Due in large part to Michael Lewis’ Moneyball, analytical baseball ideology has often sold as a necessity for low-revenue franchises to compete with teams who have vastly more resources. The A’s story was written as brains overcoming riches, and a number of teams in smaller markets decided to emulate their success. Over the past decade, the front offices most known for their analytical decision making processes inlucded teams like the A’s, Rays, Indians, Astros, and Cardinals, and because of this, Moneyball was the catch-all phrase for poor teams that used analytics to compete with teams that didn’t need it.
Except that story hasn’t been entirely true for quite a while now. It’s an easy story to tell, because low revenue teams have used these kinds of tools to allow themselves to make up for their revenue deficits, but the notion of analytics being only for small market teams is outdated and now just not correct. The Red Sox were probably the first big market team to really buy into the combination of efficient spending while maintaining a very high payroll, but the Yankees weren’t far behind, with a significant analytical department of their own. And of course, the Dodgers already hired one analytically-oriented GM, with Paul DePodesta running the team in 2004-2005, though that didn’t last.
When the Cubs new ownership wanted to build a sustainable winner, they poached Theo Epstein from Boston, and are now not too far away from being a very scary competitor for the rest of the NL Central. And now, the Dodgers have lured Rays GM Andrew Friedman out of Tampa Bay, making him the President of Baseball Operations for the team with the largest payroll in baseball. With Friedman heading west, arguably the four most historic franchises in MLB — and certainly four of the teams with the highest revenue potential — fit the mold of a Moneyball front office. This kind of structure is no longer the domain of poor somewhat less rich teams, and this transition serves to make the Dodgers an even more formidable opponent in the NL West.
Certainly, Ned Colletti did some things very right during his tenure, which is why the Dodgers were one of baseball’s best teams this year. The team’s aggressive spending on international free agents — specifically Yasiel Puig and Hyun-Jin Ryu — paid massive dividends, and their decision to buy low on Hanley Ramirez also looks quite shrewd in retrospect.
But the team’s significant resources also allowed the team to be somewhat careless with money when they didn’t need to be. While Adrian Gonzalez and Carl Crawford were useful contributors for the Dodgers this year, the team absorbed contracts that put too much money on the books for the performances they received, and acquiring Crawford while re-signing Andre Ethier created an overcrowded outfield that resulted in a significant waste of money. And then there was the bullpen.
The team spent over $26 million on the foursome of Brian Wilson, Brandon League, J.P. Howell, and Chris Perez this year, hoping that group would form a strong setup core in front of cheap-and-dominant closer Kenley Jansen. No other team spent $26 million on their entire bullpen, closer included, so this was the most expensive collection of middle relievers baseball has ever seen.
And as a group, they performed at essentially replacement level (-0.8 WAR by FIP, +0.7 WAR by RA9), taking about 10 percent of the Dodgers payroll and lighting it on fire. When the playoffs rolled around, the Dodgers had essentially lost faith in all of their relievers besides Jansen, and their bullpen’s NLDS performance — 6 runs allowed in 8.1 innings — didn’t do anything to stem the criticism.
And so now the team is changing directions, hiring Friedman away from the small market Rays to bring his analytical bent to Los Angeles. Odds are pretty good that this isn’t going to be the only change in LA, as Bill Plaschke reported last week that the team would like to get their payroll down below $200 million for 2015. Whether that’s actually possible or not — the only way I could see it happening is if they didn’t even try to re-sign Hanley Ramirez, some team took nearly all of Matt Kemp’s remaining contract, and then the team made no significant free signings at any position this winter — it seems like the Dodgers are looking to bring their spending more in line with what the Red Sox have done in recent years, pushing the edges of the luxury tax without actually incurring the penalties for going over.
And that is why I think the the spread of analytical front offices is less of a threat to competitive balance than is often suggested. For years, we’ve been speculating about how teams like Oakland and Tampa Bay would be able to compete once the big market teams caught on to better spending habits, eliminating the intellectual advantage while maintaining the revenue gaps. But even as more and more teams build out departments devoted to the kinds of ideas that allowed Friedman to prosper in Tampa Bay, the game has seen unprecedented levels of parity, with the correlation between winning and team payroll reaching its lowest levels in decades this year.
The focus on value spending doesn’t just allow low-revenue teams to put good teams on the field; it allows high-revenue teams to contend while making larger profits for their owners. While the Dodgers will certainly talk about how Friedman’s track record shows that he gives them the best chance to build a sustained winner — and he very likely does just that — he also will allow them to build that kind of winner on a sub-$200 million payroll, meaning more money for Magic Johnson’s rich friends and less money for the players on the Dodgers roster. There is a reason companies acquired by hedge funds are often known more for cost reduction strategies than expansionist growth plans; the easiest way to show a profit is to sustain current revenues while cutting costs, rather than trying to grow revenues faster than you grow your costs as you spend more.
And while baseball is often criticized for not having a salary cap, the luxury tax system actually does provide a pretty significant deterrent to the kinds of spending that LA pursued recently. While the Dodgers tax bill amounted to only $11 million last year, they are facing a 40% tax on their overage this year, and that would rise to 50% next year if they were over again. Sending the league a check for $20 or $30 million for the right to have the most overpaid bullpen in baseball is probably not an experience the Dodgers were looking forward to, and the hire of Friedman and a shift towards more efficient spending likely means that the Dodgers are serious about avoiding big luxury tax penalties in the future.
So yes, a well-run team with significant capital is still a very formidable opponent, and I fully expect that Friedman and Epstein will have the Dodgers and Cubs near the very top of the National League going forward. But at the same time, we shouldn’t be sounding the death knell for the rest of the NL either, as Friedman’s move to Los Angeles likely means that the Dodgers aren’t going to be running $240 million payrolls much longer. The Dodgers can likely be a better team with a well-spent $190 million budget than they were under the sign-everyone-with-a-pulse mentality of the last few years, and this is certainly good news for Dodgers fans, but it’s not the end of the world for the Giants, Padres, Rockies, or Diamondbacks either.
Baseball is getting smarter, and this the direction the sport is heading in. But baseball is also achieving record revenues, and we’re currently two wins away from talking about the Kansas City Royals as American League Champs. Andrew Friedman is a great hire for the Dodgers, but the little guys aren’t dead yet.
Dave is the Managing Editor of FanGraphs.