TORONTO — Billy Beane’s famous “Moneyball” theory to building a baseball team may not be so money for teams these days. A study by researchers at the University of Toronto’s Rotman School of Management claims that the analytics-heavy strategy lost some of its luster once it became adopted by most other teams.
Back in the early 2000s, Beane, who was the general manager of the Oakland Athletics at the time, started to implement the use of data analytics in building his team. Beane felt compelled to look beyond the know-how of baseball purists in order to compete as relatively low-budget team. Major League Baseball has no salary cap, meaning teams can spend as much as they want on players for their roster. In an age when teams like the New York Yankees were simply paying the game’s best players premium salaries to win ballgames for them, the A’s were forced to take a different approach.
It was a strategy that paid off. The A’s advanced to the playoffs in 2002 despite a budget of about $44 million, compared to the $125 million the Yankees spent that season.
Study author Ramy Elitzur, a professor of financial analysis at the university, says the advantage Beane and the A’s enjoyed en route to multiple division titles and playoff appearances in the early 2000s has since dwindled because of its ubiquity in the game today. Today, most, if not all of MLB’s 30 teams, are using advanced statistics to some degree to find valuable players who they don’t have to offer hundreds of millions of dollars.
“It’s like having a secret sauce,” Elitzur explains in a statement. “When you have a secret sauce and nobody else knows about it, you have a competitive advantage. Once the secret sauce was outed, which was what happened with the book, everybody could imitate the Oakland A’s.”
Elitzur is referring to the popular book Moneyball, by Michael Lewis, which details how Beane built a championship-contending team on a shoestring budget thanks to data. The book was eventually made into a film starring Brad Pitt as Beane.
For his study, Elitzur created a database in which he input statistics from 1985 to 2013 concerning team payrolls, playoff appearances and success, which specific data analytics or “sabermetrics” were used by each ball club, and their players’ overall contributions to their team.
This final statistic is the heart of Beane’s Moneyball approach. Wins Above Replacement, or WAR, is a statistical index indicating how many wins a player contributes to his team. WAR takes hitting or pitching, defense, and baserunning into account, with each individual statistic weighted to provide an accurate representation of each player’s true value.
According to Elitzur, there were only two true “Moneyball” teams in MLB between 1997 and 2001. By 2002, three more teams were emphasizing advanced statistics such as on-base percentage. The advantage of using the approach hit fever pitch in 2003, a season in which the A’s won the American League West.
Yet in 2008, when numerous other teams caught onto the trend, the competitive advantage of using the data began to decline. By 2013, 75% of MLB teams were using that approach.
So while Moneyball was — and still is — highly influential in the sport of baseball, perhaps some strategies are better left unshared.
“If you have a built-in advantage, don’t ever talk about it,” says Elitzur. “Once Moneyball happened, you had a new arms race. There was no way out.”
The study will soon be published in Omega, The International Journal of Management Science.