May 5, 2016

Prospectus Feature

The Cost Of Saving Money

by Trevor Strunk

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One of the things that really got me into baseball around 2009, when I was enjoying my first season watching literally every Phillies game I could, was reading old columns at Fire Joe Morgan. I expect that blog doesn’t need much of an introduction for this audience, but just in case: Fire Joe Morgan was a blog that ripped apart the mainstream sports media of the early-to-late 2000s, exposing it—actually, no, I was right, it doesn’t need an introduction. It was and is wonderful.

One of the major misunderstandings the blog tried to correct was sports media’s systemic inability to understand what the book Moneyball was about, and, consequently, what the general philosophy of Moneyball actually was. More often than not, commentators and journalists, particularly the titular Joe Morgan, would argue that Moneyball meant teams being cheap, privileging walks over batting average, and losing in the playoffs like the Oakland A’s. As Ken Tremendous and company would insist over at Fire Joe Morgan, though, the idea behind Billy Beane’s strategy as documented by Michael Lewis in Moneyball was the exploitation of market inefficiencies. Especially for teams that did not have the capital to spend like the New York Yankees or Los Angeles Dodgers, Beane’s philosophy—which Lewis gave the shorthand of “Moneyball”—was essentially a leveling technique, a way of attacking a hopeless mismatch by finding a completely different resource to pursue. No money? No problem!

This philosophy is very appealing in the abstract. You can imagine yourself as a kind of treasure hunter, finding players who would have never gotten a chance in previous years, and showing how they can be productive major leaguers. The bad body types, the too-patient hitters, the light hitting defensive center fielders: analytics have rehabilitated all of these kinds of players at one point or another. I would argue that the Jack Custs or the Jarrod Dysons of the world would not have had nearly the shot they have had if not for Beane’s emphasis on market inefficiency, and that’s all for the good.

But the dark side of sabermetrics also has to do with labor. On the players’ side, this is something of a necessary evil in modern baseball. With the number of analytical tools at the disposal of major-league teams currently, teams will know how risky any player is, his upside and, more importantly, his downside. So when GMs offer “team-friendly” long-term contracts to very young players, these are necessarily “player-antagonistic” as well. (With the possible exception of that overlap in each party's interest created by each party's different incentives.) The player can gamble on his own upside against his downside, but he can only ever do so knowing that the team has run the actuarial and statistical math to determine exactly where the monetary limit of their risk is. The team has run the simulations, and the player gets to bet on himself against the numerical odds or accept a contract that, while sizable, is a fraction of future potential earnings.

And that’s fine, as these things go. I’m fairly far left on the ol’ economic issues, so if I had my druthers, labor would have a lot more power over things like arbitration and pre-arbitration salaries, but that’s all for another article down the line. In terms of my issue here, inefficiency, the difficult position in which players find themselves in the negotiating room is directly related to the information that teams now have access to. It’s difficult to turn back the clock on that, and in order to argue against the proliferation of that data (outside of a stronger union or abolition of the free market), one would have to problematically argue for less knowledge. And so, players will unfortunately be more under- than over-paid until they reach free agency, which is becoming further and further away. Teams win; labor takes an admittedly survivable loss.

So, despite the curmudgeon class railing against data in defense of gut instinct and feel, data continues apace because it makes teams money. Furthermore, if you’re the owner of a team, you have to at some point start wondering how far this particular line of thinking can go. Are there market inefficiencies everywhere? Can you put together an entire working team on the cheap that can win the World Series? Are there stadium inefficiencies? Fan giveaway inefficiencies? And, most tempting, could there possibly be front office inefficiencies? Could the guys who get the most money outside of the players themselves be streamlined and made cheaper and more efficient?

I suppose I’ll come clean and say I don’t have an empirical answer to this question. It remains unclear to me if you could somehow identify some crucial quality of GMs and just keep plucking a 22-year-olds out of MIT or Stanford to successfully run your team at a low-six-figure salary forever and ever. Maybe you can, maybe you can’t. But what I can say with some certainty is that you shouldn’t.

One part of this warning against the attempt at making baseball front offices as efficient as the team on the field is practical. While leverage index and catcher framing have started to show ways in which intangibles can translate onto the field, the touchy-feely qualities of a front office are much more numerous. How might one quantify facility in the boardroom? How does one analyze the traits necessary to pull off a good trade? What specifically is the skill that allows some general managers to see their team in the big picture, and keeps others from such a vision? And those questions are just for the general manager—for the scouts, minor-league development department, vice presidents, presidents, etc. of the team, there are these questions and more. Far too many questions, I’d argue, to accurately quantify and gameplan an efficient, cheap front office.

Teams still, despite my concerns, go ahead with this plan here and there. Internships and low-level analytics or scouting jobs are often given to the smartest young baseball writers at Baseball Prospectus and other top baseball sites online. And while these internships and jobs are absolutely cherry in their content, they often pay far less than what these individuals deserve. As the braintrusts of the sport get relatively poorer and more willing to take bad work to be in a good front office, then, so will the distance between the rank and file of the front office and the figurehead of the president, owner, or GM increase. When this happens, the smartest and most excited members of your organization feel alienated and uninvolved. Remember, these are people who by definition are pretty smart, and pretty good at assessing performance value. They're not going to miss this point.

I find myself thinking back to a time when a friend was considering opening a private school. He’d have very little money, he said, but he wanted it to be really forward thinking. I knew what to do: I told him he had to look through tests and grades and figure out what skills were undervalued by the teaching market in producing student success. Then he just needed to hire the teachers with those skills for peanuts. Even shortly after I said it though, the injustice of it became clear: These would be teachers who knew they were good, who we knew were good, and who students knew were effective. And we would be paying them like college seniors. It wasn’t fair.

And I think much of the salary-management in baseball isn’t fair, especially in the minor leagues. I’ll exposit on this more if I’m able to in future months. But for now, I’ll leave it at this: As tempting as it may be to use the knowledge we have of market inefficiencies in baseball to identify (and then ultimately underpay) undervalued executives as well, the extremely well-compensated GM may not be something we want to scoff at too quickly. The miserly mindset toward analysts is based on an assumption that there are lots of them, these plentifully well-educated widgets that can slot in wherever. In fact, the skills that make the best of these employees valuable (intuition, interpersonal skills, and other touchy-feely qualities) are decidedly unwidgetlike. The ones who are good at it shouldn't, for practical reasons, be treated widgetlike; they should be treated as rare and valuable employees.

There's no analytical silver bullet coming to reduce the dependence on these attributes. The idea of turning soft skills like research, negotiation, and analysis into statistics is likely never going to work. We have been trying as a country to do this in high schools for decades now, and all we have to show for it is a broken system reliant on arbitrary exams and benchmarks. No, the successful GM and successful front office in general likely has more to do with “feel” than any of us are comfortable admitting.

Because just as the clutch hit at exactly the right moment has the feeling of magic about it more than data, the savvy front office executive seems more like a magician than a drone. GMs evade data-driven location for the same reason a computer can’t reliably identify the best book ever written in the English language: because both evaluations are deeply subjective. And, as I expect we’ll see more and more, this might be true of many other aspects of baseball’s beautiful game.

Trevor Strunk is an author of Baseball Prospectus. Follow @hegelbon
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