Friday, August 17, 2012

MONEYBALL AND THE AMERICAN DREAM

"[T]hrough baseball I was put in touch with a more humane and tender brand of patriotism, lyrical rather martial or righteous in spirit and without the reek of saintly zeal, a patriotism that could not so easily be sloganized, or contained in a high-sounding formula to which you had to pledge something vague but all-encompassing called your allegiance." -- Philip Roth, "My Baseball Years" (1973)   

We call it “the national pastime”. And for over a century, luminaries ranging in vocation from academia and journalism to politics, literature, and business have all exalted the game as an American archetype and have identified it among the sacred rituals and icons that form our nation's identity. During his tenure as Major League Baseball's Commissioner, Renaissance scholar A. Bartlett Giamatti's pronounced baseball “an important, enduring American institution…[with] a purchase on our national soul”. A sentiment historian Jacques Barzun's conception of the game echoes. Baseball, he wrote, reveals "the heart and mind of America." While a century before them, our bard himself, Walt Whitman, declared the sport as much a part of "our institutions... as our Constitution's laws" and as no less integral to our history. 

Their grandiloquence only serves to beg to a fundamental question however.  What precise national trait, value, or practice, does the Diamond consecrate or signify?  The traditional totems of American identity conjure a signal and immediately identifiable American idea, attribute, or inheritance: Stars and Stripes, the nation's colonial ancestry and federal union; the bald eagle, our ferocious and prideful independence; Lady Liberty, our revolutionary tradition and immigrant heritage; and our founding documents, the nation's experimental origins and democratic creed. 

Baseball, on the other hand... Sure, its a rigorous craft, a selective profession, a stern discipline, a frequently edifying and theatrical drama and a consistently prodigious display of talent and skill.   But this doesn't change the inglorious facts.  Professional baseball remains, at its best, a diverting entertainment played for hire, and at its worst, a ruthless business that trades men like commodities and discards them like waste.  Rhapsodies notwithstanding, it is ultimately just a game.

How then can it possibly exert a claim on, all of things, the nation's "soul"? What truth about its native land can it possibly embody? 

MR. SMITH GOES TO OAKLAND 
For all its many flaws, last year's Oscar-nominated baseball film, Moneyball suggests a tentative answer.  An inkling of which appears in the film's widespread popularity and unique genre pedigree.

Now, ordinarily, baseball movies like Field of Dreams, Damn Yankees, For The Love of the Game, and The Rookie descend from the same family tree from which the generic sports motion picture hails-- whether set amid the ring, the racetrack, the Diamond, or the gridiron.

From Rudy to Rocky, they tell the story of endearing, mettlesome underdogs as they triumph over hardscrabble origins, debilitating injury, insular bias, and hopeless odds.  And along the way, we get a little romance, a suspenseful big game finale, and above all, a triumphant, uplifting ending. However, in Moneyball, Director Bennett Miller and screenwriter Aaron Sorkin (and Steven Zallian) actually have engineered something of a genetic hybrid-- cross-breeding Hollywood's inspiring tale of athletic triumph with another common Tinsel Town species, the social problem film. The Natural mates Mr. Smith Goes to Washington.

As Peter Roffmann describes Hollywood's formula for the social problem film in his eponymous book, "social analysis and dramatic conflict [combine] within a coherent narrative structure... [T]he central dramatic conflict revolves around the interaction of the individual with social institutions," and the motifs of America's populist tradition figure prominently in the story. In fact, the formula hasn't changed much since Capra's day either. Noble, virtuous men do battle with greedy plutocrats, a hostile establishment, or venal institutions.   They suffer dire setbacks.   They endure tragic sacrifice.  But in the final reel, truth, justice, and the American way prevail and crown a hero's victory.

Moneyball not only radiates this populist sensibility, its bears Aaron Sorkin's signature melodramatic stamp besides. The film dramatizes its subject-- the influence of money on teams' fortunes-- with all the intellectual complexity and poetic nuance of a Will McAvoy rant in Newsroom.  As early as the opening montage, in fact, it projects Major League Baseball through the black-and-white lens of populism. The New York Yankees, naturally, epitomize corporate Wall Street gluttony and decadence; while the Oakland Athletic personify rugged California pluck and ingenuity.

The deciding game of the two teams' 2001 American League Divisional Series sets the scene. But just before the Bombers complete a stunning, improbable comeback from an 0-2 game deficit and rally to win Game 5; just before the raucous Yankee Stadium crowd shakes Ruth's House to its foundation and New York stands in unison to applaud its shining light of bravura and resilience just one month after the Twin Towers have fallen; Sorkin qualifies the achievement.  A full frame of portentous text interrupts the game footage. "New York Yankees $114,457,768 vs. $39,722,689 Oakland Athletics," it reads. 

The implication: the best team didn't win; the richest one did. America's game is rigged.1

"YOU'RE NO MR. SMITH"
Of course, outside Aaron Sorkin's Manichean imagination, the truths of the world are neither so monolithic nor so facile.  Sure, the Oakland Athletics' payroll consistently ranks among the lowest in the league (29th of 30 in 2012).   The Yankees, meanwhile, have owned the top payroll in baseball every year since 1999.  Yet payroll figures, in the absence of revenue totals, mean very little.  How much a team spends, after all, doesn't tell us how much revenue it generates or how much in earnings its ownership pockets.  Indeed, a closer look at the A's balance sheet evokes less Capra's Senator Jefferson Smith than one of Wall Street's TARP recipients. 

The $300 million dollar value of the Athletics alone ill equips it for the part of humble populist hero.  Actually, the Athletics current ownership group has nearly doubled its investment since they bought the team, according to Forbes' annual "Business of Baseball" issue.  From the $172 million dollar they purchased the A's for in 2005, their asset has risen in value to $321 million dollars in 2012.

Sure, the Bay Area media market the A's inhabit is about 40% of New York's size.  It's smaller still for the A's because they have to share it with the San Francisco Giants, their more popular neighbor.  (What's worse, the Giants have opposed the A's plan to move to San Jose.) This inexorably constricts Oakland's available revenue sources and limits their spending capacity accordingly.

However, Moneyball-- and the movie and book both suffer this flaw-- conveniently overlook the approximately $50 million the A's collect annually from MLB's revenue sharing program which compensates them precisely for their geographic limitations.  The subsidy the A's collect from Major League Baseball's revenue sharing program emanates from two separate sources:  (1) a "local revenue" tax assessed on all teams' broadcast dollars and gate proceeds and then redistributed from the large media market "Haves" to the small media market "Have-Nots" and (2) a "central fund" allowance realized from national broadcast contracts, merchandise sales, the MLB cable network, and MLB Internet properties but split evenly among all 30 franchises.

True, the League hasn't published exact figures in seven years.  I nonetheless extrapolated the $50 million dollar allotment, a modest estimate, from the following.  In 2005, records show the A's received  $19 million dollars from "local revenue" transfers-- this sum, no doubt, has risen-- and Baseball America estimates that the "central revenue fund" yielded every team about $30 million as recently as 2009.  This sum probably has grown since then as well.   

So, what exactly have the A's done with the $50 million-dollar-a-year allowance Uncle Bud gives them each year to spend on players?  They certainly haven't spent it on major league free agents; that's for sure.  Since the A's new owners arrived, their payroll actually has fallen.  It totaled $62 million on Opening Day in 2006 and $55 million on April 6, 2012.  And perhaps, for this reason, Forbes' calculates that in 2011, the A's owners netted a $15 million dollar operating profit-- $5 million more than the supposedly rapacious Yankees. 

Not exactly a business model worthy of Capra's exemplar of agrarian virtue, is it?  Actually, with the $15 million dollar operating income the A's showed in 2012 and the $23 million dollars they realized in 2011, Oakland looks more and more like Ronald Reagan's phantom "Welfare Queen" than they do the caricature of small-town thrift and maverick ingenuity Moneyball celebrates.

THE RINGS MONEY CAN'T BUY  
The greater fallacy of Moneyball however lies in the film's simplistic equation of payroll with performance.

Sure, the Yankees spend 3.5 times as much on their major league roster as do the A's on theirs ($197,962,289 vs. $55,372,500 in 2012.)  However, the surplus expenditure does not purchase them either a proportionate advantage in roster talent or yield them an equivalent boost in on-field performance. That this benefits the Yankees, only their most dogmatic fans would dispute.  Among the advantages, the Bomber's $200 million dollar payroll enables them to retain star veterans, to acquire premiere free agents, and to squander resources on boondoggles like Kei Igawa and Carl Pavano without it hamstringing their roster.

However, the Yankees' extravagance avails them far less than most people assume and less still than the linear correlation implied by Moneyball's premise.   According to Ranjit Dighe, an economist at Oswego University, the Yankees actually receive no marginal benefit, at all, from each dollar expended above $150 million. See also. More germane still, in the book Wages of Wins, Stanford economists, David Berri, Martin Schmidt, and Stacey Brook conclude, using a complex regression analysis, that over the eighteen Major League seasons between 1988 and 2005, payroll discrepancy accounted for only 18% of clubs' win variation.  A significant correlation but hardly a determinative one.  The .18 coefficient also doesn't indicate whether spending reaps wins or whether winning spurs teams to spend more or whether some third variable like, number of under-30 free agents signed, subsumes both.  

Witness, as illustration, the variability among the sport's World Series champions over the last decade.  Since 2000, eight (8) different teams have won baseball's title.   Since 1982, the trophy has gone to eighteen (18) of them.  Consider, too, the payroll ranking of the last eight World Series victors. Diamondbacks (8th); the Angels (5th); the Marlins (26th); Red Sox (2nd); White Sox (13th); Cardinals (11th); Phillies (13th); Giants (10th)2 

Now, compare, by contrast, this to the NBA and NFL, two leagues where salary caps control salaries and impose a relative spending parity among teams.  Over the last thirty (30) years, only nine (9) different franchises have claimed the NBA title, only fourteen (14) in the NFL.   

FREE AGENCY'S DIMINISHING RETURNS
Among the many reasons why payroll doesn’t impact baseball clubs’ success more directly, a primary one lies in the systemic inefficiency MLB’s collective bargaining rules embed in the sport's salary structure. Or in brief, the period when players perform at their most proficient doesn’t correspond to the time when they earn the most money.  

 In a Baseball Prospectus issue published in 2005, Nate Silver calculated that the average ballplayer’s peak performance spans his twenty-fourth and thirtieth birthdays, cresting for the hitter at age twenty-eight. However, this very same player doesn't reach free agency until 30, on average, the very end of this optimal performance curve. The anomaly originates in the relative advanced age of Major League rookies. In the NFL and NBA, the typical player starts his career at age 21 or 22, following college graduation.  In baseball, however, he first has to serve his time in the minor leagues, and as a consequence, he doesn't reach the Majors, on average, until his 24th birthday, according to AlanSchwarz, author of The Numbers Game.  And once on a Big League roster, he still has to play six more seasons before he can declare free agency and earn a salary worthy of his production.  But by then, his most prolific years already have elapsed. 

Take, for example, Jason Giambi.  In Moneyball, you may recall, Giambi's impending free agency-- along with Johnny Damon's and Jason Isringhausen's-- arouses considerable consternation in Oakland's front-office at the end of the 2001 season.  Billy Beane knows the A's can't afford to pay the players' asking price, and he despairs of replacing Giambi, in particular, with comparable talent.  Instead of griping, though, the A's should consider themselves fortunate.  Because the collective bargaining rules enabled them to renew Giambi's salary in his first three full seasons in the Majors at league minimum and in his next three, to minimize its escalation through the arbitration process, the A's battened on Giambi's most prolific years and paid him next to nothing for the privilege.      Between 1996-2001, Giambi earned, on average, only $1.6 million dollars annually-- a mere fraction of what the 150 wOPS he averaged would have commanded on the open market.

The converse is true for the Yankees, the team, not coincidentally, that signed him to a $120 million dollar contract just shy of his thirty-first birthday.   Between 2002 and 2007 (the next six years of Giambi's career), his average annual salary escalated nine-fold to $15.23 million dollars while his mean wOPS fell to 138.

The inefficiency is emblematic.  And it likely explains why the Yankees have failed to recapture the supremacy their core of young, cheap, prolific and homegrown players conferred for a brief interval in the late 1990s (Jeter, Williams, Rivera, Pettitte, Posada).  The talent available each year on the open market is too sparse, the salaries, too high, the contracts, too burdensome to enable even a team willing to spend $200 million dollars on Major League salaries to assemble a championship caliber team through free agency alone.  Indeed, the Orioles' failure during this period to keep pace with the Yankees through expensive, high profile free-agent acquisitions and the decrepit, calcified roster they accumulated in the process offers both a vivid illustration and cautionary example.     

THE VILLAIN AS HERO
That the Yankees should assume the form of populist bogeyman in any liberal's imagination smacks of irony to begin with.  In Moneyball's casino metaphor, Billy Beane fancies himself the card-counter; the Bombers, the House.   But baseball's Bronx franchise owes more to the Federal Reserve than to Caesar's Palace.  Far from a corporate barony that dominates its industry through lavish spending, talent piracy, and sheer financial might, the Yankees function as the League's fiscal ballast and financial guarantor.

First of all, the Steinbrenner family numbers among the few owners of professional sports franchises who, to their credit, recognize that a sports franchise is as much a public trust and civic institution as it is an individual proprietorship or private corporation.  With this in mind, their business model doesn't aim primarily to augment its shareholders' value or to maximize the company's profits.   No, the Yankees' upper management strives, above all, to win games, to honor the city that inscribes its name, and to hearten the fans invested in its fate.   Too often, baseball's owners regard their title to a sports franchise as a vanity stake or as a license to line their pockets.  Whose spending habits, in the end,  more readily summons the predatory monopolist: George Steinbrenner or Frank McCourt?  Whose behavior more closely approximates the robber barons of yore: the Steinbreners' profligacy or Jeffrey Loria's profiteering.    

Secondly, the Yankees' ample revenue and the proportionate sizable surcharge on it the League's revenue-sharing program assesses actually fortifies the sport's economic structure and competitive parity much in the way the U.S. government's tax receipts underwrite a stable and productive economy: (1) through block and formula grants, which transfer wealth from flourishing states and cities to economically depressed regions; (2) through counter-cyclical deficit spending which reinforce the economic system, as a whole, when individual industries falter and local revenues fall; and (3) through earmarks and appropriations for social services and collective goods the market ordinarily neglects.

Since 2005, the Yankees have paid over a $100 million dollars each year in revenue sharing levies and luxury tax surcharges that MLB has transferred to the League's Have-Nots. $75 million consists of the balance between their local revenue tariff and their central fund receipts.  Another $20 to $25 million dollars comes from the 40% competitive balance penalty (commonly called "the luxury tax") they part with on every payroll dollar expended over a fixed threshold-- $178 million in 2011.  (Again, the League doesn't disclose the exact amount so I provide a conservative estimate based on the full accounting MLB published in 2001 and the balance sheets and revenue-sharing figures leaked to Deadspin last year.) 

As discussed above, the proceeds go to franchises like Pittsburgh, Tampa, Miami, Kansas City, Arizona, Milwaukee, and Oakland where an indifferent fan base or shrinking urban population inadequately supports them.  Money, which enables their management, when so inclined, to sign their star players to long-term contracts or on occasion, to dabble in the free agent market.   And anecdotal evidence would indicate it has succeeded in this very objective.  Consider the teams inhabiting small-market cities who have signed star players to long-term contract within the last five years alone:  Minnesota, Joe Mauer; Milwaukee, Ryan Braun; Miami, Josh Johnson; San Diego, Carlos Quentin; Arizona, Justin Upton; Seattle, King Felix; Cleveland, Travis Hafner; and Kansas City, Joakim Soria.  The middling talent available through free agency during the last few off-seasons further proves the point.   To revise an old GM maxim, "What's good for the Yankees is good for baseball."     

THE DIAMOND REPUBLIC
Yet for all its stock caricature, populist sentimentality, and dramatic simplification, Moneyball nonetheless succeeds in its appeal to the audience's sense of injustice for a significant reason.  Sure, it accomplishes as much through hyperbole, distortion, and sensationalism.  Still Michael Lewis himself subtitled the book from which the film borrows its subtitle as "the art of winning an unfair game."  And whether or not the revenue disparities and payroll imbalances MLB permits actually compromise the outcome on the field perhaps means less in the end, for our purposes, than the general perception that it does.

After all, why does the idea that a revenue-rich baseball team can buy a World Series offend our sense of justice and fair play? Why does this outrage us when every day companies like Microsoft or IBM, despite manufacturing an inferior product, leverage their cash reserves and brand recognition to dominate the international marketplace and to outspend their competition and it elicits no greater reaction from the same public than a collective shrug?  Why on the baseball field do we demand that athletic talent, managerial acumen, or executive discretion alone prevail?  And if only by posing the question, it is, here, perhaps where Moneyball, unwittingly, conveys a fundamental truth about the national pastime and sheds light on the lofty status it occupies in the American imagination.

In his essay, America and Cosmic Man, the Englishmen Wyndham Lewis captured for his compatriots what distinguished their former colony from all other peoples.  The U.S., he wrote, is not a nation in the sense of England or France. "It is a new kind of country... America is much more a psychological something than a territorial something.. [much more] a site for the development of an idea of political and religious freedom than a mystical terre sacrée for its sons, upon the French model."    We, of course, have actualized this 'idea' in a vaunted and time-honored myth commonly called "the American Dream".   It's the social contract the nation implicitly enters with all its citizens, promising to each the opportunity to rise as high and to advance as far as his talent and drive, his savvy and mettle, his industry and initiative will take him.  His racial affiliation, class ancestry, parental upbringing, or nation of origin notwithstanding.

Only the Dream goads our conscience even as it eludes our grasp, receding like the green light at the end of Daisy's dock at the very moment Jay Gatsby came closest to apprehending it.  Still, into our third millennium,  we remain a nation of fluid class lines, swift cataclysmic change, and of democratic aspirations only partially fulfilled-- a land where economic inequality and cultural xenophobia divide us and where a Senator's son, an Ivy League legatee, a trust-fund baby, and celebrity name, among other hereditary privileges, impart professional advantages, financial means, and political clout about which the rest of us can only dream.

Except, that is, on our level-playing field nonpareil.  Where, inside the white lines, to quote Ring Lardner's biographer, "the rules, if observed, guarantee the triumph of merit."  The baseball field stakes a world where objective transparent rules isolate personal excellence.  Where timeless universal statistics quantify it.  Where wealth, fame, honor, and immortality reward it.  Where a man's parentage grants no advantage and individual merit alone carries quarter.

No, it isn't an Arcadia.  If Jose Canseco performed the country any service at all, it was to remind us that fraud, treachery, corruption, and prosaic human vice bedevil Major League Baseball no less than any other business or institution whether it's Wall Street, Hollywood, or Washington.  

It is rather that the "fresh, green breast of [] new world" the Diamond contains and the competition staged within it may project as a real an incarnation of the Dream as America can ever hope to achieve.  

               
       


1 Evidently, only the Red Sox win because of ingenuity. Sorkin postscript informs us as follows: "Two years later the Red Sox won their first championship since 1918 embracing the philosophy championed in Oakland," Sorkin's postscript informs us. Their $125,000 payroll that year had not the slightest influence.

 


2 Both the Red Sox and Cardinals won two titles over this period but ranked 2nd and 11th in payroll, respectively, on both occasions.


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3 OPS+ or Weighted OPS measures a player's total offensive production with 100 signifying the league's average players and each point above or below 100 registering an equivalent percentage in variation.

3 comments:

OldYanksFan said...

Very intelligent artilce. Thanks.

Matthew S Schweber said...

Dear OldYanksFan,

I fixed the link to the Ranjit Dighe study about the marginal benefits the Yankees derive from the payroll they spend in excess of $150 million.

You should now be able to download.

Thanks for reading,
Matt

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