Sep

25

Moneyball, from Lars Van Dort

September 25, 2011 |

The movie Moneyball is in theatres. This article by a leading sports economist looks back on the impact that Moneyball the book has had since publication in 2004.

It features an application of the point that I've often seen made by the Chair, that once an anomaly gets published it disappears:

We thought there was a decent chance that we could refute the economic claims in Moneyball, in particular that players with high OBP were under-priced in the labor market. Any card-carrying economist knows this is inconsistent with equilibrium in a well-functioning, competitive labor market, and were not baseball teams intensely competitive? But instead, Jahn and I found that high OBP players did come cheap, relative to the contribution of their skill to winning baseball games. Intriguingly however, we found that the "OBP discount" vanished in 2004, the year that Moneyball was published.

It makes one question the decision of the Oakland A's to cooperate with the book. Although it may have been a matter of time for the other teams to catch up anyway, it seems that sometimes vanity can be costly.

Stefan Jovanovich writes: 

I live in the SF Bay Area and am a thorough baseball addict. When I should have been attending law classes at Berkeley in the 70s, I was loitering at the Oakland Coliseum watching Dick Williams and Alvin Dark (one of the truly obscure great figures in the history of baseball) manage the A's to their championships.

Moneyball is complete hype. The theories of value - OBP, for example - are sound but hardly original. They are the substance of what Dark and Leo Durocher (another great figure) and Casey Stengel (the greatest of them all) knew from experience and observation. What Billy Beane missed (but none of those managers would have) is that the real "Moneyball" is putting the customers' butts in the seats. While Beane has been practicing his genius, the A's have become a chronically weak franchise (it remains in as poor financial condition as the Seattle Mariners and Kansas City Royals and, until this year, Pittsburgh Pirates). At the same time, across the Bay, the Giants went from being literally bankrupt (they were going to be sold and moved to North Carolina) to becoming the owners of the best stadium in the country (privately financed, no less) and the 5th most valuable franchise. How? They signed Barry Bonds. If Yankee Stadium is the House that Ruth (and then Reggie Jackson) built, AT&T Park is the stadium that Bonds built.

Phil McDonnell writes:

I agree with Stefan that one very rational reason to pay up for a Bonds or Willie Mays was that a home run is a lot more exciting than watching a guy walk. Home runs sell tickets and that is ultimately good business. On the other hand managers restricted to a below average budget can improve performance better by adhering to Moneyball principles.

Another often used strategy of small market teams is to bring along recruits, especially young rookie pitchers. Seattle uses that strategy. They are little more than a farm team for the Yankees. Any time they get a young rookie pitcher that shows any promise he is immediately sold off to a big market team, with the Yankees being the most likely buyer. A big part of their business model is to collect millions from the Yankees for selling off their low priced talent.

 


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