Where markets and predictive models deviate.
Fangraphs is a leading baseball analytics website whose features include projection systems that use historic data to make predictions. The below chart looks at predicted W-L records for each major league team, comparing those records to corresponding team over-under lines posted amongst Pinnacle’ MLB futures.
A few things to keep in mind when looking at these predictions:
- MLB projections tend to play out closer to the mean than reality, in large part because these predictions don’t account for the outliers luck creates. Note that no team is predicted to win more than 91 games.
- While certainly worthy of your study, we are not endorsing these predictions as the only ones you should enlist.
- While our over/under lines generally started at close to even, some markets have drifted. Differential totals marked with an asterisk have moved to the point where the favoured side of the market has moved into the 1.70-1.79 range as of publication. No totals line amongst these has moved below 1.70.
- Data used here on O/U is from Monday, March 17th.
The larger the number in the right-most column, the less agreement you’ll find between the predictions and markets, suggesting there is greater opportunity in betting those markets.
With negative numbers, the predictions are giving teams like the Blue Jays, Indians and Rockies a lot more credit for potential success than the markets do; an opportunity if you’re looking for longshots. Large positive numbers, like those we see with the Nationals, Cardinals, A’s and Braves, at least provide opportunity for profit in betting under the predicted number of games won, though may suggest a team isn’t worth your World Series vote.
The market (size) doesn’t matter
It’s seldom you’ll hear someone at Pinnacle say the above, and this time, it’s only because of a play on words. Major media markets saturate the market with winter speculation, with the likes of the LA Dodgers, Boston Red Sox, New York Yankees and Chicago Cubs – all of whom have incredibly powerful media followings – potentially getting more attention than deserved.
With those powerful clubs considered the apple of the national media’s eye (after all, national media goes in large part off what they hear from municipally-inclined media, so there’s a direct correlation between size of media market and amount of national attention), clubs in smaller markets often will not get their appropriate share of popular appraisal. Which are the smallest markets in MLB by population?
Milwaukee (1.56M), Kansas City (2.07M), Cleveland (2.09M), Cincinnati (2.17M) and Pittsburgh (2.35M). Assuming media influence is commensurate with population, even Pinnacle’ non-American user-base is likely to somewhat be influenced by the local baseball news.
Our statement about not betting the Nationals, Cardinals A’s and Braves make some sense here. The Nationals are a big hype team, thanks to Bryce Harper and Stephen Strasburg; the Cardinals just made the World Series; the A’s are Billy Beane’s team and get more attention that their geography suggests they should; and the Braves had a huge offseason, signing many key players to long-term deals.
Ten teams make the MLB playoffs, 4 of which play immediately to take the field to eight. With that format in mind, we realize that with all things being roughly equal, a sure-thing playoff team (if there were such a thing) has a roughly 1 in 8 shot to win the title. With the most popular bets amongst champion futures close to that value, the certainty of a favoured team making the playoffs has to be weighed. The clearer the path, the better the true odds.
The Los Angeles Dodgers and Detroit Tigers have the best odds in our markets of winning the World Series and this reasoning likely plays into it. Both teams are built on multi-superstar foundations, with resources to buoy their rosters as necessary whilst playing in what are generally considered the two weakest divisions in baseball. Making the playoffs is the first, very big step. There’s value in knowing it’s the next best thing to a sure thing and the Pinnacle markets are seldom very far off.
Regression to the mean
Every year, there are teams that don’t measure up to the hype and it’s often as much due to luck as skill. Injuries, offensive timing, a poor record in one-run games, etc. can contribute to a team’s downfall, and as we saw with the Toronto Blue Jays and Los Angeles Angels of Anaheim in 2013, there can be a snowball effect.
The good news for fans of those teams and bettors is that there’s usually some regression to the mean, which against the perception of the previous season’s win loss record can create value. Teams like the Jays and Angels, both of which saw massive injury tolls last season, should gain at least some wins just by virtue of the fact it’s a different year.
In the end, it mostly comes down to team Wins Above Replacement (WAR) and a little bit of luck, but the above factors all serve to throw off an individual’s WAR calculations. Finding where the masses have erred is key to getting a +EV bet down on the clubs you ultimately deem worthy. Keep looking for trends in missed calculations and you should do well in 2014.