On Friday, “Moneyball” finally hits the silver screen. I, for one, couldn’t be more excited. Will Brad Pitt or Jonah Hill deliver an Oscar-worthy performance in this adaptation of Michael Lewis’ 2003 novel? Decidedly not. But it couldn’t matter less. Friday presents a glamorous opportunity to reflect on the book that changed the way we understand sports. For legions of baseball stat junkies, it won’t take much for Billy Beane and his “Misfit Toys” to walk their way right into our hearts.
But what of Beane’s peers — the baseball front-office generals with real decision-making power? Have the revelations exposed in “Moneyball” changed the way that Major League teams evaluate baseball talent? Specifically, have teams caught on to Beane’s use of statistics to exploit inefficiencies in the free agent market? The short answer is: yes. Since the book was published, more and more Ivy League-educated stat heads have made their way into prominent baseball operations positions. In the last eight years, Jon Daniels, Neal Huntington, Andrew Friedman, Paul DePodesta and many others have given a new mathematical twist to the General Manager position. These GMs openly discuss their regular use of state-of-the-art statistical techniques in evaluating baseball decisions.
Indeed, in an article for ESPN, Jim Bowden (GM with the Reds at the time of the book’s publication) describes how Lewis’ book was a great move for Beane’s career (he now commands hefty speaking fees) but a terrible move for the Oakland A’s. As Bowden explains, “Every team in baseball copies success … Soon other clubs realized that base-cloggers with high OBPs were undervalued … and guys like [Scott] Hatteberg were hard to find on the cheap.”
We would be remiss, however, to draw any conclusions without statistical analysis — this is, after all, a story about “Moneyball.” We turn first to an interesting analysis presented in the Hardball Times by Russell Carleton. Lewis’ novel describes how Beane came to discover, through careful statistical analysis, that the ability to get on base (via walks) was significantly undervalued in the free agent market. By exploiting this inefficiency, Beane was able to assemble winning teams with tiny payrolls. Carleton’s piece explores whether the rest of the league shifted their valuation of on-base percentage in response to the book’s publication. To do this, he examines the correlation between a free agent’s on-base percentage and his salary. In 2001, two years prior to the publication of “Moneyball,” that correlation was 0.44 (on a scale from -1 to 1). In 2004, a year after the book’s release, that correlation had jumped up to 0.64. For comparison, Carleton looks at the correlation between RBI (a more “old-school,” anti-“Moneyball” statistic) and salary. He finds that this correlation dropped from 0.70 in 2001 to 0.55 in 2004. Thus, he concludes, the book’s publication in 2003 led the market to stop overpaying for more traditional skills and start shelling out big bucks for Beane’s coveted on-base guys.
Hakes and Sauer (2007) explore the same question using a more academic analysis. They begin by using win probability to demonstrate that, as Beane proposed, on-base percentage is more important to winning games than is slugging percentage. The authors go on to show that from 2001 to 2003, teams paid free agents more for a high slugging percentage than for a high on-base percentage. This trend, however, reversed following the publication of “Moneyball” in 2004, at which point teams began throwing more money at players with high on-base percentages.
Thus, the story of on-base percentage and the free agent market paints a convincing statistical proof of the influence of “Moneyball” on baseball’s front offices. But what of other statistics? We might imagine that Beane’s OBP analysis was only the tip of the iceberg. If teams systematically mispriced an ability as important as getting on base, there is no telling what else might have been (and might still be) poorly priced in the free agent market. Perhaps teams have been throwing too much cash at stealing bases or pitching strikeouts. Perhaps home runs are not as valuable as GMs think? We have to wonder whether other such market inefficiencies are a vestige of a pre-Moneyball era or whether they still exist today.
There is some anecdotal evidence suggesting that Beane-esque treasure hunting is still very much a part of the game. Most analysts (including Bowden) point to Andrew Friedman and the Rays, who managed to assemble a pennant-winning roster despite an A’s-like payroll. They are often commended for their focus on defense, pitching and athleticism. It should shock no one that these attributes are valuable, but many believe the Rays came to realize that they were not valued sufficiently in either the free agent or draft market. My favorite example of bargain-shopping has always been the Red Sox during the 2009-’10 offseason. That year, Theo Epstein and co. made a series of curious signings that included four aging veterans considered well past their primes: John Smoltz, Takashi Saito, Brad Penny and Rocco Baldelli (not to mention the re-signing of Jason Varitek). These were all classic veteran signings: low-risk financial commitments that would likely fade but presented the possibility of significant return. The timing, however, was puzzling — never before has a GM invested in so many former stars in one offseason. My strong hunch is that someone in his statistics department discovered that washed-up veterans are actually undervalued relative to their peers. Epstein pounced.
There is still much research to be done. We still need a good way to systematically quantify the “pricing” of attributes in the free agent market. We also need to apply this Beane-esque analysis to a number of skills and statistics that go well beyond the scope of his original experiment. That said, the spirit of “Moneyball” and the Oakland A’s is still very much alive today, both in our hearts and in Major League front offices. This Friday will serve as a pleasant validation for sports nerds everywhere. More than anything, I can’t wait to see Philip Seymour Hoffman do his best Art Howe imitation.
John Ettinger is a senior in Saybrook College.