Skip to content

More on Holliday and PPA

January 11, 2010

It’s been discussed (dollar value per win assumptions for the duration of the article are stolen from that article) that because of the length of the deal and the decline phase there is a decent chance that the Holliday deal won’t have any overall surplus value for the Cards.  It’s also been discussed that next year the addition of Holliday will go a long way towards improving the Cardinals chances of making the playoffs.  The question I asked myself, “Self, is there any way to look at these two things together?”  To that end I offer the following chart for your perusal.

First a quick explanation, the vertical axis is playoff probability added (PPA) given the Cardinal’s baseline of 87 projected wins.  Numerically it’s PPA(baseline wins+ WAR)-PPA(baseline wins).  For the Holliday line the WAR term is Holliday’s assumed war (based on chuckb’s THT post) and for the Average Production line the WAR term is the market value production of Holliday’s salary (i.e. $17M/4.4 for year one, $17M/4.7 for year two etc.).  The chart assumes the same baseline wins for each year (a stretch I know, but it doesn’t change the big picture too much if you do assume a moderate decrease).  The chart is as expected, there are gains at the beginning of the deal and losses at the end (when compared to getting average market production).  Maybe the following chart will be more insightful into the deal as a whole

This chart shows the cumulative PPA added (the line) and yearly PPA added (the bars) when compared against paying assumed market value for wins.  A bulletized list of takeaways

  • The deal would have been “optimized” at 3 years, after which the Cards would have been better off with market value production.
  • The Cards keep an overall net positive PPA until the 7th year.
  • Feelings about the deal boil down to one’s willingness to pay a premium late in the deal for additional gains early.

There has been some comment on the pessimism associated with starting Holliday at 4.6 WAR given his recent WAR totals, so I also created the same charts using the WAR estimate that VEP came up with here.  Here they are

and the cumulative one.

These two charts clearly give a rosier picture, with the Holliday deal outperforming market level production for the first six years and having a large net positive over the life of the contract.

I thought graphs like these would be a way for everyone to wrap their minds around surplus value with something a little more tangible than dollar figures.  I’m sure there are even better ways than this, and if I come up with any I’ll be sure to post them here.  In the end doing this analysis didn’t change my opinion too much on the Holliday deal.  I still love it in the short term knowing we may have to pay “interest” eventually.


Comments are closed.

%d bloggers like this: