Moneyball: Sports, Markets, and Statistics

I’m not exactly early to the party on this one. Michael Lewis’ book, Moneyball, came out in 2003. I’m a bit of a Michael Lewis fan but I ignored Moneyball for years because I’m not really much of a baseball fan. The bottom line is that you don’t need to be a baseball fan to get something (I would argue a lot) out of this book. If you like baseball, you’ll probably like Moneyball, if you like math/stats/science you’ll probably like Moneyball, if you like business you’ll probably like Moneyball.

The book follows the Oakland A’s general manager Billy Beane through the 2002 MLB season. Why would you do this? Because the Oakland A’s are an outlier. They are winning more than they should given the amount of money they spend on players – way more than they should. How are they doing this? Billy Beane has a system in place. When it comes to drafting players, he’s ignoring all his ex-jock talent scouts and looking at mountains of data. When it comes to trading players, he’s ignoring the most obvious statistics and relying on his own metrics. In short, he’s finding market inefficiencies.

The most straightforward thesis of the book is that managers overpay for baseball players that look and act like baseball players, while ignoring people who get the job done in sometimes-unconventional ways. The example that the book concentrates most on is the batter who has a poor batting average but yet gets to first base frequently (typically by earning a walk). General managers consistently overpay for high batting averages while undervaluing the ability to get to first base by drawing four balls. The A’s were even signing designated hitters that had batting averages in the .200s because they were good at making pitchers throw balls rather than strikes. The book elucidates a few more of the simple overlooked stats that are (or at least were) consistently undervalued in the MLB marketplace and opens the door and gives you a peek at some of the more complicated metrics that the A’s are using. Why is this good reading? Well, Michael Lewis is an excellent storyteller when it comes to financial narratives, and this story fits his mold well enough. But more than that (for me at least), baseball and statistics are almost synonymous, and it’s crazy to think that as recently as 2002 there were teams out there finding players that were undervalued by using more statistics. If that’s true for baseball, think of all the areas of your life that could be improved by doing some perhaps unconventional things in order to achieve a desirable end result.

Billy Beane started a bit of a revolution in sports, it’s easy to see how statistics apply so readily to baseball players but more challenging to see how this sort of scheme applies to other sports. But other sports are interested in playing moneyball, nonetheless. But the times they are a changing, it isn’t as easy as it once was to play moneyball, now that the secrets are out. The Boston Red Socks basically credit their recent World Series wins to moneyball tactics. Boston is a big market team, with big market money. When the big markets start sniffing out little ineffeciencies in the market, the rules start to change and it gets tough again for the little guys.

In any case, Moneyball is a soon to be released major motion picture staring Brad Pitt as Billy Beane. While the movie is likely to be pretty decent (listen to our trailer trash talk segment), there definitely won’t be all the behind the scenes explanations of how the A’s system worked. Read the book, you’ve got time before the movie hits theaters.

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