Moneyball: An Introduction

The Moneyball movie comes to theaters later this month, and I'm looking forward to it. We've already interviewed Chris Pratt, who plays Scott Hatteberg in the movie, but figured the film deserves a little more coverage. You probably know that it's based on the 2003 book by Michael Lewis, about Oakland's efforts under General Manager Billy Beane to build a competitive team, despite a limited budget. This is probably the first film ever based on sabermetric principles, and it will be interesting to see how they adapt it for the big screen - one presumes it will be based more on the characters than anything.

But it's probably helpful if you know a little bit about the background behind the ideas, as I doubt they'll be handing out liner notes on the way in to the cinema. So, consider this a Moneyball primer... And, hey, Brad Pitt framing the 'Pit has got to be a step-up from Joe Mauer, hasn't it?

The Moneyball concept is often thought of as being to do with on-base percentage, but that's not strictly the case. It's really all about finding hidden value to help you win baseball games, and that's a constantly shifting goal, as supply and demand ebbs and flows. At the time covered by the book, sabermetric ideas were much more lightly-regarded: an offensive player's worth was measured by batting average and home-runs, but the Athletics and Beane bought in to the idea that this was not a 'true' measure of their value.

The radical nature of this concept may seem strange: while you may or may not agree with their worth, most readers here will be familiar with more advanced statistics like OPS and WAR, now obtainable for any player with just a couple of clicks. That wasn't always the case: baseball-reference.com first came on line in 2000, and fangraphs.com was only registered in March 2005. It has only been in the past few years that numerical analysis has been regarded more highly, with its disciples being employed in many major-league offices.

In its purest form, the subtitle of the book sums up the core idea: "The art of winning an unfair game." The playing field in baseball is never level: some teams will always have more resources than others. They will thus have a better chance of acquiring the "better" players. For a team which is not able to out-spend its rivals, the alternative is to out-smart them: buy what is wrongly undervalued by the market and sell what is overvalued. That way, you can convert your smaller budget into more wins than it would generally represent.

Wins don't come cheap. Analysis has shown that the average win, above those you'd get from a team of replacement-level players, costs about $4.5 million on the open market. So, an average, $90 million budget would get you about 20 wins above replacement-level, which is only around the .500 mark. If a team wants to compete for a post-season spot, they can either spend more money, or find a way to get wins on their record, for less than that market rate. Projecting future production accurately for a single player is almost impossible, but if you can skew the odds in your favor and get more bargains than busts, it can be enough.

Beane believed a player was defined by his numbers  The problem was that this approach flew almost directly in the face of a century's worth of observational-based scouting. Billy did not care what  a player's "tools" were, or what he looked like - as Beane famously retorted when told one player's thighs stick together when he walked:  "We're not selling jeans here." Tthe scout replied, “That’s good, because if you put him in corduroys, he’d start a fire," and I suspect that this culture clash between Beane and the traditionalists will be the dramatic focus of the movie

For the Athletics, it was, at the time, mostly about on-base percentage. Walks had been regarded as neutral since their exclusion from batting average in the 19th century, but Beane was a disciple of the legendary baseball analyst Bill James, whose work is largely created with publicizing the importance of OBP. Most baseball front offices continued to operate as they had done, defining - and paying - players based on their batting average. This may have been simply fear of change: no-one wants to be the first to risk failing, it's a lot easier for most people to follow the herd. See also the 'closer by committee' idea: it may be more efficient, but usually lasts about two blown saves.

However, the men who run baseball teams are not stupid. When they see someone else doing something that works, they have no problem following suit. As a result, on-base percentage is no longer under-valued, or at least, not as much, as it was previously. The Hardball Times had a piece looking at the correlation between player salary and OBP, and found a sharp increase after the publication of the book, though the trend had pulled back towards the end of the period covered.

Market inefficiencies are a perpetually-shifting set of goalposts. As teams realize OBP is an undervalued talent, the demand for it increases, and as a result so does its cost, until it's no longer undervalued. However, with a (more or less) fixed amount of cash, this means that another talent declines in value. This might be something which was over-valued previously, e.g. RBI, or it might be something which was correctly priced by the market - and therefore becomes the next inefficiency. Finding that, and staying ahead of the curve, are the real philosophies behind Moneyball, rather than adherence to one particular metric.

So where are the market inefficiencies now? You could ask 30 GMs that and get 30 different answers - though few would likely be willing to come out and say it, since public exposure of an inefficiency is the first step in its eventual destruction. For a while, defense was one candidate, and more recently, it was suggested that bullpens could also provide wins at a lower cost than generally necessary. Is it a coincidence that these are strengths of the 2011 D-backs? fangraphs.com say our relievers have been worth 3.1 WAR, ranked sixth in the NL, and the team's collective UZR of 61.6 is best in the majors by fifteen runs.

But let's save that for next week, when we look at the D-backs, and whether they should be considered a "Moneyball" team.