How Wall Street Strangled the Life out of Sabermetrics
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How Wall Street Strangled the Life out of Sabermetrics

Once upon a time, advanced baseball stats had an application beyond the fevered hunt for market inefficiencies.

Baseball is getting awfully weird. Recently departed Rays executive Andrew Friedman wrote a letter thanking the fans—"some of the most passionate and well-informed fans in all of baseball,"—to team blog DRaysBay. Former Red Sox executive Theo Epstein's appearance at a Chicago Starbucks caused a two-week media stir. Brad Pitt appeared on the cover of Sports Illustrated not for his portrayal of an athlete, but rather his role as baseball's most mythologized general manager. It would appear that Ralph Waldo Emerson's quote, "an institution is the lengthened shadow of one man," has a new application. A baseball team, it could be said, is the lengthened shadow of one man: the executive.


Baseball teams have a long history of lionizing their patriarchs, dating back to John McGraw and Connie Mack in the early 1900s and extending through Sparky Anderson and Earl Weaver as the league grew in the 1960s and 1970s. McGraw's Giants, Mack's Athletics, Anderson's Reds, and Weaver's Orioles were all the lengthened shadows of their respective managers. The managers were the deciders, the men who called the shots, and for this reason it was upon their shoulders that the glory of victory or the agony of defeat would ultimately rest. Such a viewpoint was perfectly suited to the business world.

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The authors of The American Business Creed, a 1956 sociological examination of the symbolism of businessmen, cite responses to a survey asking the purpose of the business executive: "Benjamin Fairless of United States Steel considered himself a playing manager, while A. S. Igleheart of General Foods Corporation preferred to manage from the dugout."

The release of Michael Lewis' Moneyball in 2003 marked the introduction of the hero GM to the public. However, the patriarch's shift from the dugout to the front office can be traced back to 1965 and the institution of the amateur draft. The Philadelphia Phillies, then and now an organization built on scouting, decried "the amateur draft and its socialistic tendencies" in their 1981 organizational handbook. Scouting Director Paul Owens told Kevin Kerrane, author of Dollar Sign on the Muscle, "It's part of a push to equalize talent from team to team… The draft rewards mediocrity. It stifles initiative in scouting… The best thing I can say about the draft is that it's a bad way of keeping a ceiling on bonuses."


"Think differently." - Brad Pitt

In his 1965 autobiography, The American Diamond, Branch Rickey wrote, "Ownership must eliminate the bonus." The draft was a Rickey invention, just as the farm system was before it. The farm system exploited one of baseball's first market inefficiencies: the hundreds of young boys and men willing to sign any contract Rickey put in front of them, willing to hop on a bus to some unknown minor league town multiple states away, willing to toil in a minor league system that at one time went 32 teams deep, and willing to say "Yes, sir, I understand," when Rickey informed them that big raise they were counting on wasn't coming this year. As the farm system became popular, other teams began fighting Rickey's Cardinals (and later, his Dodgers) for young talent and preventing him from leaving players on the farm until they "ripened into money." The draft became the new way to minimize risk, and in sports labor, "risk" and "player salaries" are one and the same.

Any institutional change that eliminates competition, as the draft did with competition among scouts, is seen as an affront to good old American capitalism. Despite the Phillies' complaints, the draft, a system designed to funnel money away from workers and keep it in the pockets of ownership and management, is as American and as capitalistic as it gets. Baseball's shift from an anything-goes amateur market to the bureaucratic and centralized draft most resembles the process that established Wall Street as it exists today: Morganization.


Named after legendary investment banker J.P. Morgan, Morganization represents the period from roughly 1890 to 1920 in which, as Karen Ho writes in Liquidated: An Ethnography of Wall Street, "business in the United States moved from the recurrent depressions and crises of laissez-faire, robber-baron capitalism into a relatively more coordinated and bureaucratic period, characterized by the larger-scale form of organization that would come to be understood as the modern industrial corporation." The primary purpose of Morganization was to prohibit self-destructive competition between already wealthy businessmen. In business, Morganization. In baseball, Rickeyization.

The rise of the general manager as hero has coincided with the rise of sabermetrics. Advanced statistical ideas have been around in baseball since its inception—one of FanGraphs' major offensive statistics, weighted on-base average or wOBA, was invented in a crude form by Baseball Magazine editor F.C. Lane in 1915. For Lane, statistics functioned as a storytelling tool, a way of contextualizing baseball beyond the simplistic and incomplete efforts of statistics like batting average and earned run average. Similarly, for men like Pete Palmer and Bill James, some of the earliest popular sabermetric authors, sabermetrics centered around understanding, around reconciling the differences between what they saw on the field and how those within baseball said the game was played and won.


Sabermetrics at its best can deconstruct myths, make connections between eras and leagues separated by centuries, and create new conversations and ideas about the games and the people who play them. Projects like Retrosheet, which has collected hundreds of thousands of box scores and play-by-play logs and made them available to the public, were founded on principles of openness. The idea was that anybody with a computer and an internet connection could make the next FIP, the next OPS+, the next wOBA or WAR—and they did. Voros McCracken, Bill James, Tom Tango—they were anonymous people from outside the establishment (Tango even uses a pseudonym), people who had rare and unique thoughts on baseball and wanted to share them with their baseball fan friends.

This principle of openness is missing in today's sabermetrics. Sites like FanGraphs, Baseball Prospectus, and Beyond the Box Score function as farm systems, churning out major league consultants once they prove their technical skills and creativity (all on the cheap, of course). When Andrew Friedman hired new Rays consultants, they were immediately greeted by non-disclosure agreements. Why secrecy, in a discipline once defined by openness? "The short answer," Nate Silver told Baseball Analysts when asked why he kept the formula to his golden goose projection system PECOTA proprietary, "is that we're trying to make a living off this stuff, and we're reluctant to give away trade secrets."


J.P. Morgan telling you what he thinks about the sacrifice bunt. Photo via Wikimedia Commons 

In 2010, three years after Silver's invocation of trade secrets, Mets analyst Ben Baumer told a group of New Jersey City University students, "Teams tend to be very guarded about what they're actually doing with it and getting from it, because it's trade secrets and stuff." Sabermetrics has transformed from a public intellectual debate into a trade, a business, with secrets to be locked down like any other.

It is no coincidence that publicly available sabermetrics have had little new information to offer over the past half-decade or so. The latest eureka moment came with the publication of Mike Fast's research on catcher receiving in September 2011, which suggested a catcher's ability to frame a strike can save as many runs as some of the league's best hitters produce with their bats. Although the details have been and will be quibbled with, the research removed what was a huge blind spot for many sabermetricians, who had previously either ignored the concept of framing or claimed its impact was negligible. Fast, naturally, was hired by the Houston Astros and taken off the public grid shortly after publication.

"So there's a brain drain going on, and I'm not going to lie and say that isn't an important piece to the puzzle," Colin Wyers, then Baseball Prospectus' director of analytics, wrote me in an e-mail in 2013. "But I think there's something else going on here, too, and it's the Harvey Dent Problem: Either you die the hero, or you live long enough to become the villain. If you look at the history of sabermetrics, it starts off as this very outsidery thing, and it's in constant struggle with places like Elias over who owns baseball's statistical history and who decides what baseball stats are important and which aren't."


"So now you have sabermetrics that's in a sense very establishment," Wyers wrote.

Sabermetrics have become an inescapable part of baseball. FanGraphs and Baseball Prospectus have a joint website with Fox Sports. Fox Sports 1 hosted a sabermetrics-based simulcast of the first game of the NLCS this October. Brian Kenny became the unofficial spokesman of sabermetrics on MLB Network. Brad Pitt played Billy Beane in a film scripted by Aaron Sorkin.

"Maybe that kind of outsider movement was never meant to last," Wyers concludes, "But maybe it is. And the question is really whether or not the current sabermetrics movement is going to be a part of that, and if so if they'll be on the side of the outsiders or if they'll be the establishment being rebelled against."

The Astros hired Wyers less than five months later.

Stu Sternberg, the Rays owner who brought Andrew Friedman to Tampa, made his name at Goldman Sachs. The Rays with Sternberg and Friedman were consciously constructed in Wall Street's image. Karen Ho writes of the structure of Wall Street investment banks in Liquidated, "'Front-office' workers -- referred to as the bank's 'officers' [as the Rays do here] -- are the most valued employees because they are understood to generate revenue for the company… Almost everyone else in the bank is considered 'back-office' support staff… and treated as a "cost center," which is understood as a division that depletes money."


As backwards as it might seem, under this construction, the revenue generators of the Tampa Bay Rays were the executives in the suits, and the players scoring the runs and making the plays in the field formed the "cost center." Members of Wall Street's cost centers, Ho writes, "are often from middle-class and working-class backgrounds, with an overrepresentation of people of color," just like the players, now considered more asset than employee. Wall Street controls its cost centers through constant downsizing, recruiting from less prestigious colleges, and placing back office workers in Jersey City as opposed to Manhattan. In sabermetrics, Friedman, Beane, Epstein, and the rest of the early adopters had the perfect tool to control their cost center. An understanding of sabermetrics and the market inefficiencies it exposed allowed Friedman to pounce on cheap players who would remain cheap thanks to the way salary arbitrators and other market forces failed to understand their contributions.

Sabermetrics is of course just one means of cost control, and in that sense, it pales in comparison to the reserve clause, to the farm system, to the salary cap. and to outright collusion, just a few of the methods owners and executives have used for years to prevent each other from paying players what an open market would award them. Both baseball men and Wall Street banks have appropriated money saving strategies from wherever they could find them for centuries. And the problem thus isn't "sabermetrics," the idea of thinking about baseball in new ways and applying mathematical thought to the sport, but rather what the men who have seized it will use it for.

In his 1940 work A Mathematician's Apology, British mathematician G.H. Hardy attempts to reconcile his lifetime engaged in what many consider a "futile" and "unproductive" field. "I have never done anything 'useful,'" Hardy wrote. "No discovery of mine has made, or is likely to make, directly or indirectly, for good or ill, the least difference to the amenity of the world." Writing as his country finished its second year of engagement in World War II, Hardy took great pride in the fact that his work, unlike the work of chemists or physicists, was so abstract, so intrinsically unproductive, that it could not be used to make the weapons of war then destroying Europe.

Hardy died in 1947. Perhaps for the best, as he did not get to see his work in number theory become the basis of modern cryptography. Hardy's work is why your credit card number isn't stolen every time you enter it into an online shopping form; it's why your cell phone is able to decrypt signals coming down from satellites in space. It is also the backbone of the NSA's spying tactics, with Hardy's number theory the first discipline listed under the NSA's call for mathematicians on its website. Digital wars and digital spying are now waged with the fruits of Hardy's labor, useless as it may have originally seemed.

Like mathematics, sabermetrics can appear to many as something intrinsically useless and, perhaps, occasionally beautiful. But like mathematics, sabermetrics can also be weaponized. After all, this the legacy of Morganization and the legacy of Rickeyization. This is a world where Wall Street attempts to remake everything in its image, including baseball teams; a world where the Rays, A's, and Red Sox serve as little but lengthened shadows of Andrew Friedman, Billy Beane, and Theo Epstein, rather than thrilling players like Carl Crawford, Miguel Tejada, and Manny Ramirez. It was only a matter of time before sabermetrics was subsumed and turned into another hammer in the owners' salary-smashing toolbox.

Statistics don't have to be evil. They don't have to be gross. They don't have to be dehumanizing. But there is no beauty in data as information to be hoarded, as a means to find the next market inefficiency, as a way to slash a bottom line. Statistics as F.C. Lane saw statistics—as stories waiting to be told— can be fascinating and inspiring. Until sabermetrics is free of the executive grasp, however, it will be doomed to take on the colorless, joyless image of the Wall Street suits who now grasp it for themselves.