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Where discussions of player “value” go wrong

Looking for the “best bang for the buck” misses the point entirely

Last week, the Athletic’s Molly Knight penned a piece (subscription required and recommended) entitled “The 20 most valuable players in baseball (and this list might surprise you).” That, in and of itself, isn’t terribly controversial to a lawyer; we all can disagree on who the most valuable players are, but arguing about it is fun, and if you don’t find it fun you’re probably reading the wrong website.

Knight’s piece, however, provoked a good deal of backlash on Twitter and elsewhere, not for the topic itself, but rather for its methodology.

“But it’s hard to talk about ‘value’ and not look at which players are providing the most bang for the buck. Or, if it makes you more comfortable, which players are most criminally underpaid. It’s reasonable to think this way because arriving at X — where X is the most value and value is determined by wins — while constrained by Y — where Y is the money you are allowed to spend on X — is what general managers do for a living. Another way to think of the list below is that if for some reason these players were available in trade, they would command a king’s ransom, a queen’s ransom and all the best dogs in the city.”

This also isn’t the first time Knight has proposed a relationship between value and salary. Last month, she tweeted this.

As someone who’s twice before held an MVP vote, Knight is among the brighter stars in the pantheon of baseball writers, and as such her ideas generally deserve a serious discussion. On this, however, she’s just absolutely wrong.

To lawyers, words matter, almost more than anything else in our toolbox. What’s more important than words? Context. As Gabriel Lorca said, context really is for kings. And it’s context that defeats Knight’s argument.

Let’s start with that pesky word, “value.” What is “value” anyway? Let’s ask a dictionary.

1: the monetary worth of something : MARKET PRICE

2: a fair return or equivalent in goods, services, or money for something exchanged

3: relative worth, utility, or importance

a good value at the price

the value of base stealing in baseball

had nothing of value to say

4: something (such as a principle or quality) intrinsically valuable or desirable

sought material values instead of human values

— W. H. Jones

5: a numerical quantity that is assigned or is determined by calculation or measurement

let x take on positive values

a value for the age of the earth

6: the relative duration of a musical note

7a: relative lightness or darkness of a color : LUMINOSITY

b: the relation of one part in a picture to another with respect to lightness and darkness


We can throw out the sixth, seventh, and eighth definitions right away; we know they’re irrelevant. How does the BBWAA define “value” in terms of MVP voting?

Dear Voter:

There is no clear-cut definition of what Most Valuable means. It is up to the individual voter to decide who was the Most Valuable Player in each league to his team. The MVP need not come from a division winner or other playoff qualifier.

The rules of the voting remain the same as they were written on the first ballot in 1931:

1. Actual value of a player to his team, that is, strength of offense and defense.

2. Number of games played.

3. General character, disposition, loyalty and effort.

4. Former winners are eligible.

5. Members of the committee may vote for more than one member of a team.

You are also urged to give serious consideration to all your selections, from 1 to 10. A 10th-place vote can influence the outcome of an election. You must fill in all 10 places on your ballot. Only regular-season performances are to be taken into consideration.

Keep in mind that all players are eligible for MVP, including pitchers and designated hitters.

Let’s see which definitions of “value” are implicated by this definition. The first and second criteria are both measurable, quantifiable values; that’s the fifth definition above. The third criterion is an intrinsic value, the fourth a definition. The rules say that relative worth and importance can be weighed; that’s the third definition. What the Rules do not consider to be of “value” are the first and second definitions: monetary worth, and a fair return or equivalent in a trade. That kind of value is listed nowhere in the Rules. But it’s that kind of value that is the entire focus of Knight’s thesis.

Knight conceived of a relationship between salary and value from a trip to Costco.

But you don’t have to just believe the headline. From Knight’s article:

“But then the other day I was at Costco and saw the word ‘value’ over and over again flanking cookies and beer, and it made me wonder if we should be framing the MVP debate in a new way.”

Knight, you see, proposed looking at determining value in a way similar to commodities like beer and cookies. What is a commodity?

“A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.”

But is labor - that is, the work of human beings - a commodity? Labor is certainly an input, but is it a commodity? Scholars, even today, argue both sides. Paul Zarembka, a University of New York at Buffalo economics professor, argued that it isn’t.

“By purchasing labor-power, the capitalist obtains a very specific, and unique, use-value: the workers’ ability to produce value! The use-value of a light bulb is to provide light. The use-value to the capitalist purchasing labor-power is the value the worker produces (not specific items like light bulbs, TV’s, which are of no interest to the capitalist).”

But you don’t have to get into complex economics or labor theory - or a political philosophy debate - to understand why cookies and beer are commodities whilst baseball players aren’t. Cookies are fungible; players aren’t. Cookies might be uniform across boxes, but players certainly aren’t. Open a box of Oreo’s and the cookies are all the same. The Los Angeles Angels roster would feature the best Oreo in the world and some that are...not the best Oreo in the world. If players were truly fungible, as Oreo's are and as Knight’s methodology implies, substituting Mike Tauchman for Mike Trout would make no difference to the Angels.

This distinction matters—a lot—because at Costco, the “value” you get—the “bang for your buck,” if you will—is one of quantity, not quality. At Costco, the Oreo’s aren’t better than at your local supermarket; you just get more of them. The beer isn’t of better quality; the container is just bigger. “More bang for your buck” means that the unit price is lower; that is, the price you pay per Oreo is lower.

On the other hand, the Dodgers don’t get more “bang for their buck” with Cody Bellinger, because there’s only one of him. He’s not fungible. If Cody Bellinger were to clone himself tomorrow, (a) the Dodgers would be even scarier than they already are, and (b) the unit price of Cody Bellinger wouldn’t change.

“But Sheryl!” you say. “Paying Bellinger less means the Dodgers can spend more elsewhere!” That, however, is confusing inputs with outputs. Costco’s model works for fungible goods because it sells large amounts of outputs. Cody Bellinger is an input. What Bellinger does is an output. Looking at the cost per home run, as Knight does, is the equivalent of looking at the price per pound you’ve gained from those Oreos. Bellinger isn’t fungible. Home runs might be, but the producers of home runs certainly aren’t... and that’s where Knight’s argument really falls apart.

Simply put, comparing a box of Oreos to Cody Bellinger is a problem because Knight is comparing apples to oranges. With goods and commodities like—well, apples and oranges—monetary value can be determined by unit price. On the other hand, as Professor Zarembka wrote, with labor—any kind of labor, really—its use value (or, in a more modern sense, utility) that matters, not unit price. Every player is one-of-a-kind. Adam Smith, the founder of modern economics, differentiated between the two in his book, The Wealth of Nations. Smith called unit prices “exchange values” and, as he explained, it is a very different concept from use value.

“The word VALUE, it is to be observed, has two different meanings, and sometimes expresses the utility of some particular object, and sometimes the power of purchasing other goods which the possession of that object conveys. The one may be called ‘value in use ;’ the other, ‘value in exchange.’”

This is the reason why a dollars-per-WAR calculation is, on the whole, a futile endeavor. WAR is an attempt to calculate a player’s quantifiable utility. A home run has, on its own, no exchange value aside from the satisfaction it brings to fans. It isn’t a good you can sell; ergo, by definition, it has no exchange value. A WAR is no different. Dollars per WAR tries to assign an exchange value to a use value. The end result might be helpful in showing that a person provided a lot of utility for very little money or vice versa, but that isn’t, in and of itself, “value.” Use value and exchange value are, in the end, different concepts.

Now, at this point, you’re probably wondering about how trades work. After all, doesn’t there have to be some way to quantify use value if players that provide different utilities can be traded? The answer is, of course, yes; utility can be quantified. But dollars per WAR isn’t the basis of Major League Baseball trades.

Take the Christian Yelich deal between the Brewers and the Marlins. The use value of Christian Yelich far exceeded the use value of Isan Diaz or Lewis Brinson. The Marlins made that deal because the exchange value of Brinson and Diaz—i.e., their salaries—was lower. Teams generally look to maximize use value and minimize exchange value, but as the Marlins showed with Yelich, they will sacrifice use value in order to obtain even less exchange value—and that’s what Knight was really measuring.

You see, Major League Baseball is largely a monopsony; that is, a single-buyer market. (Note: saying MLB is a monopsony is not saying it’s collusive. Collusion applies in the context of free agency, which, as you’ll see below, is the sole exception to MLB’s monopsony.)

“The concept was developed by the economist Joan Robinson in her 1933 book The Economics of Imperfect Competition to describe the labor market equivalent of a monopoly, where workers only have the option to work at one employer, so their wages will be set less than the value they create since they have no outside options. Think of a mining town—geographically remote so that workers cannot find mining employment elsewhere—where laborers are stuck with lousy wages and probably high prices at the company store, too. In her then-theoretical model, Robinson suggested that gains from economic growth are not balanced between workers and employers.”

Yes, there are technically thirty teams, and yes, they technically compete for the same players when those players are free agents, but that doesn’t change that MLB is a monopsony. Why? Because free agency is the only time that players get to decide where they will play, and the only time teams compete over players. Otherwise, MLB - a single buyer in the market for baseball players - assigns players to teams, sets rules that determine how much they will be paid in the minor leagues, sets more rules that determine how much they’ll be paid in the first six years of their MLB careers, and sets rules allowing teams to transfer players largely at will. For all intents and purposes, with very few exceptions, MLB player labor is very much a single-buyer market.

The fact that the MLBPA collectively bargains doesn’t change the fact of MLB’s monopsony. After all, the MLBPA doesn’t negotiate with thirty separate team employers; it negotiates with one league directly, which decides the rules on behalf of thirty teams. And though collective bargaining increases players’ rights somewhat through salary floors and the like, we continue to see the majority of revenues generated from MLB go to ownership and less to players, just as Robinson’s model predicts. This kind of monopsony situation is common in labor markets and limits players’ rights significantly; players have no meaningful alternative if MLB refuses to accede to salary demands, because they can’t all go play in the Atlantic League.

All of this is to say that what Knight was really measuring wasn’t value in terms of MVP voting at all, nor was it anything like value in the Costco sense. Instead, Knight was measuring how the league determines the exchange value of utility, and in so doing creating a list of the game’s most underpaid players relative to that utility. To put it another way, what Knight was measuring is, essentially, what economists call deadweight loss; that is, the inefficiency in the MLB labor market created by the league’s monopsony.

In short, instead of the most valuable players, Knight’s list is of the players who are the most valuable to team owners as a result of an inherently inequitable system. That criterion certainly isn’t anywhere in the BBWAA voting instructions, and it probably never should be. As we’ve seen, utility isn’t meant to be directly translated to exchange value, and exchange value certainly shouldn’t be determined by a single-buyer market.

Knight’s argument might hold more water if MLB players were paid based on the work they put in, or received a cut of ticket sales and attendance, or if they had multiple options for employers. But in MLB’s single-buyer market, where $/WAR curves are essentially determined by a central planner rather than a free market, the result is utterly meaningless. Cody Bellinger has value to his team because the team, along with 29 others, decided what that value is. Giving players an MVP award on that basis might as well congratulate them for being the most screwed, and that’s an award MLB already gives out.