The Return of the Big Market Clubs

In 1977, Bill James released his Baseball Abstract, tearing down the house built on BA-HR-RBI and W-L records. He demonstrated empirically how inadequate those measures were in player evaluation, ushering in an era of discernible -- and exploitable -- market inefficiencies.

The exploding capabilities of the PC and the rise of the Internet multiplied the power of James's observations and allowed low-revenue baseball teams -- starting with the Oakland A's -- to compete with the big boys.

The Internet also paved the way for athletes to become famous wherever they played, allowing LeBron James in Cleveland, Stephen Curry in Oakland and Bryce Harper in Washington to emerge as global brands.

That significantly leveled the playing field and removed the nearly insurmountable advantage enjoyed in MLB by the Yankees, who had money, market and intangibles on their side in the 90s and 2000s. They won largely by throwing money at all the best players and managing them wisely.

Money Matters Again
That formula doesn't work anymore, but a new one does. The Yankees still have the largest market and the most money, as do the Dodgers and Cubs in the NL. Instead of investing in free agents, they have invested in the best baseball operations people, in player development and in the secret formula that small market teams were riding to success -- statistical analysis.

Forty years after Bill James threw a hand grenade into baseball's intelligentsia, his wisdom is finally received in total. The big market clubs are taking their reduced advantage in disposable income and leveraging it to raise the best young players. 

Investing in Management Rather Than Labor
Aaron Judge, Gary Sanchez Greg Bird, Luis Severino and Aaron Hicks are not an accident or serendipity. They are products of  a well-capitalized player development plan. They teach Baby Bombers to play smart defense, become students of the game, learn patience at the plate, stay even-keeled when behind, and so on.

The fleecing of the White Sox to procure the services of Tommy Kahnle, David Robertson and Todd Frazier was not simply good fortune. Top dollar buys the best front office too. Brian Cashman has done this before in his career, such as when he stole Bobby Abreu from the Phillies for Cory Lidle in 2006. Abreu added 7 WAR to their playoff-run efforts in a little more than two seasons.

The Dodgers have used smart analytics and the power of the purse to build the deepest team in baseball, one that delivers quality well beyond the 25-man roster. So when L.A. suffered a string of injuries this season, a wily front office employed the disabled list to stash pitchers between starts to stretch the roster and then dipped into a pungent minor league system to promote MLB-ready replacements.

And so here we are, back to the 70s when NY and LA dominated the World Series. 

It's Could Be Horrible for the Game
It could be horrible for the game that a few big market clubs make regular playoff visits because it's could be horrible for fans in Cleveland and Milwaukee and Minneapolis and, well, almost everywhere else. It was boring, frankly, to see the same teams win every year, unless you were fans of those teams.

Watching the Yankees ascend within a game of the World Series and knowing that they will soon sign Bryce Harper and a host of other young free agents and dominate the American League again makes me miserable. It should make you miserable too unless you happen to be a Yankee fan. 

But it's the new reality. Now that the playing field has returned to level with respect to intelligence, money matters again.

Depth: The New Inefficiency

Last season, the New York Yankees roster went on the disabled list.  In the absence of players like Derek Jeter, Alex Rodriguez, Curtis Granderson and Mark Teixeira, the Bombers plugged in whatever they could rummage from the junkyard -- Jason Nix, Eduardo Nunez, Lyle Overbay, Travis Hafner and a cast of thousands who contributed even less. The result was their second playoff absence since 1995.

Meanwhile, the talent-challenged Rays and A's made the playoffs, winning 92 and 96 games respectively. The Athletics featured one star -- the hitherto unknown third baseman Josh Donaldson -- and no one else who either batted over .300 or socked more than 30 homers. On the mound, Bartolo Colon shocked the league with an 18-6, 2.65 record, but you'd be forgiven if you never heard of the rest of the staff.

So how did Oakland win the West? How about this: seven of nine regulars posted an above average OPS, and all nine cleared 90% of league average. Another five backups with 100+ at bats contributed likewise. On the hill, the A's threw six quality arms at the league, the worst of whom was Tommy Milone, 12-9, 4.14 with a K/BB rate over three. The bullpen chipped in well-distributed excellence, with seven above-average pitchers finishing more than 10 games each.

It wasn't just the numbers on the bench. Skipper Bob Melvin slotted 18 different players into the DH role over the 162 games, using it to maximize lefty-righty and offense-defense match-ups. Four catchers shared shin guard duty -- Derek Norris, utility man John Jaso and Kurt Suzuki for their hitting skills and Stephen Vogt for his defense.

This year, Billy Beane inked four solid relievers to longish-term deals, a rarity in MLB and certainly in Oakland. The lead the AL in scoring and in ERA; following a four-game skid they remain atop the AL West.

For a couple of years after Moneyball spilled Beane's beans, the A's lost a bit of their edge. But he has found new inefficiencies to exploit and has Oakland poised to ride their embarrassingly low payroll to a third straight West Division title. And it's easy to see what the inefficiency is.

While the Yankees were reacting to inevitable injuries on their geriatric roster, the A's prepared for it by inking average players to moderate paydays and scattering them around the diamond. The result is a catching platoon of Derek Norris and John Jaso that has limited their plate appearances to opposite-handed starters. Combined they are hitting .302/.397/.482 and earning $2.8 million.

Just three of the A's 13 moundsmen earn more than $800,000 -- closer Jim Johnson, set-up man Luke Gregerson and starter Scott Kazmir. Hitting star Donaldson, still under team control, takes home half-a-million bucks. It's as if the A's, unable to afford George Clooney and Sandra Bullock, entice Jeremy Irons and Emma Thompson to act in their movie for scale, and then ink Annette Benning, Robert Downey, Jr. and Maggie Smith to low-dough deals with the promise of juicy roles. 

It's working, and as soon as the rest of baseball figures it out, Oakland and Tampa will be on to something else.

The End of Moneyball

I remember reading the seminal book Moneyball and wondering to myself, why is Billy Beane letting Michael Lewis spill all his secrets? Beane had created a juggernaut in Oakland from 1999-2006 with a payroll that could hide in CC Sabathia's shadow. He had done so by exploiting inefficiencies in the baseball marketplace.

Beane had determined that other teams were overvaluing batting average and paying little attention to on base percentage, so he signed unwanted walking machines like Matt Stairs for pennies on the dollar. 

He discovered that any decent pitcher with some moxie and reasonable righty-lefty splits could get three outs in the ninth, but that other GMs still drooled over saves. So he let his hard-throwing closer rack up saves, traded him for good young players, and then plugged in the next guy. Shampoo, rinse, repeat. 

Beane recognized that the on-field manager isn't a field general; he's a squad captain with good personal skills. So he told his manager, Art Howe, who to play and how much. When Howe sought genius money after leading the As to the playoffs, Beane let the Mets pay it and hired another middle manager.

He realized that the best predictor of a pitcher's future success was his college baseball aptitude, not his build, or his athleticism or the speed of his pitches or other mysterious elements.So he avoided drafting high school pitchers, who had a very high bust rate.

Beane knew that buying baseball players on the free market could sink a low-income franchise if they didn't pan out. At the same time, players' salaries are immune to free market forces in their first four years in the Majors, and then are still undervalued through arbitration in years 4-6. (On average, players can expect to earn 40% of their free market value through arbitration in year four, 60% in year five and 80% in year six.) So he milked the core of his team --Tim Hudson, Mark Mulder and Barry Zito -- until just before free agency, when he traded each of them for a shower of good, young, underpaid performers. This effort provided the A's with Rich Harden, Dan Haren, Joe Blanton and Justin Duchscherer, among others, while only Hudson of the original trio has come within an elephant's butt of delivering value to his new team.

Since Beane's success depended on suckering fellow GMs, why on earth would he let someone publish his strategies? The answer, it turns out, was that other teams were on to Oakland by 2003 and were eliminating those market inefficiencies. In fact, the A's shortly thereafter turned away from OBP and began stressing defense as the next undervalued commodity.

By 2007 or 2008, whatever market inefficiencies existed were difficult to find and hardly worth exploiting. Baseball fans and sportswriters may not accept the conclusions of new baseball research, but all 30 franchises have and they are toiling diligently to develop their own, proprietary insights. Billy Beane's big advantage is gone.

The result, in case you haven't noticed, is that the A's are simply a low-budget team with predictable results -- between 10 and 12 games below .500 each of the last three years. Even if they squeeze value out of players now, with their lowest-in-the-league $57 million payroll (the Yankees are somewhere around $210 million), getting a lot for their money still leaves them under .500. To wit: the A's signed Kevin Kouzmanoff to staff the hot corner this year for $3.1 million, roughly one-ninth of Alex Rodriguez's pay. If Kouz is three times as effective per dollar as ARod, he's still one-third the player.

Beane's strategy these days seems to be to wring value out of the last bastion of sabermetric research -- middle relief -- and to take calculated flyers on low-cost retreads and imports. The $10 million gamble on Ben Sheets is a prime example of that. Sheets has a golden arm, but has been healthy about as often as the Haitian economy. And so, the once vaunted Oakland sabermetric machine will present the good people of the East Bay with a roster including the likes of Coco Crisp, Kurt Suzuki, Rajai Davis and Jack Cust. No wonder Michael Lewis moved on to the thievery on Wall Street.