Boston Red Sox: A Whole New BallgameBy Mel Duvall | Posted 2004-05-14 Email Print
Re-Thinking HR: What Every CIO Needs to Know About Tomorrow's Workforce
Keeping track of stats in the numbers-obsessed world of baseball is nothing new. But Boston Red Sox General Manager Theo Epstein has amassed a collection of personnel data utilizing the right blend of enterprise software and business intelligence applications other teams and corporate business managers can only dream about. This is the story of how success is created by blending intelligent analytical technology against employee performance management.
Boston Red Sox: A Whole New Ballgame
The burden resting on Epstein's shoulders is impossibly heavy. He grew up barely a mile from Fenway Park, home of the Red Sox, and is just as rabid a fan as those second-guessing his decisions today.
Epstein was chosen general manager in 2002—becoming, at 28, the youngest GM in the majors—largely because he shared the Sox owners' philosophy of putting numbers and analytics to work on the playing field. He is one of a growing number of general managers in major league baseball who are students and practitioners of Sabermetrics.
Sabermetrics is the mathematical analysis of player batting and pitching performances. Baseball is a sport already brimming with statistics, yet Sabermetrics—the term is derived from the acronym SABR, which stands for the Society for American Baseball Research, a community of baseball enthusiasts—is a departure from traditional player metrics such as runs batted in (RBI) and batting average.
RBI is a faulty gauge of talent, Sabermetricians say, because it is heavily dependent on where a player sits in the batting order. And batting average, they say, does not take into account how adept a hitter is at working a pitcher and drawing walks—a walk gets a player to first base just as well as a hit.
Instead, Sabermetricians have come up with measures that more accurately reflect a player's value toward achieving a win, such as "runs created." This statistic counts the number of times a batter gets on base, be it by walk or hit, and factors in an added value for the power of a hit, be it a single or a home run. The purpose is to determine what the batter does at the plate to create an opportunity for his team to score a run.
Done right, practitioners say, Sabermetrics can help teams more accurately find minor league prospects who will succeed in the big leagues. Similarly, Sabermetricians claim they can use the analysis to determine which major league players deserve a $10 million paycheck and which "stars" can be dumped.
Prior to the rise of Sabermetrics, teams primarily relied on their scouting systems for finding and drafting talent. The problem, as Oakland A's general manager Billy Beane saw it, was the system was too much of a crapshoot, particularly when it came to drafting young players out of high school who had yet to mature physically and emotionally. "We didn't have the resources of the other clubs, so we couldn't afford to gamble," Beane said recently at a conference in Chicago, referring to the team's low revenue, which is estimated at $110 million, the eighth lowest of all major league teams.
Beane, one of the best-known practitioners of Sabermetrics, has used baseball analytics to consistently field one of the best teams in baseball on one of the smallest payrolls—$50 million in 2003, the eighth lowest in the league and far below the Yankees' $150 million payroll.
The A's just missed making the playoffs in 1999 but have been there every year since. They've done it at an average cost per win of only $388,000 over that five-year period, the best in the league. The Yankees have been to the playoffs every year during that stretch, but at a cost of $1.23 million per win.
Beane set the bar; now the Sox are attempting to raise it. In addition to Epstein, they have hired Bill James, the so-called father of Sabermetrics, as a special advisor.
The object isn't to be cheap, says Epstein. After all, the Sox, one of the most lucrative franchises in the league with annual revenue of $200 million, open the season with the second highest salaried team in the majors—$125 million.
It's about making the best use of the team's resources so that when it's time to re-sign Pedro Martinez ($17.5 million salary in 2004), Manny Ramirez ($20.5 million) or Curt Schilling ($12 million), the money will be there. "We are fiscally responsible because the alternative would be a disaster," he says. "Fiscal irresponsibility is the single quickest way to hamstring a franchise for a decade." The prime example is 2003's American League West cellar dwellers, the Texas Rangers, who broke the bank in 2000 on superstar Alex Rodriguez, signing him to a 10-year, $252-million deal, then lacked the funds to pay for a supporting cast.
As even a casual baseball observer knows, the Sox almost signed Rodriguez in the off-season. But the bottom line was that the team set a $20.25-million-a-year threshold it was not going to go over. After numerous failed attempts to structure a deal that was at or under that salary, the Sox walked away from the table. Rodriguez eventually signed with the Yankees after the Yankees got the Rangers to pay a large portion of the player's salary.
But the ability to combine statistical smarts with the wealth to make the deals should give the Sox an incredible edge.