I ran across this interesting article today from John Hollinger of ESPN.com, where he took his Player Efficiency Rating stat (PER) one step further (PER is Hollinger’s overall rating of a player’s per-minute statistical production).
He came up with a new acronym: VA. It stands for “Value Added.” The idea behind VA is to take the difference b/t a given player’s performance and that of a “replacement level” talent – perhaps a player that rides the pine and doesn’t see a lot of quality playing time. So to get VA you multiply that difference by the number of minutes that player played. The result shows how many number of points the player added to his team’s bottom line on the season.
Hollinger says VA is an excellent predictor of this year’s MVP (really a two-man race now b/t Kobe Bryant and Lebron James), because it allows us to compare players with disparate production and minutes — say, one player who was brilliant in 60 games and another who was merely good but played all 82 — and figure out which performance was more productive.
That’s not all, there’s another acronym Hollinger analyzes, called EWA (Estimated Wins Added). EWA is the same idea as VA, except that the result is expressed in terms of wins instead of points. This is helpful if you’re trying to figure out the impact of, say, removing LeBron from the Cavs or Kobe from the Lakers.
I pointed out in a earlier blog post called Are They Ready For Prime Time? that professional sports organizations have long been using statistical analysis to conduct due diligence on athletes. The athletes that are predicted to have the most upside are the ones that get drafted, make millions of dollars, and go on to have the most successful careers.
In his review of the book Wages of Wins, Malcom Gladwell wrote, “Weighing the relative value of fouls, rebounds, shots taken, turnovers, and the like, they’ve created an algorithm that, they argue, comes closer than any previous statistical measure to capturing the true value of a basketball player. …Looking at the findings that Berri, Schmidt, and Brook present is enough to make one wonder what exactly basketball experts—coaches, managers, sportswriters—know about basketball.” Well, after reading Hollinger’s article today, I think Gladwell can remove sportswriter from his expert list…
But this VA acronym that Hollinger has coined raises an interesting question. How can we apply VA to the business world? Well, it’s something we debate nearly everyday. Will Apple’s stock turn sour without Steve Jobs running the show? What will happen to News Corp when Peter Chernin steps down in June and is replaced by average talent? Which executive is more valuable to their team? At North, we love this kind of stuff. We’re all number’s geeks at heart.
Oh, I almost forgot. The winner of this year’s NBA Most Valuable Player Award according to Holinger? King James by a landside. As a lifelong Laker fan it pains me to write that, but after looking at his statistical rationale, it’s extremely hard to disagree. Read the full article on predicting the MVP here.