Jonah Keri

HBT Q&A: Jonah Keri, author of The Extra 2%

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Earlier this morning I reviewed Jonah Keri’s new book, The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First. Yesterday he took some time to answer some of my burning questions.  Well, maybe not burning. Just mildly irritating. The kind that go away with a cold compress or by simply not thinking about them for a little while.  Whatever. Here are the questions:

HarballTalk: Why the Rays?  What was it about them and their approach that first attracted you to them as a topic?

Jonah Keri: The short version is the publishing partnership of ESPN Books and Ballantine approached me with an idea, so I said yes. The long version is several factors were in play. Loved the underdog story, how a team with a revenue stream that was so tiny compared to the Yankees and Red Sox could climb that mountain. The dual sports and business angles were a big draw too. Here you had two guys from Goldman Sachs and one from the private equity world who’d come into baseball without a ton of experience (Andrew Friedman played college ball at Tulane, that was about it). So they took the best ideas they’d accumulated in their old careers and brought them to bear in their new gigs. Since I’m both a sports and business writer (I’d covered the stock market for Investor’s Business Daily for about a decade by that point), it seemed like a great fit too.

And yes, there was a little bit of a Montreal Expos connection too (I was a huge Expos fan growing up). I’d already started rooting for the Rays before I got approached for the book. Like the early-to-mid-90s Expos, the Rays were a low-revenue club built on homegrown talent and shrewd player acquisition that had defied the odds and become great.

HBT: The book is obviously filled with countless examples of Sternberg/Silverman/Friedman’s unique approach. If you had to name one thing they did that made the biggest difference — some watershed move — either in terms of changing the tone for the franchise or in terms of a move that led to the greatest measurable improvement for the Rays, what would it be?

JK: The Evan Longoria contract. The seeds had already been sown with the team’s deals for Carl Crawford and James Shields. In those two cases, the team saw a pair of quality pre-arbitration players who could be solid for the next several years, so they offered long-term security in exchange for upside if those players performed as the team hoped. The kicker was tacking on club options — not one, but multiple years of club options — at the end. That way you had all potential reward, no risk for the Rays.

In Longoria’s case, it was taking that model to the extreme. They first approached Longoria when he was still in the minor leagues. They’d tried the same thing with B.J. Upton when he was in the minors too (before Sternberg took over majority control, but after he, Silverman and Friedman had come in) but were unsuccessful. Fortunately for the Rays, Longoria was more receptive to a long-term deal right off the bat, figuring he’d be set for life if he did the deal and invested wisely. So you ended up with the type of contract that had never been done before in that form. Six days into his major league career, Longoria makes it official and signs a nine-year deal worth about $48 million all in. There are not one, not two, but three club options at the end of the contract, worth $7.5M, $11M, and $11.5M. We’re still a few years away, but those look like gigantic future bargains.

HBT: Perhaps the most entertaining/frightening thing in the book is your documenting of the horrors of the Naimoli era. The guy was unconscionably cheap, insanely ego-driven and profoundly tone-deaf when it came to public relations. In your mind, what was the most shocking/hilarious/gobsmacking Naimoli anecdote you uncovered?

JKDeadspin ran a lengthy excerpt from the Vince Naimoli era which encapsulates some of the crazier policies and decisions of that regime. As to which anecdote was the most gobsmacking, I almost feel like you need to separate these into categories, like you would at the Oscars.

For Best Comedy, it’s a tight battle between Naimoli complaining to the city of a “pesky raccoon” terrorizing their property; Naimoli complaining to the city that he doesn’t have his own reserved parking space at the airport; and Naimoli refusing to authorize Internet and email access until 2003.

For Best Drama, Naimoli terrorizing his ushers and ticket takers into snack-prevention supercops who threw out an elderly couple for a bag of cashew nuts; Naimoli making a high school marching band pay for tickets in exchange if they wanted to sing the national anthem at the Trop; and Naimoli pulling copies of one of the local flagship newspapers out of the stadium because they characterized him as a Tony Soprano-like figure.

There are so many more stories, though. Good chance readers might find five other stories they like better.

HBT: Can the Rays’ success last?  Is the “look for the small advantage in everything we do” approach something that, unlike like the A’s and their identification of that which is undervalued in the marketplace, isn’t easy for someone who is just as bright but with greater resources to co-opt?  Put differently: do you think that what has happened in Tampa Bay is a function of unique skills on the part of Sternberg/Silverman/Friedman coming together in a perfect storm, or is it possible for any team to apply the same principles and find success?

JK: Well, first of all the A’s won 87 games or more in eight straight seasons and made the playoffs five times in that stretch, so it took a while for the advantages they’d exploited to be grasped by the competition. That aside, is it possible for other teams to deploy…if not identical methods, at least somewhat similar ones? Sure. But it’s also possible to simply be a little better at a given game, even if everyone tries to use your tricks to win it.

That to me is one of the key takeaways of The Extra 2%. It’s not any one thing with the Rays, and I don’t portray it as such in the book. It’s making seemingly small trades that pay off years later; stockpiling draft picks, then executing on those picks better than other teams; doing a better job of developing players once they come into the system; more roving minor league instructors than most other teams better collaboration between the analytics people and the manager; better contract-negotiating skills; a willingness to be flexible on budget, rather than having hard and fast round numbers for how much to spend in any given season; and a whole bunch of other factors too.

So sure, other teams will try. And the Rays probably won’t spend the next 20 years winning two out of every three AL East titles over and over. But there’s a real foundation for success here, despite the huge disparity in resources. As long as this management stays together, the Rays will have a fighting chance. And even if they take a step back here or there, they’ll still be pointed in the right direction, and be a threat to have a huge season in any given year.

HBT: Finally, the team on the field in 2011: This may be a bit of a transition season for the Rays, but I think people are sleeping on them too much. My gut is that they and the Yankees will battle for the wild card all year. What’s your take?

JK: That sounds about right to me. The biggest move of the Rays’ off-season was the Yankees not getting Cliff Lee. Had that happened, you’d be talking about a potential swing of six-plus wins, which likely would have been too much for the Rays to overcome. Since Lee went to Philly, the Yankees have major uncertainty in the bottom three spots of their rotation (though Bartolo Colon has apparently harnessed the power of hot fudge sundaes into fastball velocity this spring). That makes New York vulnerable.

Then you look at some of the players who’ll be asked to step up this spring with the exodus that occurred this off-season. Reid Brignac and Jeremy Hellickson might be better than Jason Bartlett and Matt Garza right now, leaving aside how much cheaper they’ll be, and that they should get better with experience. Getting Manny Ramirez for $2M is a coup of the highest order; by wOBA and other advanced offensive metrics he’s been better with the bat (on a rate basis) than anyone on the Rays, including Evan Longoria. They’ve gone dynamic, young bullpen arms like Jake McGee and Adam Russell poised to at least pick up some of the slack left behind by a bullpen full of pitchers who almost across the board had career years in 2010.  The Red Sox will be tough to beat for the division title, and I wouldn’t bet on the Rays winning 96 games like they did last season. But they can absolutely compete with the Yankees, as well as the runners-up in the Central and West divisions.

The better news is that they will be very young, very cheap, and only getting better in the next couple years, with 12 of the top 89 picks in this year’s draft to boot. The Rays aren’t going anywhere. If you like underdog stories, they’re a great one.

Yankees, Aroldis Chapman avoid arbitration at $11.325 million

Aroldis Chapman
AP Photo/Charles Rex Arbogast
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Ken Rosenthal of FOX Sports reports that the Yankees and closer Aroldis Chapman have avoided arbitration, settling on an $11.325 million salary for the 2016 season. It is the lefty’s third and final year of arbitration eligibility.

Chapman had filed for $13 million while the Yankees countered at $9 million, so he gets slightly more than the midpoint between the two submitted figures.

With the Reds this past season, Chapman posted a 1.63 ERA with 33 saves and a 116/33 K/BB ratio over 66 1/3 innings. The Reds have opted to rebuild, so they traded him to the Yankees this offseason in exchange for four minor leaguers. Chapman, who turns 28 at the end of February, will make for a fearsome 1-2-3 punch in the back of the Yankees’ bullpen along with Andrew Miller and Dellin Betances.

Indians sign reliever Tommy Hunter to $2 million deal

Baltimore Orioles relief pitcher Tommy Hunter throws to the Miami Marlins during the seventh inning of a baseball game in Miami, Friday, May 22, 2015. (AP Photo/J Pat Carter)
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Paul Hoynes of the Cleveland Plain Dealer reports that right-hander Tommy Hunter has agreed to a one-year, $2 million contract with the Indians. It’s a major-league deal, so Hunter gets a spot on the 40-man roster and will be in the Opening Day bullpen if he’s fully recovered from core muscle surgery.

Hunter split last season between the Orioles and Cubs, totaling 60 innings with a 4.18 ERA and 47/14 K/BB ratio. He had a sub-3.00 ERA in both 2013 and 2014, and has generally been a setup-caliber reliever since shifting to the bullpen full time.

He has good control and a mid-90s fastball, but Hunter has never missed many bats despite the big-time velocity and often struggles to keep the ball in the ballpark. He’ll likely fill a middle relief role in Cleveland initially.

“YER OUT!” Jenrry Mejia permanently suspended for a third positive PED test

Jenrry Mejia
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You knew someone would be dumb enough to do this eventually, you just didn’t know who. Now we do: MLB just announced that reliever Jenrry Mejia has been permanently suspended after testing positive for Boldenone. That was his third positive test and under the Joint Drug Agreement that means his career is more or less over.

Mejia’s three strikes came in pretty rapid succession. On April 11, 2015 it was announced that Mejía had been suspended for 80 games after testing positive for use of stanozolol. On July 28, 2015 it was announced that Mejia had failed a test for Stanozolol again and Boldenone to boot, giving him a 162-game suspension, which he’d still be serving at the beggining of the season. Now this third test.

Mejia has played five seasons in the big. He started with so much promise, looking like a great prospect coming up. His performance only matched the promise in fits and starts, however, resulting in a 9-14 record with a 3.68 ERA and a K/BB ratio of 162/76 in 183.1 innings, all with the Mets.

Per the rules of the Joint Drug Agreement, Mejia can apply for reinstatement after being banned for two years. But it would obviously require him to spend two years doing a lot of smart things he hasn’t been doing in the past year. And it would also represent a near-unprecedented comeback. It could happen, I suppose, but it’s a far safer bet that his career is over.

I’m going to break it to you: some teams will stink this year. Like every year.

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There’s an AP story out today talking about how — brace yourself — some teams are going to be bad this year. It’s true. There are some teams, such as Atlanta, Philly, Colorado, Cincinnati and probably Milwaukee who seem certain to lose a lot of games.  The article’s author notes that, while a lot of money was spent in free agency this winter, not everyone was spending. He says “for some clubs, 2016 is basically over before it starts when it comes to contending.”

That sort of framing sounds pretty familiar, doesn’t it? Isn’t it exactly the sort of thing we heard back in the early 2000s when people were still stumping for salary caps? Boston and New York were outspending everyone, the low money teams couldn’t keep up and, as spring training dawned, the season was over before it even began for half the league at least. There were scads of articles like that written 10-15 years ago. Bud Selig and others even used that exact construction — teams going to spring training already knowing they couldn’t compete — as points of rhetoric in the leadup to the 2002 labor battle with the players. Indeed, here’s the exact language from the 2000 Blue Ribbon economic report that Bud Selig commissioned which, by the way, should be read as a piece of labor propaganda, not as an actually useful or illuminative report:

What has made baseball’s recent seasons disturbing, and what makes its current economic structure untenable in the long run, is that, year after year, too many clubs know in spring training that they have no realistic prospect of reaching postseason play. Too many clubs in low-revenue markets can only expect to compete for postseason berths if ownership is willing to incur staggering operating losses to subsidize a competitive player payroll.

Different circumstances, obviously, but the same general bogeyman: some teams have no chance to compete!

Using that as the concern for whatever ails baseball has never made much sense to me as there will always be teams that are bad. Really, go look at any year’s league standings going back to the 19th century and there will be bad teams. It’s sort of the other side of the coin of good teams. Hard to have one without the other. And it’s probably a good thing to have some good and some and teams. Who wants a total crapshoot every year? What is this, Lake Woebegone, where every team is above .500? God, how boring.

The real issue is not that some teams will be good and some will be bad. It’s why they’ll be good and why they’ll be bad and whether the dynamic which creates good and bad teams is itself positive or negative for the game.

In the 40s and 50s, almost the entire American League knew that it had no chance to compete with the Yankees but they kind of liked that because they were making a lot of money not fielding competitive clubs. That was bad. In the late 1990s maybe some felt the same way too and it was because of no revenue sharing or incompetent management. Not great, and a lot of tweaks were made. Now a small handful of teams can’t compete because they’re doing wholesale rebuilds which some people call “tanking” and others think is not an issue.

As I recently wrote, to the extent people do think “tanking” is a problem, it’s important to (a) put it in perspective; and (b) look at the incentives teams have to tank and talk about whether they should be adjusted. As far as the perspective part goes, I’d say that only having five or six out of 30 teams with no realistic shot is actually pretty good compared to other points in baseball history. There’s a lot more parity now than there used to be. As far as the incentives: look at the dumb draft rules which were imposed to save owners a buck when it came to paying amateurs but which GREATLY increases the importance of picking high and thus losing.

The AP article touches on that, but it’s buried fairly deep down, well after the hand-wringing about teams entering spring training with no chance to win. As spring training progresses, there will likely be a lot of talk of just how bad some of these rebuilding teams will be as well. Most of that analysis will stop at the current state of the team and the hopelessness the fan bases are supposed to be feeling.

As a critically-minded fan, don’t let it stop there. If your team stinks, think about why it does and why it’s pursuing the course it is. Twenty years ago you could probably be safe in saying “well, my team’s GM is dumb and the owner is cheap.” That’s not really the case for most teams now. Now, I think, it’s far more about the incentives in play which make putting a lousy product on the field in the short term preferable to not doing so. Call it tanking, call it whatever you want, but if this is concern for you — and if this is a problem for Major League Baseball — the focus needs to be on the incentives.  Not on the fact that some teams are going to stink. Because teams will always stink. The important question is why.