My professional and personal interests once again collided at a conference I covered last week when I got to hear a keynote speech by Billy Beane, who provided tremendous insight into how he used the “Moneyball” concept to build a playoff-caliber baseball team despite limited resources.
The Oakland A’s general manager was nervous and edgy on stage, maybe due to a phobia about public speaking (hard to imagine for a person with his job title) or perhaps somewhat intimidated by talking in front of a crowd of insurance professionals who Beane insisted were much smarter than him (he was speaking at the Risk & Insurance Management Society’s annual conference). Beane seems to have a bit of a complex about his intelligence, cracking several jokes about his much smarter former right-hand man, Paul DePodesta, now an official with the New York Mets.
It’s shocking to realize this, but the A’s in 1992 had one of the highest payrolls in baseball at $48 million. But as other teams’ payrolls skyrocketed, in large part thanks to lucrative television deals, the A’s payroll rose at a much slower pace.
“For us, the biggest risk that we can have is actually doing things like everybody else because if we do things like everyone else, we’re destined to finish exactly where our payroll and revenues say we are,” he said.
To his credit, Beane dismissed the notion that he and DePodesta created the Moneyball concept. He specifically named Bill James (who Beane said deserves to be in the Baseball Hall of Fame) and others that advocated the use of mathematical analysis to build baseball teams for years before Beane did, but were generally ignored because they were outsiders.
But for a while, Beane and his team used the Moneyball theory of player evaluation better than anyone else in baseball, focusing on players with strong on-base percentages and other unrecognized metrics that were important to winning games. For instance, he drafted a young Nick Swisher, a player now with the New York Yankees who is known for his OBPexcellence, out of college.
“That’s passé now because the highest paid players in the game are guys that get on base,” he said. “Back then, 10 or 12 years ago, it was about the seventh highest paid statistic in the game. People were paying for skill sets that didn’t necessarily correlate strongly to winning.”
Beane talked about how teams with greater resources could invest in players that had all the skills, the way the Yankees once invested in a young, high school shortstop named Derek Jeter, who could run, throw, hit and play defense.
“Those guys cost $20 million a year,” he said. “We couldn’t afford that. What we needed was guys who did one thing really well and what they did really well had a huge impact on winning.”
Beane adopted this philosophy out of necessity, of course, due to his miniscule payroll, but he still deserves a lot of the credit for the Moneyball concept taking hold in Major League Baseball.
The GM was quite funny and self-deprecating, noting the disappointment of women when they see him rather than his movie star alter-ego Brad Pitt, and his own unsuccessful baseballcareer, launched after being the 23rd pick of the 1980 Major League Baseball draft, which ended with a career stat line of a .219 batting average, 66 hits and 29 runs batted in.
“That’s essentially Chapter 11 if you’re a baseball player,” Beane said.