August 17, 2001

6-4-3

Push Over the Top, Part Three

by Gary Huckabay

Two weeks ago, I asked readers to put themselves in the shoes of the management of the Kansas City Royals, turn back the clock to about a week before the Jermaine Dye trade, and come up with suggestions on how to best run the franchise.

Last week, I did my best to share the flavor and highlights of the copious responses we received. (Bill James wrote a piece in Rob Neyer's space at ESPN this week that basically says that this kind of exercise is so much narcissistic wheel-spinning. Personally, I don't like to miss an opportunity to waste time narcissistically.) This week, I wanted to take a bit of time to outline what my action plan would be, given the information available to the Royals at that point in time. So, without further delay, here we go....

There are a number of obstacles between the Royals and consistent success on the field. The Royals are not a comparatively wealthy franchise. In the near term, it's not likely that they will suddenly become so. Kansas City is not a large market by any stretch of the imagination, and barring revolutionary revenue sharing in the new Collective Bargaining Agreement (CBA), it is unlikely that the Royals are going to move into the top third of clubs in terms of revenue generated by local broadcasts. Therefore, in order to compete effectively on the field, the Royals need to be among the most efficient clubs in MLB in terms of performance on the field per salary dollar spent.

That sounds like a desirable goal--sort of like a new strategy that "increases revenue" and "reduces costs." But how do you get there?

The current CBA imposes a compensation structure that's pretty straightforward:

• Clubs have renewal rights for all players with two years of experience or less, and those with 2-3 years experience who are in the bottom 83% of service time within that subcategory. The club can simply write out the contract, subject to the restriction of the league minimum, and the player has no recourse other than to sit out the season.

• For those players with 2.83-5.99 years of experience (or thereabouts), the club has the option to offer the player arbitration, or to simply release the player to free agency. If the club chooses to offer arbitration, the player must either accept arbitration, or sign a deal with the club that holds his rights.

• Players with six or more years of service time are free agents, and may offer their services to any club in MLB. Fun with the free market.

It's not hard to forecast what player salaries end up looking like under this system. (This graph is an example, and does not contain the actual data--it's not that important for a general discussion. I'm just trying to make a couple of points, so bear with me.)

Players are cheap very early in their career, and then salaries escalate rapdily, first because of arbitration, then free agency. "Damn the free market!" -- C. Montgomery Burns.

So that's a broad sketch of the cost side of things. How about the performance side?

There are a number of different metrics out there for measuring the effectiveness of players on the field. Pick the one with which you're most comfortable. I simply used an index and made up some relatively plausible sample data, which combines the idea of a bell-shaped performance curve throughout a career, combined with the Darwinistic/Actuarial nature of the game. (Again, the actual numbers should be the subject of rigorous work, and for right now, that's not really necessary to grasp the concept.)

I'm cheating a little bit here for simplicity and clarity. Age, and not service time, is really the driver here. This is for a player aggregate that joins the league around 22 or 23 years old, and peaks around 27 or so. The index on the left is simply an analog for performance. You can choose EqA, OPS, RC27, WHiLMA, or whatever you want. Just focusing on the shape and trend here.

By now, you know what's coming next. If you take a look at player cost, and the cost for that player's services, you end up with something that looks like this:

The sweet spot, in terms of return on your investment, is in the early years of a player's career. The numbers here really aren't all the important, except to demonstrate the dramatic extent to which the early years of a player's career are what the Royals need to buy into. Clubs with big revenue streams can have a bit more diversity on their team in terms of players of different ages, but the Royals really need to focus on having young players.

In all likelihood, this is going to be the key issue for the Royals going forward. The structure of compensation isn't likely to change, and revenue sharing simply isn't going to be the NFL model in the forseeable future.

So, if the club has a major weakness in terms of turning draft choices into productive ballplayers (particularly on the hitting side), as we assumed in the initial article, the performance index for players of that age coming from the organization is going to be lower. How do we fix or get around that?

In the Long Term:

• Measure the effectiveness of the scouts and coaches more carefully. Identify the good ones from your own organization, and pay what you need to in order to keep them on board. Use objective measures, preferably ones that allow you to compare your people with those from other organizations. Make sure the metrics you use are directly relevant to what makes a winning team at the MLB level. If good scouting or coaching talent becomes available from other organizations, aggressively pursue it. Invest the money here.

• Promote players that do the things that win games. I know we praise the Oakland A's Way back and forth to Lubbock, but that's because it works. Reward players that do the things you want your major league players to do. The A's won't give their Minor League Player of the Month award to a hitter that doesn't walk at least once every ten at bats. The reinforces the notion that to get to the bigs, you have to get on base. The Royals need to do this, and do it to improve behavior all across the spectrum, from making measurable defensive improvements, to decreasing your time to the plate. Over time, this works, and builds a culture that really does help.

• Be a bastard organization. Don't publicize it, but keep your players in the minors a little bit longer. Give them a Mo Vaughn spelling lesson. Yes, eventually, this might cost you some goodwill, but you can pick the spots (long-term contract offers) where you can make it up to those players who you really want to keep. I guess I should say this in English: Keep your prospects in the minors a little longer, so you get the years closer to their peaks at a lower price. Until the minor leagues are liberated, this is the sort of relationship that's going to exist, and the Royals are faced with some serious resource constraints in a brutally competitive environment. Another year of performance at pre-arbitration or pre-free agency prices is a very valuable thing. Discretion is going to be exceptionally important here, but it does need to be part of doing business as usual.

In the Short Term:

• Go out and get low-priced, high risk talent. There are a number of guys in the minors who might be able to perform well in the majors in one role or another. A lot of these players can be had for a very low cost, and if you stock up on a few of them, one or two will turn into players with significant value that can be used either in trade, or as medium-term contributors on a contending team. Guys like Cory Lidle, Chad Bradford, Izzy Alcantara, and so on and so forth. Go get a few, give them the opportunity to play, and try to hide their weaknesses as best you can. You might be able to fill five MLB roster spots with championship-caliber role players this way, and perhaps even come up with a starter or two.

• Conserve cash. This is not a club that's going to contend this year, and isn't likely to do so next year either. Take this as an opportunity to save some cash, and experiment with the MLB playing time. Is Kit Pellow notably worse than Joe Randa? He's notably cheaper.

• Identify two or three key young players, and offer them Jim Thome/Omar Vizquel/Tim Hudson/Miguel Tejada contracts. Lock them up. Mitigate your risk and theirs. It's too late to do that with Mike Sweeney (do you think he might have accepted a seven-year, $14-million deal during his early seasons? I'm not just using hindsight here--the club probably could have done something like that, and it would have worked out well for all parties.), but something can probably be worked out with Carlos Beltran, for example. You'll hit some and you'll miss some, but the cost can be low, and the potential gain enormous.

This is all highly simplified. Obviously, you'll want to be very careful and rigorous in all your analyses. Player performance, coach and manager performance, financial analysis, risk profiling -- everything needs to be done carefully if this is the real thing. But as a plan, I'm fairly comfortable with this, at least if I get to stay in the GM's chair. I'm making assumptions all over place, but I'm writing a column, not a business plan, and I don't want to bore you silly with a bunch of academe. (I'd rather bore you silly without doing the legwork.)

But there is one very big assumption that I need to make explicitly, and from that flows everything else:

This plan assumes that the Kansas City Royal management will do the homework required to better understand the basic tenets of what wins ballgames. They need to have the epiphany that Life is OBP, and OBP is Life. They need to protect their pitchers' arms. They need to understand the effects of parks and leagues on player performance. I honestly believe the biggest obstacle between the Royals and consistent success is that Allard Baird really believes that Neifi Perez is a great ballplayer, and that Tony Muser thinks that slick glovework is more important than a great bat.

Despite all the work that's been done in baseball analysis in terms of developing the technology to evaluate performance, and all the work transfering that technology into MLB front offices, there is still a very long way to go. Royals fans still have many painful miles to walk, I fear. I think Tony Muser and Allard Baird are dedicated professionals, and I have a great deal of respect for the amount of effort they put forth in their jobs. I also think they need to improve. Brian Cashman isn't sitting still in terms of learning, and neither is Billy Beane. Baird and Muser are already behind, and facing challenges unique to their situation. That means they need to work hard, work smart, and work now.

Gary Huckabay is an author of Baseball Prospectus. You can contact him by clicking here.

Gary Huckabay is an author of Baseball Prospectus. 
Click here to see Gary's other articles. You can contact Gary by clicking here