Hot Stove Economics: Understanding Baseball's Second Season (review)

In The Baseball Economist (2007), J. C. Bradbury's first book of "sabernomic" analysis, the author led us on a wide-ranging tour of received baseball wisdom. Using the tools and assumptions of economic analysis, Bradbury dissected topics as diverse as the effect of market size on team success, what might motivate players to use performance-enhancing drugs, and whether a major-league manager has any demonstrated ability to influence an umpire's calls.

With Hot Stove Economics, Bradbury turns his economist's eye toward "the main event of the hot stove league . . . the opening of free agency" (xiii). Bradbury employs much the same economic thought as before, but here his focus is much tighter: through eight chapters, he examines the myths, rules, and economic truths of how, when, and why major-league clubs evaluate and acquire players.

This examination centers on Bradbury's creation of a metric to put a dollar value on player performance. As we follow in this creation, he urges us to think, as an owner might, of players as assets. That is, "a player is worth what he generates in revenue to his team minus his expected employment costs" (9). This mode of thinking doesn't just serve to prop up Bradbury's model-it's also how, he reminds us, the owners themselves operate: "After all, look who typically owns baseball teams: successful business executives. The good news for fans is that winning normally begets revenue, so the motives of fans and owners are somewhat congruent" (119).

If you're a baseball fan without an economics degree, you might stumble over a few of Bradbury's assertions-say, "Baseball owners are rational professionals who seek to hire players because players generate revenue" (91), or "minor-league prospects represent highly volatile assets who yield positive expected returns despite their considerable low rate of success" (168). It may seem a little silly to the uninitiated-try dropping that "rational professionals" line into your average baseball conversation-but starting from such assumptions is essential to the economic analyses that Bradbury applies here. It's a credit to his book that he is able to guide us past such tricky terrain to persuasive arguments about the valuation of players, and about the ability of general managers and owners to accurately measure those values.

Along the way, Bradbury peeks in on questions of competitive balance, dissects a few examples of free-agent contracts, and digs into the intricacies of player service time, arbitration eligibility, and free-agent status. Some of this is in the service of building his player valuation model, and some of it comes as "Hot Stove Myth" asides-codas to each chapter in which Bradbury takes a few shots at some persistent commonplaces, like the idea that certain players are more "clutch" than others or that high player salaries lead to high ticket prices.

It's in some of these myth-debunking sections that Bradbury's arguments seem weakest. This may be due to the limited space he gives over to the end-of-chapter digressions. But, for example, while he is persuasive in pointing out the deficiencies of Bill James's VAM approach to player evaluation, he is too brief in his dismissal of the various "replacement player" metrics used by Baseball Prospectus and other sites of sabermetric analysis. I don't doubt that Bradbury can lay out a full case against these other metrics, but here he seems to go only halfway.

Likewise, in his discussion of the "myth" that higher player salaries lead to higher ticket prices, Bradbury makes a cogent point that laws of supply and demand can describe recent rises in ticket prices. But the analysis feels a little too neat and small for fully explaining why "the cost of attending a baseball game rose approximately 150 percent" (152) from 2000 to 2009.

In any case, these are diversions from Bradbury's main pursuit, and he doesn't set out to answer all possible questions...