Handicapping the 2007 MLB Playoff Race

Making predictions always puts a pundit into a dangerous position—and I can imagine columns like this one could haunt my credibility for years to come.

However, people are interested in hearing this stuff...and everyone has an endless supply of opinions.
 
In this column, I'm using two tools to help me make predictions.
 
One is the PECOTA playoffs predictions available at Baseball Prospectus (BP). PECOTA is a proprietary sabermetric method BP uses to predict how individual players will fare in an upcoming season. BP adjusted the system to assist in predicting teams' playoff chances.
 
The other source I used was the futures market at TradeSports.com. I won't go into too much detail about why I like TradeSports as a prediction tool, but I will say that most people don’t invest money in something unless they're confident in it.

TradeSports contracts are done in a dollar amount, ranging between zero and 100 dollars. If a contract costs 50 dollars, you could say investors think there's a 50 percent chance of the contractual event coming to pass.  

This is a huge simplification, but I don’t want to muddy this space with a long explanatory note on the ins and outs of this futures market. Just understand that the dollar price of a TradeSports contract corresponds to the probability, according to the investors, of an event actually happening.
 
A word of warning: Don’t be fooled here. I’m not in the business of giving financial advice, and any opinions expressed below are for entertainment purposes only.
 

AL East
 
The recent surge by the New York Yankees has made the AL East race of some interest, but the Boston Red Sox still have the edge.
 
The PECOTA adjusted odds for the Red Sox stand at about 91 percent. The Yankees are at 8 percent.
 
There is a sizable departure from those odds in the TradeSports contract market: The TradeSports contract on the Red Sox winning the division sits at $73.50. Considering the near 20 point difference between the statistical prediction and the futures market, that contract is a bargain.
 
Along those same lines, you should avoid the Yankees contract like the plague—at $23.00, they're a sucker’s gamble.
 
I know the Yankees have a very easy schedule for the rest of the year and have been on a hot streak since the All-Star break...but the five-game lead is too steep a hill to climb.
 
The Yankees would have to sweep Boston in their two remaining series, and I don’t see a high probability of that happening.
 
 
AL Central

It’s a nail-biter in the Central.
 
The Detroit Tigers and Cleveland Indians are in a virtual dead heat for first place. PECOTA gives the edge to the Tigers, with a 53 percent chance of winning the title. The odds on the Indians are at 43 percent. 

However, other projections available from Baseball Prospectus show the Tigers and the Indians to be equally likely to win the division.
 
The TradeSports contracts on those two teams are also evenly split: Cleveland sits at $45, while the Tigers maintain a contract of $49.50.
 
I can’t say there’s enough of a discount on the Tigers contract to purchase it. If you’re looking for a tip, I'd go with Cleveland based on their pitching edge.
 
The Twins still have some support from TradeSports, with their “Win Division” contract selling for five dollars...but their statistical projection is only about two percent.
 
I’m a huge Twins fan, but I wouldn’t bet on them. It’s clear GM Terry Ryan is in a partial selling mode, and has no intentions to buy the parts he'd need to make the Twins competitive down the stretch.
 
In fact, it’s not even clear Ryan is prepared to make any moves in the offseason to fill the holes he already has.

 
AL West
 
This one is pretty much in the bag—the Angels have an 81 percent chance of winning the division based on the statistical projections, and their TradeSports contract can be had for about 83 bucks.
 
The Mariners have a 17 percent chance at finishing out with a title, while their contract can be had for $18.50.
 
 
AL Wild Card
 
PECOTA gives the edge to the Yankees, with 64 percent odds.
 
There’s about a 10 percent chance the Red Sox will falter enough to fall into the Wild Card. The other teams in the running are long shots at best.
 
If you’re going to invest money, avoid the Boston's $24 Wild Card contract. The smart move might be to bet the field against the Yankees...but I don't see the Yanks screwing up enough in the next six weeks to miss out on the playoffs.
 

NL East
 
The New York Mets hold a 71 percent chance of taking the NL East title, but you can get their contract at a discount of $61.70.

The traders at TradeSports give the Braves a decent shot at the title, with a $22 contract. PECOTA is more pessimistic, giving the Braves a 15 percent chance of winning the division. 

The Phillies’ contract of $17.50 is efficiently priced given their PECOTA projection of 12 percent.
 
 
NL Central
 
This is the only race in PECOTA and TradeSports project different winners.

Statistically, the Brewers are favorites to win at 52 percent, trailed by the Cubs at 41 percent and the Cardinals at five percent.
 
The futures market tells a different story: The Cubs have the edge with a $42 contract, while the Brewers sit at 36 bucks at the Cardinals are at $22.40.

Personally, I think the St. Louis number is a bit preposterous.

These NL Central contracts have been very volatile, and actually changed before I was able to finish this column. They’ll probably change a lot between now and October.

My two cents: I prefer the Cubs over the Brewers, but the smarter play is to buy into both clubs as speculators and fools put money into the Cardinals contract.

 
NL West
 
As usual, the NL West is a mess.

Statistically, the Padres are favorites at 43 percent, with the Diamondbacks at 34 percent, the Rockies at 15, and the Dodgers at seven.
 
Futures contracts give the edge to the Diamondbacks, with their contract selling for $43. The Padres are selling for $37.50, while the Rockies can be had for $7.50 and the Dodgers for $4.50.
 
The best strategy here might just be to invest in the Padres and the Diamondbacks. If either team wins, you can still collect gains of nearly 25 percent.
 
My pick?

The Padres.

 
NL Wild Card

With six teams in the mix, this race is going to be a mess well into September.

Right now, PECOTA tells us the Braves are the favorites with a 27 percent chance of winning, followed by the Phillies with a 23 percent chance.
 
The Mets have a solid 16 percent shot, while the Padres and Diamondbacks both sit at 10 percent.
 
The TradeSports contracts are priced nearly in line with the statistical projections: The Braves have a $22 contract, followed by the Phillies at $19.50, and the Mets at $18. 

I’d wait for the picture to get a little clearer here, but I like the Braves contract. Atlanta made some of the best moves at the trading deadline by selling out their farm system for short-term gain.

World Series

If you’re really in the mood for risk, you could take a crack at the World Series contracts available at TradeSports.

The Red Sox are the favorites with a $17 contract, while the Yankees are right there at $14. The Angels and the Mets follow with contracts in the ten-dollar range.

There’s high volume on the three-dollar Brewers contract too, but I don’t think it’s enough to get me to buy. 

I like the Yankees as underdog World Series winners, but I think the best speculation strategy is to focus on the National League contracts.

Though investors favor the American League, I think the National League has a 40-45 percent chance of victory in the World Series. 

The NL contracts are very undervalued, and it'd be worth a look to invest in several National League teams.

I especially like the Phillies, Braves, and Brewers contracts, which can all be had at or below the five-dollar range.

Just remember—if you win any money, I’d like a cut.

If you lose your house, I don’t know you.