value to be worth approximately $440,000,000 over the course of ten seasons.

Of course we couldn’t reasonably give Mike Trout $440,000,000, could we? Check back later this week to find out how we accounted for risk, what our final proposal was, what the judges thought, and how we spent the rest of our time in Phoenix!