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January 27, 2008

Prospectus Q&A

Mike Pagliarulo

by David Laurila

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Mike Pagliarulo hit 32 home runs for the Yankees in 1987, and was a key contributor to the World Series champion Twins in 1991, but his impact on the game has arguably been greater since retiring. Successful, and sometimes controversial, "Pags" has been at the forefront of scouting Japanese baseball for the past 10 years, both advising and correctly predicting results on both sides of the Pacific Ocean. A third baseman during his playing days, Pagliarulo hit .241 with 134 home runs over 11 big league seasons with five teams.

David Laurila: A lot of people are familiar with the scouting you've done in Japan with iScouts, Inc. What are you up to now?

Mike Pagliarulo: What I've done since 1998 is international consulting work for major league teams and teams in Japan. I played over there, as did my partner, Willie Fraser. We use Bryan Harvey, one of the best closers of his time. We've used players and scouts with international experience who know what it takes to play and have success internationally. Our record for projecting major league players who are Japanese born--from Nippon Professional Baseball--has been 100 percent accurate. We've never missed, and I feel that's due to our decision making process, the way we evaluate and project players. What I've wanted to do is bring that same process here, to the US, and use it at the major league level. That's what I've done, and the name of our existing consulting company is The Baseline Group.

DL: What expectations do you have for The Baseline Group?

MP: Coming in, I wasn't targeting anyone specifically. I merely wanted to build an honest company dedicated to MLB and, in particular, consulting for the 30 franchises. All I know is that the weakest aspect of major league baseball is player evaluation. That is clear by the millions of lost dollars within the industry each year. Any good scouting or evaluation system looks to improve itself, and there really haven't been any improvements in that particular area of major league baseball. In my opinion, the value of scouting is misunderstood. Each club works their tail off and the scouts are overloaded with responsibility. They work to get things covered, not to get them right. It's more important to the majority of clubs to have data in the office system than to have unique, accurate intelligence. There has been a different dynamic with more formal science applied--statistical analysis--but the actual process for scouting players hasn't changed in 40 or 50 years.

DL: What changes does The Baseline Group hope to implement?

MP: The way that we evaluate is completely different. The way scouting systems are built is one-dimensional. You have an individual scout who turns in a report and the GM sees it. It's singular thinking, and to me it's a waste of talented scouting expertise. We use reports that incorporate diverse knowledge. Our system uses diverse expertise and collaborative efforts, and we use consensus. In our group everyone is vital to the outcome, therefore everyone is extremely important. We use different types of knowledge and sciences to get to the end results, and because of that, our projections are more accurate with a very high percentage of identifying what our group actually sees. What I did is bring that process over here from Japan. In the last year I've hired Bill Livesey who--with Gene Michael and Hank Steinbrenner--basically built the Yankees' structure in the late 80's and early 90's, at least what it is now with Jeter, Posada, and those guys. Bill is a classy gentleman with a great work ethic and tremendous knowledge within the game. We have Ed Kenney, Jr., who was the assistant GM over in Baltimore and has tons of front office and development experience with not only the O's but the Red Sox as well. Adam White comes from outside the professional baseball world although he pitched in college. Adam has his MBA from MIT/Sloan, and he runs the business side of the company and provides organizational process consulting for teams. Quite honestly, throughout the experience during the past 14 months, Adam is quite capable to enter any MLB franchise at this time at the highest level. He's already been a CEO and is qualified, I assure you.

We also have some fabulous scouts all willing to learn and, more importantly, to check their ego at the door when we meet because there are certainly a ton of fireworks. So, basically what I'm trying to do is gather diverse expertise in baseball, for the sole purpose of designing a consulting company for major league franchises, in particular for ownership. I don't feel that ownership really understands--at least not to the extent that I see it--player evaluation. When you're spending 50 to 100 million dollars on players and you miss, you better have a damn good explanation, and you don't see many explanations out there. Ownership doesn't have to understand scouting but they do have to know how the industry justifies its value. If one of my guys misses on a player--and it happens--I can explain it because we've not only done our homework but we've reviewed to the best of our ability. When you're spending that kind of money, you should have a very good process which is unique and is far and away better than the projection method for most baseball organizations in the world.

DL: Scouting has long been considered an inexact science. Are you saying that you can make it more exact?

MP: What I'm saying is that scouting is a science of empiricism unlike the naturalism or experimentation type of sciences currently within the game. My type of evaluation is a mixture of sciences, and science is merely a system of acquiring knowledge based on the level of expertise. No one type of science is going to be good enough for the money being spent today, and if anyone thinks that one science is the way to project players--be it scouting, computer science, or whatever--there's no way it can beat a combination of information from diverse expertise. Just no possible way. There's a reason why the Red Sox hired Bill James and pay him an awful lot of money; there's a reason teams are hiring statistical analysts--teams want to improve, and because they can visually account for stats, many scouts are let go. That situation creates a problem due to the fact that scouting expertise is empirical, but that doesn't mean the knowledge isn't there. That said, I don't think a lot of teams actually know what to do with those [statistical analysts], because they're not using them properly. But they are needed, because it is another important group of knowledge needed for quality assurance. So I feel that we have a unique way of evaluating and projecting, and it's proven to work. My recent project, which revolves around risk factors in major league pitchers, is one in which I can project with better than 75 percent accuracy who is going to get hurt and who is going to have surgery. Preliminary tests, right now, show that my research is substantial and significant in a few areas. We've been able to communicate areas of science within the game, communicate with a unique language, and we've been able to identify projection of surgery. If you're going to give contract extensions to Jake Peavy, Dontrelle Willis, and C.C. Sabathia, wouldn't you want to know which is in a high-risk category? Among those three guys, there are distinct categories and one of them is high-risk. That's a fact. I can't tell you which one it is, but I've proven it.

DL: What are the specific parameters of your risk analysis? How are those determinations made?

MP: I've found a way to communicate the knowledge of proper pitching fundamentals and correctly identify them to measurable data. What I've done--and believe me, I don't know a lot about pitching; I know what the pitching experts tell me--we've identified one set within a sequence of what I'd call necessary consequences. There are five measurable points, and we measure pitchers toward those consequences. What happens is that some pitchers are closer, and some are further away and thus higher risks.

DL: On the surface, Brendan Donnelly appears to be high risk, but is it that simple?

MP: He makes it that simple. Of course, there are going to be exceptions; there are going to be guys who throw like that who won't be injured. But you have to understand, the only way that Major League Baseball projects risk today is with medical records, primarily MRIs. But if you took an MRI of every pro, every one of them has arm damage. There isn't anyone who has a great labrum and a great rotator cuff. I don't care how young they are, they all have damage. You can measure that damage all you want, but they still can't prevent it. What you have to do is understand which arms are really damaged, and then find out why. Like I said, you're always going to have exceptions, but there's Donnelly, and then there's K-Rod.

DL: How about Kevin Appier? He has had some injury issues, but despite a lot of questions about his mechanics he's pitched for a long time.

MP: I think there are a couple of reasons. One is that he didn't throw a lot of breaking balls. Two, there are some aspects within the fundamentals of the dynamic process that are identified as proper mechanics. Some of the sets he does are good, and some are bad. With a guy like Donnelly, it's obvious which category he's in. Others aren't so simple. Take a guy like Manny Delcarmen; I don't think his mechanics are all that great. To me he's a high-risk guy, but he's blessed with a great arm, and he's young. And then there's James Shields. He's 26 years old, and he's never really repeated his mechanics from year to year. How consistent is that? I would never give him a seven-year contract.

DL: How large of a sample size have you incorporated into your risk factor study?

MP: It's not that big, yet; it's 100 major league players. Within that, the high-risk guys we've been 76 percent accurate so far, and with low-risk we've been 90 percent accurate. These are from my research; they aren't official medical records. I can't claim my findings are infallible, because I don't have official documents, but do you know what? What I've done is capture the knowledge that is out on the field and manipulated it so that it relates to whatever area you're trying to project. Baseball doesn't do a good enough job of that, and they should. That's why this consulting company was designed, to deal with franchises and help them understand. This is a billion dollar business and it doesn't have consulting. George "Boss" Steinbrenner was the master, he always knew what he had. Say what you want about his trades, tirades, etc, but there was nobody better at checks and balances. The toughest area to evaluate and identify, and you can ask anyone in the game, is your own organization. We've created a system where we can perform a thorough needs-analysis with a franchise, customized to identify their core, trade-prospects, organizational guys and non-prospects, and their international needs. We identify and evaluate their philosophy and core processes, we create a gap analysis and generate creative results for unique solution design.

DL: You mentioned the importance of statistical analysis. How do you view its value compared to that of more traditional scouting?

MP: I don't think either one can be by itself and maintain much value. I'll tell you why. The most crucial time any valuable information is used is at the end of a game. At that time, the best knowledge and best projection are both needed. You can't use just one and be consistently successful. I use statistics without even writing them down; I create percentages in my head while watching games. I can tell when a guy is a tipping his pitches, and I have a good idea if the guy at the plate can hit the pitch. The manager already knows this and has to put on a sign based on that knowledge. You're using different groups of knowledge within baseball at the most crucial time of the game; that's been the focus of my research this winter. I've tried to go to the core--to the source--of all knowledge in baseball. I've tried to find all of the information and ask, "What value does it have?" and "Can you measure it?" If you want accurate player evaluation and projection, you need to do that in my opinion. Logic shows us most successful companies do the same, which is why I find it funny that baseball doesn't have clear standards. I've read through hundreds of documents and medical journals, and most state that the best preventative measures for injuries, and risk factors, require adjustments to "proper mechanics of pitching." Yet, there's not one place that has the proper mechanics of pitching. Not one. There are many theories, but there's not one standard that can be tested, measured, and proven--until now. That's been my research, and I've proven it. I just have to make it official.

DL: A lot of people would argue that you can't clone pitchers. How would you respond to that?

MP: Hitting and pitching are both physical activities; they are learned. They're mechanical things. You're not born a hitter, although that phrase is out there, like "Will Clark was born a hitter." Sure, it's true that he looked natural out there, but nobody is born to do those things. You have to learn to do them, and in baseball--and I know this for a fact--there are fundamentals pertaining to hitting. For instance, you have to get back in order to hit successfully. You either have to start back or move back. Nobody says, "This is how you start back," but they say, "Back is where you have to go." I don't see anything like that in pitching. I don't hear anyone say, "You have to do this." My point is this, and it's really clear: You create the standards. You don't have to make someone do something, but you use it as a reference. There's no reference anywhere, and that's what I'm creating. I'm not suggesting, nor do I think it's valuable to clone anybody, but I think it's imperative to have a reference. Right now there is such a vague knowledge of a reference that in every medical document that refers to pitching mechanics, the only thing in the last 100 hundred years that baseball has said--that they can verify as true and test with respect to preventative measures to pitching mechanics--is to throw fewer pitches! That's it. I was just reading a document yesterday from Dr. Glenn Fleisig, who is an associate of Dr. James Andrews. They've done this study, from Little Leaguers to major league pitchers, and it has recommendations. It says, "Throw fewer pitches to prevent injuries." To me, that's astounding. This is a billion dollar industry, and that's the best anyone can come up with?

DL: Why do you think that is?

MP: I think there are a couple of reasons. One is that you have thirty teams. Anyone who is any good--anyone with good baseball knowledge--is taken by one of those thirty teams, and all of that information is confidential. It's very difficult for major league baseball, or anyone else, to come up with standards because they're not in one of those thirty groups. It just so happens that I have a group of guys that have diverse expertise within the game, and we can research like crazy, we have resources all over the place including the international market. We can come up with results and be quite creative, just as we are at this time.

DL: What you've put together is essentially a think tank, but right here in Boston the Red Sox have a staff that includes people like John Farrell and Bob Tewksbury. What can your group bring to the table that they can't?

MP: Mine can be public knowledge, while theirs can't. That's the difference. The guys you just mentioned are very good, but they're not allowed to tell you everything they know, because it's Red Sox property. The fact is that confidentiality and exclusiveness within the monopoly of baseball is a very sensitive area, and I understand that, but we're making some great strides in that area. I find it odd that there's no consulting in baseball. It's a billion dollar industry, and there's no consulting. Corporate America has consulting all the time. How else do you find out what's in your system? The biggest weakness teams have today is in knowing what they have. They know more about what other teams have than they do about themselves, and because of that they always overcompensate. What we try to do is get diverse knowledge from all areas of baseball, including the business end of it, the medical side of it, development, scouting, all of those things--and because we don't work for one team we're unbiased. We manage the knowledge and focus the talent to be one creative group. And boy do these guys love to work.

DL: Some of the work you're doing is on a website: DugoutCentral.com.

MP: That is one of the things that helps differentiate us. Through media research, we're able to create and support great writers with fabulous imaginations--brilliant people. They submit their own articles and our staff edits and posts them. We have some great baseball minds working on the site, like Steve Caimano, Jesse Santos and Matt Bouffard, and it's been not only fun interacting with fans that way, it's been educational to learn their perspectives on the game.

DL: You've talked about identifying risk factors for pitchers. How about performance factors?

MP: I'll give you one example: a guy by the name of Josh Beckett. The move he made on the rubber last year created a whole bunch of strikes in his repertoire. His curveball was finally going over the plate. Now, does that make a big difference? It makes a 100 percent difference. He's throwing that nasty breaking ball over the plate, and it's because he adjusted on the pitching mound. One thing you can do is concentrate on things like that, and it will control your pitching. If you can do things like that, how can you not be better? If we can identify what needs to be different with Josh Beckett, there are other guys we can do it for too. That's the basis for why we feel that pitchers can be manipulated, adjusted, and fine-tuned, so that you can get the most out of them, that you can maximize their strengths and minimize their weaknesses.

DL: You're talking about establishing standards. Do you look at your ideas as being more global in scope than simply the major leagues, or even professional baseball as a whole?

MP: The information we have, we could sell to individual owners, to agents, or we could write books; we're doing it to improve the game, but more importantly because we love it. We have the integrity of the game in mind, and we feel there should be standards set. Major League Baseball should be able to go to colleges, and high schools, and youth leagues, and say, "Here is what you use as a reference." It's amazing, some of the things you see taught--the craziest stuff. But it's not the fault of the youth league coaches--it's that there aren't any standards to reference. It's just, "Do this," or "Do that," because there are so many different theories. Let's stay away from the theories and get right to the facts. If you use all of the knowledge groups you can come up with facts, and you can test them. This can be done at any level. When you have solid information that lets you identify proper mechanics, you can use it as a measure. You can use it as a reference when you go out and test pitchers, and we've done it with 100 big league pitchers and separated them into categories based on the lines that have been drawn. You can identify measurable physical properties. Anybody can measure, but it has to be done the right way--the measurements have to be identified in the right area. That doesn't mean that every pitcher has to throw like that, but what that does is bring in more accurate and knowledgeable discussion about pitching, and it helps prevent injuries. And it's not only pitching, it's also hitting and fielding. I think that the work we're doing can help make the game of baseball better.

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