The Rebuild and Abandoning the Middle Path?

The Reds have (reportedly) committed to a tear down and a rebuild. Everyone is now (reportedly) available. The page has (reportedly) been turned at long last.

This qualifies as good news. Even the most starry-eyed optimist has to admit that this team isn't configured to win, especially in light of the divisional competition. The Cubs are only going to get stronger. The Cards are the Cards. The Pirates aren't aging out yet.

Quite clearly, changes must be made. MUST. BE. MADE. The Reds have aimlessly wandered the middle path between contention and rebuilding for too long. In the face of the inevitable end-of-days, they elected to dance the night away rather than face the looming specter of reality.

They held on to their fading reality until the wee hours of the morning. There's something oddly endearing about that, but the party is now over. Night is giving way to day and the rising sun is revealing the truth to all. Not even those who have chosen to be starry-eyed optimists can now deny in the harsh light of day the carnage strewn about the landscape. Hopes dashed here, best intentions fractured over there, and organizational dreams of success strewn about and trampled under foot like confetti from good times long since over.

It's time for sober, unflinching reality. The bill has come due and the good times have ground to a halt. It's time to get to work and clean this mess up. It's time to get rid of the stragglers still passed out on the coffee table and in the hedges. It's time to sweep away unrealized dreams and start anew.

The Reds had a good run. Fans may not appreciate it now, but they should. It's disappointing that this team never reached, much less won, the World Series. In hindsight, it all peaked and crashed on one swing of the bat by Buster Posey. We didn't know it at the time, but when Ryan Hanigan dejectedly hung his head as the ball arched up and into the left field seats at Great American Ballpark, he was hanging his head for all of us. That was our last, best chance for a World Series. We let it slip away.      
Now, we start over.

At the trade deadline, the Reds started the process. They at least recognized that 2015 was a lost cause and started trading impending free agents. So, we'll look back before we look forward and we'll do it quickly because the Reds are ready to move.

That said, the first thing the Reds need to do is figure out who they want to be. They need to develop a plan for roster construction before they break ground on construction itself.


1. Pick a rebuilding timeline and COMMIT TO IT!

Pure intent and full-on commitment can be the difference between success and failure.

While the Hot Stove is sizzling with news that the Reds are making everyone available, it remains to be seen what type of rebuild they envision. There are two different paths to take, quick or total.

A quick rebuild would basically mean trying to build around Todd Frazier and Jay Bruce while they are still in their peak years. A total rebuild would mean moving on from Todd Frazier and Jay Bruce.

Oddly, everyone else is either too old (Phillips) or too young (Hamilton, Mesoraco) to be much impacted by either type of rebuild.

For me, it comes down to whether the Reds are going to deal Todd Frazier. If they hold on to the Todd Father, then the rebuild needed to focus on upper level minor league prospects or young MLB talent. If they deal Frazier, then they can also target younger prospects.

Money is to baseball operations what velocity is to pitching: the more of it you have, the greater your margin for error. In those terms, the Reds aren't quite Jamie Moyer, but they clock in somewhere around Bronson Arroyo. Basically, the lower your payroll, the fewer misses you can afford to make.

Not only do the Reds not have much margin for error, but they also can't afford to roster surplus assets. To get back to being a contending organization they need to sync-up the productive years of their assets. It doesn't do them any good to bring assets who are 3-4 years away, because Joey Votto and Frazier will be in real decline by the time those types of assets are established and productive. Failure to sync up asset productivity just ensures that they will be consistently average for the foreseeable future. They may avoid valleys, but they also limit their chances of actually reaching the summit.

Sync it up, Walt!


2. Target Disciplined Hitters

One of the interesting things about last offseason's trades was that Walt seemed to really target disciplined hitters. Guys who could control the strike zone.

To recap, Walt landed Chris Wallach in the Mat Latos trade. He then landed Eugenio Suarez in the Alfredo Simon deal. Suarez hasn't shown it as much at the big league level, but in the minors he showed flashes of being able to control the zone and produce high walk rates.  I wonder if Walt recognized a deficiency in the system and took steps to address it.

This past draft, Chris Buckley, Senior Director of Amateur Scouting, made the statement that, when it comes to position players, he targets athleticism and up-the-middle players. Personally, I'd rather have a heavy thumb on the scale in favor of disciplined hitters. I wonder if Walt agrees with me.

I am hoping that Walt prioritizes acquiring disciplined hitters. If he does, then it might be evidence of his recognition that Chris Buckley doesn't focus on players with that type of offensive profile. As it stands, it's fair to wonder whether such a trade approach is necessary to compliment Buckley's draft philosophy.

Regardless, this team needs tougher outs in its lineup, which means fewer guys willing to give away outs and flail away at pitches.

Does the organization need to fill in through trade the gaps inevitably created by Buckley's draft approach?


Final Thoughts

The Reds now seem willing to tear it down and start over. It remains to be seen to what extent they will, but it seems like ownership and front office are finally on the same page and recognizing that the end-of-days has arrived.

This is an important and interesting offseason for the organization. If they do it right, then bottom of this cycle might be fairly shallow. If they flounder about, then they could be looking at a long, sustained period of irrelevance.

While I want an emphasis on disciplined hitters, the most important thing is intent. The organization needs full blown commitment to a plan. No more half measures or middle path, just complete and total buy-in to a clearly established plan for rebuilding. The competition is too intelligent, focused, and committed for us to find success without matching their efforts.

It's a huge offseason for the organization. The clean-up starts now.

On Thinking....and Baseball....and Thinking on Baseball

Hannibal Lecter
Courtesy: Unknown

"First principles. Simplicity. Read Marcus Aurelius, of each particular thing ask what is it in itself, what is its nature." -- Hannibal Lecter


I've seen The Silence of the Lambs a number of times, but I never understood the power of this borderline throw-away-line from Hannibal Lecter. Evidently it gets lost in Hannibal's neatly tailored prison jumper and psychotic unblinking gaze, but it's an idea worth chewing on...so to speak.

To me, first principles is about getting vertical with your thinking. The good doctor cites to Marcus Aurelius, but the credit more properly belongs to Aristotle. Adopting first principles leads to a simple shift in thinking, but one that unlocks an entirely new perspective. If you reason from first principles, then you are simplifying things down to their fundamental truths and then reasoning up from there. The more common style of reasoning is by analogy, which is a more lateral style of thinking based on existing similarities and things we know.

The importance of first principles is that it allows you to truly see underlying commonalities between seemingly disparate ideas and concepts. Things that on their face seem completely different, when boiled down to their basic elements, can suddenly seem connected by a common thread. That's a powerful thing.

Maybe it's what Albert Einstein was talking about when he said, "Everything should be made as simple as possible, but not simpler."

I'm not smart enough to truly know, but it seems like the Elizabeth Holmeses and Elon Musks (a First Principles proponent, by the by) of the world are ahead of the curve because they have both (1) the ability to see the commonalities between disparate ideas and concepts, and (2) the ability to see both the big picture and small picture at the same time and switch freely back-and-forth between the two.

In other words, they can see "the forest" and "the trees" at the same time. To put some meat on the bones of this analogy, let's make it a bit more literal. To start, let's take "seeing the trees," so imagine that you're traveling through dense jungle. You can't see more than a few feet in front of your face and to make any progress in your travels you have to hack your way through with a machete, breaking trail with every step.

Courtesy: Unknown

You might be the best trail breaker in the world. People might come from far and wide to study your technique to learn how you swing the machete so powerfully, swiftly, and tirelessly. However, if you can't get vertical in your perspective, then your progress will always be limited by your vision.

On the other hand, let's take "seeing the forest," so imagine you are able to get above that dense canopy jungle and see the big picture. If you can get vertical, then your perspective will change and you'll have the ability to see where to go and how to avoid obstacles to make real progress in your travels. You'll be able to effectively navigate the terrain, but you also have to know how to break trail in order to make progress.

Courtesy: Unknown

The best travelers will be able to simultaneously see the forest and the trees, to excel at the machete swinging AND the land navigation. Those are the geniuses, the people whose brains clock at speeds the rest of us can't fathom. The people who can hold these two differing perspectives in their brain at the same time.

So, how does all of this relate to baseball?

Well, in the final analysis, baseball teams are merely the sum total of their organizational decisions. Draft picks. Free agent signings. Trades. Player development hires. Decisions. Decisions. Decisions. When two teams take the field, you are watching one organization's decisions square off against the other organization's decisions. Ultimately, the better decisions will carry the day.

When I read Moneyball, one of the many things I took from the book was that player names are just proxies for the probability of obtaining a certain level of production. Fans love the personalities, style, and individuality of the player, but front offices are merely trying to tap into that player's production. So, when Billy Beane went to replace a "Jason Giambi," he didn't try to replace the player, he tried to replace the aggregate production. So, he broke Giambi down into his component parts and tried to rebuild that production over multiple roster spots. That philosophy changed the way I look at players and production.

Similarly, I now look at teams as largely the sum total of their organizational decisions. If you look at it that way, then the primary goal of any organization should be to improve its decision-making process; to increase the probability of making a "correct" choice on every possible decision.

When you root for a player, you are rooting for the probability of a certain level of production, when you root for a team you are rooting for a bundle of organizational decisions.

How do you increase your chances of making a "correct" decision? By understanding the true nature of the thing. If you understand something's true nature, then you understand how to properly value it. How do you understand something's true nature? By drilling down and down and down until you reach its fundamental truth.

You can engage with an idea on a number of different levels. If you engage with it on its fundamental level, then you are more likely to be able to consistently identify it in the future.

A baseball example of engaging an idea on different levels can be found in hitting ability. At what level do you want to engage the idea of hitting ability?

Let's take a quick look at this handy pyramid of levels, representing a simplified evolution of hitting evaluation, before we get into the discussion of these levels.

Henry Chadwick is credited with creating the box score and a variety of statistical measures. Chadwick felt that batting average was the best representation of a player's offensive skill and, for a lot of years, that view was reflected in the way teams were constructed and players were valued.

However, as we all now know, batting average is not the best representation of a hitter's ability, as it contains a great deal of fog that clouds a player's true performance level, including park effects, quality of opposing defenses, and random chance.

The next breakthrough in evaluating hitting ability came about when Voros McCracken discovered Defense Independent Pitching (DIPs) and the notion that a pitcher/hitter does not have true control over whether a ball in play results in a hit or an out. That discovery led to the use of Batting Average on Balls in Play (BABIP) to put batting average into context in an effort to strip out the "luck" component.

After that, the next step in the evolution of hitting evaluation came with the use of batted ball type, as certain types of batted balls were determined to be much more likely to result in a hit than others. So, batted ball type was added to BABIP in an effort to put batting average into even better context and eliminate a larger percentage of the fog surrounding true ability.

Currently, we have reached what may well be the fundamental components of hitting ability. Technology has enabled us to measure batted ball characteristics in ways that were previously unimaginable. At this point, we are beginning to measure hitting ability through (1) exit velocity, (2) contact rate, and (3) launch angle.

Given that hitting is largely a function of (1) how hard you hit the ball, (2) how often you hit the ball, and (3) the type of loft you get on the ball, we may have finally uncovered the fundamental truth of hitting ability and reached the top of the pyramid in the process.

It seems apparent that the closer you get to the fundamental truth of hitting, the closer you get to understanding what drives hitting success. If you can identify what drives hitting success, then you can more effectively identify those players who have it and how to value it.

The recent success of the Cubs under Theo Epstein and the Astros under Jeff Luhnow is revealing the only real "curse" in the game of baseball to be front office ineptitude. The fog generated by a lack of understanding of the fundamental truths of baseball has allowed narratives like "curses" to be introduced into the game. Those narratives are great for the fans, but they cloud the fundamental truths that should govern baseball operations. By harnessing the power of big data, both qualitative and quantitative, and converting it into an actionable form, organizations like the Cubs and Astros are riding stone cold rationality to a better understanding of "true" ability and player value.

Of course, there's also real irony to the fact that teams are employing complicated and convoluted statistical measures and data mining techniques in order to reduce baseball to its simplest, most fundamental truths.

If you want to know why front offices around the league are engaged in a race for brainpower, it's because the more intellectual horsepower in your front office, the more likely you are to uncover the fundamental truth of the components of baseball. And, if you uncover the fundamental truth before the opposition, then you have a real and exploitable competitive advantage.

In the end, the better your understanding of something's true nature, the more likely you are to value it correctly. Better understanding comes from getting vertical in your thinking.

Get vertical, Reds, get vertical!

The Case for Signing Tony Cingrani to a Long-Term Extension....Like, Right Now

"There are contract extensions and contract extensions. This is the latter."

Earlier this offseason, Walt Jocketty stepped up and got a long-term extension done with Homer Bailey. Prior to that point, media reports stated that the Reds and Homer were "far apart" in negotiations. Like most Reds fans, conditioned by years of ownership frugality, I had fully expected Homer to walk after the year, but when I saw the arbitration hearing deadline looming on February 20th, it suddenly hit me that this is exactly how Jocketty operates. He waits until there is some type of pressure, some level of urgency for both sides to get a deal done and then he strikes.

More than most GMs, Jocketty seems to operate in shadow. It can make for interesting times for the fan base. It may be his preferred working style. It may allow him to get things done free from scrutiny. But, it can also be a weakness. He doesn't control the message that fans receive. He passes on the chance to control public opinion. That's fine when you're winning, but if things turn south then you run the risk of losing the fan base.

But, this isn't a post about Jocketty's operating style. It's about why the Homer extension and others like it make a tremendous amount of sense for the Reds right now.


TWO TYPES OF INVESTMENTS

There are two types of investment gambles: (1) finding an individual asset in which to invest that you feel is valued inaccurately by the market, or (2) finding flaws in the market itself and betting against the entire system.

An example of the first would be finding a single family dwelling that is priced $50,000 below where it should be. A residence that, because of a solid foundation, an unappreciated chandelier, and a great location is worth more than others realize. So, you buy that asset for less than it's worth and reap the value.

An example of the second would be recognizing that the entire subprime mortgage industry is completely corrupt, setting the entire housing market up for imminent collapse, and betting against the entire system.

The first type of gamble can earn you a tidy profit, the second type of gamble can make you stinking rich...if you invest heavily enough in it.

Courtesy: Gene Puskar, AP

Homer's contract extension (even if the Reds don't recognize it) actually works well under both investment scenarios.



I support the extension given to Homer Bailey. I support it because of reasons specific to Homer, including his performance line trending upward and his impressive durability. Homer seems like a good individual investment. However, in addition to these Homer-specific reasons, it's an even better idea for systemic reasons.


EXPLODING MLB REVENUE AND LAGGING PLAYER SALARIES

Revenue is exploding in Major League Baseball and has been for a number of years. However, unlike salary cap leagues that base their salary structure expressly on a percentage of league-wide revenue, MLB relies on market forces to determine the percentage of revenue that will trickle down to the players. One of the big knocks on salary caps is that they are a "wealth transfer" mechanism, shifting money from players to owners. Instead of letting market forces dictate how much of the revenue naturally goes to the players, the percentage that goes to the players is artificially established through collective bargaining. Not surprisingly, market forces typically allocate more revenue to the players than the percentages that are collectively bargained by the owners. However, when the salary structure is determined by a percentage of revenue, it is calculated on an annual basis. As a result, salary cap systems more quickly allocate revenue gains to player salaries than market forces, even if those slower market forces eventually allocate a significantly greater share of the new revenue to player salaries.

Currently, the revenue in Major League Baseball is increasing at such a massive rate that the percentage trickling down to player salaries is lagging behind. It just can't trickle down fast enough to keep pace with the new revenue, resulting in the percentage of league-wide revenue that is allocated to the players falling far below where it used to be. As of now, the MLB percentage has even fallen below the percentage of revenue that salary cap sports (NHL players receive 50% of Hockey Related Revenue; NBA players receive 49-51% of Basketball Related Revenue) mandate be allocated to player salaries.

What this creates is an opportunity for teams bold enough to grab it. As it stands, players are being paid based on an outdated reality. Player salaries haven't caught up to the revenue boom, so players are being paid less than they should be.

In short, the owners are living in the luxurious "new revenue" world, but are still paying costs under the "old revenue" reality.

Baseball contracts are largely pulled upward by the contracts of superstar players. As their contracts are extended or they receive a free agent contract, those contracts set the market for everyone below. The new market creates upward pressure on the salaries of all players below. Unfortunately, those deals don't come up all that often, so it may take awhile for those deals to reset salary expectations. That is clearly starting to happen with the recent deals for Clayton Kershaw and Miguel Cabrera, but it seems clear that there are still bargains to be had because the percentage of total revenue that goes to MLB salaries is lower than standard business practices would dictate.

Here are some rough numbers to illustrate the point:



Major League Baseball Salaries as a Percentage of MLB Revenues, Salaries per Cot's Contracts

2000: 50.02%
2001: 53.08%
2002: 56.24%
2003: 54.55%
2004: 46.03%
2005: 43.84%
2006: 41.55%
2007: 40.64%
2008: 41.33%
2009: 40.40%
2010: 40.12%
2011: 41.10%
2012: 40.14%
2013: 39.79%



Major League Baseball Salaries as a Percentage of MLB Revenues, Salaries per Lahman Database

2000: 49.00%
2001: 52.99%
2002: 56.34%
2003: 54.70%
2004: 46.05%
2005: 43.85%
2006: 41.53%
2007: 40.69%
2008: 41.40%
2009: 40.48%
2010: 38.91%
2011: 39.82%
2012: 39.10%
2013: --------



Again, what's important is the trend line, not the specific percentages. Under each salary calculation, the percentage of revenue that goes to player salaries has fallen ~10% since the 2000 season. Forbes just reported, citing to The Associated Press, that Major League Baseball spent $3,767,445,277 on total player salaries in 2013, representing 47% of total league wide revenues. So, Forbes is obviously calculating salaries differently (and, probably more accurately), but, despite the different methodology, 47% is still significantly lower than in previous years.

As it stands, the percentage may not catch up until revenue growth slows, but it seems very likely that owners will eventually, and naturally, spend what they used to spend on players. So, if the market for players isn't reflecting the "true" percentage of revenue that typically goes to players, then there are bargains to be had system-wide.

If owners are spending a lower percentage of their total revenue on labor costs, then they can afford, and will ultimate be forced, to spend more. They have shown in the past that they can effectively operate their business while paying more for labor costs. If the market for labor is lagging behind the revenue, then longer term contracts that take advantage of this disparity make sense. If you can lock in talent at the current "lower percentage of revenue labor market rate", then you can lock in a below market rate for years to come. Act before the market correction and you are ensuring significant cost savings, which would seem to mitigate much of the risk of a signing someone like Homer Bailey in the first place.

If the Reds were smart, then they'd lock up desirable assets to long-term deals now, BEFORE the market correction arrives. One asset I'd look to lock up right now is Tony Cingrani.


WHY CINGRANI IS WORTH A LONG-TERM EXTENSION

Courtesy: Tom Uhlman, AP

Personally, I don't share the common fear that hitters will suddenly adjust to the fastball. It's obviously a plus-pitch with good velocity and late hop. And, to the extent that they do adjust, it seems very likely that Tony's improved secondary offerings, which should only get better, will counteract that. And, I'm a big fan of Tony's pitching mechanics, which should reduce his risk of arm injury. So, I buy the performance level, believe he has a lower injury risk, and give him a boost in value for being a southpaw. He's a good investment from an individual point of view.


And, it's a good bet from a systemic point of view, as there are two scenarios where this type of contract would pay off:

1. Either revenues level off, but the % of revenue that goes to labor costs increases back to more "normal" levels, or
2. Revenues continue to grow, making it irrelevant whether the % of revenue increases back to more normal levels. 

Basically, this type of extension would pay off if (1) the future slice of the pie that goes to players increases or (2) the whole pie continues to grow. Either way, any contract signed under today's market reality is a potential bargain because both scenarios reflect continuing market escalation. And, quite frankly, I'm not sure I see any scenario OTHER THAN continuing market escalation playing out over the next 5 to 7 years.


MATT MOORE AS A COMPARABLE

I'm higher on Cingrani than most, so that needs to be factored in, but I think there's very likely a deal here that makes sense. If you consider the deal the Rays handed to Matt Moore as a baseline, then I think it would make a lot of sense. So, let's revisit it:

Matt Moore lhp

5 years/$14M (2012-16), plus 2017-19 options; signed extension with Tampa Bay 12/9/11
$0.5M signing bonus

12:$1M, 13:$1M, 14:$1M, 15:$3M, 16:$5M, 17:$7M club option ($2.5M buyout), 18:$9M club option ($1M buyout), 19:$10M club option ($0.75M buyout)

2017 club option increases by $0.5M with 600 IP in 2014-16
2018 club option increases by $0.25M each with 1) 85 starts or 570 IP in 2015-17, 2) 90 starts or 600 IP and 3) 95 starts or 630 IP
2019 club option increases by $0.5M each with 1) 98 starts or 600 IP in 2016-18 and 2) 66 starts or 400 IP 2017-18

The Rays signed Matt Moore to this extension after he had thrown something like 10 MLB innings. Now, the key to this deal making sense is the existence of team options. Contracts are substantially about risk allocation, the team option years shift that allocation more favorably in the direction of the team. The Rays were undoubtedly comfortable handing this type of deal out because (1) Moore had a longer minor league track record of success and (2) was more highly regarded than Cingrani.

The Moore extension was signed prior to the 2012 season, but it was also given to a pitcher with (arguably) less risk and more certainty. So, maybe a similar deal (maybe a couple million needs to be tacked on to each year's salary) could be struck now, as Cingrani's higher level of risk would help offset inflation and the revenue explosion. And, seriously, how much risk is there in that Matt Moore deal? He's set to earn $9M and $10M in 2018 and 2019? Is there ANY scenario, other than injury, in which a lefthanded pitcher with a mid-90s fastball ISN'T worth that?

Given what Clayton Kershaw just signed for and, hell, what Jason Vargas just signed for, I see very few ways in which this type of deal DOESN'T pan out. If Jason Vargas is worth $8.5M NOW, then what are the odds that Cingrani ISN'T worth ~$12M in 2019?


FINAL THOUGHTS

Personally, I think an extension for Tony Cingrani is something that should be seriously considered. Given the explosion of revenue and the lag in it trickling down to player salaries, it seems like there are more ways for this type of deal to pay off than not. Realistically, how much risk is there in a ~$12M salary in 2018 and 2019?

If I could extend Tony through his first 6 years AND get a team option year or two, then I'd jump at the chance to do it. Now is the time to spend. Take advantage of the league-wide financial conditions and the fact that Tony's reputation has yet to catch up to his performance level. Waiting, even a year, could change both of those realities. Kershaw type contracts and a top flight year by Tony would make this opportunity far less likely to happen.

The Reds were smart enough to lock up Homer Bailey under the current, below-market salary structure, but in order to get really wealthy they need to double down in their bet against the system. There is a low risk, high reward opportunity right now to exploit a systemic inefficiency. Right now, it's as much about being right about this systemic inefficiency as it is being right about the player who will receive an extension. In fact, the former will mitigate the risk of being wrong about the latter.

Sign Tony BEFORE the market correction arrives!!!

Front Offices: Jeff Luhnow Twitter Chat

After reading the MLB.com article on how new GM Jeff Luhnow was rebuilding the Astros and having an epiphany about it, I decided to follow him on Twitter. I was surprised to find that he held a quick Twitter Chat. In and of itself, it's pretty cool to see a GM actually hold a Twitter chat, but there are also a few nuggets that I thought were interesting, so I'm re-posting the chat for those who might be interested in how front offices operate, as everything out of Luhnow's mouth is like a master class in modern GM'ing.

#SSAChat FIRST General Question for everyone: What are the recent advancements in analytics people should be aware of?

Jeff Luhnow @jluhnow @SloanSportsConf The biggest advancement is the ability to understand and get insights from the amazing amount of data now available.

Jeff Luhnow @jluhnow Enormous amounts of new data available in baseball every year #SSAChat What are recent advancements in analytics?

Jeff Luhnow @jluhnow All of the above...@jluhnow Where is player evaluation going? Field f/x and Hit f/x? Catcher defense? #SSAchat

 Jeff Luhnow @jluhnow Database set up is key, data from mulitiple sources @sugdaddy are you tracking on your own or from standardized databases? #SSAChat

Jeff Luhnow @jluhnow Everyone to varying degrees @jluhnow are there really any teams any more that don't use analytical tools for player evaluation? #SSAChat

Jeff Luhnow @jluhnow D-base is foundation @nofatmike @jluhnow Do you think having some SQL or database administration is a necessity for analysis?

Jeff Luhnow @jluhnow Ever hear of Mike Fast?Great work, will help us@whimsicalcookie @jluhnow are #Astros using systems like FieldF/X and HitF/X? Did #Cardinals?

Jeff Luhnow @jluhnow Have to beat the best to be the best @aaaltaras @jluhnow how are you preparing to move to the powerful AL W? #SSAChat

Jeff Luhnow @jluhnow Several questions on what to study/how to get a job... no one formula... specific knowledge is hit and miss depending on club #SSAChat

 Jeff Luhnow @jluhnow  Agree 100% @dmorey NO RT @TRedd #SSAChat do you think sports analytics will ever replace the major role of scouts in professional sports?

Jeff Luhnow @jluhnow Albert. @OscarGzz86: @jluhnow if you could have on your team any player from any era, who would that be? #SSAChat

Jeff Luhnow @jluhnow Will eb and flow as we get better on both sides @TRedd @jluhnow @dmorey #SSAChat mostly scouts and a little analytics. Could that % flip

Jeff Luhnow @jluhnow  Most have already. Danger is double counting @FatMerry @jluhnow are you having your scouts become more well-rounded analytically? #SSAChat

Jeff Luhnow @jluhnow Score runs and prevent runs @aaaltaras @jluhnow with divisions so diff, how do you balance building for 2012 in NLC vs 2013 in ALW? #SSAChat

Jeff Luhnow @jluhnow BP, Hardball Times, The Book for baseball @JMVingelis Any good books/website to recommend for learning sports analytics? #SSAchat

Jeff Luhnow @jluhnow Track it over time, use history @forzafutbol Are there ways to measure the effectiveness of a stat? #SSAChat

Jeff Luhnow @jluhnow Always will be debates. Broader fan base. @heathhamilton @sloansportsconf How have analytics changed way fans consume sports? #SSAchat

Jeff Luhnow @jluhnow How mgrs use prob and game theory imp but agree @dmorey Coaching analytics very difficult&should be weighted low vs other factors #SSAChat

Jeff Luhnow @jluhnow Thanks to all who participated... looking forward to the conference. #SSAChat

Light Bulb: MLB Front Offices and the Power of Information

Lately, I've come to a number of realizations, not all of them baseball related but all of them relevant. First, the quality (such as it is) of the writing on this blog is directly related to what I read. If I'm not being exposed to new ideas and information, much of which I can apply to baseball and the Reds, then my writing tends to stagnate. Second, and as an example of the first point, over the past week a number of writings have combined to help reshape my view of Major League Baseball front offices, their role and how they operate.  

In part, my revised view is a happy accident relating to the collision between (1) a very good book ("The Powers That Be" by David Halberstam) that I'm reading about the information distribution business (aka: media) and how it shapes all facets of American life and (2) the revolution happening in the NL Central this offseason. It has taken a surprisingly long time for the new wave of baseball thinking to reach the Central, but this offseason has seen it hit with tsunami like force. For all intents and purposes, the wave started on the West Coast where the A's were looking for a way to compete. It spread gradually in a few directions, but the next big step was when it was carried across the country and landed in the uber-competitive AL East where the Boston Red Sox were looking to change decades upon decades of futility. Now, after penetrating both coasts, the new wave of thinking and operating is coming to an NL Central team near you. Both the Astros and, most noticeably, the Cubs have changed GMs and are beginning to completely overhaul their front offices and their overall methods of operating. That makes for interesting times in the NL Central and challenging times in the future for the Reds.

In light of the efforts of the Northside regime to, once again, overcome decades and decades of futility, I've become more interested in how and why these new front offices are able to effectively change the culture. We're talking about cultures so flawed and consistently ineffective that fans and media created "Curse" narratives, Bambinos and Billygoats, to explain their lack of success. Facing that level of consistent futility, it can be safely assumed that there was something greater at work than the individual talents of the GM. The problem had to be systemic, as countless GMs were rotated in and out of the top posts in these organizations and yet the futility continued. So, the problems clearly ran deeper than just the individual talents of one person.

That was the state of my thinking when I read the following from David Halberstam:

"What it lacked, (Ben) Bradlee and his friend Phil Geyelin sometimes agreed, was cruising speed. The New York Times had cruising speed, the Times was not a product of one or two men's talent and brilliance, it was the sum of its many parts, often at the expense of the individual talent. The Times was special because of its awesome and often stifling structure, it could carry weaker reporters and raise them to the general level of the product just as frequently as it pulled more talented reporters down to that same level. The Times was on a plateau, a moderately high one, all by itself; the (Washington) Post was a series of peaks and valleys."

Even though the blurb discusses the issue in the context of newspapers, it applies equally to organizations of all types. To build a consistently successful organization requires implementation of an effective structure. In Major League Baseball, an effective structure is one that supports quality decision making by consistently increasing the probability of making a successful decision: Cruising speed. A less structured organization may be able to generate success in spurts, but any type of consistent, sustained success requires a structure. It's the system vs. the individual distinction, basically the difference between an organization built on the individual talents of a GM and an organization built on a structure that lends itself to a systematic way of operating.

With that in mind, it becomes much clearer what the new regimes in Chicago and Houston are attempting to do. Basically, harness the power of all the organizational assets into an effective and efficient system for the collection and distribution of data. Over the years, unsuccessful organizations have either had no structure at all or, even worse, an ineffective structure that has been ingrained into the organizational fabric by each and every decision made. The efforts of these front offices to install new structures became even more clear when I stumbled across this story, discussing Jeff Luhnow's efforts to rebuild Houston's front office, on MLB.com:

HOUSTON -- Jeff Luhnow has long been a proponent of sabermetrics, so it shouldn't come as a surprise that one of his first duties as Astros general manager was to bring in someone to help sort through the massive amount of data that's available. 

Luhnow announced Tuesday he had hired Sig Mejdal from the Cardinals, where he had worked with Luhnow for the previous six years and was most recently the team's director of amateur draft analytics. Mejdal's title with the Astros will be director of decision sciences. 

The Astros also announced they had hired Stephanie Wilka as coordinator of amateur scouting, a position previously held by Mike Burns before he took a job as an area scout with the Blue Jays.

Mejdal was involved with modeling, analysis and data-driven decision-making throughout all levels of the Cardinals organization and was a key contributor in the Draft decision processes that led to more Major League players than any other organization during that timeframe. 

"It's a capacity that he was involved in and helping us build when I was with the Cardinals, and he had a lot skills and passion in that area," said Luhnow, who was hired away from the Cardinals last month. "He's going to be a key member of the front office." 

Luhnow described Mejdal's new role as a systematic method of combining all the information you can collect on players, whether it's using previous performance information, health and medical information and opinions of scouts who have laid eyes on players. 

"It's really a systemic approach to combining all the information into a decision-making tool to assist people, whether it's the scouting director or farm director or general manager, in making decisions," Luhnow said. "There is a pretty significant component with it that's data-driven and based off of using stats from the past to project future performance. It's definitely a critical component." 

Wilka, meanwhile, has previously worked in the PR department of the Red Sox and served as executive director of the philanthropic arm of the Dodgers. She has an undergraduate degree from Harvard and a law degree from Pepperdine. 

"She has a passion about baseball and should be a good addition," Luhnow said.
Mejdal earned two engineering degrees at the University of California at Davis and later completed advanced degrees in operations research and cognitive psychology/human factors. He has also worked at Lockheed Martin in California and for NASA. 

Mejdal has been active in baseball statistics and analytics since earning his membership in The Society for Baseball Research (SABR) while in grade school.

The article lays out the approach that the Astros wish to implement and the importance they place on information of all types and from all sources. The long running debate of sabermetrics vs. traditional scouting has overlooked the key point, namely that ALL valid information is of value to the organization. The Astros' decision making is data-driven and ensuring both the quality and volume of that data is paramount to the success of such a system.

To me, there are also inferences to be drawn from the article based on both the people hired and their respective job titles. It's clear that Luhnow's prime objective in the early going is improving the information gathering and distribution abilities of the organization. After all, a decision maker is only as good as the information on which he relies.

Oddly enough, I first heard of Sig Mejdal from the book Fantasyland, which detailed a writer's attempt to win his fantasy baseball league by hiring a team that blended the traditional scouting viewpoint with statistical analysis, the latter viewpoint strongly represented by statistical analyst Sig Mejdal. But, one of things that strikes me as particularly interesting in this blurb is his job title: Director of Decision Sciences. A job title which seems to both (1) indicate the importance the organization places on data and (2) set Mejdal's individual responsibilities as everything right up to the decision point. 

In a data-driven system like this, the information flows in an upward direction from all points in the organization. In essence, the organization is a pyramid with all information flowing from the base up to the top, where the decision makers reside. If you generate a consistent, reliable flow of information, then you improve the ability and effectiveness of the decision maker. And, the longer this flow of information runs through these defined channels, the more and more ingrained they become in the organizational fabric (forget Billygoats, this is the real curse of inept baseball organizations). Further, the organization can have sustained success because, to a certain extent, once the decision maker installs this system he himself becomes more fungible. If all the information for making the proper decision is readily at hand for the decision maker, then the specific abilities of that decision maker become somewhat less important. The decision is driven by the process, not the individual. At that point, you have established a measure of organizational intelligence, which supersedes, and should outlast, any single individual. 

As for the second hire, Stephanie Wilka, at first it seemed an odd one. Admittedly, I don't know anything about Ms. Wilka, so I'm only going off what is written in this article. At first, she didn't strike me as being qualified (though she could certainly be an undercover scouting genius), but upon further review it's patently obvious that it was my own understanding of the job qualifications that was wrong. If someone is hired as the Coordinator of Amateur Scouting despite having no background in scouting (bringing instead public relations and ??philanthropy?? experience to the table), then it seems likely that her responsibilities are something other than rating players on the 20-80 scale. In actuality, I believe her job is ensuring the proper flow of information up the ranks. She's not there to scout, but rather to manage those who do, ensuring both the quality and flow of the scouting information coming from her underlings. In short, the emphasis in her job title should be front-loaded, as she is more "Coordinator" than "Amateur Scout". It's important to have those who generate the information, but it's equally important to have those who verify the quality of the information and facilitate its distribution. Again, this hiring seems to be an organizational effort to ensure that good information flows up to the top of the pyramid for consideration by the decision makers. 

Finally, once the information is gathered and arrives at the pinnacle of the pyramid, it has to be properly compiled and presented to the decision maker for it to be useful. So, it's not enough just to collect and compile the information, but it has to be readily sortable and accessible for the decision maker. And, not surprisingly, many organizations have implemented proprietary computer programs to manage the data generated by so many different sources.

For example, the recent Sports Illustrated Moneyball issue had an article that discussed "Carmine", the Boston Red Sox proprietary data management program: 

Now I can click on the screen... ." Epstein says as he executes a few keystrokes, "... and call up ... there's [Jacoby] Ellsbury."

A trove of information pops up about the Boston centerfielder. It includes some proprietary statistical data, including Boston's in-house defensive metrics (the popular ones cannot be trusted, especially in one-year samples) and an overall empirical valuation that combines offense, defense and baserunning metrics. Carmine automatically updates the numbers, including projections, every day for every player in professional baseball.

Carmine also guards less quantifiable data, including the first report filed on Ellsbury in 2003, two years before he was drafted, as well as eight follow-up reports chock-full of anecdotes culled from interviews with his coaches, trainers, college SID, opposing coaches, summer league coach and others. There is a story about a foot injury "no one knew about" that explained a brief slump in the Cape Cod League in '04. There is the story of the day in '05 when two cross-checkers worked out Ellsbury in a San Diego gym because of rain: The 21-year-old picked up a stray basketball and threw down a monster dunk, confirming their reports on his athleticism. All those notations—which a decade ago would have consumed just two or three sentences under "makeup" in most teams' player files—are separate from the actual nuts-and-bolts scouting report on his skills.

Each spring the typical area scout for the Red Sox will follow about 50 players on his watch list. Cross-checkers will see about 100 players each. They all file background reports with Carmine every time they see a player. "That's a lot of information," Epstein says. "But that's where you get the edge. You're not going to have the most success with the most obvious, readily available information."

In short, I have gained a new found appreciation for the power of information and the importance of those mechanisms, institutions, and entities that distribute said information. It is becoming more and more apparent that in the modern game, knowledge truly IS power. As fans, it's fun for us to think of GMs as guys who wheel-and-deal to make winning trades solely on the basis of their individual brilliance and charisma. In reality, the role of the GM is to design and construct an organization that supports decision making by increasing the probability of making correct decisions. Think of the massive advantage to be reaped by an organization structured in such a way that the probability of making a successful decision is increased by 15% on each and every decision (i.e. trade, draft pick, free agent signing, etc) to be made. Over the life of an organization, the payoff would be massive. Accordingly, much of the organization is designed solely for the purpose of collecting and generating valid information, ensuring the proper flow of that information up to the proper decision maker, and enabling that decision maker to access it in a usable format. Further, establishing that type of structure is what generates long-term, sustainable success, as it doesn't rely on individuals, but rather on the collective power of the organization.

It remains to be seen to what degree the Reds utilize such a data-driven system, but the competition is certainly hitting the ground running. Make no mistake, competition is coming to the NL Central. Ultimately, competition leads to one of two outcomes: 1) it drives an organization to improve efficiency and effectiveness in order to succeed or 2) it destroys organizations that fail to adapt and evolve to meet the challenge. It remains to be seen which path the Reds will follow, but the competition has arrived on the shores of the NL Central and it's here to stay. The Reds need to be ready to meet the challenge. And, they need to start now.

Looking Back on the Reds GM Switch

Well, it's time to look back on the Reds latest headscratcher: Firing GM Wayne Krivsky and replacing him with Walt Jocketty. Unfortunately, this represented yet another change for an organization that has undergone far too much of it lately. More than anything, the Reds need stability. With this latest batch of hirings and firings, this organization has now had 4 different managers and 3 different GMs in the last 5 years. The best teams demonstrate tremendous stability in their front office and coaching staff. The Braves, Red Sox, and Twins are good examples.

Say what you will about Wayne Krivsky, but what did he do this year to deserve the ax? To me, this is a baffling move. Truly baffling. If you were going to make this move, why not make it over the offseason when Jocketty could have done something to reshape this team?

END OF THE KRIVSKY ERA

Krivsky certainly had his ups and downs, but taken in total he's performed well in his time in Cincy. However, it's clear that he made some missteps. "The Trade" was and will continue to be beyond terrible. I (still)don't like the Hamilton for Volquez trade and Krivsky had an alarming habit of giving out multiyear deals or just large deals to mediocre veterans (Stanton, Patterson, Castro).

Still, Krivsky was leaps and bounds better than O'Brien, who couldn't even pull the trigger to alleviate our 4 outfielder fiasco. Krivsky stole Hamilton and Phillips in very shrewd moves that demonstrated both strong player valuation skills and the willingness/confidence to roll the dice. He locked Harang into an extension and brought in the perpetually underrated Scott Hatteberg.

WALT JOCKETTY

As for Jocketty, I'm not entirely sure what he has done in St.Louis that's so great. He seems to excel at acquiring expensive veteran talent (Rolen from the Phils, Edmonds from the Halos, McGwire from the A's, etc), which is the exact opposite direction from where we need to go. It's hard not to conclude that he got very lucky with Albert Pujols. Maybe he personally saw something in Albert, but if he really knew what he had, then he wouldn't have waited until round 13 to draft him.

An alarming aspect of the GM switch is that Jocketty fell out of favor in St. Louis because he couldn't get along with Jeff Luhnow, Cardinal V.P. of scouting and player development, who is one of the new wave of baseball minds who embraces statistical analysis. The Cards showed Jocketty the door and brought in GM John Mozeliak, who embraced the new wave of baseball thought, while we decided to hire the old school guy. I'm not entirely sure we come out ahead in that deal.

It just seems like a move that smacks of desperation, when there is really no need to be desperate. Unlike firing a manager, firing a GM is unlikely to spur the team on to better performance. In the case of a change of manager, just the change itself can be enough to change the environment and performance (i.e. Pete MacKanin). For me, it seems like changing GMs at this point in the season would not only lack positive impact, but would in fact have a detrimental effect.

Changing an entire GM regime over will inevitably bring about a period of adjustment. People have to get used to a new dynamic and there will inevitably be a reshuffling of employees or at least employment responsibilities. Overall, this just seems like more instability for an organization that has suffered from far too much of it lately. In addition, it's difficult to see what Jocketty brings to the table that Krivsky lacked.

However, it did result in some revelations about Krivsky's final days. He's on record as saying that he was told to do what it takes to sign Corey Patterson, but he also stated that Dusty Baker was his choice. Still, it seems that at some point, Krivsky lost some of his independence and the total authority to act on behalf of the club.

FINAL ANALYSIS

Unfortunately, this seems like change for nothing more than change's sake. This organization is beyond past the point at which we need to commit to a plan and stick to it. This constant reshuffling of the deck does nothing to help this organization succeed. Consistency and continuity are what drives success. It reminds of the old saying: Do SOMETHING, even if it's wrong. Well, the Reds NEED to stick with a plan, even if it's wrong. By constantly changing course, we never even get to find out if we were on the right path before we conclude that we have taken a wrong turn.