At this week's CFO Corporate Performance Management Conference in New York, Jonah Keri, author of 2011's The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First, told how the Tampa Bay Rays managed to reach the playoffs three out of the last four years with one of the lowest payrolls in baseball. Keri's message was that one could optimize performance without large investments by being smarter and using data to drive decision making.
According to Keri, the Rays plumbed the statistics to discover what really produced wins in order to exploit market inefficiencies in much the same way Michael Lewis famously described Oakland A's general manager Billy Beane doing in 2003's Moneyball.
The A's, like the Rays, were one of baseball's have-nots, with far less money to play with than did the Yankees or Red Sox. In Beane's case, the market inefficiency he and his data analyst, Paul DePodesta, discovered was the overvaluing of raw talent (potential) and the undervaluing of production (a history of success). Therefore, Beane eschewed drafting high school kids in favor of college players with a record of achievement that allowed him to forecast performance at the big league level. They focused on signing (at a discount) players baseball looked down upon (guys with bad bodies, bad wheels, and suspect arms) but who had demonstrated an ability to get on base,the sine qua non of scoring runs. But by the time Keri begins his story with the 2008 Rays, the market had adjusted and everybody was looking for fat, slow players who could get on base. Consequently, the Rays looked for a differentiator and found it in defense, building their ballclub around players who could catch and throw. This, Keri claims, is what enabled the Rays to leverage their limited resources and go from losing 96 games in 2007 to winning 97 in 2008 and going to the World Series.
In his CPM presentation, Keri distilled the Rays experience down to several maxims: process is more important than outcomes as processes are sustainable while results can be fickle (the Rays have never actually won a World Series; neither have the Beane-led A's); trust the data not the common wisdom (statistics showed Mike Mussina, a righty, killed left-handed hitters so Rays manager Joe Maddon, defying hundreds of years of baseball thought, loaded his lineup with righties and pounded Mussina); size doesn't matter, nimbleness does.
All this is no doubt true, but . . .
The only reason the Rays made the playoffs last year is because the Red Sox (with baseball's third largest payroll) choked like dogs. The Rays, once they got into the tournament, were dispatched by the Texas Rangers, a team with double their payroll. The Rangers were beaten in the World Series by the Cardinals, a team with a payroll higher than theirs. In fact, over the last 10 years, the only team to win a World Series with a payroll in the bottom half of the league was the 2003 Marlins (ranked 25th).
Yes, results are fickle; the World Series is a small sample of games, and performance can improve by being smarter and nimbler. But let's not forget that brute resources are also a differentiator and, intelligently applied, a very powerful one.
Of course, resources can also be wasted foolishly and disastrously. Just ask a Mets fan.