Importance of Measuring Profit/Loss
Most sports bettors are familiar with the importance of knowing not only a football or basketball team’s ‘straight up’ record but also a team’s record ‘against the spread’. There’s plenty of situations where good ‘straight up’ teams have a losing pointspread record and vice versa. This information can be helpful itself and more importantly can help the astute handicapper discover other elements of team performance (good and bad) that can be leveraged to find winning bets.
In a moneyline based sport like baseball there is a similar metric and one that many novice bettors ignore: the profit/loss. Simply put, a moneyline profit/loss metric quantifies a team’s performance on a per unit basis. The profit/loss is a running tally of a team’s performance from a betting perspective. There’s a number of ways to quantify this but here are two of the easiest:
–PER UNIT: With this method, a team’s game by game tally is measured with units. If a team loses a game as a -120 favorite you subtract 1.2 units from their total. If they win a game as a -120 favorite you add 1 unit to their total. Underdogs work the same way—a team that wins as a +150 underdog has +1.5 units added to their total. Teams that lose as a +150 underdog have -1 unit subtracted from their running total. Using this method, here’s the most profitable and least profitable teams from the 2019 MLB season:
OAKLAND ATHLETICS 97-66 +21.5 UNITS
DETROIT TIGERS 47-114 -43.1 UNITS
–BASE 100: This method is essentially identical to the previous one but instead of using units you work in increments of $100. For a favorite, you assume that you’re laying the necessary price to win $100. With an underdog, you wager $100 for whatever the takeback might be. If a favorite wins, you add $100 to their ‘running tally’. If they lose, you subtract whatever the favorite price might be. If an underdog wins, you add the ‘takeback’ amount to the tally. If they lose you subtract $100. Here’s the example we used above expressed in terms of $100 units:
OAKLAND ATHLETICS 97-66 +$2150
DETROIT TIGERS 47-114 -$4310
As long as you’re getting the data correct there’s not a wrong way to do this but most handicappers use one of the previous two methods.
WHAT TO MEASURE AND ADVANCED SITUATIONAL METRICS
There’s no limit to the situational profit/loss figures you can track but here are the two most important:
–TEAM PROFIT/LOSS: A running tally of each team’s profit or loss assuming you bet 1 unit or to win 1 unit in the case of a favorite on every game. If you’d rather use the $100 base method that’s also fine.
–STARTING PITCHER PROFIT/LOSS: This is another metric that you won’t find in your local newspaper. Most baseball fans are aware that when a pitcher starts a game he can be credited with a win, a loss or a no-decision. This metric eliminates the ‘no decision’ and simply measures a team’s W/L record and accompanying profit/loss every time he starts. If a pitcher starts a game and his team ends up winning he gets ‘credit’ for a win no matter what his actual role in the victory. It works the same way with a loss. A pitcher who starts a game that his team ends up losing gets rung up for a loss with this metric no matter what the official decision. You then measure a starting pitcher’s running per unit (or per $100) profit/loss throughout the season. Although you’re measuring the same factors for starting pitchers that you would for a team there are some other unique considerations. For this reason, we’ll focus on team profit/loss in this article and delve deeper into starting pitcher profit/loss in a separate article.
So what can be quantified beyond a team’s wins/loss and profit/loss? Any number of additional situational metrics can be applied including a team’s home and away profit loss, a team’s profit/loss versus left handed starters and against right handed starters, a team’s profit/loss in day games or night games. The same detailed situations can also be used for starting pitcher profit/loss measurement.
WHAT THIS DATA CAN TELL US
Every handicapper’s ‘system’ for evaluating matchups is unique and the profit/loss provides another ‘tool’ that they can use within their own framework. That being said, the profit/loss is an excellent indicator of a team (or pitcher) being overvalued or undervalued. Going back to the 2019 season, here are a couple of examples:
–BOSTON RED SOX: The Red Sox finished with a winning record going 84-78. Unfortunately for bettors who backed the Sox that translated into a -28.4 unit loss. This was the second worst profit/loss figure in Major League Baseball ahead of only the pitiful Detroit Tigers. The Sox are a well known ‘public’ team and that reality combined with this big unit loss strongly suggests that they were overvalued.
–TEXAS RANGERS: The Rangers, on the other hand, finished the season with a losing record at 78-84. Their profit/loss suggests that they were an undervalued team since despite finishing 6 games under .500 they compiled a +9.5 unit profit over the course of the season.
The same concept applies to the situational measurements and they can yield an even better understanding of a team’s good or bad tendencies. Back to the Red Sox for a moment—the bulk of their unit losses came at Fenway Park. On the road, the Red Sox were right around break even at 46-37 for -0.7 units. At home, they posted a disappointing 38-41 record which produced a -27.8 unit loss!