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At What Point Should The Sox Buy?

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Tdogg, whose strike apparently can't kill his optimism, wants to know at what point us gloom-and-doomers would want Kenny and JR to start buying talent.  There's two ways to answer the question.  First, there's the fan's perspective: I want domination and I want it now.  I want to crush the opposition and steal their women.*  Second, the team is run as a business.  The former being more straightforward, I will flesh out the latter.

First things first, any move is going to have to pass a basic cost/benefit analysis unless JR thinks the '10 team merits a bullet taken. FTR, that's a lot of love for such an ugly duckling; this team was ill-constructed and overly dramatic from day 1.  In fact, I can vividly imagine Reinsdorf instructing Kenny not to chase bad money with good.  But surely, the starry-eyed fan hopes, in reaching .500 the Sox can at least start to think about making a move on the ALC leaders.  If they can't buy right right now, they will soon!

Except that, based on what I can cobble together, it doesn't look like they will put themselves in position to be buyers.  Let's lay out that cost/benefit equation:

Revenue Gained - Cost of Contract = Profit/Loss

The revenue portion is dependent on the number of wins added and the chance the Sox have of making the playoffs, since making the playoffs results in a huge pay out for the clubs that make it.  The cost of the contract is what you owe the player(s) producing those wins.  So determining whether or not to buy is dependent on the Sox' chances for the playoffs.  What kind of odds can we get on that?

To start, it's not outlandish to say the Sox are average-ish, at least 2-4 wins worse than the Twins.  An average team before the season can expect to exceed 86 wins about 16% of the time just based on standard variance.  If that average team has an 86 win team in division, the average team is going to pretty much never make the playoffs.  If the Twins are an 84 win team and the Tigers are yet another average team, the Sox have basically the same dilemma as before: little shot at the post-season.  So even after all that work to get back to .500, the basics haven't changed much. The playoffs and most importantly, the payoff therefrom, isn't really on the table yet.  BP's playoff odds confirm much of this, tagging the Sox with anywhere from 6% to 13% chance of making the playoffs.

This means the benefit from adding an additional win or two is going to be much less than it might be if the Sox were at the top of their division with, say, a 50% shot at a division title.  In essence, the contract you can acquire boils down to the point at which the possibility of the playoffs multiplies the baseline value for the marginal win so that it equals the dollars owed for that contract.  See Vince Gennaro's article at THT.

The data there show the revenues accrued from a marginal win.  That is, how many additional tickets, hot dogs, foam hands, etc. will a team sell because the team has gotten one win better?  A 2006 win is pretty nearly worth a 2010 win as far as I can figure (thanks to the economic crash) so we're looking at a mil or two in revenue gained from adding one win to an average squad.  Meaning the Sox can't afford to pay free agent market price for a win.  In the 2009 offseason, that figure was $3.5MM.  Any acquisition along those lines right now would mean Reinsdorf is taking a loss. 

Let's look at Prince Fielder, for example, who is signed to a below market deal since he's in his arbitration years.  He's probably a 4 win player and he's making $10MM above the minimum.  If we pro-rate that for half the season, that's 2 wins and $5MM, or $2.5MM owed per win contributed.  If the Sox are gaining their 82nd and 83rd win from that acquisition, they're only adding $1MM each in revenues (per Gennaro).  That's a $3MM loss that Reinsdorf has to be willing to finance.  Not to mention the opportunity cost on that loss, which makes it $3MM the Sox can't spend in 2011+ on players who might actually get them to the playoffs (and thus be profitable investments).

The end result is that most of the guys that would fit a White Sox 2010 Buying Opportunity given this model and assumptions are young, team owned for future seasons and are highly valued by the team that owns them. For instance, the Sox are going to get 4 or 5 wins from John Danks and they're going to pay him less than 4 mil to do so.  Even the worst clubs making next to nothing for the few wins they scratch across are going to want to keep those kinds of players, because they produce profits at any win level.  That kind of demand likely makes actual sellers scarce.  They aren't just waiting to be plucked up by the lone quality GM in a sea of morons. If Kenny wants in on such guys, he may have to risk a young current/future contributor in exchange.

In terms of what this team can do cheaply, its bigger hopes lie in what it has. So maybe the better move right now is to cut dead weight and see if the bargain barrel can't offer some slightly better returns.  In the very least, there are certain situations where replacement level would be a step up.  In specific terms, Kenny already cleared up the Nix/Vizquel redundancy, but Kotsay is a waste of a roster spot.  And it still might make sense to hand off the catching duties to Ramon Castro, since AJ costs $5MM more.  Or you could cut both and go with a Flowers/Lucy platoon and use that to help pay for Prince.  

And then there's the chosen two. Beckham and Quentin have been terrible.  If they were both off the team, replacement level fill ins would both prove more productive than George and Lenny**.  But the fact is that their realized potential remains only real way to genuinely improve the expected win total for the team.  And for free, no less.  CHONE projected them to combine for 6 wins.  They're on pace for -5 per fangraphs. Negative.  Five.  Obviously that's subject to error, but no amount of correction makes them even replacement level. 

I've been set against sending Beckham down, but the upside there is that he doesn't cost the team any more outs fixing himself.  If he is capable of figuring it out, do you think it's contingent on being on the big league club?  I'm guessing that's not the case, but Kenny is far closer to the situation. Additionally, I bet Beckham's attitude and treatment will be significant for the rest of the squad's mentality, so hopefully it all goes over well.

Quentin is an even bigger mystery.  From near-MVP to nearly washed up in two years?  He's a candidate for non-tender at the end of the season, but that timetable could be sped up.  If his injuries are chronic and malignant such that even the Sox can't help him, that's probably the right choice.  Can you justify spending even $500K on a below replacement player?  If there is a Q! I'll be punished for writing that.  And like any good Catholic, I've set myself up for potential flagellation on purpose.  But business is business. Kenny will do it if it must be done.

If the switch goes on for one or both, that in and of itself will aid Kenny in justifying further spending.  Without either, this is still an average team and I doubt JR or KW see it differently.  But if the Sox figure to make $2.5+MM per win, you can start to see how JR's love for the squad might make being a bit in the red okay.  No matter what, if the Sox can in fact profit from adding Prince Fielder, then obviously they will acquire him regardless of what some hack and a few links say.  And that's basically my answer to Tdogg's question: the Sox will do what's profitable.  Anything else is a fan talking.  But if KW and JR went into the season thinking they'd break even as a mid-80's win team, then I bet they're more than a bit in the red.  Taking on a contract to get them where they thought they'd be at the beginning of the season only guarantees the loss on their bad projections.  The Sox would finally have the talent, but half the time and a 4.5 game handicap.  Which means that I think that as far as the Sox brass are concerned, the best way to get back in front of the Twins is cheaply.  But the closer they get, the more the Sox can spend profitably.  And if Beckham and Quentin wake up, it's game on.


*If I were to write that post, it would be in the style of LL after something ominous happens Felix Hernandez.

**Creative license applied: it's rarely the case that the hulking guy is also the cerebral one.  So work with me.