Friday, May 17, 2013

The Rays: A Simple Lesson in Comparative Advantage

In my last post, I discussed the inherent flaws with Michael Lewis' Moneyball concept. In summary, rich teams can buy good players, good players win games; its that simple. However, the Tampa Bay Rays (formerly, the Devil Rays) have continuously found a way both to succeed in a division containing the Yankees and the Red Sox and to be cost-effective. In essence, the Rays contradict my aforementioned notion that cost-saving is pointless. The natural question to ask is: how do they do it?




First of all, let's take a moment to appreciate the Tampa Bay Ray's 2013 payroll: $57-million. Now, the Orioles pay $91-million, Toronto at $1.18-billion, Boston at $1.59-billion, and the Yankees pay a mind-numbing $2.29-billion. Compared to their AL East competitors' payrolls, the Rays are plebeians. (Source)

How have the Rays averaged more than 90 wins a season for the last three years? The 2013 payroll supports my previous hypothesis that those teams that pay more, win more; the Rays' payroll places them in the company of San Diego ($71-million), Oakland ($68-million), Pittsburgh ($66-million), Miami ($39-million), and Houston ($24-million). Only the Marlins and the Astros pay less than the Rays, and both of these teams are on pace together to win less than 100 times this season (both are 11-30 so far; they'd have trouble winning in the SEC). All the Rays have done is win two AL East titles in the last five years.


Someone, please explain to Cashman how the Rays do it! It's madness!

Well, according to Jonah Keri, who wrote a book on the Rays' success, "The Extra 2%: How Wall Street strategies took a Major League Baseball Team from Worst to First," the Rays could teach a college course in comparative advantage.

Summarily, the Rays look for the extra 2%, whether it be on the field or off, and after a while, all these little advantages add up and lead to wins. They build optimal lineups to expose certain pitchers, they matchup relief pitchers very smartly in order to grind away outs, but most importantly, their manager Joe Maddon meets with, and actually listens to the "quant" guys in the organization.

For example, the head of the Rays' R&D division (who are they, Google?) met with Maddon and suggested that the Rays counterintuitively start same-handed hitters against certain pitchers, like John Danks. This is called the Danks Theory, named after lefty pitcher John Danks, who's ability to throw changeups well makes him a harder matchup for righties than lefties. Well, Maddon adjusted his strategy accordingly, and likely earned 2 or 3 wins because of this.

2 or 3 wins don't seem like a lot, but if you add up a bunch of these marginal advantages, you start to become a successful baseball team. The Rays were also one of the first teams to embrace sabermetric measures for fielding ability, which also probably added a couple wins to their record. The secret behind the Rays success is not their star players, like Evan Longoria, and David Price. In fact, according to Keri, it is their ability to purchase and maximize the abilities of players like Ben Zobrist, a swiss-army knife like player who can play any position well, and James Loney, a former top prospect turned "bust" who they acquired cheaply this year and is currently batting .367.

Off the field, the Rays sell their veterans quickly (try explaining that one to the Yankees) before they're market value diminishes too much, and emphasize their farm system, where they can either use their prospects to win games, or sell them for finances.

In baseball, and especially against the Red Sox and Yankees, every edge counts. The Rays know that they cannot compete with the corporate teams in the free-agent market, since they will be outbid most of the time, so they allocate their resources to smaller markets such as their farm system. On the field, the Rays know that they cannot hit more homeruns than other teams, since homeruns command high prices, so they do the little things right, such as exploiting matchups and fielding the ball well. In the end, all of these little advantages add up.

In 2008, the Rays blindsided the Yankees, and the media.

The Rays solved the MLB. If you can't fight with the best, don't. Just give up, learn to throw sand in their eyes, and hit them in the back, or better yet, when they're not looking. Hey, winning is winning!


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