Home Run

...Beane has determined that the last skill to disappear is the ability to get a walk—so he will happily use older and cheaper players whom other teams have discarded...

...Joe Morgan, arguably the greatest second baseman ever to play, said that it was not surprising the A's lost to the Twins in the playoffs, because Beane's team didn't manufacture runs and insisted on depending on walks and home runs...

...The other part comes from his invention of entirely new statistics that reveal previously unknown truths about the game...

...Perhaps that last question explains why Bud Selig is not a Billy Beane devotee...

...McCracken, a fantasy-baseball player who was active in sabermetrics websites, was intrigued when someone in an Internet discussion group said that it was impossible to distinguish pitching from defense...

...Conventional wisdom holds that good "closers"—the pitchers who finish games for teams—are worth millions of dollars...

...BY MARK GERSON After beginning his career on Wall Street, Michael Lewis turned to writing and focused his ironic sensibility on the world of commerce...

...Beane, who tells his scouts they aren't "selling jeans," believes players who can get on base come in all sizes...

...At the end of the 2002 season, several players on the A's questioned the strategy that brought them to the playoffs against all conventional wisdom...

...Examining the numbers for 1999, McCracken determined that the five best pitchers were Randy Johnson, Kevin Brown, Pedro Martinez, Greg Maddux, and Mike Mussi-na—which, as the obviously right result, suggested the theory worked...

...Focusing on Billy Beane, the general manager of the Oakland Athletics baseball team, Moneyball tells the story of how someone considers his business in an entirely different way from his competitors—and achieves consistently outsized returns...

...Beane's analysis has not uncovered anything remarkable in retiring the final three batters for a team that's ahead...

...Working the count for a walk might not be conventionally regarded as a glorious activity, but it is a beautiful thing to Billy Beane, who says, "Baseball is a game of attrition...

...As a dejected Beane reflected, "My sh—t doesn't work in the playoffs...

...They consider instead the alleged double as a hit at a certain velocity and trajectory to a particular point on the field...

...But perhaps the ï market isn't as effi-< cient as we think...

...Beane's competition uses a combination of conventional wisdom, sentiment, and superstition, allowing Beane to get the players that he wants for low prices and to trade the players that he does not want for high prices...

...Billy Beane is a baseball genius, but it doesn't take a genius to follow his example and start asking the right questions...

...Given the abundance of baseball information and its transparent distribution to countless participants and observers, the market for baseball players should be perfectly efficient— which means, absent luck, teams that can afford to sign the most expensive players will win, and teams that cannot afford expensive players will lose...

...I bought copies of Moneyball for around twenty of my company's employees...

...But his most recent book, Moneyball, is the best business book Lewis has written...

...Conventional wisdom holds that it is important a prospect "look like" a baseball player...

...No wonder Oakland A's pitcher Tim Hudson referred recently to a thirteen-pitch duel that ended in a home run as "the best at-bat I've ever seen...

...In answer, DePodesta showed how the A's scored an average of 0.6 runs more per game in that playoff than they did during the regular season...

...The problem was that the A's' ace Tim Hudson had two terrible outings...

...What is the return on the cost of the baseball season tickets our company has...

...Sure, they are slower as fielders, Beane concedes, but there is a greater variance in on-base percentage than in fielding—making the difference between getting on first base and not getting on first base greater than making a defensive play and missing it...

...Part of Beane's success comes from his identification of discrepancies between how conventional wisdom regards statistics and how he, through careful mathematical analysis, regards them...

...So the world needed a new number, and McCracken provided it in an essay on baseballprospectus.com...

...So Beane will trade a fast player for a guy who can get a walk...

...Beane won't look at them because high-school competition is too variable for its statistics to be meaningful...

...Beane's strategy succeeded in its intention: to generate the 800-820 runs and give up 650-670 runs for a total of 95 wins, so as to make the playoffs...

...And what's being attrited is pitchers' arms...

...Of course, the fact that Beane works in baseball helps make Moneyball so compelling, but anyone in business can derive lessons from the book...

...How much is that product line that gets such good press actually contributing...

...Beane believes that staying on base is the important thing...

...And who is often best at working a count...

...As Paul DePodesta, Beane's twenty-eight-year-old Harvard-educated protégé, says, "What gets me really excited about a guy is when he has warts, and everyone knows he has warts, and the warts just don't matter...

...His memoir of the bond-trading business, Liar's Poker, has become a Wall Street classic—and rightly so...

...The sports section in the New York Times retains the ultimately meaningless batting average as its first and most prominently displayed statistic—and doesn't list the leaders in slugging percentage or on-base percentage...

...His analysis shows that stealing bases only contributes to a team's "expected run value" when it is done successfully 70 percent of the time—which only very rare players can do...

...On its basis, he snagged the pitcher Chad Bradford, who, because of his unconventional delivery and his slow fastball, was not highly valued by any other team...

...According to Beane and DePodesta, it can't...

...Luck, as Branch Rickey said, may be the residue of design—but it's still luck, and it persists...

...Still, baseball's conventional wisdom is so deeply embedded that it is unlikely to be swayed merely by the truths in Moneyball that challenge it...

...How and why does our company actually make money...

...According to Billy Beane, most of the criteria baseball people use to identify a valuable player are overrated or simply wrong...

...Mitchell, and Richard Levin) he commissioned to study the issue of payroll parity...

...It is a long-term strategy, with no solution to the playoffs' short-term vicissitudes...

...Most baseball people believe in "manufacturing runs" through bunting, base stealing, and the hit and run...

...Do our compensation and promotion policies correspond precisely with that answer...

...Why would Billy Beane give Michael Lewis such access and thus allow his secrets to be shared with his competitors...

...Lewis doesn't say, but there are a couple of possible answers...

...If the market for baseball players is not efficient, then no industry can be safely considered efficient...

...They then examine ten years of balls hit at the same velocity to the same point, which yields a much better idea of the "expected run value" of the hit than the lazy classification of "double" allows...

...The solution is payroll parity, which can be achieved through a mechanism like a salary cap or a tax on | high-spending teams...

...My job is to get us to the playoffs...

...The central question asked and answered in Moneyball is, How can the Oakland A's consistently be at the bottom of the league in payroll and at the top of the league in performance...

...Boston Red Sox owner John Henry, who made a fortune off inefficiencies in the commodities market, tried to hire Billy Beane away from the A's and did hire Voros McCracken as a pitching analyst and Theo Epstein, a twenty-eight-year-old Yale graduate, as his general manager...

...After all, a pitcher's earned run average—the conventional statistic for evaluating pitchers— doesn't (aside from errors) account for the fielding that can allow or prevent runs...

...The first is that other teams are already beginning to get it...

...Anyone in business who sees how Beane has won so many games with so little money will be either inspired or frightened...

...He flushed out the fielding from pitching statistics by dividing hits and earned runs (for which fielders are partially responsible) by walks, strikeouts, and home runs (for which fielders are not responsible...

...Most general managers are excited by great high-school athletes...

...One answer is, essentially, luck...

...For instance, Beane and DePodesta ask how the term "double" can fairly describe both an unfield-able shot against the wall and a blooper to left that a less forgiving scorekeeper might have considered an error on the outfielder...

...It may be the best business book anyone has written...

...What happens after that is the f—ing luck...

...And inefficient markets create opportunities for people who think in new ways...

...Is the employee who made a good first impression genuinely performing better than his peers...

...Is that popular "brand-building" campaign really generating a lot of cash...

...And the practice worked for Billy Beane...

...So he has twice had pitchers accumulate many saves, become regarded as outstanding closers, and traded them to teams who valued this contribution a lot more than he does...

...And most of the criteria they should use are underrated or simply ignored...

...Beane and DePodesta learned about valuing hits from former derivative traders, and they learned about evaluating pitchers from Voros McCracken, an unemployed paralegal living with his parents at age twenty-eight...

...That's the answer of Commissioner Bud Selig and the blue-ribbon panel (with George Will, Paul Volker, George Mark Gerson is CEO of the Gerson Lehrman Group, a New York-based investment research firm...