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Team’s winning strategy loses its edge

Marketplace Staff Apr 18, 2008
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Team’s winning strategy loses its edge

Marketplace Staff Apr 18, 2008
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TESS VIGELAND: That famous baseball philosopher Yogi Berra once said, “Nobody goes to that restaurant anymore, it’s too crowded.” Interesting theory, right? And it applies to baseball itself these days, as teams left and right usurp what was once an innovative strategy for their own gain. Commentator Dan Drezner explains how the Oakland Athletics are coping.


DAN DREZNER: As baseball season begins, few experts are giving the Oakland Athletics a chance to win much of anything. This is not surprising. During the off-season, A’s general manager Billy Beane traded away his best starting pitcher and everyday player for younger prospects in an effort to rebuild after a disappointing 2007 season.

Some baseball traditionalists are delighted by the A’s woes. To them, this represents a clear rebuke to Michael Lewis’ 2003 book, “Moneyball.” That book chronicled how Billy Beane allegedly out-drafted, out-traded, and out-thought other baseball GMs by relying on sophisticated baseball statistics known as sabermetrics.

This innovative strategy helped the A’s outperform their payroll, because Beane signed and drafted players that performed better than baseball scouts expected. He applied a simple economic principle to the practice of building a baseball team: When a business sector is run by an insular old-boy network, an outsider can exploit market inefficiencies and reap significant arbitrage opportunities. For some of those traditionalists, the apparent decline and fall of the A’s symbolizes the failures of the “Moneyball” philosophy.

But as sabermetric methods have become more accepted in the boardrooms of baseball, Beane and other innovators have fewer inefficiencies to exploit. Since the publication of “Moneyball,” almost every team in the major leagues has incorporated sabremetric thinking into their organization.

The Boston Red Sox won two World Series in the past four years while employing Bill James, the godfather of the sabermetrics community. Other franchises around the league have also hired young sabermetrics devotees to run their front offices. The result: The popularization of sabermetrics has left Beane with less of an advantage — it’s harder to find diamonds in the rough when everyone else is mining the same territory. The A’s are not struggling because of “Moneyball”‘s failure — they are struggling because of its success.

This doesn’t mean there are no remaining arbitrage opportunities, however. Beane got more and better prospects in his recent trades than other teams received in return for trading better players. This was because Beane’s players were signed to inexpensive, multi-year contracts. Just because other GMs are mimicking Beane’s past innovations doesn’t mean he’s run out of new ideas.

VIGELAND: Dan Drezner is a professor of International Politics at Tufts University. His most recent book is called “All Politics is Global.”

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