Reading Between the MLB Lines

By Aaron Hermann for www.sportsinsights.com

The world of Sports Investing is full of nebulous verbiage, trite clichés, and axioms treated as Gospel, and perhaps no word encapsulates this more so than “value”. With the 2009 Major League Baseball season just days old, soon the sports forums, tout service advertisements, and various web sites offering their free “MLB Play Of The Day” selection write-ups will be peppered with the word “value”. Such phrases as “this favorite is greatly overpriced which gives the underdog extreme value here”, and “this favorite is underpriced and offers a great value play in this spot” will once again make their way into our sports betting lexicon, but what does the concept of value really mean within the realm of wagering on Major League Baseball?

It is one thing to casually refer to “looking for value” when analyzing a potential investment, but it is another thing all together to be able to quantify value in regards to specific Moneyline pricing. In addition, how do we go about recognizing true value and turning that into a profit? What pricing dynamics will create the most profitable investment opportunities, thus providing the true value we are seeking? This article will explore the concept of value in reference to the first month of the Major League Baseball season and will provide a foundation for you to get off to a profitable beginning to the season.

In an effort to quantify the concept of value and how it applies to Favorites and Underdogs in the early part of the Major League Baseball season, I went back and looked at every game featuring a favorite priced -150 or higher for the month of April the last three seasons. In addition, I went one step further and broke down the Moneyline pricing into four different price sectors: -150 to -175; -176 to -200; -201 to -225; and -226 and higher. The goal of this analysis was to identify whether or not there were any consistent price levels, in regards to Favorites and Underdogs, that offered consistent profits over the early portion of the last three seasons.

We will begin our analysis from a wide perspective and look at all games featuring a favorite with a closing line price of -150 or higher, the won-loss record of Favorites and Underdogs in those games, and the corresponding profits (all lines taken from Pinnacle sportsbook, an 8-cent sportsbook for lines up to -190/+182. For more information on how they calculate their underdog lines, please click here):

Year
Favorites
Underdogs
2006
63-35 (64.2%) -1.7
35-63 (35.8%) -10.96
2007
52-41 (55.9%) -11.83
41-52 (44.1%) +19.64
2008
60-42 (58.8%) -5.74
42-60 (41.2%) +4.77
Totals
175-118 (59.7%) -19.27
118-175 (40.3%) +13.45

The next table breaks down games featuring a favorite priced between -150 and -175:

Year
Favorites -150 to -175
Underdogs
2006
32-27 (54.2%) -7.9
27-32 (45.8%) +6.66
2007
26-24 (52.0%) -8.51
24-26 (48%) +10.28
2008
40-32 (55.6%) -6.55
32-40 (44.4%) +8.09
Totals
98-83 (54.1%) -22.96
83-98 (45.9%) +25.03


Here we have the games featuring a favorite priced between -176 and -200:

Year
Favorites -176 to -200
Underdogs
2006
11-3 (78.6%) +2.98
3-11 (21.4%) -5.78
2007
17-3 (85.0%) +6.67
3-17 (15.0%) -11.89
2008
13-6 (68.4%) +1.6
6-13 (31.6%) -2.66
Totals
41-12 (77.4%) +11.25
12-41 (22.6%) -20.33

This table breaks down games featuring a favorite priced between -201 and -225:

Year
Favorites -201 to -225
Underdogs
2006
7-2 (77.8%) +1.35
2-7 (22.2%) -3.17
2007
5-10 (33.3%) -7.63
10-5 (66.7%) +15.15
2008
5-4 (55.6%) -1.62
4-5 (44.4%) +3.34
Totals
17-16 (51.5%) -7.9
16-17 (48.5%) +15.32

Lastly, we have the games featuring very heavy favorites priced -226 and above:

Year
Favorites -226 and higher
Underdogs
2006
13-2 (86.7%) +2.84
2-13 (13.3%) -8.67
2007
4-4 (50%) -2.36
4-4 (50%) +6.1
2008
2-0 (100%) +.83
0-2 (0%) -2.0
Totals
19-7 (73.1%) +1.31
7-19 (26.9%) -4.57


Based on the results within these tables, we are able to make some rather strong conclusions regarding value investing in the early part of the Major League Baseball season. An indiscriminant Sports Investor who only played Underdogs in games where the favorite was priced -150 and higher would have made a respectable 13.45 units over the first month of the season from 2006-2008 with an ROI of 4.6%. While these are very respectable numbers, you can greatly improve your profits and ROI by implementing some Moneyline price-level dynamics into your analysis.

By playing mid-level underdogs in games where the favorite is priced -150 to -175, a Sports Investor would have made 25.03 units over the first month of the season from 2006-2008. That is a 186% increase in profits by limiting your plays to this specific price range and sticking with only Underdogs. In addition, the ROI on these plays is a rather astounding 13.83% for an ROI increase of 300%!

The third table (-176 to -200) demonstrates that value is not a concept strictly limited to Underdogs. By investing in strong favorites priced in the range of -176 to -200, a Sports Investor would have made 11.25 units over the same time span with an ROI of 21.2%, which is higher than either of the Underdog categories! However, it is important to keep in mind that when you begin to consistently play favorites priced -201 and higher, you will begin to reach the point of diminishing returns with a rapidly decreasing ROI as evidenced in the tables above.

The last point I would like to address is in regards to the fourth table (-201 to -225). The Underdog numbers in this table are rather impressive, with a total profit of 15.32 units on a 48.5% strike rate; however, with such a small sample of games fitting this profile it would be somewhat naïve to expect to maintain such an astoundingly high profit margin and ROI by consistently playing teams that are a more than 2-1 dog. This is not to say that selective plays on live dogs with great prices should not be a part of your early season wagering arsenal, but you should definitely temper your long-term expectations when investing in such scenarios.


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