Five years after it was the feel-good sports-lit hit of the summer of ‘03, Michael Lewis's "Moneyball" is back in the news again. The story goes like this: The plucky, cash-strapped and unconventional Oakland Athletics, using Ivy League-educated statistical geniuses and the intense personality of their high-strung, Ramones-lovin’ general manager, Billy Beane, outsmarted hidebound, got-the-job-because-they-drank-a-cup-of-coffee-in-the-bigs, glad-handing scouts and executives and put together great teams on a shoestring, often by making trades that seemed inexplicable at the time but worked out to Oakland’s advantage.
Five years later, Beane and “Moneyball” are in the news again. That’s because Thursday, July 31, 2008, is Major League Baseball’s trading deadline and the A’s are looking to deal away talent: underrated second baseman Mark Ellis, oft-injured, former phenom shortstop Bobby Crosby, and pitchers Huston Street and Alan Embree. The list would be longer, but in the last nine months, the A’s have traded just about all of their veteran players: Danny Haren (to the Arizona Diamondbacks), Nick Swisher (Chicago White Sox), Joe Blanton (Philadelphia Phillies), Rich Harden (Chicago Cubs), Mark Kotsay (Atlanta Braves) and Marco Scutaro (Toronto Blue Jays) have been dispatched. Oakland’s active roster is now filled with players with fewer than four years of show time.
So, what are the A’s up to?
Sportswriters say it’s all about the genius of Billy Beane. But the irony is that the key to Oakland’s moves, and ones you’ll see this week from San Diego, Baltimore, Florida, Kansas City, Toronto and Minnesota, to name some other teams traveling a similar path, isn’t clever, high-tech management. Rather, it's a reliance on one of most thoroughly loathed relics of the dark ages of baseball: the reserve clause.
The reserve clause was a standard part of every baseball contract until the '70s. It bound a player — for life — to the first team that signed him. Say it’s 1967, and you’re an 18-year-old kid with a rocket for an arm and a hellacious slider. The New York Yankees have drafted you, thus obtaining your exclusive negotiating rights. They offer you a one-year minor-league contract for $3,000 with a $30,000 bonus. $30,000! You can almost buy a home in Westchester for that! “Where do I sign?”
Once you sign, though, it means you can't play for another ball club without the permission of the Yanks. You are owned. As you can imagine, this had a profoundly depressive effect on salaries.
The system came crashing down in the mid '70s when then-A’s owner Charlie Finley forgot to (or just didn’t want to — stories vary) pay a bonus to Catfish Hunter, then one of the best pitchers in the game. An arbiter threw out Hunter’s contract. Completely.
Hunter became baseball’s first genuine free agent and teams stood in line to get a crack at him. He ultimately signed with the Yankees for the unheard of figure of about $670,000 a year, triple what the next-highest-paid player was making. The players' union chief, Marvin Miller, who’d been cajoling the players for years to make a serious effort to bring free agency to the sport, used Hunter’s example to say, “I told you so. This is what happens. You can play where you want for a lot more money.”
At each pass in subsequent labor talks, owners argued that baseball is unique in professional sports because it requires a long-term, expensive player development system — i.e., the minor leagues.
If players could just walk away from a team after it had invested four years training them, what would be the incentive of the team to train them in the first place?
The players bought it. The reserve clause survives, mutated.
True free agency — signing a two-year contract, then having the option to sign wherever you wanted two years later — never came to be. When our hypothetical 18-year-old rocket-armed kid signs a one-year Yankees contract in 2008, he is still bound to the Yankees whether he signs another contract or not. It’s just not for a lifetime anymore. Depending on how fast he advances, it’s more in the neighborhood of eight years — the prerequisite six in the majors before free agency can be granted and the first, say, two in the minors. (We’ll leave out for now the majority of kids who sign that contract but will never graduate from the minors.) This has the still-predictable effect of radically depressing young players' salaries. From Beane’s point of view, they’re dramatically more cost effective than players who are eligible for free agency.
That’s half of what Beane is thinking about. The other half is this: In June of 2000, baseball Commissioner Bud Selig, proving once again that a stopped watch is right twice a day, convinced baseball’s owners — a group notorious for self-interest — to share Internet revenue equally. Given Selig’s clumsy political skills, it probably helped that, at the time, there wasn’t any actual internet revenue to share, and that elderly, über-rich team owners probably most associated the Internet with the hits their portfolios took in the dot-com bust.
This just in: The Internet took off. Major League Baseball Advanced Media (MLBAM, mostly internet stuff, but also Extra Innings, now exclusively licensed to DirecTV) brings MLB somewhere north of $300 million a year, according to Money, and on top of that, Selig managed to get a limited form of general revenue sharing funded by a Fox TV deal and a “payroll tax” on the New York Yankees. (The Yankees are paying Alex Rodriguez’s salary, but they’re also paying for Kansas City’s left fielder.)
Together, this means that each Major League Baseball team has a guaranteed income before it sells a single ticket, makes local television and radio broadcast arrangements, collects cash from stadium-naming rights and advertising, or sells a single Belgian Budweiser, foam finger, parking pass or piece of laundry with a player’s name on the back. How much, is a closely guarded secret. But estimates from Forbes and Money put it in the range of $30 million to $70 million and no one would be surprised if it were higher.
Some quick math:
The median team salary in baseball is about $80 million. (Closest to that figure, according to CBS Sports, are the Cleveland Racist Logos, er, Indians, and the Milwaukee Brewers.) It’s not hard to see that if a team goes much under that median, it doesn’t have to sell a single ticket to make a profit. What you have then is a gigantic ATM machine laboring night and day to spit cash into the team owner’s wallet. And that’s the business model a bunch of teams, including the A’s, have decided to pursue.
The extreme example this year is the Florida Marlins. Its payroll, the lowest is the game, is around $22 million. That is to say they stand to make a considerable profit even before counting paid attendance. Expect the A's payroll, at $48 million, the 3rd lowest, to get even lower before the trade deadline.
But trading isn’t where Billy Beane shines. His real genius is in reserve-clause management. No matter what happens this week, he's going to field a team with three kinds of players: (1) guys in their first three years, making at or near the minimum major-league salary; (2) guys in their next couple of years after that who forego independent salary arbitration to sign a medium-length deal. These players are typically cheaper because they’re willing to sacrifice short term gains for medium-term security. The best players, unfortunately, tend to avoid this route; and (3) veterans from the Island of Misfit Toys — players with injury or attitude problems or prolonged period of ineffectiveness who can be acquired cheap in a one-year deal.
As both the A’s and the Marlins are proving this year, you can win some games this way. Both teams are playing slightly above .500 ball, and the Marlins, playing in a weak division in a weak league, even have a shot at the playoffs.
But why are Beane and the A’s doing it this way? It’s moneyball, after all. Money is how we keep score in baseball and in America. And that’s the real story of the trade deadline, not the players moving about. The A’s have announced their willingness to leave Oakland (for Fremont), and high-salaried encumbrances would hinder a move (and a sale, which is where owners Donald Fisher and Lew Wolff stand to make the real money). Beane and the A’s have figured out that there’s more money in bad or mediocre baseball than there is in spending for high-priced free-agent veterans and making a serious effort to compete for a world championship.
Editor's note: Some language was corrected soon after publication. The content remains unchanged.