Finally, convincing evidence of Billy Beane’s genius

It seems like just about everyone thinks Billy Beane is a genius, thanks to the Michael Lewis book Moneyball, which details the way in which his Oakland A’s use statistics in innovative ways to choose talent and win games.

I’ve never been part of the Billy Beane cult. For instance, in a January 2004 Financial Times interview about my research on sports, the subject came up:

There has been much hype recently about baseball clubs finding statistics to identify good players. Levitt read Michael Lewis’s book Moneyball about the supposed innovators, the Oakland As, and is unimpressed. “If you look at all the stats they say are so important, the As are totally average! There’s very little evidence Billy Beane [the club’s general manager] is doing something right.”

The simple point I was making is that the A’s don’t win for the reasons Moneyball implied, i.e that they put a bunch of misfit looking characters on the field who have out of this world on base percentages which somehow leads them to manufacture runs without paying high salaries. The reason the A’s win, year after year, is because they have better pitchers than anyone else. the 2004 season is typical: the A’s were ninth out of fifteen teams in the American League in scoring runs, but had the second lowest ERA.

I was surprised how many people were upset by this quote. As just one example, the following post of my quote generated 143 comments

link to posting

So what does Billy Beane do in the off season? He deals two of his top starters to other teams. And after four years of averaging 97 games a year, the gambling markets at www.tradesports.com project the A’s to win 83 games this year. If there were markets for multiple years in the future, my guess is that Oakland is not expected to be a good team again for the forseeable future. So I guess not everyone is in the cult of Moneyball after all.

But, in spite of this, I recently stumbled across the following Oakland A’s press release:

Beane, Crowley join ownership group
OAKLAND — The new Oakland ownership group headed by Lewis Wolff added another wrinkle to their $180 million purchase of the A’s on Friday. General manager Billy Beane and club president Mike Crowley both joined the group as limited partners without the liability of underwriting losses sustained by the team, Wolff announced at a media conference. Both men also had their contracts extended: Beane to 2012 and Crowley to 2008.

Just as the A’s are about to head south, he negotiates a lucrative contract extension and becomes the first baseball GM to get an ownership share (but he doesn’t have any liability for losses, only sharing in the gains!).

That is genius.

Anonymous

For an even better debunking of Moneyball, there is the recent Sports Illustrated article on John Schuerholtz, GM of the the Atlanta Braves. He's one of those dinosaurs who usually actual scouting rather than statistics. If Moneyball were accurate, the Braves would be in the basement every year, which, of course, they are not.

KL Snow

I think there's a case to be made for both sides here. Because when John Schuerholz picks up a middle of the road pitcher and he posts a 3.04 ERA (John Burkett), a lot of the credit actually ends up going to Bobby Cox and Leo Mazzone, and while it's certainly not a quantifiable thing, the value they seem to add to their players is largely accepted as being part of the reason they win every year.
I agree with your argument about Beane's team OBP still being low, but I'd counter it with this: he largely avoids busts. He consistently succeeds on low-risk, medium-high reward players, meaning his teams are consistently meeting expectations, or doing slightly better. Given the chance, I don't think he could turn the Tigers into the Yankees, but I do think he can be counted on to get the most out of the resources available to him.

Anonymous

I'm not sure how you can say There's very little evidence Billy Beane is doing something right," while acknowledging that the A's have averaged 97 wins per season over the past four seasons.

To me, that seems like A LOT of evidence. Maybe it's not the OBP thing, sure. But that's still a lot of evidence indicating that Beane has some idea about what he's doing.

g eugene

The Braves have roughly twice the payroll as the A's, so the comparison is unfair. The A's have scouts too, they just don't always have the final say. By the way, everyone has caught on to OBP (and OPS) as a way of measuring a players ability, so the A's have developed metrics to measure defensive ability. In other words, players with high OBP are now fairly valued, whereas excellent defensive players are probably undervalued. Look for this year's A's to play excellent defense behind their young starting pitchers.

Anonymous

The comment above mine has it exactly right. To build a perennial playoff team while spending in the lowest quartile of baseball clubs is all the evidence you need that Beane is a superior GM (genius is, of course, hyperbole). If others, like Lewis, are wrong about the causes of his success, that's their problem, not his. Beane did not write the book.

That said, I don't agree that if Oakland's offense is ninth out of fifteen in run production than Beane's signings of high-OBP players is a fiction or, at best, a distraction. In evaluating general managers, everything must be referenced to payroll and if Beane can produce the ninth best producing offense with the fourteenth highest payroll, that's nice work (Oakland's stadium is an offense-suppressor too and hoepfully that was accounted for.) Otherwise, we are forced to the seemingly absurd conclusion that the Yankees and Red Sox have the best general managers every single year no matter who performs the role.

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PaulNoonan

It's also worth noting that pitching is addressed in Moneyball. People seem to have seized on the offensive portions of Moneyball, but there is certainly a lot of discussion on pitchers too. Barry Zito and Chad Bradford are both discussed at length. Even if you make the point that Beane's offense is not up to par, then the Moneyball principles of pitching seem to work very well.

But I agree with the larger point. Beane's new contract and ownership stake may be ther smartest move made by a GM in history.

Anonymous

Mr. Levitt includes a quote by himself "If you look at all the stats they say are so important, the As are totally average!"

Given that the As have a way-below average payroll, though, that seems to me to be pretty darn good.

Anonymous

Adjust those offensive numbers for ballpark and salary, and see if your assertion still holds.

Anonymous

levitt finally over his head?

steve,

it's called moneyball not walkball for a reason.

it's all about talent valuation.

Rick

Levitt, go back to fantasizing about right wing libertarian utopias rather than a real actual industry. You have no idea what you're talking about, which is probably why you teach in an ivory tower. If you knew what you were talking about you'd be GM of the Brewers leading them to their third straight world series. Instead you're high fiving neo-cons.

Anonymous

you're an economist at an excellent school and you don't understand a book about market inefficiency?

the whole point of the A's was that OBP was a commodity that was singularly undervalued based on how useful it was in producing a successful product.

now that markets have adjusted to value OBP more efficiently, the A's are looking for OTHER undervalued commodities, as they don't have the overall resources of the Yankees and Red Sox to get everything they'd like.

notice the increase of focus on defensive players, and the noticable lack of effective indicators. this indicates that defense is signifigantly undervalued, and hence cheap and effective.

lordy.

Anonymous

Man, it took until the last post before someone got it.

Beane took a simple principle and surrounded himself with people who could manipulate it (Riccardi, DePodesta).

But being a GM is more than just staring at a computer screen. What makes Beane so special is his charisma...he just seems to be able to "deal".

This will be a telling year for the A's. The mainstream media has them pegged for last place. I disagree, I think they will surprise.

The Angry Gambler

Yep,

The guy who posted about market inefficiency got it exactly right. There was a research paper written about that very subject late last year:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=618401

It concluded that the market had indeed started to correct the inefficiency identified by the A's and described in Moneyball.

What have the A's been doing since then? They've been concentrating on defense, defense and more defense because they identified that as being undervalued.

Why did Beane shock the baseball world by trading both Hudson and Mulder this offseason? Because he correctly identified that starting pitching was being greatly OVERvalued in the market. He cashed out his chips for some great young players while the going was good because he knew that he wouldn't have a chance of signing either Hudson or Mulder at market rate.

Finally, I want to echo something that others have said already. Saying that their team BP is merely average misses the point entirely. Even with the self-correction of the baseball market the money they paid per point of OBP is very, very low indeed. THAT is the point. Give us all a $200m payroll and we could put together a team with the top OBP in the game. Beane should receive only praise for putting together a team that has won the 2nd most games in the Major Leagues since 2000 with a pitifully small payroll.

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Anonymous

as posted above, the most important part of moneyball is market inefficiencies, and learning how to capitalize on them.

a secondary one is not to listen to critics who know it all - as the a's would collapse without jason giambi's leadership/power, as the a's would collapse without miguel tejada's leadership/power, etc.

will they do well this year? i have no idea. but just as john schuerholz (braves) and terry ryan (twins) have done well for years and should be given a fair amount of leeway, so should beane.

Anonymous

Professor Levitt, the point's already been made well here by others, but just to restate it: Your quote in the FT (and your current post) suggest that you read Moneyball cursorily at best. The book's thesis is not that Beane's singleminded focus on OBP and power is the reason for the A's success. The thesis is that Beane has done an exceptional job of recognizing the kind of talent that the market is undervaluing, and picking that talent up at cheap prices -- thereby allowing him to build exceptionally succesful teams (and the A's record over the past five years is exceptionally successful) at a remarkably low cost. In the late 1990s, as you'd have seen if you'd looked at more than a single data point, the A's were in fact a high-OBP, high-power team. In 2003 and 2004, their portfolio of assets was stronger in pitching and defense. But the principle behind how and why they acquired those assets was the same.

It's also absurd to point to the excellent pitching staff of the A's and say that Beane had nothing to do with it. Zito and Hudson are now recognized as excellent pitchers, but when Beane acquired them they were not rated all that highly. Just as important, Beane has avoided wasting money and draft picks by concentrating primarily on college players, which was something that most GMs did not believe in.

Finally, the idea that the A's are going to win fewer than 83 games this year is absurd. (And I have, in fact, put my money where my mouth is.) Baseball people are doing exactly what they've done in the past: overrating big names and the impact of one or two players and underrating young players who will perform excellently.

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Anonymous

OK, so where's the book on Terry Ryan, GM of the Twins, who have spent less and won as much in the past three years? And what about the Florida Marlins, who won the World Series with a low payroll, but did everything Moneyball says you should not do? Granted, Florida has had its ups and downs, but isn't the ultimate goal winning the World Series. And the Blue Jays, using the Moneyball strategy, have floundered. A lot of it is luck still, not statistics.

Anonymous

OK, so where's the book on Terry Ryan, GM of the Twins, who have spent less and won as much in the past three years?

So you're criticizing Beane for someone wanting to write a book about him rather than Ryan? How is that Beane's fault?

As for the Twins, their success on a small budget is a bit deceiving. First, they've play in the worst division in baseball throughout thei run. If they had played in the AL West or AL East, they likely would have zero playoff appearances under Ryan. Second, the Twins had the second highest payroll in their division in 2004.

That's not to insult Ryan. he's a very good GM whose team has performed far better than most given their payroll.

Ray

I believe the point Levitt is making, and I think it's a valid one, is that Moneyball's central premise is by and large a false one. The book sets out to answer the question "how did it come to be that a team with one of the lowest payrolls in baseball come to become one of its winningest?" The answer it posits is that it did so through the singular vision of Billy Beane, who embarked on a plan to get the most bang for his small market buck by using statistical modeling. Those models led him to eschew qualities that other teams were overpaying for (speed, defense, high school power pitchers) and stock up on areas that other teams were undervaluing, like high OBP, low walk totals, and college position players.

It's a nice story, and there are certainly elements of truth in it, but it remains a significant distortion of the bigger picture. By and large, the success of the Oakland A's in the early 2000s is due not to a bunch of control pitchers and no-name guys with high OBPs, but rather to the same qualities that EVERY team covets -- big bopping sluggers like Jason Giambi and Miguel Tejada and hot young stud pitchers like Mulder, Hudson, and Zito. The A's were in a position to have such players, not because they were looking where no one else was, but by and large because they were so bad in the 1990s that they stockpiled prospects. Hence, Beane was fortunate enough to take over as G.M. in 1998 with a farm system built by his predecessor, Sandy Alderson, that already included Giambi, Tejada, and Hudson, and at the time he had a last place team at the major league level -- thus allowing him to take Mulder with the second overall pick in 1998, and Zito with the ninth overall pick in 1999.

So the answer to the A's low payroll, high production of the early 2000s is the same one that many other teams -- even the likes of the Braves and Yankees in the early 90s -- have had before: when you bring up a bunch of hot prospects on a rebuilding team, you're granted a few years' window before you have to start paying them the big bucks. As that window has been closing, the team's ability to compete, predictably, has been shrinking.

Billy Beane has shown himself a solid G.M., and I don't think any of this detracts from that status. I do, however, think that the hype doesn't exactly match with the reality. Where I think he compares most unfavorably with some other G.M.s is what he's been unable to do OFF the field -- to sell the Oakland A's. If you look at what John Schuerholz did in Atlanta, what John Hart did in Cleveland, what Pat Gillick did in both Toronto and then later in Seattle, is to not only turn around teams that had always been perenial losers, but to transform them from low revenue money losers to high revenue franchises that can compete with the best. Whether it be through savvy marketing or finding better stadium deals or television packages, those G.M.s all were able to grow the pot they had to draw from. That certainly hasn't been the case in Oakland's case.

Nor, unlike the Mariners or the Braves, were the A's perenial losers before Beane arrived on the scene. From 1972 through 1990, they won six pennants and four world championships -- more than any other team in baseball. Beane hasn't even won a playoff series yet.

And as a previous commenter said, I think the ultimate refutation of the Moneyball thesis is provided by the 2003 Marlins. With a lower payroll than the A's, the Marlins were able to do the two things Beane's team never did -- win the World Series and beat the high-powered Yankees. And it's more than a little ironic that they did it with a team built on the very things Moneyball (published that same year) claimed were overrated and overvalued -- speed, defense, and power pitchers drafted out of high school.

In my opinion, Michael Lewis picked not only the wrong G.M. -- he picked the wrong sport. The book should have been called Moneypucks, and it should have been about New Jersey Devils G.M. Lou Lamoriello, who has accomplished in reality all of the things Billy Beane has accomplished only in his own mind.

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Anonymous

Those models led him to eschew qualities that other teams were overpaying for (speed, defense, high school power pitchers) and stock up on areas that other teams were undervaluing, like high OBP, low walk totals, and college position players.

Did you miss the section on defense?

By and large, the success of the Oakland A's in the early 2000s is due not to a bunch of control pitchers and no-name guys with high OBPs, but rather to the same qualities that EVERY team covets -- big bopping sluggers like Jason Giambi and Miguel Tejada and hot young stud pitchers like Mulder, Hudson, and Zito.

Don't you think the A's well defined draft strategy of pursuing polished college players helped them draft Mulder and Zito?

at the time he had a last place team at the major league level -- thus allowing him to take Mulder with the second overall pick in 1998, and Zito with the ninth overall pick in 1999.

If it were so easy to turn top 10 picks into stars, don't you think more teams would do so? The vast majority of top 10 picks don't become stars.

Where I think he compares most unfavorably with some other G.M.s is what he's been unable to do OFF the field -- to sell the Oakland A's. If you look at what John Schuerholz did in Atlanta, what John Hart did in Cleveland, what Pat Gillick did in both Toronto and then later in Seattle, is to not only turn around teams that had always been perenial losers, but to transform them from low revenue money losers to high revenue franchises that can compete with the best. Whether it be through savvy marketing or finding better stadium deals or television packages, those G.M.s all were able to grow the pot they had to draw from. That certainly hasn't been the case in Oakland's case.

Why do you think this is part of the GMs job? Do you think he negotiates stadium and television deals or devises marketing strategies? I don't know what would lead you to believe that Hart or Schuerholz perform those duties.

And as a previous commenter said, I think the ultimate refutation of the Moneyball thesis is provided by the 2003 Marlins.

If the thesis to Moneyball were that the strategies described were the only way to win, you'd be correct. I don't think Lewis (and certainly not Beane) ever came close to saying this.

And it's more than a little ironic that they did it with a team built on the very things Moneyball (published that same year) claimed were overrated and overvalued -- speed, defense, and power pitchers drafted out of high school.

Again, you should reread the section in Moneyball about defense. The A's value it highly. You seem to be confusing the 1999-2000 A's with the 2001-2005 A's.

I agree with the general sentiment that the book glossed over some of the more important aspects of the A's success. In that sense, your beef is with Lewis. Levitt, however, carries that over to a criticism of Beane.

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Anonymous

There are IMO lots of problems with your critque ofMoney Ball, some of which are stated in other comments. But you get it wrong at a more fundemental level. The A's OBP over the years ARE significantly above average. Perhaps more to the point, their OBP performance over the years is generally better than their overall run production (relative to league), which supports the Moneyball argument.

I don't have time to run all of the numbers, but over the last 5 years the A's OBP is .010 better than league average, which is pretty significant. Even last year, when they were ninth (and a bit below average)in Runs Scored, they were 5th (and .010 above average) in OBP.