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September 2, 2011

Baseball ProGUESTus

The Moneyball Misperception

by Tommy Craggs

Believe it or not, most of our writers didn't enter the world sporting an @baseballprospectus.com address; with a few exceptions, they started out somewhere else. In an effort to up your reading pleasure while tipping our caps to some of the most illuminating work being done elsewhere on the internet, we'll be yielding the stage once a week to the best and brightest baseball writers, researchers and thinkers from outside of the BP umbrella. If you'd like to nominate a guest contributor (including yourself), please drop us a line.

Tommy Craggs is a senior editor at Deadspin. Email him at craggs@deadspin.com.

A few weeks ago, I went to a preliminary screening of Moneyball, the movie starring Brad Pitt and a couple thousand pouches of Copenhagen. I believe I'm still duty-bound not to write about the film itself in any detail, but I will say in general that, as Hollywood adaptations go, it's a surprisingly gentle movie whose only real howler is the part where Royce Clayton shows up in the role of a major-league baseball player.

There's one scene that sticks out in my mind, though, if only because it made me realize something about the Moneyball phenomenon as a whole. You'll remember it from the book as the chapter where Billy Beane simultaneously wheedles Ricardo Rincon out of the Indians and leaves Brian Sabean wandering around the Embarcadero wearing a barrel. That moment is the heart of Michael Lewis's book. In the film, it seems almost out of place, as if some poor assistant rushing a latte to Mr. Sorkin had tripped and fallen and gotten his script crossed up with 10 pages from another movie. What to that point had felt a little like, I dunno, The Bad News Bears Learn Microsoft Excel became something else entirely. Pitt works the phones, and Jonah Hill beaches himself in the corner of the screen, and the whole enjoyable hustle unfolds like something out of another movie—Glengarry Glen Ross, maybe. And that's when it occurred to me: Moneyball is, very quietly, a story about a con.

I don't mean the lesser cons that Beane perpetrates on his fellow GMs. I mean the large-scale one that the book never mentions, the one that's central to how baseball teams do business in the Bud Selig era—the one about hopeless cheap-asses like the A's who soak the wealthy clubs on revenue sharing and win just often enough that no one points out they're really just the Pirates with better marketing.

We all know about the bizarro incentives that revenue sharing creates, and the leaked financial documents we obtained over at Deadspin make them plain: it's good business to lose cheaply. Win too many games, draw too many fans, and you risk losing that revenue-sharing check. In reality, that's the "unfair game" of Moneyball's subtitle. It's not that the rich get richer, but that the "poor" are essentially bribed, via revenue sharing, not to try too hard. The Moneyball way, at bottom,is about cleverly not trying too hard.

Few bestsellers have been so misunderstood as Lewis's book. And because the A's have once again absented themselves from the playoff race, it goes without saying that we're in for another fatuous round of "Moneyball is dead" dork-punching when the movie hits theaters. (Joe Morgan is doing solfeggio warmups in front of a mirror as I type this. I figure we're less than a month from watching him get caught in another rundown between subject and predicate.)

The VORP yuks are one thing. The more insidious mistake people make about the book, I'm realizing, is in conceiving of the A's as a victim of baseball's economics, not as the prime beneficiary. (A corollary is the notion, especially post-Moneyball, that the "poor" teams who lose are stupid, rather than cheerful participants in a game they know to be rigged.) Moneyball remains one of the best sports books ever written, but an unintended consequence is that Lewis—in turning a story about cold-eyed, revenue-maximizing bidness into a story about scruffy, yipping, slipper-chewing underdogs—helped consecrate the deeply Seligian idea that there is something inherently noble about being cheap and efficient, that teams like the A's are competing heroically against a stacked deck when in fact teams like the A's want the deck stacked in the first place. Even the little guy can win with the right kind of know-how, the book says.

It's a lie in the long run, albeit a pleasant one. It's what made a book about arbitrage so appealing to so many readers, including a handful of people in Hollywood. It keeps fans from seeing the central fact of baseball under Selig, which is that the fix is in from the moment that $30 million revenue-sharing check lands in a team's mailbox. That's a huge misperception—and a very profitable one for the lords of baseball. Moneyball is the new market inefficiency. How about that?

This is a longer version of a story that will appear in the October issue of GQ

Related Content:  Moneyball

44 comments have been left for this article. (Click to hide comments)

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bflaff1

Sorry, the premise of the article may make sense for a team like Florida, which seems to be a money laundering front, but for everyone else - guys like Billy Beane aren't trying to win? He's trying to lose cheaply because he is under orders to keep revenue checks flowing? He's cleverly not trying too hard? That doesn't compute. These guys are trying to win, but their need to be incredibly risk-averse (because bad contracts are a lead balloon) probably accounts for mediocrity more than gaming the system.

I mean, if revenue checks are so great, why isn't everyone chasing them? The real money is still in winning.

Sep 02, 2011 10:55 AM
rating: 7
 
smocon

Well, you have to realize the story is written by someone from deadspin first off. And your last statement doesnt really hold true at all. Look at the Brewers....3 million fans this year, a certain playoff spot, and they will probably lose money this year.

I do not agree with the "sarcastic" premise of the story, but he makes a great point about Selig and cheap (two words that should be mutually inclusive), and how in the end it pays off.

Great piece of work.

Sep 02, 2011 11:34 AM
rating: 1
 
cfinberg

I dunno. While I agree that the As are possibly better run and certainly held in higher regard than Loria & Co, it doesn't mean that the premise fails.
Looking back over the past five years (with an admittedly not-very-scientific eye), both teams have had fleeting moments of success while playing in mediocre divisions, though I think the NL East trumps the AL West during that span. While the As have certainly spent more on payroll during that arbitrary period of time, both teams have routinely been in the bottom quarter of the league regarding spending. And regardless of their payrolls, Forbes has ranked both teams at the bottom when discussing the values of the teams themselves. Taken together, it's pretty indicative that they are run in similar ways.
Also worth mentioning are their respective stadium situations, with both teams kicking and screaming for new mallparks. Forget that a new stadium will not be forthcoming in the Bay Area, and forget that if the As WERE successful in getting one it would likely better their ticket sales much more than the Marlins' new digs will improve theirs. Both scenarios feature the logic that it is the stadiums, as opposed to the players on the field, which are somehow responsible for fannies in the seats. I am highly skeptical of this idea in itself, and I think it indicates that owners of both teams are far more focused on the the business of business than the business of winning.

Sep 02, 2011 12:07 PM
rating: -1
 
bcornell

There's an on-going MLB farce where Selig has appointed a "blue ribbon" panel to decide if the A's can move to San Jose, which would drastically change their finances. It's been dragging on for years with no decision in site. Lew Wolff, the A's owner, has no problem blaming the Giants and Selig for blocking him, but the growing suspicion is that he likes the panel's inertia just fine: "don't make me move and earn revenue!".

Sep 02, 2011 12:08 PM
rating: 0
 
Richie

The Brewers will lose money this year?? According to who?

Sep 02, 2011 12:13 PM
rating: -1
 
smocon

According to Rick Schlesinger, the COO of the team:

http://www.pittsburghlive.com/x/pittsburghtrib/sports/s_751926.html

Sep 02, 2011 12:48 PM
rating: 1
 
Randy Brown
(189)

A team official of an MLB team claiming that his team is losing money is simply not a credible source.

Maybe it is true, maybe it isn't (the latter strikes me as more likely, especially assuming the Brewers make the playoffs and reap the associated revenue), but an MLB official telling a reporter that his team is losing money is less believable than Rafael Palmeiro at a congressional hearing.

Sep 02, 2011 13:18 PM
rating: 15
 
Richie

Like bflaff1, I'd like to see non-Marlins evidence that other owners (and especially especially GMs) are actually tanking, rather than just 'it fits my theory and some of the facts that they are'.

Sep 02, 2011 12:15 PM
rating: 0
 
cfinberg

You can start here:

http://www.forbes.com/lists/2010/33/baseball-valuations-10_The-Business-Of-Baseball_Revenue.html

http://www.cbssports.com/mlb/story/13162308/-baseball-payrolls-list

1/3 of revenue is spent on player salaries. The As clear more cash than the Red Sox! Good enough?

As for publicly available direct proof that they're taking a dive? Bud says no.

Sep 02, 2011 13:09 PM
rating: 3
 
pmeneely

I have often thought that one of the most interesting aspects of Moneyball is that Billy Beane the player was exactly the opposite of who Billy Beane the GM was looking for. I wish Michael Lewis had explored that a bit more.

Sep 02, 2011 13:22 PM
rating: 3
 
pra1974

You almost had me there.

Sep 02, 2011 14:09 PM
rating: 1
 
Matt Kory

I'm pretty sure there was a chapter, if not on that, then where that exact premise was mentioned specifically.

Sep 02, 2011 14:22 PM
rating: 0
 
Matt Kory

Ah, well if that was a joke, you got me.

Sep 02, 2011 14:23 PM
rating: 0
 
gpurcell

Well played.

Sep 02, 2011 16:52 PM
rating: 0
 
klipzlskim

This is what distresses me so much about being an A's fan, and a sports fan in general - the fact that someone can buy a team with no goal other than to make money, as opposed to winning. The A's ownership have a double incentive to put a poor product on the field: 1) revenue sharing and 2) strengthening their case that Oakland is a lousy market, thus facilitating a move. Back in the Haas days, Oakland was a plenty-good market, but as an A's fan now, it's obvious that the owners have no interest in putting butts in the seats. I know this is a free market, and I can't expect the A's owners to invest in start-ups instead... but there are a lot of billionaires in this country (412, according to Forbes' 2011 list). Is it crazy to assume that at least 30 of those 412 people are baseball fans who would happily fork over ridiculous sums to buy a team and help it win? I suppose I'm being naive, but I don't understand how a few jerks who don't give a rat's ass about the sport, the team or the city ended up being the best and most-willing buyers.

Sep 02, 2011 13:47 PM
rating: 3
 
Llarry

Because Czar Bud doesn't want Mark Cuban to own a team.

Sep 02, 2011 17:02 PM
rating: 6
 
gpurcell
Other readers have rated this comment below the viewing threshold. Click here to view anyway.

Shorter Moneyball:

Be in a four-team division with three bad teams and a couple of good starters and you can win a division.

Sep 02, 2011 16:51 PM
rating: -5
 
ostrowj1

Also, become a GM after the team has drafted / signed Hudson, Giambi, and Tejada, while looking the other way when players use steroids...

Sep 03, 2011 07:19 AM
rating: -3
 
Yarky1

Two of the other three teams in the AL West won more than 90 games, and the other was 72-90 while playing an unbalanced schedule against three of the four best teams in the league in 2002. The average winning percentage in the division was .565, and obviously that breaks down to .500 in intra-division play and better than .565 against the other divisions. Also, when you consider park factors, the offense was about as good as the pitching.

Sep 04, 2011 08:28 AM
rating: 3
 
elcubano

Fact: Baseball has a competitive balance problem.
Fact: "Revenue Sharing" works as well as any other leftist equalizer which is horribly.
Fact: Revenue sharing has nothing to do with the premise of Moneyball.
Fact: AL West was actually one of the better divisions in the early 2000's.

Sep 02, 2011 18:36 PM
rating: -3
 
rcrary

"any other leftist equalizer"

comedy gold

Sep 06, 2011 12:23 PM
rating: 2
 
Johnston

Can someone please name me three - heck I'll settle for two - teams that aren't playing to win?

Sep 02, 2011 21:37 PM
rating: 1
 
ofMontreal

The players play to win. Management plays to maximize profits. Neither side can help itself. As long as a GM doesn't give his manager too many good players, but enough to look like a major league product, you can take your chances getting the revenue sharing dough.

To answer your question: the teams that BP loves to beat like dead horses, KC Royals(smartest GM around DaytonM), Florida Marlins, Pittsburgh Pirates, Washington Nationals, Baltimore Orioles. If you just look at what happens instead of imposing a false system of athletic competition beyond the field, it's pretty clear who's in it for the money.

And of note for the revenue sharing being a failed leftist idea: this is called right wing bribery fool. Get your head straight. I'm paying you not to compete. If it happens elsewhere, why wouldn't it happen in baseball? Can't get more capitalistic than that. Plus, who would actually buy all these half-assed franchises if they weren't sure they'd get payed plus accrue value?

Sep 04, 2011 17:23 PM
rating: 3
 
Pat Folz

I think your blame is a bit misdirected: it's the owners who set the budgets, but I think the GMs do the best they can to win with the money they're given. They're competitive people too (some are even former players).

The thing is, this is true in all sports, regardless of anything. The Cowboys and Redskins typically spend more than the Packers and Jaguars. Adding or subtracting revenue sharing, salary caps, relegation, what have you, isn't going to change the basic fact that some teams/owners have and/or are willing to spend a lot more money than others.

Your last question is a very salient one: the whole point of revenue sharing is to keep teams profitable regardless of on-field success, so that they can continue to operate period. Deadspin keeps trying to argue that the Pirates' turning a modest profit is some sort of huge scandal, but it's just not. There are a fixed number of wins available each season, so even if every team gives max effort, someone is going to lose. Spending more is no guarantee of better results (recent Cubs, Mets, and Astros teams know all about that), so what you'd see without revenue sharing is the worst teams operating even more cheaply to ensure profitability, if they're not just contracted. The people with enough money to own a major sports franchise got that money by making good financial decisions, and spending hundreds of millions to own and operate something that isn't basically guaranteed to turn a profit is not a good decision.

Are there better ways to do revenue sharing, then? That's the real argument, and the answer is "probably," but since most league revenue isn't centralized (by which I mean most revenue comes from gate receipts and regional broadcast rights that go to particular teams, rather than national broadcasts that go to the league itself a la the NFL) the issues get pretty complicated. Offhand I've never seen or thought of a better way. I don't think we'll see a real change unless and until MLB starts broadcasting most of its games itself on MLBAM/the MLB network.

Sep 04, 2011 20:52 PM
rating: 4
 
thebigfella.us

Houston should count as two, but Houston and as of right now the Chicago Cubs.

Sep 05, 2011 23:07 PM
rating: 0
 
Drungo

If the Orioles aren't playing to lose, they're doing a damn fine impersonation.

Sep 06, 2011 09:29 AM
rating: 1
 
fawcettb

I think it's safe to say that by the time Hollywood gets around to making a movie about something, the Zeitgeist is somewhere else. In MLB, I'd suggest it's now lodged somewhere in Alex Anthropoulis' cellphone.

Sep 03, 2011 09:19 AM
rating: 2
 
Richie

For getting 3 out of 4 inarguably right, elcubano sure got alot of minuses.

Sep 03, 2011 19:48 PM
rating: 0
 
ofMontreal

2 out of 4 inarguably right. There are a lot of things nobody talks about in baseball and revenue-sharing is about number one. And Michael Lewis is a writer, not a reporter. He doesn't have to write the truth. He HAS TO tell a good story. So just like elcubano, Moneyball is probably about 50% true.

Sep 04, 2011 17:28 PM
rating: 0
 
evo34
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Yeah, it's just sheer chance that teams with a tiny pool of potential customers tend to be the cheap-asses and the organizations in cities that could easily support five teams are the big spenders. Clearly they are all getting the same amount money thanks to revenue sharing. So it's just a question of whether you want to win or not, right?

Gimme a break. Note to baseball: institute a salary cap, or reduce the number of teams (by a lot). Not that hard. Every other sport seems to get it.

Sep 04, 2011 02:08 AM
rating: -5
 
R.A.Wagman

Those sports are not doing any better than baseball is.

Sep 04, 2011 08:08 AM
rating: 2
 
Drew Miller

How so?

Sep 04, 2011 17:23 PM
rating: 0
 
R.A.Wagman

Admittedly, I don't follow basketball or football, but what I have read from those who do, its problems mirror hockey's to a great extent.
The cap has done nothing but force poor teams to avoid minimum-waged earning rookies and spend on marginally more expensive veterans who are generally no better. So their kids don't develop and they end up with crappy veterans who can't get contracts on better teams. So where baseball had the Pittsburgh Pirates of the turn of the century (hello, Pat Meares and Todd Ritchie, etc.) where competitiveness was feigned, the NHL now has the New York Islanders. Mind you, they now have a good prospect crop. Instead of the Marlins, the NHL has the Atlanta Thrashers/Winnipeg Jets. Instead of the Oakland Athletics, there are the Phoenix Coyotes, locked into a horrible situation in a bad place for the sport. Those 3 NHL franchises would have been vastly better off if they would have been allowed to divert the money going into paying lousy vets to reach the cap floor, into player development. Forced to spend what they did not have, they could not get themselves into a good place to succeed. For every Moneyball A's, you get the odd (and likely short-lived) rise of the well-managed Phoenix Coyotes, or the competence of the Buffalo Sabres before new and rich ownership pledged funds to compete on a grander scale. Forcing a cap/floor system on MLB would kill incentive to develop from within. Baseball would become overrun by mediocre veterans.

Sep 04, 2011 20:18 PM
rating: 2
 
onegameref

Your point is easily translated to politics as well. When you subsidize something from the successful to the less successful, the lower rungs have less incentive to succeed. I don't know that I will view the movie but your description does not offer much enticement. Revenue sharing is corporate welfare any way you slice it. Salary caps, be they on teams or single players, are punishment for the successful. I believe in developing your players internally or using them for trades, but the free agent system is in place and the game is different because of it. Stop sending $ to losers and you will see them make more valid attempts to win or moved out because of failure. With checks in the mail they can sit around fat and happy and failed.

Sep 04, 2011 11:37 AM
rating: 0
 
bflaff1

He's going Galt!

Sep 05, 2011 12:39 PM
rating: 4
 
Johnston

The highest wisdom lies in knowing to never, ever, ever support or reinforce failure.

Sep 05, 2011 21:42 PM
rating: 0
 
saigonsam

that's all well and good if the Pirates could decide to move to Brooklyn without the Mets and Yankees stopping them.

Sep 08, 2011 05:42 AM
rating: 0
 
Drew Miller

Yay Deadspin trolling. I can't go to bed, someone on the Internet is wrong.

Sep 04, 2011 17:13 PM
rating: 1
 
Duranimal

A fix to this issue would be to drop the losingest couple of teams each year to AAA and play with 28 teams. After a year out the Majors - and no revenue sharing - the losingest teams would be brought back up to the Majors and be replaced by 2 other teams.

Sep 04, 2011 17:31 PM
rating: -1
 
jamiedodd7

That would not be a fix. I get that the soccer model is appealing to people, but it just doesn't make any sense with respect to MLB baseball.

Sep 05, 2011 13:18 PM
rating: 2
 
Drungo

Promotion/relegation only works in open leagues. Almost all North American sports leagues are closed. Would take an unprecedented revolution or upheaval or gov't intervention to change that. In other words, not going to happen.

I'd love to see it, nevertheless. Anything would be better than 15 straight years of the Orioles making a tidy profit and slowly piling up franchise value, mummified in last place.

I always thought it ironic that free market America has closed leagues with owners who become quasi-monarchs over their cities' sports lives. While in socalist Europe sports are subject to cutthroat competition that sees even famous, storied clubs like Newcastle occasionally relegated to the minors.

Sep 06, 2011 09:39 AM
rating: 1
 
ruben398

If the goal is to incentive winning, but not punish teams for the scarcity of wins and luck involved in fielding a successful team, why not make team ineligible to receive revenue sharing checks unless they make the playoffs at least once ever few years (say, 5-8 years).

Imagine if in 2014 the Orioles would not be eligible for revenue sharing checks for 3 years unless they made the playoffs by 2013. You would very likely see the Orioles try a lot harder (for at least a year or two) as they don't want to lose that money. It would probably encourage some teams to adopt a cycle of rebuilding/1-2 years shots at winning, but that is better than perpetual rebuiling by a lot of these teams.

Sep 06, 2011 11:16 AM
rating: 1
 
Pat Folz

Using a longer timeframe like that might work. If the vagaries of actually making postseason play are still uncomfortable, one could tie it to salary expenditures over that timeframe -- like team must spend $350M on players over 5 years or be ineligible for revenue sharing for three years, or something.

Actually one could do an either/or type thing -- spend $X or make the post-season at least once over Y years to keep eligible. That might be fairest...

Sep 06, 2011 15:27 PM
rating: 0
 
R.A.Wagman

Tying anything to MLB salary output is dangerous as it ignores the very real costs of development (signing bonuses) - why force a team to overpay for a crappy veteran when it makes more sense to overpay a highly talented 19 year old in the draft?

Sep 06, 2011 15:39 PM
rating: 0
 
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