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Monday, February 09, 2009

How much are intangibles worth?

Neat post by Tango:

...Cliff Floyd is all about heart, determination, and grit.

[He] is forecast to be a league average hitter. And a league average hitter who cannot (or is not expected to) play the field is the very definition of a replacement-level player. Indeed, the GM of the Padres agrees with this assessment, as his stated role is also the very definition of replacement-level player. That replacement-level player, with ordinary heart and determination, will cost you 400,000$. Cliff Floyd however is going to cost 750,000$.

When people say that you can’t measure the intangibles, remind them that those intangibles are being paid for with tangible dollars. And the value of those intangibles, as determined by MLB, is $350,000. If it was worth more, then some team would have paid more. They didn’t.
So, veteran leadership and a strong clubhouse presence are worth just less than 1/10th of a win per season. I believe that. I also believe that it matters. Overrated by the media and overhyped? Sure. But I have no problem with giving someone a $350k bonus for this sort of value.