NOTE: It is possible for us to do a follow-up interview with Mr. Gennaro, so if you have questions about topics that were discussed, e-mail them to Lane at Lanemeyer.nomaas@gmail.com and try to make sure they are relatively short and concise. The best questions will be included in the follow-up.

LM:  You've become well known due to your advanced statistical analysis, particularly in the field of determining player worth in dollars. Can you give our readers a synopsis of your player valuation system, as well as any information on your background, your involvement in MLB, etc.?

VG:  I’ve looked at player value from several vantage points. First there is the player’s economic value to a team, meaning how much revenue and overall financial value the player is expected to generate from his impact on team performance and the translation of that improved performance into team financial value. A second component—a much debated one—is a player’s “marquee value.” I happen to be in the camp that believes certain players generate value beyond their on-field performance, reflected in their ability to attract fans to games, to sell team merchandise, and build the team brand, etc. Admittedly, it is tough to measure or even estimate this form of value. A third way of defining value is to analyze the free agent market and estimate what a player would be worth in today’s free agent market (I’ll get into this more in addressing some of the other questions) Think of this as the current “market value” of a player.

In terms of my background—MBA from the U of Chicago, had a successful career at PepsiCo where I was President of a billion dollar division. I left the corporate world about 5 years ago and got back to some of the things I started analyzing a couple of decades ago while in grad school—the dollar value of players, the value of player development, etc. I wrote Diamond Dollars: The Economics of Winning in Baseball. I’m teaching at Columbia and Manhattanville in the Graduate Sports Management programs and consulting for a couple of MLB teams.
 

LM:  CC Sabathia has been clearly touted as the number one target of the Yankees this offseason, even over a fantastic all-around star like Mark Teixeira.  There is much debate among the fans as to which player they should target if they can only target one. Assessing their worth at this point, what does your analysis suggest? Additionally, you've often said a player's production is "worth more" to a team like the Yankees - what do you mean by this?

VG:  First of all, there is no financial reason that the Yankees can only target one of the two. They may ultimately decide to do that, but it’s not like they’re financially constrained. The positive regarding CC is the Yankees desperately need a top of the rotation starter, so why not go for the best one available. On the other hand, when was the last time a player hit the free agent market after pitching 500 innings over the previous two seasons? The wear and tear on his left arm has to be a concern over a long-term contract. There is a lot to like about Tex, including his superb 1B defense, which will help the entire infield defense. I do think if you’re forced to choose just one, you have to go with the best starting pitcher available.

As you and your readers know, the Yankees cannot afford to miss the postseason again this year. It would be very difficult to justify the kind of ticket pricing they set for the new ballpark with anything short of a perennially playoff-bound team. In fact, even if they make the playoffs but continue to exit early, there will be some grumpy premium season ticket holders paying $40,000+ per seat. So, the marginal revenue from winning is huge, as is the financial penalty for not winning. And with the stronger AL East, the bar is even higher. Not only can the Yankees afford to spend aggressively, they must spend whatever it takes to field a minimum 95-win team in 2009.

I’ve built statistical models—one for pitchers and the other for position players—to estimate the average annual value and contract length for free agents. It takes into account the 600 free agents that signed deals over the last 5 years and a variety of data—performance stats, age, injury history, etc. The model suggests that the Yankees, Angels, Cubs, Dodgers and Red Sox tend to pay more to a player, all other things being equal, than the rest of the league. Since these large market teams typically have more to gain financially from winning, I wouldn’t call this “overpaying”, but rather using their advantage (market size, stronger team brand, etc.) to “win” a player. My model says that Sabathia would command $26 million x 7 years in this market, but it also says the Yankee premium could be another $3 to $4 million per year, taking the total value of the deal into the vicinity of $200 million—if the Yankees are pushed to go there by other bidders. My model says Tex should go for about $21 million x 6 or 7 years.
 

LM:  The Nick Swisher acquisition made us happy to the point of feeling faint, as we saw the swap as highway robbery. Are we crazy?

VG:  I really like the Swisher acquisition too. I think he’s an excellent fit for the Yankees. He hit way below his career average on BABIP in 2008, so he should get a nice bounce back there. He also gives the Yanks some flexibility at 1B, corner OF or even occasionally in CF. I don’t know enough about Jeff Marquez or Nunez to know if it was a fair deal. But any deal that gets rid of Wilson Betemit, can’t be all bad.
 

LM:  How well do your evaluative methods account for durability/injury? For example, when you feed a name like "Ben Sheets" into the Gennaro Generator are you wholly confident in what is spit out, or do you need to apply finishing touches that the metric cannot interpret?

VG:  We’ll see how the model fares for some of the unusual situations this year. I include the variation in the number of games played over the last 5 years as a proxy for injury history/durability. My model has Sheets at $13 million per year, below Lowe, Burnett and Dempster, driven by Sheets injury history.
 

LM:  We've been advocates of moving Robinson Cano in a deal for a similarly young, talented, and and proven player. What does your analysis say about his worth? Also, is it possible for you to turn back the clock to see what that analysis was before his horrid 2008? Can you do the same with Swisher?

VG:  As a fan, I feel the same way as you about Cano. It’s very frustrating to watch his inconsistency and his sometimes mindless play. But from a business perspective, his value as an “asset” is way down. This is one where resisting the temptation to deal him now could pay big dividends, either in future performance for the Yankees or future trade value. I used my model to convert the performance stats and other attributes of Cano (age, past games played, etc.) into a forecast of what Robby would command if he entered the free agent market today. Because he came off a very disappointing 2008 season, I estimate he would be valued at about $13.2 million in today’s market. However, if we turn the clock back one year and look at how he might have been valued coming off his 2007 season, my model pegs him at about $17 million. Similarly, one year ago Nick Swisher could have commanded an estimated $13 million coming of his 2007 season, but after a weak 2008, my model currently prices him at about $8.5 million per year.
 

LM:  Much is being made of the secondary pitching market, and we at NoMaas definitely hold strong opinions about it. In describing the trio of Derek Lowe, AJ Burnett, and Ben Sheets, an old, college phrase used to assess a group of three women comes to mind: "Marry, Kill, F***."  Lowe is the one who is steady and stable, AJ is the one who you don't want any part of, and Sheets is so damn sexy, but you just know getting into a relationship with him is a bad idea. Do we have that in the right order in your opinion?

VG:  Of these three, my model agrees with your order. Burnett and Sheets have made more than 25 starts only twice each in the last 5 years. The other pitcher my model really likes is Dempster, although the fact that he hasn’t pitched in the tougher AL scares me a bit. You might want to see the piece I recently wrote at maplestreetpress.com on the market for Lowe, Burnett and Dempster.

Each free agent season, there are several players that seem to be on nearly every team’s shopping list, therefore creating a very competitive situation and leading to a higher than expected deal. This year I would put three players in that category—Lowe, Orlando Hudson and Brian Fuentes. The paradox is that everybody thinks these guys will be a great value, which pretty much ensures that they’ll be higher priced than expected.
 

LM:  Is there a Free Agent out there this offseason that you think a team is going to get a steal on? I'd assume Mark Ellis would have been your guy, but he shot himself in the foot by re-upping with Oakland so quickly.

VG:  If a team can pick up Joe Crede for two years at $9 million per year, that could turn out to be a great deal, although Crede’s history of back injury makes it a high risk signing. If Randy Wolf can be had for 2 years at $7 million per year, that could be a good deal. On the flip side, I wouldn’t touch Oliver Perez—a very mediocre pitcher that shows occasional flashes of brilliance. My model, which compares him to other players over the last 5 years with comparable stats, prices him at a modest $8.5 per year for 3 years. Despite being pretty similar to Randy Wolf, I have to assume that Boras will get Ollie considerably more dollars…somehow.
 

LM:  Finally, are you publishing anymore material going forward, or are you looking to work exclusively in the private sector?

VG:  I’ve done some writing for Yahoo! Sports over the last year and I continue to write for Maple Street Press’ pre-season annuals, including Bombers Broadside 2009, which is an in-depth look at the upcoming Yankee season. I am enjoying working with teams on baseball ops issues. The area of player development is something I’ve spent time on in the last year—considering things like how to most efficiently source talent, the emphasis of the draft vs. international markets and which international markets are undervalued. I’m also working with the business side of teams on issues like strategic ticket pricing and team branding. My teaching at Columbia and Manahattanville also are pretty time consuming. As for other writing projects, possibly another book sometime down the road.
 

Vince Gennaro is the author of Diamond Dollars: The Economics of Winning in Baseball and a consultant to MLB teams. Over his 30-year business career, he served as a CEO of a public company, was President of a billion dollar division of PepsiCo and an owner of a women’s pro basketball team. His innovative analytical work on the business of baseball has been featured in The Wall Street Journal, CNNMoney, and The New York Times, and he has written for The Hardball Times and Yahoo! Sports. He teaches in the Graduate Sports Business Management programs at Columbia University and Manhattanville College and has an MBA from the University of Chicago.