Editor's note: This essay earned the author a 2012 Herb Moss Business of Baseball Scholarship from Ohio University's E.W. Scripps School of Journalism. Moss is a longtime SABR member and a 1968 graduate of the Scripps school. He established the scholarship to recognize the importance of business and economic news, and to follow his love of baseball. Moss is VP at UBS investments, which specializes in financial services. The essay is being republished in its original form at SABR.org with the permission of Herb Moss.
By Robert St. John Schreier
Moneyball has made such an impact in professional and minor league baseball that the term itself has entered the lexicon of baseball. Teams that appear to value the concepts of sabermetrics (advanced statistical analysis) are often said to be playing "Moneyball.” Baseball traditionalists, in particular some scouts and media members decry the sabermetric revolution and have disparaged Moneyball for emphasizing concepts of sabermetrics over more traditional methods of player evaluation. Nevertheless, the impact of Moneyball upon major league front offices is undeniable. In its wake, large payroll teams have also hired full-time sabermetric analysts in order to compete in the world of talent evaluation too. Moneyball is now beginning to have an impact on minor league baseball. I know this because I have been named as the director of media relations and sole play-by-play baseball announcer (summer, 2012 capstone unpaid sports broadcasting internship) for the Salem-Keizer (Oregon) Volcanoes, the single “A” minor league affiliates of the San Francisco Giants.
The central premise of Moneyball is the collected wisdom of “baseball insiders” (including players, managers, coaches, scouts, and the front office staff) over the past 50 years is subjective, and more often than not, flawed. Statistics such as stolen bases, runs batted in (RBI), and batting average, typically used to gauge players, are products of a 19th century view of the game and what statistics were available at that “ancient” time. The book highlights the Oakland Athletics (A’s) front office and how it took advantage of more analytical gauges of player performance to put together a team that, mathematically, cold compete successfully against richer competitors in Major League Baseball (MLB).
Rigorous statistical analysis had demonstrated that on-base percentage (OBP) and slugging percentage (SLG) are better indicators of offensive success than the usual garden variety of baseball statistics, and the A's became convinced that these qualities were cheaper to obtain on the open market than more historically valued qualities such as speed and contact. These observations often flew in the face of conventional baseball wisdom and the beliefs of many baseball scouts and executives.
Moneyball also touches on the A's methods of prospect selection. Sabermetricians argued that a college baseball player's chance of MLB success is much higher than a traditional high school draft pick. A’s General Manager Billy Beane maintains that high draft picks spent on high school prospects, regardless of talent or physical potential as evaluated by traditional scouting, are riskier than if they were spent on more polished college players. Author Michael Lewis cites A's minor leaguer Jeremy Bonderman, drafted out of high school in 2001 over Beane's objections. Bonderman had all of the traditional "tools" that scouts look for, but thousands of such players have been signed by MLB organizations out of high school over the years but failed to develop. He was, indeed, one of these products, costing the A’s money, time, and effort to bring him through the minor league system, only for the venture to collapse.
The First-Year Player Draft, also known as the Rule 4 Draft, is Major League Baseball's primary mechanism for assigning amateur baseball players, from high schools, colleges, and other amateur baseball clubs, to its teams. The draft order is determined based on the previous season's standings, with the team possessing the worst record receiving the first pick. In addition, teams which lost free agents in the previous off-season may be awarded "compensatory" picks.
High school and college baseball, the primary sources of MLB draftees, are not nearly as popular as college football, college basketball, and, in Canada and certain parts of the U.S., college and junior hockey. Unlike top draft picks in the NHL, NBA and NFL, all of whom are expected to make immediate impacts, top MLB draftees are nearly always assigned to the minor leagues for several years to hone their skills. The entire 2007 first round (64 players) totaled one inning of major league playing time as of the end of the 2008 season; as of the 2009 season, the vast majority of 2008 first-rounders were still assigned to minor league organizations. In contrast, every first-round pick in the 2008 NFL Draft had played in the league by the end of the 2008 season.
While many NHL, NBA and NFL draftees will eventually reach their respective leagues, the vast majority of players selected in the First-Year Player Draft will never play in a single MLB game, including many first-rounders. For example, only 31 of 53 first-round draft picks in the 1997 draft eventually made a big-league appearance, and only 13 of those 30 appeared in more than 100 games as of 2009.
Therefore, it is essential for a MLB franchise to sign a player that shows future talent for the betterment of the teams involved at all levels. There are similar effects felt throughout the minor leagues as well. Additionally, there can be a certain amount of risk taken with players who are not deemed “ready” for the major league level, but, with coaching and practice, can reach that stage. That makes minor league baseball coaching development a key aspect of the success of the related major league franchise
Salary Cap Elements
Player salaries continued to escalate through the 1980s. In 1986, Bo Jackson became the first draftee to sign a total contract (signing bonus and salary) worth over $1 million (or $2,120,219 today).Jackson, a Heisman Trophy-winning football player for Auburn University, was also the first overall choice in the National Football League Draft, and was offered a $7 million contract to play football for the NFL’s Tampa Bay Buccaneers.
High school players possessed additional leverage, as they had the option of attending college and re-entering the draft the next year. Agent Scott Boras routinely exploited this advantage to increase the contracts of his clients. As evidenced in Moneyball, in 1990, Boras client Todd Van Poppel signed a $1.2 million contract with Oakland Athletics, after committing to play for the University of Texas. The following year, Boras negotiated a $1.55 million contract for Yankees first round pick Brien Taylor, who had said he would attend junior college if he didn't receive a contract equal to Van Poppel's.
Increasingly, teams draft based on whether or not a player is likely to sign for a particular amount of money, rather than on his talent. This has become known as a "signability pick." Before the 1992 draft, team owners unilaterally decided to extend the period of time a team retained negotiating rights to a player from one year to five. In effect, the rule prohibited a high school draftee from attending college and re-entering the draft after his junior or senior seasons. The Major League Baseball Players Association filed a legal challenge, but Major League Baseball argued that, since the Players Association did not represent amateur players, it was not necessary for the union to agree to the change. An arbitrator ultimately decided that any change to draft articles must be negotiated with the Players Association.
Case Study: Salem-Keizer Volcanoes – SS Joe Panik
Let us explore the implications of Moneyball within the minor league system, focusing on my team, the Volcanoes. Case in point, shortstop, Joe Panik. Joe Panik attended John Jay High School in Hopewell Junction, New York. He went to college at St. John's University, where he played college baseball for the St. John's Red Storm baseball team, playing in the Big East Conference. Panik compiled a .398 batting average with 19 doubles, 10 home runs and 57 RBI during his junior season, ranking tenth among all college baseball players with a .509 on-base percentage (OBP). Panik earned All-America honors from the American Baseball Coaches Association (ABCA), Baseball America and Louisville Slugger. Panik was also a finalist for the Brooks Wallace Award, an honor given to the nation's top shortstop.
Out of St. John's, the Giants drafted Panik in the first round (29th overall) of the 2011 Major League Baseball Draft. Panik made his professional debut with the Salem-Keizer Volcanoes of the minor league Class-A Northwest League. He led the league with a .341 batting average, 49 runs scored, 54 RBIs and a .401 on-base percentage (OBP) for Salem-Keizer, winning the league's Most Valuable Player award. He was rated the tenth best second base prospect prior to the 2012 season by Baseball America and was invited to spring training with the San Francisco Giants.
Panik is a perfect example of a talent that matched skills, round selection, and contract execution. By skipping his senior season at St. John’s, Panik entered directly into the minor league system without any stoppages in momentum after a great junior collegiate baseball season. Contract negotiations were quick, making the process as painless as possible. If the contract negotiations had dragged out, time on the field would have been lost and momentum stopped for Panik. Also, the Giants could have lost one of the best infield prospects of this current rising class.
Here is the list of first round draft picks that have made a drastic impact on the Giants organization since 2002, all of whom came up through the minor league system of the Giants, beginning with the Volcanoes:
2002: Matt Cain (currently in starting pitching rotation on Giants)
2006: Tim Lincecum (Cy-Young winner, top starter pitcher)
2007: Madison Bumgarner (number 4 starter in rotation)
2008: Buster Posey (starting catcher)
2011: Joe Panik...what chapter will he write in Giants history?
Decade after decade, major league (and increasingly, minor league) baseball owners have attempted to buy success. As pointed out in Moneyball, “in professional baseball it still matters less how much money you have than how well you spend it.” (Moneyball; preface, page 13). Such has been the case as Moneyball has been practiced within the Salem-Keizer (Oregon) Volcanoes single “A” minor league baseball operation.
Paraphrasing a pivotal statement made by Billy Beane, the notorious manager of the Oakland A’s, as recited by in Moneyball: “ there was no avoiding just how important the amateur draft was for the future of the Oakland A’s. The Oakland A’s survived by finding cheap labor. The treatment of amateur players is the most glaring of the many violations of free market principals in major league baseball. The team (whether major or minor league) that drafts and signs a player holds the rights to his first seven years in the minor leagues, his first six in the majors. It also enjoys the right to pay the player far less than he is worth.” Moneyball, page 22.
Increasingly, minor league baseball teams within major league baseball franchise farm system operations employ the principal of Moneyball. This is certainly the case with the Salem-Keizer Volcanoes as the aforementioned table of major league first string roster players for the world champion San Francisco Giants illustrates. While at the time, in 2001, ten years ago, the principals of Moneyball were scoffed at, now, they are held as the paragon of running a competitive, effective, and financially efficient professional baseball team.