Designated HitterMarch 23, 2006
The Irrational Market
By Derek Zumsteg

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.

The Forgotten

Pittsburgh Pirates, 80-1
San Diego Padres, 48-1

Yeah.

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.]

  • Comments

    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.


    TradeSports.com will allow you to short bets, but their odds differ greatly from your average sports betting site since it's more of a true market.

    Those odds are right in line with 95% of the preseason predictions, so your predictions must be way off.



    You said "Both the Indians and Twins are better teams than the White Sox". The White Sox and Indians are clearly the best two teams in the AL Central, if not the entire league. The Twins? They will be lucky to stay ahead of Detroit this year for 3rd place.



    The worst odds have to be with the Yankees, 17-5, but you hardly mentioned that.



    My question is why would the White Sox not be one of the top teams by the odds offered? They won 99 games last year, went 11-1 in the playoffs, and added a big bat (Thome), 5th Starting Pitcher that threw 200IP last year (Vazquez), and solidified their bench (Mackowiak, Cintron) this offseason.

    As I mentioned in a the AL central preview post....the White Sox overachieved both in pitching and hitting. When they slumped in July and August and most of September, they failed to score runs. Adding Jim Thome makes the offense better, but not great. Those bench players may be good come playoffs, but they wont make a huge impact during the season. Their offense is still middle of the pack, and their pitching is top third, but their bullpen is a question mark, and even was last season but it was a wash in the playoffs. Why do you think Ozzie's men pitched all those CG's? Cuz their bullpen is weak...I stand by my prediction of the Indians winning 90 games again (they will be better this year than they were last year) and beating out the 87- win Sox.

    Anyone that thinks the White Sox will win less than 90 games is a moron.

    The Sox have AVERAGED 88 wins over the last 6 seasons and this year's team is CLEARLY the BEST team of all of them.

    The Indians are very good but not as good as the Sox . The Twins pitching is up there with both teams but their lineup isn't close enough.

    Sox fans are drinking way too much kool-aid. They were the third best team in their division last year (if the Twins had stayed healthy, they were easily better). The Sox infield is lousy (Iguchi looks terrible this spring). The outfield is bad (Pods is done and Anderson will be on the bench by June). The only thing they have is 5 middle-tier starting pitchers and a bloated payroll. They are an 80 win team this year. I would peg them for 4th place in the Central.

    What are much more interesting bets are the divisional bets. While not well advertised in Vegas, many on-line books have divisional races, which are much more controlable.

    I have Texas at +850 to win the AL West. Some of the other bets that are +EV aren't really worth taking over the course of 6 months, tying up money that could be bet on individual games multiple times over reducing variance. For example, Indians to win the AL Central at +175. Given Pythagoras last year, I think that's a great bet, but then again, it locks money up for 6 months. So, I'm passing.

    The Sonx have averaged 88 wins over the past 6 seasons? So what? How is their record in 2002 indicative of anything in 2006, let alone the 1998 record you're counting in that average?

    The ChiSox were a skilled, but also incredibly lucky team last year. I would further argue that the Indians were the better team LAST SEASON, but just didn't happen to win. That gap has now grown, and the Sox will be lucky to finish within 5 games of the Indians.

    I'm not a Twins believer. Their bats are terrible, and those guys have to issue more walks than they did last year, which will make their low K rates hurt them with HRs.

    About the White Sox being lucky last season, it can easily be argued they were only the 6th or 7th best team in the AL. Their luck in one run games completely distorts their record. I think they are easily the weakest World Series champion in the last forty years or so. Can anyone think of a more mediocre team that won it all?

    The 1987 Twins

    The 87 Twins weren't great, but they had 2 HOF caliber players (Puckett and Blyleven) and some good suppporting players (Hrbek, Brunansky, Gaetti, and Reardon). The 2005 Sox had 0 HOF level players (except for Thomas, who was only around a few games), and a lot of luck.

    For all of you supposed baseball fans - you're supposed to be watching the games.

    The White Sox were the first team since the 1927 Yankees to be in first place every day of the season AND sweep the World Series !

    Additionally, they were so dominant that they won 16 of their last 17 games including the playoffs. When is the last time a team did that ?

    And, before that they beat Cleveland at home 4 straight when this "great" Cleveland team HAD to win - but they choked and the Sox whipped them as usual - the Sox were 16-5 against this "powerhouse" ?

    The White Sox are men. The Indians are boys.

    The White Sox were so clearly the best team in baseball last year that one would have to be a moron(Tom & Evan) to say otherwise.

    Tom, your jealousy shows way too much. I can't wait to watch another big winning White Sox team. We haven't had a losing season since 1999.

    World Champions - smoked the Red Sox, smoked the Angels and smoked the Stros ! Woo hoo !

    Another playoffs is a lock for the Sox. But, which NL team will they sweep this year ?

    They were the third best team in their division last year (if the Twins had stayed healthy, they were easily better).

    I agree that the Twins were much better than the White Sox in an imaginary world where Minnesota stayed healthy but Thomas, Hermanson, and Podsednik still suffered injuries.

    The White Sox were the first team since the 1927 Yankees to be in first place every day of the season AND sweep the World Series !



    The Reds went wire-to-wire in 1990 and swept Oakland in the World Series. Don't forget all about Cincy just because their pitching is awful.

    The White Sox were the first team since the 1927 Yankees to be in first place every day of the season AND sweep the World Series !

    Big whoop. A division containing the Royals and Tigers doesn't strike me as that impressive in terms of competition. Wake me when Chicago moves to the AL East.

    Big whoop. A division containing the Royals and Tigers doesn't strike me as that impressive in terms of competition. Wake me when Chicago moves to the AL East.

    AL East? Home of perennial powerhouses Baltimore and Tampa Bay?

    Big whoop. A division containing the Royals and Tigers doesn't strike me as that impressive in terms of competition. Wake me when Chicago moves to the AL East.

    When the Sox won 16 out of their last 17, they beat Detroit twice, Cleveland four times, Boston three times, Anahiem four times, and Houston four times. So, that's 10 wins against 90-win teams, and four more against the NL Champion Houston Astros.

    About the White Sox being lucky last season, it can easily be argued they were only the 6th or 7th best team in the AL. Their luck in one run games completely distorts their record. I think they are easily the weakest World Series champion in the last forty years or so. Can anyone think of a more mediocre team that won it all?

    According to Pythag, the Sox ranked fourth in the AL, behind Cleveland, Anahiem, and Oakland.

    But, please, if you would like to, list for me six teams that were better than the Sox last season in the AL. Go ahead, I could use a good laugh tonight.

    The only thing they have is 5 middle-tier starting pitchers and a bloated payroll.

    If the Sox have five middle-tier starters, the rest of baseball's rotations must absolutely suck.

    I'll take our six (with McCarthy) 'middle-tier' starters over any other rotation in baseball.

    AL East? Home of perennial powerhouses Baltimore and Tampa Bay?

    Immaterial. The last time an AL Central team got the World Series, Wayne Huizenga's Marlins were there to meet them. There is a reason for this.

    Your 75% of the White Sox reaching the playoffs is way off. If you look at Larry Mahnken's simulations, you'll find it's more like 23%. I wrote an article on it here: http://educatedsports.blogspot.com/2006/03/white-sox-odds.html

    Still, nice job. I really appreciate your writing.

    Immaterial. The last time an AL Central team got the World Series, Wayne Huizenga's Marlins were there to meet them. There is a reason for this.

    You cite the two worst teams in the AL Central as evidence that the division sucks, but the two worst East teams are immaterial? Also I don't see the point of your non-sequitur about the Marlins.

    The AL's Central and East divisons are the 2 toughest in baseball -clearly.

    Anyone claiming that other teams were better than the White Sox last year must be using criterion where WIINING BASEBALL GAMES is just not important. As in, I'm the best golfer that I've ever seen - it's just that other players shoot for lower scores than me. Other than that, I'm the best.

    Now, back to reality. The idiot that said the Sox have 5 middle tier starting pitchers should realize that every team in baseball would trade their 5 for the Sox 5. The only possible exception would be Oakland.

    The reason I mentioned that the Sox have averaged 88 victories per season over the last 6 years(which goes back to 2000,not 1998 for those that can't count)was to scuttle any stupid comments about the Sox being a fluke. They've been putting a winning contending team on the field for some time.

    Also, in averaging 88 wins, most of their teams had 3 good starting pitchers and a couple of ?? that really hurt them. The reason they won last year and the reason that they will again be a playoff team is BECAUSE THEY HAVE 5 EXCELLENT STARTING PITCHERS that give them an excellent chance to win every single day.

    So, even in a very tough division, they will surely win over 90 games.

    By the way, Derek, anyone that says that the cubs will win the wild card and that they are about the same as the Cardinals.....has no business writing about baseball.

    Can anyone think of a more mediocre team that won it all?

    my beloved 1988 dodgers.

    Damn you Vishal. The last person that used that terminology I slugged. Gawd I hate roommates.

    Even if the W.Sox are a "100 win" team, Zumstag's article stands, they have a terrible betting line. I wouldn't get close to them with money.

    The Twins at 30-1 are a much better betting line. Betting odds are different than playoff odds.


    cardinals' 2005 run differential: +174

    cubs' 2005 run differential: -11

    Cubs have a long way to go to make a 185-run difference in order to be 'about the same" as the Cardinals...

    Cards shouldn't be a whole lot different in 2006; a little turnover here and there, but any offensive downgrade might be ameliorated by a full year of a healthy Rolen. In the rotation, Sid Ponson for Matt Morris might be a wash, plus Birds seem to have a little more depth on the staff.

    Juan Pierre and Jacques Jones might add 40 runs, but there's still a long way to go....

    haha, if it makes you feel any better i'm also an A's fan. i was thrilled to see them beat the giants in '89, and i loved eck and rickey. but i grew up in LA so 1988 was a life-changing year for me and baseball.

    I am twins fan
    the white sox are a 93-85 win team if the season was played 100 times they would end up there 70% of the time. alot of players over achieved but they still have some good players and starting pitching in Burhle Garcia but contreras and garland were put up career years.

    There are some hilarious arguments here. The White Sox won the World Series, and they were the best team in the league. Regardless on how you look at it and crunch numbers on paper, and compare lineups, the White Sox had the best team.

    Then they had one of the best offseasons for a World Champion leaving them in a good position to repeat in 2006. The only thing stopping them is a couple of injuries. They will have 5 starting pitchers pitch over 200IP, check the last time that happened. No rotation in the league is even close to their depth.

    Randy - The Sox infield is lousy
    Really? I guess you don't watch much baseball. They have 3 potential Gold Glove candidates (Pierzinski, Uribe, Crede), their whole infield can hit 20+ HRs, and their bench players Mackowiak, Cintron, and Ozuna provide less of a drop off in talent compared to Blum and Harris of 2005.

    Vazquez > El Duque
    Thome > Everett
    Bench 2006 > Bench 2005
    Experienced Sox team > Rest of league

    Where are these odds from? 30-1 for the Brewers to win the WS? I got them at 25-1 to win the NL Central in LV about a month ago.

    They were the third best team in their division last year (if the Twins had stayed healthy, they were easily better).
    Fine for analysis - even after the fact, but long-time White Sox fans like myself found little solace in that kind of thinking (re-thinking?) year after year. Bottom-line is they WON and decidedly so...the only thing I didn't analyze fully last October was whether I called enough old friends who'd suffered through all those years with me. Even if we weren't on the same couch, the same room, state or country.
    I wanted to talk to them all. Share that moment.
    I remember taking pride in things like a great team ERA, most guys with 20+ HRs, having the best second half or so many other two-bit honors, but nothing compared to Uribe to Konerko for out number three. Knute Rockne was right. Ozzie too. Magnified...

    It's silly to argue about how good the White Sox were last year. They were obviously the best team in baseball. Are they likely to repeat that? No. Many of their players had career years and are likely to regress to some degree, and their record in close games is likely to be more even. But to dismiss a team that won 99 games last year and may have improved (depending on how Thome and Vasquez work out) is also stupid. To me the AL central looks like a 3-team dogfight right now, with the Sox as a slight favorite. Also, as a Twins fan I'd take our 6 (Santana, Radke, Silva, Lohse, Baker, Liriano) over Buehrle, Garcia, Vasquez, Garland, Contreras, and McCarthy. But it's close. I'd give the Sox a moderate edge offensively, and the Twins a slight edge in starting pitching and a moderate edge in the bullpen. 4-1 odds for ANY team to win the Series is obviously ridiculous.

    And just so I fit in: The Sox obviously suck and have no chance; the Twins are unbeatable because they're so great. You're all idiots and I am an all-knowing god.

    nice topic:)

    The odds aren't really meant to predict the future in this case. They're just made that way for the bookies to get some money. Teams like the Yankees and White Sox are going to have a lot of money put on them no matter what Vegas puts their odds at. People see "defending champs" or "Yankees" and figure they're the best bets. Vegas doesn't want to make them too big of a long shot (11 or 10 to 1) because if the Sox or Yankees happen to win, Vegas would be putting out a lot more money.

    Basically, I don't think Vegas is saying that the odds for the White Sox to win are 4:1. I think they're mostly just saying that they know a lot of people will put money on the White Sox and they don't want to put out more than 4:1. Raising the odds from 4:1 to 10:1 wouldn't get many more people to bid on them. A smart better might stay away from the 4:1 odds, but the majority of people betting on sports aren't smart. They'll put the money on who they believe to be the favorite either way.