Are Free Agents Worth the Money? (Plot of the Week 9)

This week I created a few plots to look at the effect of major MLB and NBA free agent players switching teams.

First, I wanted to see if players tended to move to teams with a better chance at winning a championship (think LeBron James), or if they moved to worse teams that would pay them more money (Albert Pujols who left after winning a championship with the Cardinals).  The first plot shows the regular-season team winning percentage for the three years before the player switched teams (old team) and three years after switching to a new team.

Note: Since some players recently switched teams (LeBron, Bosh, Pujols, Fielder), we don't have a full 3 years of data to look at.

1. Teams that win championships are denoted by small squares.  LeBron and Bosh are the only players to win a championship within 3 years of switching teams.  Pujols was the only player to switch teams after winning a championship within the past 3 years.
2. For this small sample size, it looks like basketball players (dashed lines) that switched teams moved to better teams, where baseball players received a lot of money to move to teams that had roughly equivalent records.

Next, let's look at the winning percentage of teams before and after signing a big free agent (i.e, the Heat before and after LeBron).  The thought is that spending all of this money to sign a marquee player will help the team win more.

1. Basketball players have an immediate effect on increasing the win percentage.
2. Baseball teams seem to have a worse record in the year immediately after signing a big free agent.  None of the baseball players brought a championship to their new team within 3 years.
3. This shows that it is worth trying to sign big name basketball free agents.  However, baseball free agents don't seem to be worth the big bucks in terms of immediately winning more games.
4. One could argue that it makes economical sense to sign big name free agents (increased ticket sales, marketing, etc.) even if they don't increase winning percentage.

Finally, I wanted to look at the winning percentage of the teams that lose a free agent (i.e., the Cavaliers before and after LeBron).

1. Again, we see that basketball stars have a huge effect on their team.  Every team had a much lower winning percentage after losing a key free agent.  But the teams seem to recover within a few years, presumably because they are able to rebuild quickly through the draft.
2. Baseball teams do not suffer the same losses after losing a key free agent.  In fact, some teams have a huge increase in win percentage immediately after losing they player.  This includes the 2003 Chicago White Sox who won the World Series the year after Magglio Ordonez left for the Tigers. 
3. The effects of losing a key player may have a longer-lasting impact, with win percentage decreasing 2 and 3 years after losing a free agent.

Overall conclusion: Baseball players don't have as large an impact on win percentage as basketball players.  Thus, they probably don't deserve the huge contracts they are earning.

One caveat about this analysis is that the sample size is very small.  I have limited the analysis to players who sign huge free agent contracts with another team, and exclude players who were traded.  I would love to add more players to this analysis, so leave a comment if you can think of a player who you would like to see included.