Article: Betting Against The House

[John Bonnes]

Download attachment: Pelfrey_Mike_walking_US_720.jpg The latest casino project in Las Vegas is going to cost seven billion dollars. That is an incredible gamble (*1), but there are reasons that investors make it. The first is that in the long run, the house always wins. But the second is equally important: in the short run, anyone can win. If that wasn’t true, nobody would go to the casino, and there would be no reason to invest.

 

Mike Pelfrey, who the Twins will be signing for $11 million over two years, is an investment too. [PRBREAK][/PRBREAK]In the long run, he’s averaged out to a 4.48 ERA return, but that's like saying a roulette spin will come up blackish-red. He’s thrown about five-and-a-half seasons in the majors, and only once (4.74 ERA in 2011) has he ever come anywhere near that career ERA. Instead, he’s crushed it twice (3.72 in 2008 and 3.66 in 2010) and been crushed three times (5.57 in 2007, 5.03 in 2009, 5.19 last year). It doesn’t take a lot of advanced analysis to tell you that the Twins are betting against the house.

 

But the advanced stats tell us the same thing. Pelfrey’s success or failure each year has been almost entirely based on how many home runs he has given up. Home runs are highly dependent on whether or not a pitcher tends to be a ground ball pitcher or a fly ball pitcher, and Pelfrey is the latter. It’s hard for any pitcher to control what percentage of those fly balls turn to home runs, but there is some long-term trend to it, and Pelfrey has been very good at keeping fly balls from turning to home runs. Every year he has pitched in the majors, Pelfrey has been in the top half of pitchers in home run to fly ball ratio (HR/FB).

 

But the two years he was really good, he was elite in HR/FB, ranking 4^th among qualified pitchers in 2008 and 9^th in 2010. The other years, he wasn’t bad, but merely slightly above average. When Pelfrey has been successful, he’s been elite at doing something in which pitchers have very limited control. I don’t like to call that “luck,” but I also don’t like to call a good run at a blackjack table “luck.” I go with “secret sauce.” But whatever I call it, I don’t rely on it.

 

If this was a one-year deal, I could say that the Twins won’t need to rely on it either. But a multi-year deal changes how teams react. If Pelfrey isn’t effective, whether it’s luck or skill or the wind blowing out in Target Field (*2) this spring, it’s going to be hard to push him out of the rotation. Nobody is going to be anxious to give up on a player with that contract, especially given that Pelfrey is by all accounts a good guy and hard worker.

 

So the Twins are making a bigger bet than they should have against the house. They might have been emboldened to do so by their success with Kevin Correia, who paid off handsomely in his first year. The Twins have responded by doubling down instead of walking away with their winnings.

 

That’s a natural, human reaction. It’s also why they still keep building casinos.

 

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*1) We tend to read numbers and blow right past them, but think about what it means to build a seven BILLION dollar casino. That’s the value of thirteen of MLB teams, including the Twins, combined. And that money needs to be raised and paid UP FRONT in cash. And it’s not like casinos never go bust – several of them have over the last decade or ended up being partly built and then stalled out. Just what kind of return do you have to anticipate to make a seven billion dollar bet like that?

 

*2) Target Field is probably worth addressing. HR/FB rate is also influenced by ballpark, and it would make sense that Target Field would help pitchers, especially right-handed pitchers, in that regard. But it’s worth noting that Pelfrey’s team, the Mets, also have a home ballpark that has suppressed home runs. For instance, in 2010, the Mets and their opponents hit 110 home runs in CitiField, but 153 home runs on the road.

 

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