A History of Moneyball

Scott Hatteberg

On ESPN's Baseball Today's podcast, Keith Law discussed Moneyball somewhat at length.  I found it interesting that his growth in his understanding of baseball mirrored my own.  Like most people in life, a set of ideals are often focused on in our youth and over time we recognize that such absolutism is misguided.  Absolutism is often kindled by a bit of truth and adherance is formed based on piecemeal evidence and ignoring things that disagree with our notions. 

Law talks about his first year in baseball with the Blue Jays.  He was a pure stats guy and an assistant to Ricciardi who was rather dismissive to scouts.  Often Law would be called into the GM's office and Ricciardi would go off on rants on evaluations, such as Eric Hinske.  He thought Hinske was a remarkable player who would be a major component of the future Jays' teams.  He deemed his scouts foolish for thinking Hinske was an organizational player.  At that time, the Jays' front office was a highly biased atmosphere toward scouting.  Unfortunately it was behind the curve of other organizations by a few years.  Over time Law recognized that their methods were unworkable and subsequently left.

Listen to the podcast, it is a very interesting response given by Law to an email by The Common Man, our friend over at one of our sister blogs on the Sweetspot.  What I am about to write are my thoughts on it and takes very,very little (almost nothing) from what Law said.

Unlike running for political office where it is a major hindrance on a career, successful people realize the folly of absolutism and begin to moderate their views.  Now, I think many ideas have to be chaotic and overly held onto in order to break through long held traditional views.  What winds up occurring is that the first line through is given some notice, but to have lasting power...it will also need a moment of success.  The A's success is what many sabermetric minded folks grabbed a hold of and, to their detriment, eschewed traditional approaches to assessing talent.  It is common to misunderstand how one single approach that succeeds often will succeed given a certain set of variables and that once that context is removed, the approach needs to be altered.  I think it is a major reason why many "Moneyball" teams have failed to equal what the A's did.

In the early to mid 90s, several important people began to see the importance of statistics in baseball and how some skills are being overlooked.  I do not know who were the first trailblazers, but most of the lines draw back to Sandy Alderson's crew in Oakland.  However, they were not alone.  Several clubhouses had elements of this minority held view.  The Indians come to mind for me as a front office who had one or two of these guys.  In the public sphere, you had guys like Bill James, Pete Palmer, and others who were pushing through the concept that statistics were useful and not being utilized.  It was an amazingly rich time where there was probably far more cutting edge information publicly available than proprietary within baseball.

The tide turned with the Oakland A's.  Their late 90s and early 00s benefited from some great amateur talent acquisition in the years before.  There were proto-Moneyball draftees like Jason Giambi and Ben Grieve who both did well for the A's.  There were traditional acquisitions like Miguel Tejada and Eric Chavez.  Part of this was an amazing hit on three young pitchers with Mark Mulder, Tim Hudson, and Barry Zito.  This combination of recognizing the benefits of a statistical approach, utilizing traditional scouting, and hitting on three pitchers created a vital core whose presence would be felt over roughly a decade in Oakland.  This club was set up by the collection of incredible talent and somewhat open mindedness of Sandy Alderson.

When Billy Beane took over, he had some strong ideas as to how to improve upon Alderson's model.  He could have gone and hired more scouts and taken the talent competition to every other team or he could go with a statistical perspective and find ways to exploits talent that was not properly valued.  Now, I think I am rationalizing this in a backward sense.  I imagine what the early tenets of applying statistics in the front office saw this as extraordinary and that other teams were foolish for not seeing it.  In this perspective, scouts have "no value" because improved scouting is often a razor thin improvement in the talent you are bringing back.  It is monetarily inefficient.  Whereas if you cut expenses and turn it over to the sabermetric crowd, you are investing in a field that few teams were doing and even fewer were actually using.  In short, Beane read the wave, rode it, and many within that group likely forgot that others will do likewise with the following waves.  Beane saw this.  He saw others liking what he was doing and he saw that teams like the Blue Jays would commit to it more so than he would.

The A's emphasis on college players in the draft preceded the "Moneyball" draft of 2002 by several years.  In fact, it likely happened in 1997.  When the ownership changed hands before the 1997 season, the new ownership let it be known that they were no longer going to green light a great deal of money for large free agent contracts.  Alderson looked at his amazing collection of talent in scouting and development; and made a decision.  He recognized that to maintain a successful organization that he was not going to be able to compete with other organizations and that he had to implement more cutting edge ideas.  Alderson turned the A's into a more sabermetric focused franchise.  This gave more power to Billy Beane who was an early convert.  When Alderson left shortly after implementing this plan, the owners hired Beane to take his place.

What Alderson started, Beane finished and probably in a way that Alderson could not have done himself.  The A's drafts began to focus almost solely on college talent.  The A's 1997 draft (Alderson's last) included only one high schooler in the first ten rounds.  If not for Hudson in the sixth, it would have resulted in 12 picks who would not contribute in MLB.  Beane's first draft in '98 was better with Mulder being selected.  In '99, Barry Zito was pretty much the lone prize.  In '00, no one in the top ten amounted to much, but they did select Rich Harden in the 17th round.  The controversial '01 draft resulted in Bobby Crosby, Jeremy Bonderman (which supposedly infuriated Beane), and Dan Johnson.  Nothing exceptional, but really not much different from the draft before.  In fact, the whole thing about the '02 draft focusing solely on college talent is likely overblown.  From '97 to '01, the A's selected six high schoolers in the first ten rounds in total.  If anything, what they found out was that a polished college pitcher is a better investment in the first round than an exciting, hard throwing high school pitcher.  Outside of that, the returns were not different from any other club.

However, people who commit to ideas often over commit and the A's went all college in the next draft to take advantage of Beane's maneuvering to acquire seven of the first 39 picks.  It did not go well, they wound up with Nick Swisher and Joe Blanton.  Those two alone made the draft valuable and worthwhile, but the A's were certainly expecting more.  Jeremy Brown probably could have been a useful backup, but I think there was a lot of Moneyball pressure on him that he did not handle well.  Anyway, we can continue on going through all of these drafts, but the point is clear to me that statistics certainly have their place in the draft although the benefit gained is marginal.  A stat-alone approach will not result in drafts that are significantly different from what would be expected on average.  As the Blue Jays would find out later, these returns are likely to become more marginalized if more people start taking this approach.

So I never mentioned the second part that made those A's teams successful.  The first part again was the draft approach instituted by the previous regime and the unlikely hits on three elite young pitchers.  That strong core was supplemented by the second part of the A's success: utilizing statistics in free agency.  Part of that emphasis was on the idea that collecting spare parts with certain lines would result in a cheap and fairly successful bullpen.  Chad Bradford was the flag bearer for this idea in the novel, but someone like Jeff Tam makes just as much sense.  The A's focused on players who were successful at keeping the ball on the ground and they did this while few teams were concerned directly about that.  It was a concept that was largely built off of the work Voros McCracken did with DIPS.  The other part of his free agent approach was to acquire players who could get on base.  Scott Hatteberg was the main focus in the novel for this approach, but again there are others.  Guys like Mike Stanley, Randy Valverde, what they thought they had in Johnny Damon, David Justice, and Ray Durham among others.

Of course, the benefit of this approach was dying out too when the book came out.  Again teams like the Red Sox, Yankees, Indians, Blue Jays, etc. all took notice and understood what was going on.  Statisticians were moving in droves to MLB teams with some teams knowing what to do with them and others not so sure.  Some GMs thought that a single stat guy "would replace 10 scouts."  At one time and in a limited context, that would be true.  However, with many of the teams understanding and using statistics, the margin of success became narrower and narrower.  As it showed at the end of the novel (as I remembered it or as I remember thinking after reading it) that Beane knew others were in on this approach and that he had to stay ahead of the curve.

Moneyball for Beane next became a focus on defense.  It has been only mildly successful.  The team has never gotten much help out of the minors and the returns they had on trading their three elite pitchers did not result in comparable value.  To say Moneyball led the MLB team to success is overselling that approach.  To say Moneyball did not amount to anything and was merely a product of the Big Three would be underselling it.  The truth, quite often most obviously, lies in the middle.

Beane also stepped back from his college only approach.  This saw major investment in 2005 in high school talent, but an easily seen direction is not apparent.  In 2007 and 2008, the team heavily focused on college players and the drafts since include a smattering of promising high school selections.  These selections typically are in the Max Stassi or Ian Krol variety.  They are highly talented prospects whose characteristics did not equal their asking price.  When you overslot players like that, you are betting that they will be worth that price with development or at least the whole portfolio of overslot talent you acquire will at least be equal to the amount you invested.  The new strategy might be one where they are still heavily scouting colleges while giving looks to overslot type talent in high school. 

This brings us back to the initial point I had which is that the idea of Moneyball is a fluid concept.  The most important number in baseball is cost efficiency.  Any team has there own set budget and it is the front office's job to determine how to effectively use that money to bring back wins for their teams and, to some extent, fans in the stands.  To do this, you need to be able to assess how talent is being valued in your market and determine if a certain aspect of talent is being undervalued.  If a competitor figures out what you figure out, your knowledge becomes somewhat marginalized.  If a competitor with significantly better resources finds out the same thing, you can be rest assured that you will be left with the scraps.

In that end, I think it becomes clear that way things work in baseball that it is grossly unfair for teams with revenue streams that pale in comparison to others.  This has always been the case.  It is a major reason why the Orioles were so successful in the 60s and 70s.  Pre-draft the team signed bonus babies left and right.  A front office needs luck and an elite level direction to be successful against these high revenue, intelligent clubs.  What the Rays have been able to do is incredibly remarkable.  What they have done though is being figured out by others and being exploited by teams with better cash streams (e.g. Blue Jays, BoSox).  The question then becomes where is the next innovation and is my sad sack team going to be ahead or behind the curve?  And, again, this is not anything new.

Moneyball is about one innovation and how a small player can become a big player by exploiting it.  Nothing more, nothing less.  Sometime this fall or winter, the book club will go back and reread this classic.