In teaching my Baseball and Statistics course at Quinnipiac University, besides using my bookSandlot Stats,I require my students to read the book Moneyball by Michael Lewis. The book describes how Billy Beane, the Oakland Athletics general manager, navigated his team through the 2002 season. In that season, Oakland finished first in the American League West with a record of 103 wins and 59 loses. During that season, Oakland also set a record of 20 consecutive victories. This success was accomplished despite having the third lowest payroll in 2002. In 2002, the highest payroll was the Yankees at $125,928,583 compared to Oakland’s payroll of $39,679,746.
In reading this book for a second time it became clear to me that even though this book involved baseball, there are lessons to be learned that can be used in almost any business. Yes, baseball is a business. Before the 2002 season, Oakland could not afford to resign three of their best players. These include 2000 AL MVP Jason Giambi, outfielder Johnny Damon, and closer Jason Isringhausen. The three of them signed with other teams for a total of $33 million. This was $6 million less than Oakland’s entire payroll for 2002. Giambi alone would have cost the A’s over $16 million.
Because of his low payroll, Beane realized that he could not compete with teams like the Yankees and Red Sox in the traditional way of signing expensive free agents. He hired a Harvard economics major named Paul DePodesta, who used his computer to find players based on certain baseball statistics. These baseball statistics came from his reading articles written by Bill James. For example, in the 2002 amateur draft the computer flushed out Kevin Youkilis. Scouts from the other major league teams classified Youkilis as a fat third baseman who couldn’t run, throw, or field. Paul did not care about anything but Youkilis’ high on-base percentage, OBP.
How was Beane going to replace the three stars they lost? The loss of Jason Giambi was the most serious. Jason had a very high OBP. Beane focused on this particular statistic. Using Bill James’ theories he concluded a high OBP was the best way to produce runs and runs were the best way to produce wins. So he went out and signed Scott Hatteberg, a catcher for the Red Sox with a damaged throwing arm and made him into a first baseman, despite the fact that he had never played first base before. During the spring training of 2002, Ron Washington was given the task of making Hatteberg into a first baseman. What Beane loved about Hatteberg was his ability to get on base and see a lot of pitches in each of his at-bats. Because he was damaged goods he was cheap. His high OBP replaced Giambi’s high OBP. Hatteberg’s salary for 2002 was $900,000. Another example of Beane’s thinking was he did not believe in paying a high price for a closer. Instead, he would find a young pitcher who had good control and the ability to throw in the low 90s. He would then for almost the minimum salary turn him into a closer.
This leads me to talk about my original premise. What lesson can we learn from Billy Beane? The answer is: Do not follow the herd. Suppose you were a small retailer and Walmart opened a store nearby. Clearly, you could not compete with Walmart on price. However, you can emphasize the statistic measured by customer service. In the same way that the statistic OBP led to runs which led to wins; customer service can lead to a happy customer followed by repeat business from that customer.
My book Sandlot Stats not only teaches the concepts of descriptive and inferential statistics but shows the mathematics Bill James used to make baseball decisions on strategy and player personal. Part 2 explores some of Bill James’ theories.