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Playing “Moneyball” With Money

Why the economics of America's national sport may never be the same.


BOSTON — Never has the language of Major League Baseball’s championship seemed quite so archaic. How can you have a true World Series without Japan, Korea, Cuba or the Dominican Republic? Does the “Fall Classic” convey the very real possibility of snow cancellations? As for the Series hero, he will have to be “Mr. November,” leaving “Mr. October” to yesteryear’s Bob Gibsons and Reggie Jacksons.

The 2009 Series may also mark a revolution in an era defined by a term of far more recent vintage—Moneyball, made famous in a 2003 book by Michael Lewis. Lewis’ baseball classic introduced fans to a novel management approach, told through the shrewd mind and hubristic personality of Oakland A’s general manager Billy Beane.

It posited a theory that would change the way baseball teams did business: that small-market teams like Oakland could utilize new measures of players and statistical analyses of game trends to compete effectively with richer, big-market teams that were threatening—by dint of revenue and payroll inequities—to dominate the game eternally.

For the serious fans, new hitting stats like OBP (on-base percentage) and OPS (a combination of OBP and power) quickly became a fundamental part of the modern game’s lexicon and were elevated above traditional measures—regarded by Beane as relics of another century—like batting average, home runs, runs batted in and stolen bases.

The “moneyball” approach favored patient hitters—Red Sox star Kevin Youkilis, a promising minor-leaguer back then, was famously anointed “The Greek God of Walks”—and hard-throwing pitchers. It pioneered efforts to develop more meaningful defensive stats than simply errors, numbers that would reflect a player’s defensive range as well as his reliability.

Beane never claimed to have invented this new, stat-centric approach. Writer Bill James, the king of baseball geeks, had been developing this baseball science, now called sabermetrics, for decades. And Sandy Alderson, Beane’s predecessor and former boss in Oakland, had already begun incorporating Jamesian principles in the A’s front-office approach. But it was under Beane—with journalist Lewis in attendance—that Oakland and baseball witnessed the fruits of the revolution.

In 2003, when Lewis’ book was published, the A’s would win the A.L. West for the third time in four seasons. And while the A’s lost in each of those years in the first round of the playoffs, they did take the league giants—the New York Yankees twice and the Boston Red Sox once—to a deciding fifth game.

In the ensuing years, Beane’s regime continued its success. By 2006, the A’s had a streak of eight consecutive winning seasons. And that year the A’s won another division title and—notably, in an all small-market match-up with the Minnesota Twins—made it through the first round of the playoffs. That triumph appeared to have exhausted Oakland’s good fortune. The big-market Detroit Tigers swept the A’s in the A.L. Championship series. And over the past three seasons, the team has been a consistent loser, with 76, 75 and 75 wins.

Meanwhile this year, for the first time in a decade, all four teams in the championship series were big-market teams. And each had a payroll in excess of $100 million and ranked in the game’s top 10—Yankees 1st, Angels sixth, Phillies seventh, Dodgers ninth. (Oakland, which finished a distant last in the A.L. West had a payroll in the $60-million range, ranking 26th among the 30 teams.)

This tilt toward the rich teams does not reflect any flaws in “moneyball” theory. It was indeed an effective approach to compete with big-market teams as long as they remained stagnant, ignorant and profligate. But once “moneyball” theory took hold throughout the baseball’s front offices, the wealthy, big-market teams had the all the same advantages of new efficiencies on top of the luxury of more money to spend.

Baseball’s historic superpower, the Yankees, was pretty much the last holdout, thanks to owner George Steinbrenner’s long-held—and, at one time, successful—belief that winning immediately warranted mortgaging the future. But with ill health forcing the legendary “Boss” to retreat from an active role, the team finally began playing “moneyball,” clinging to young talent rather than dealing it away for a short-term fix from aging, overpriced stars.

A couple seasons ago, Yankees fans were clamoring for their team to acquire Johan Santana, the pitching ace the team so desperately needed. But the Yankees uncharacteristically held back because Santana would have come at the cost of promising youngsters like Joba Chamberlain and Philip Hughes. (The Mets did trade four prospects for Santana and haven’t reached the playoffs in his two seasons in Queens.) Instead, the Yankees waited a year to fill that pitching void with C.C. Sabathia who, unlike Santana, arrived in New York as a free agent, and kept the kids in the Bronx too.

The Yankees suddenly had the best of both worlds. Before the season, the team went out and spent more than $400 million on three free agents—two top pitchers, Sabathia and A.J. Burnett, and a slugging, slick-fielding first basemen Mark Teixeira. All the pre-“moneyball” inequities between the big-market and small-market teams were back in full force. And the Yankees—with surprisingly little resistance—returned to the World Series for the first time since the year Lewis’ book was published.

New York’s whopping $201-million payroll topped the league this season: 25 percent more than the next biggest, the cross-town Mets; 60 percent more than its closest A.L. rival, the Red Sox; and almost 80 percent more than its World Series opponent, the Phillies. Spending far more bucks while generating more bang from those bucks may be the recipe for more than a championship — for another Yankee dynasty.

At least, that is, until the next sabermetrics whiz kid comes along and figures out another, new way to level the playing field.