January 22, 2008
The New Baseball Economics?
by: Dan Scotto on Jan 22, 2008 12:36 AM | Filed under: Articles

“I don’t have the patience to build for the future. The future is the present, and the six months ahead of you.. . . A five-year plan is archaic, and is a cop-out.” – Billy Beane, 7/25/01

When evaluating a team’s offseason and strategy, there are two different approaches that can be employed:

– We should evaluate everyone on a level playing field and evaluate transactions solely based on the needs of teams and the players involved, not on the basis of the personalities and reputations of the front offices.

– We should incorporate the reputations and histories of the front offices in evaluating trades, in addition to the needs of teams and the players involved.

I firmly believe in the second approach. A general manager who has a history of innovative approaches and successful trades should be given the benefit of the doubt in analysis. Part of the equation is assuming that GM’s with track records of intelligent trades will continue to make intelligent trades. I might get burned sometimes with this approach, but more often than not, you can tease out interesting things about those GMs.

The analytical community praises Billy Beane, perhaps to a fault. I still respect the Oakland general manager’s acumen a lot, and I would rank him as the best in the business at this point. When he does things that go against the grain, I tend to try to see his point.

This offseason, Beane has employed a new approach. Let’s take a look at the body of work coming from Oakland this winter:

12/14/07: Traded RHPs Dan Haren and Connor Robertson to the Arizona Diamondbacks in exchange for LHPs Brett Anderson, Dana Eveland and Greg Smith, INF Chris Carter and OFs Aaron Cunningham and Carlos Gonzalez.

1/3/08: Traded OF Nick Swisher to the Chicago White Sox for LHP Gio Gonzalez, RHP Fautino De Los Santos and OF Ryan Sweeney.

1/14/08: Traded OF Mark Kotsay to the Braves for RHP Joey Devine, nonroster RHP Jamie Richmond and cash.

The A’s, a team short on veterans to begin with, dealt their two best players, both cost-controlled and in their primes, for a bucket of prospects to replenish a depleted and disappointing farm system.

Undoubtedly, the A’s are rebuilding. While Beane has always said that it’s better to rebuild a year too soon than a year too late, this is somewhat over-the-top, particularly when Beane last launched a “rebuilding” project as recently as the 2004-2005 offseason, when he moved rotation stalwarts Mark Mulder and Tim Hudson. That rebuilding project looked like a Beane-type program all the way around. He had pieces in place to replace the guys that were leaving, and he got some major-league talent to temporarily fill in the holes. It led to their ’06 playoff run.

This, however, looks like a total tear-down. It’s a concession, almost, in the face of a team that can outspend them to great excess (Los Angeles) and the AL East’s two-headed juggernaut that has put a stranglehold on the wild card.

Part of this plan, I’m sure, is based on the fact that they can’t keep up financially, and the teams with a lot of cash have used some of the methods that Beane once used to keep things level. But I think part of it runs a little deeper.

We often hear that Major League Baseball is “awash with cash.” It’s true. MLB Advanced Media has been a major cash cow, giving teams tons of additional money. The game has never been more popular, and most teams draw exceptionally well.

This leads to teams being able to sign their premier players past their cost-controlled years. The result? The free agent market has been bereft of talent for a few years. I wanted to prove this point with more than my own assertions, so I went to the archives:

2005: “Damon, a marquee name in a weak free-agent class, has said he would prefer to stay with Boston.” – Jack Curry, New York Times, 11/22/05

2006: “[Soriano]’s due to become a free agent after that, and given the mammoth season he’s having and a weak free-agent class, he easily will command a deal in the neighborhood of five years and upward of $65 million.” – Mark Zuckerman, Washington Times, 8/1/06

2007: “In this weak free-agent class, Rivera ranks as the best closer.” – Jim Baumbach and Ken Davidoff, Newsday (NY), 11/13/07

When was the last time the free-agent class wasn’t described as weak? It’s a damn good question. You’d have to go back to 2004 (I only found one hit for “weak free agent,” and it was a letter-to-the-editor in Toronto). The trend has been towards weak, thin free agent markets.

You can’t really pick up on inefficiencies in such weak markets, particularly when the whole world knows about on-base percentage and defensive metrics can only take you so far. I think Beane has come to the realization that player development is the only place where he can make his move. Only with a stockpile of young, developing talent can Beane possibly compete with the AL’s big dogs. The Athletics’ young talent, crippled by a few weak drafts, injuries, and some stagnation, needed a jolt. Beane went about it with aggressive, tearing-it-all-down-style moves. It’s a far cry from the “not having the patience to build for the future” of 2001.

So, what does this have to do with the Mets? I watch Billy Beane to see what the trends are. I think that Beane’s wholesale rebuilding is indicative of a sort of malaise that has set in as far as player movement in free agency. The influx of cash means that teams can afford to keep their guys, making trades the only way to make moves work. Even adding talent that way, though, is a tough proposition, requiring huge prospect packages.

The bottom line? This incarnation of baseball economics (the MLBAM windfall, revenue-sharing, no salary cap), coupled with the general conservatism of front offices, is leading to roster stagnation. I think that Beane is trying to burst through it. For Mets fans, though, it’s going to be tougher to get that extra piece or two than we’d hope.

Note: Newspaper sources courtesy of LexisNexis, unless they are explicitly linked.

7 Responses to “The New Baseball Economics?”

  1. Comment posted by Wally Dykstra on January 22, 2008 at 1:12 am (#593626)

    Clearly Beane saw that a particularly large premium was available for premier starting talent this off-season and chose to cash in on Haren now. Maybe once he gave up Haren, he saw little point in keeping the other veteran pieces.

    I do think the general thesis may be true — teams do seem to be having more success keeping their stars in place. If this holds, as you say, teams will be forced to rely more on scouting and development to build their teams. Ultimately, I think that could be very good for MLB fans, owners and players.

  2. Comment posted by littlefallsmets on January 22, 2008 at 1:34 am (#593628)

    “Proven talent” is sucker bait when everybody thinks they have a shot.

    The problem is, by the time you’re lead-pipe-lock “proven”… you’re probably on the decline and you’re at-least definitely edging toward it.

    The name of the game is identifying talent and getting it BEFORE it peaks and letting other teams get those years of diminishing returns.

  3. Comment posted by davidg on January 22, 2008 at 11:52 am (#593840)

    Dan –

    Good analysis. I would make one further point on your summary. While MLB is flush with cash, there are limits and those limits come into play with free agency and team rosters.

    The 2007 median team salary was about $80mm (with about a quarter of the teams below $60mm and another quarter over $110mm). This median has gone up by about 33% over the last three years (in 2004 it was about $60mm, 2005 about $65mm and 2006 about $70mm). Whether its the Yankees giving ARod $300mm for 10 years or the Royals giving Gil Meche $55mm over 5 years – every team has been spending more money.

    With more money, many teams have decided to lock up their good young talent for many years starting in the middle of those players arbitration eligible years (and by the way Billy Beane was doing this well before the rest of the market) – and that trend takes more potential free agents off the market and pushes the prices higher for good talent that gets onto the market.

    Despite the higher payrolls, there is still a limit for mid or lower market teams and they can not consider having one player that takes up 25-35% of their payroll. So the Twins (with a $70mm payroll) really have no choice now but to trade Santana now. The question is how should the Twins focus on the return they get for their star pitcher. Surprisingly, though, Bill Smith (GM) wants MLB a couple of MLB ready players versus a bigger package of younger talent (the tact that Billy Beane has taken).

    Beane, as you point out, is now doing a wholesale “tear down”. He figured out what he wanted and got out in front of the market and began making his trades and restocking his organization with a lot of younger prospects. Look at the bulk of what Beane has acquired – all young 20 year old players – most at the AA level or lower.

    If Beane is a successful trend setter – his decision to get “many” younger players over “fewer” near ready MLB players should at least make the Twins consider that perspective. (BTW – you’d also think that the Mets might be a good trading partner for Joe Blanton. Given he does not have a long term contract, nor the pedigree of Dan Haren – you would think that both the Mets and A’s could agree on a 3 prospect package for Blanton.)

    The Mets appear to be the only team (at least visible in the media), who are considering a big group of players for an ace starter. The Yankees and Red Sox have drawn their lines. The spring training clock is ticking away and there may be as many as three teams (Minn, Balt, A’s) still wanting to deal front end starters. You would think that the Mets would be in a strong position to land one of them…

  4. Comment posted by ITAC on January 22, 2008 at 12:33 pm (#593880)

    Wait a minute, if the trend is to build up farm systems due to the new economic structure in MLB–why would we want to buck the trend and not keep our farm intact?

  5. Comment posted by davidg on January 22, 2008 at 1:54 pm (#594030)

    As a big market team, we can spend $10mm in the amateur draft and foreign player market to rebuild the 5-6 players we trade away. Small market teams can’t invest that much on an annual basis.

  6. Comment posted by Elephants in Oakland on January 23, 2008 at 4:14 pm (#594806)

    I am not sure I buy the premise or point of this post. First, Billy Beane traded a pitcher and a position player from a sub .500 team and somehow this signals a “rebuilding”. I do not understand. If Beane wanted to truly ‘rebuild’ he would remove the twin albatross of Eric Chavez and Bobby Crosby. The A’s still have the most underrated player in baseball in Mark Ellis and a future star in Travis Buck. Huston Street and Joe Blanton are on the trading block. Then again, every player the A’s control is always open for discussion.

    Money has very little to do with winning baseball. The key for teams to win on a consistent basis is to draft and develop talent of their own. Arizona and Boston have been able to make spectacular trades due to a dearth of talent in the minor league organizations. The trade of Danny Haren and Connor Robertson to Arizona for a load of prospects is a trade Billy Beane absolutely had to make. While Josh Byrnes could afford to make the trade with little to no risk due the talent the D-Backs still have.

    Nick Swisher was expendable. He has old player skills and Travis Buck and Daric Barton are already better hitters and players at this stage in their careers than Swisher.

    As far as the Hudson and Mulder trades both pitchers had injury question marks and that should be considered. However what Beane traded for was four pitchers (two starters a reliever and an uunkown), a centerfielder and a catcher (at the time).

    The question is why Beane traded the players; to bulk up a pathetic minor league organization.

    The gem that Beane got was Danny Haren.
    Kiko Calero is a righty-specialist that is now oft-injured.
    Daric Barton was a catcher who is now a DH. But the A’s needed Barton to cover for drafting several catchers, including Jeremy Brown, that the A’s could not develop. Further, the A’s have not developed a productive major league hitter drafted after the 1st round in a decade.

    From Atlanta the A’s got Dan Meyer, a lefty prospect who injured himself, they also acquired a starter who can’t start and a reliever who can’t relieve in Juan Cruz and they were saddle with a pouting centerfielder in Charles Thomas.
    Meyer still has an outside shot at the rotation.
    Cruz is a great AAA starter.
    Thomas was to take over in center after Mark Kotsay left following the 2005 season. However, Thomas was a flop and the A’s signed Kotsay to a three year deal. Funny in that the A’s just sent Kotsay to Atlanta.

    The larger point of the question is – if the A’s can’t develop talent in their own system, what makes us think they can develop talent from other systems?

    Beane continually has to trade players to shore up an ever sinking draft and player development department. It is a wonder that anyone views Beane as a visionary or ahead of the curve with the number of mistakes he has made. Esteban Loaiza? Jason Kendall? Mark Kotsay? Eric Chavez? Eric Karros? Mike Piazza? Bobby Kielty? Carlos Pena? Octavio Dotel? I haven’t even started to rattle off the wasted first round and supplemental draft picks that amounted to nothing. You can link those failed draft picks to a trade that had to be made.

  7. Comment posted by Jordan Fensterman on January 23, 2008 at 4:54 pm (#594860)

    It has always been my opinion that prospects should be traded for proven talent. The Mets have the opportunity, unlike many other teams, to draft prospects that scare other teams away becuase of their price tag and to sign free agents on the international market. That is how Boston and the Angels developed deep farm systems and how the Tigers wound up with Miguel Cabrerra and Dontrelle Willis. The Mets need to trade the prospects they do have now and then get extremely agressive in signing the “top” tier of international players.