From SABR President Vince Gennaro at Diamond Dollars on September 4, 2012:
Baseball analysts often toss around dollar values of players, accompanied by an assessment of whether a team overpaid or underpaid to sign a player or acquire him in a trade. The commentary can be confusing for several reasons, including the uncertainty over which definition of value the analysts are using.
To take a step back, let’s talk about the various definitions of the dollar value of a player. It seems that when the above references of “overpaid/underpaid” are made, they often refer to market value of a player. Even the definition of market value can be confusing, so we’ll come back to that later. Another way to define player value is to analyze his value to a specific team, basing it on the team’s unique circumstances, such as their revenue opportunity from improving their win total, which is driven by their market size, excess seating capacity, location on the win-curve (i.e., are they contending for a postseason berth), etc.
A third definition of value is to estimate a player’s asset value to his team. This is often a way to assess the fairness of a trade.
Read the full article here: http://vincegennaro.mlblogs.com/2012/09/04/valuing-players/
Originally published: September 4, 2012. Last Updated: September 4, 2012.