The Irrational Market
I love watching sports odds. For all the pre-season hype and predictions, all the column inches wasted on how some guy's having a great spring, the fat guy lost weight, the youngsters look good, and the managers says no one has a guaranteed spot, this is where you can see what the real weight of baseball opinion is, because it's where people are staking their money. We can churn out all the expected runs scored/allowed standings, run simulations with Diamond Mind Baseball's predictions, but the actual market-based is the most interesting.
That's because there's only one reasonable reaction to looking over the lines as I write this: people are crazy. The White Sox are 4-1 to win the World Series. Four to one. I know they're the defending champions, but this makes no sense.
Consider for a second the odds that they'll even get a playoff berth. If they were a strong team (say 90 wins strong) in a really weak division, they might have a 75% chance of getting to the playoffs. But the line...the line essentially says that not only are they a strong team in a weak division, they're going to breeze through the playoffs.
Or, rather, consider that the playoffs are a series of coin flips, for ease of demonstrating how wacky this is.
White Sox make the playoffs: 75%
They make the playoffs and win the ALDS: 38%
They win the ALDS and the ALCS: 19%
They win the ALCS and the World Series: 9%
You want 10:1 odds or higher then. To get to the point where a 4-1 bet becomes even rational, you have to believe that the White Sox are a 90-win team in a really weak division, and that they're going to be far superior to their competition in every playoff round. And in recent years, we've seen great teams - truly great ones - lose playoff series to teams that were pretty clearly their inferior. This would be a bad bet if we knew, ahead of time, that the White Sox would win 100 games.
And that's obviously not the case. Is there that much money behind this? Is being the former champion such a big deal that everyone from Chicago put some money behind a repeat? I wish I could short that bet, but unfortunately, there's no derivatives market for sports betting that I'm aware of. That's probably a good thing.
I was curious, though, after I saw that - where else is does the market's belief about playoff chances clearly diverge from mine?
Who the Money's Behind
Top eight teams, by odds offered:
Los Angeles Angels of Anaheim, 13-1
Boston Red Sox, 8-1
Chicago Cubs, 10-1
Chicago White Sox, 4-1
Los Angeles Dodgers, 12-1
New York Mets, 5-1
New York Yankees, 17-5 (or 3.4-1)
St. Louis Cardinals, 7-1
Strictly from the betting so far, here are your division winners:
AL East: Yankees
AL Central: White Sox
AL West: Angels
NL East: Mets
NL Central: Cardinals
NL West: Dodgers
Boston and the Cubs win the wild card.
That's an entirely reasonable set of predictions, even as I look at the odds themselves and wince.
Sooooo...a lotta people from the Greater Los Angeles area putting money on their home team in Vegas, huh? You look at the Dodgers, they've got a great chance to get into the playoffs, and once there, hey, who knows? Other than that, though, none of these look like they've got a positive expectation.
Red Sox, same deal, but the odds aren't good. The Yankees even more so. I wouldn't take the Cubs bet until I know Prior's fine, but if you figure he is, they're about the same bet as the Cardinals, really.
Good Money After Bad, AL
Teams contending but not favored:
Cleveland Indians, 14-1
Minnesota Twins, 30-1
Oakland A's, 15-1
Seattle Mariners, 65-1
Texas Rangers, 40-1
Toronto Blue Jays, 15-1
Again, the baffling AL Central. Both the Indians and Twins are better teams than the White Sox, but they're getting much longer odds, the Twins almost irrationally so. I'd chalk this up to a contraction discount, but they're a good team. Even if you figure that the wild card's going to the East, and it's a race between the Indians, White Sox, and Twins, the Twins are by far the lowest valued.
That's a little baffling. Almost baffling as the A's. Even while their offense looks weak, they're going to run a stellar pitching staff out there. They're clearly the pick of the AL West litter, but if you give them a 50/50 chance to make the playoffs, they still come out ahead on the odds. Do people really think that Beane's...(uhhh, is this a family blog?) stuff doesn't work in the playoffs?
Similarly, it's odd to see that two .500 teams, the Mariners and Rangers, are both long shots, and the Mariners are by far the least favorably viewed. This illustrates something interesting, which I'll come back to in a second.
Good Money After Bad, NL
Atlanta Braves, 22-1
Houston Astros, 30-1
Milwaukee Brewers, 30-1
Philadelphia Phillies, 35-1
San Francisco Giants, 15-1
Phirst things phirst: that line is evidence that the bettors know what they're doing. The Phillies aren't going anywhere with Ryan Phranklin in their rotation. That guy's going to get absolutely brutalized in that park. If you're a season-ticket holder, please - get out from under those games as early as possible. And try to sell to people you don't know. Take it from someone who dumped Ryan Franklin tickets on people for years: the disappointed look of friends and family and the wrecked trust just isn't worth it.
Anyway, not to pound this too much, but the Astros and Brewers, who are in a division with two really strong teams and no patsies at all, get the same odds as the Twins, who are in a decent division and have a good shot to end the year with the best record in the AL Central. I don't get it. I can see that the NL wild card berth might go to someone who's not that good, but the imbalance is strange.
Compared to some of the other bets, that 15-1 for the Giants is silly.
Pittsburgh Pirates, 80-1
San Diego Padres, 48-1
The Walking Dead
Teams offered at 100-1 or better:
Arizona Diamondbacks, 100-1
Baltimore Orioles, 100-1
Cincinnati Reds, 180-1
Colorado Rockies, 200-1
Detroit Tigers, 100-1
Florida Marlins, 250-1
Kansas City Royals, 200-1
Tampa Bay Devil Rays, 250-1
Washington Nationals, 100-1
Interestingly, this is not all dead money. Even the slight inefficiencies aren't worth taking these odds on, since the 5% chance a team like the Diamondbacks might grab a berth in a weak division is still not worth it once they get through the playoffs.
But take the Tigers. They should be around .500 team in a division where 85 wins might win the division. Give 'em a 10% chance to make the playoffs, and suddenly those are decent odds. They're not good - once you figure they're going to have to run the playoffs against much stronger competition, you start to look for 175-1 or higher, which you won't get.
Moderately Interesting Conclusion
There are cases where the opinion looks quite strange to someone trying to predict next season. With a few exceptions, it's last year's standings, with a few significant moves:
The Marlins fire sale drops them
The Dodgers buying spree, such as it is, almost takes them from bottom to top
The Cubs, similarly, make a huge surge
Bonds' return makes people like the Giants again
Pat Gillick, proven winner, gives the Phillies a boost
The Blue Jays move up, and there are some other moderate movers with modest moves, but, by and large, only extremely large moves in the off-season cause the perception of a team's chances to change. In general, a team has to win - and win a lot - before they can be perceived that way.
This suggests an immediate applicability to teams: if the perception of a team lags a year behind and huge off-season acquisition binges can only make people pay so much attention, then it's likely, as is frequently speculated, that the effects of winning lag a team. A contending team may see some bump in perception during the year, but there's only so much a team can do - if the Blue Jays can spend that much money and be regarded as having half the chances the Red Sox have, well, they're going to have to show a lot on the field to start building confidence in their prospects for competing.
It means that short-term acquisitions may not be the boon teams think they are, most importantly. Signing a washed-up designated hitter to a $3.4m contract because you think fans are going to respond is a waste of $3.4m, because at the end of the year the team still stinks, the fans still think the team stinks, and they didn't all vomit with excitement and rush to buy season-ticket packages when you announced the deal.
Fandom appears to be extremely conservative and comfortable to wait and be surprised when things turn out differently then last year.
In the meantime, there's money to be made for those willing to look ahead.
Derek Zumsteg writes for the Seattle Mariners-centric site U.S.S. Mariner, but has been published in all kinds of random places, and does all his own stunts. His first book will be out in a year, which doesn't help you at all. He does not, as far as you know, bet on sports himself.
[Additional comments and retorts at Baseball Primer.]