B4B

Shawn Hoffman’s Wall Street analysis of major league baseball is one of my favorite reads. I was thrilled when he agreed to answer some questions for us, and share a little bit about his background, and the correlations between fantasy baseball and Wall Street.  

“ I was born and raised in New York City, but was coerced into being an all-around Pittsburgh fan by an overbearing mother. For three years, I worked as a statistical consultant for the University of Michigan baseball team, where we accomplished some things under the radar that I’m extremely proud of. I’ve had a bit of experience working as a Major League office gopher, and I’m currently working as a partner in a web startup that has nothing to do with sports. My greatest passions are business and baseball, and the blog allows me to satisfy both. My favorite baseball players of all-time are Matt Stairs, Frank Thomas, and Barry Bonds, and my favorite non-baseball athletes are Hines Ward and Mario Lemieux.

“ Peter is on a very, very short list of media figures I would actually like to meet. I don’t always agree with everything he writes, particularly when it comes to sabermetrics and analysis. But he’s one of the few journalists in sports today that does his job (breaking stories, bringing readers inside the industry, etc.) incredibly well, without feeling the need to play GM or constantly criticize people.

I think the article you’re referring to is further proof that the world is shrinking very fast. We started this blog in September as a self-indulgent way to hear our own voices, and a couple months later Peter Gammons is mentioning it in his column. I really believe that anyone who does not create some sort of web presence for himself or herself is missing an easy opportunity to get their names out there and connect with people they never would have otherwise.

“ Know who you’re dealing with. There are generally two types of trading partners: those that are competent, and are willing to make mutually beneficial deals, or those that are incompetent, and can be taken advantage of.

With good trading partners, try to look for depth on their team, and your own. That’s the easiest way to make a deal that benefits both sides. Usually these trades can get done pretty quickly, since you both have done your homework. With bad trading partners, exploit their weaknesses. What players are they misevaluating? What information are they not aware of? These are also usually the owners that make trades just to make trades. 

I generally like to stick by my guns.  I make very few trades, unless I’m totally blown away. As soon as a draft ends, people are already making offers. What’s the point? Why pick a guy if you’re just going to trade him five minutes later? Pick the players that you think will help your team the most, and stick by them, because your first evaluations are usually your most thought out.

“ It sounds funny, but fantasy baseball is more like a stock market than the real player market is. Real life teams succeed primarily by drafting and developing their own players. If we consider players to be “stocks,” this would be like saying that the best way for a hedge fund manager to succeed is by starting a number of his own companies.

With fantasy baseball, though, there are no long-term contracts, no marketing investments tied to certain players, no human egos to massage, etc. You are creating a short term portfolio, and each player is essentially his own stock. You have six months to extract as much value out of that portfolio as possible.

With any type of portfolio, you need to constantly reevaluate your own holdings, as well as others’. A great stock today might be a dog tomorrow. If Albert Pujols ends up having Tommy John surgery, his value tanks, just as Apple’s would if Steve Jobs were hit by a bus. That possibility has to be priced in when you decide whether to draft Pujols with your first pick.

“ One great thing about fantasy baseball is that there is no questioning a player’s value. Whatever he does, it’s worth a certain amount of points, depending on your league’s criteria. No arguments.

On the other hand, a negative aspect of fantasy is that these criteria are usually more in line with Bill Plaschke’s view of the world than Bill James’s. I.e., stolen bases are worth as much as home runs.

The key is proper evaluation, regardless of your league format. This is something I have had trouble with when I do fantasy drafts, because I have never been able to force myself to take Juan Pierre over Lance Berkman. But in many leagues, Pierre has been a more valuable player in certain years.

One tenet that spans both worlds is the inherent unreliability of pitchers. Even with everything going his way, I can’t imagine taking Johan Santana in the first round this year, nor would I have signed him to a real-life contract through 2014. With pitchers, you need to rely more on quality out of quantity. I usually stack my early rounds with position players, dabble with maybe 2 or 3 starting pitchers in the first 10 picks or so, and pick my relievers last. Unless you’re in a 20 team league, you should be able to find decent relief pitchers late in the draft.

“ What we want to do with the Data Project is collect any and all financial info we can, but with a particular focus on league and team data. The benefits of this kind of project are almost endless, but the main goal from a sabermetric point of view would be to improve existing Marginal Revenue Product calculations. This would allow us to put a real price on free agents, draft picks, etc. The systems that exist today are far too general to have any real meaning.

Right now, we’re determining what the best platform would be to make the data publicly available for people to use and contribute to. There are several new open database sites that have wiki functionality, but we want to make sure we have the best possible framework before we move forward.

I want to thank Shawn for answering these questions for us thoroughly and insightfully. I’d recommend reading through the archives at his blog Squawking Baseball and subscribing to his feed. He provides a unique take on all things professional baseball.