Jonah Keri has written about baseball, business and the places where they intertwine throughout his career. His articles have appeared in GQ, Investor’s Business Daily, The New York Times, the Wall Street Journal and Sports Illustrated, among others. His book, The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First (ESPN Books/Ballentine), was published in March and became a New York Times National Best Seller. Keri, who just signed a deal to write a book described as the definitive history of the Montreal Expos, spoke with Big Lead Sports about the business of baseball.
Big Lead Sports: What was the biggest difference you found between what the Rays did and the original Oakland A’s concept of Moneyball?
Jonah Keri: Both organizations generally deployed similar approaches — look for market inefficiencies and exploit them. The way those approaches are portrayed in the two books comes off as very different, though.
In Moneyball, A’s manager Art Howe is portrayed as the equivalent of a feckless middle manager in a large company. In The Extra 2%, Joe Maddon is highlighted as a partner in the Rays’ decision-making process and an integral part of their success. In Moneyball, scouts are painted as old, out-of-touch, even deleterious to a team’s success. In The Extra 2%, I spend a lot of time discussing the vital importance of the Rays’ scouts and player development staff, and the role they play in finding, drafting, and developing young, talented players who can be under team control for several years.
BLS: What might readers find as the biggest surprise in what you uncovered about the Rays rise?
JK: How much the smallest decisions can have the biggest impact. A decade ago, a Rays’ scout found a pudgy in Missouri who he was convinced would become a superstar. He lobbied and lobbied his team to draft this kid. They worked him, didn’t like him. The scout remained convinced, and hoped they’d at least take a late-round flyer. Instead, the Rays passed, and he got drafted by someone else in the 13th round. You’ll have to read the book to learn who the player is. But he turned out to be pretty damn good.
Likewise, the Rays cut Carlos Pena from their spring training roster in March 2007, and were prepared to hand the starting first baseman’s job to Greg Norton. A few hours later, the Rays found out Norton was hurt, scrambled to the phone, called Pena back, and asked him if he wanted to return. A journeyman player to that point, Pena figured why not, at least he might get a shot. He hit 46 homers that year, and would prove to be a big contributor to the Rays’ success during their pennant-winning 2008 season.
BLS: Do you think the way the Rays built the team is a sustainable model in today’s economy?
JK: Absolutely. They’ve been a highly competitive team for the past three years. They are again this season, and they’ve got so much young, top-tier talent at the major league and minor league levels that they’re set up for years to come. It helps that the Rays have a knack for signing their young players to team-friendly, long-term contracts at just the right time. They approached Evan Longoria with an offer when he was still in the minors. Today his deal — which would max out at nine years, about $48 million is widely considered the most team-friendly long-term deal in all of baseball. As long as the current Rays management team remains in place, we should expect the Rays to remain contenders most every season for the foreseeable future.
BLS: Since you wrote the book, what do you think has changed the most with regard to the business of baseball?
JK: We’re seeing the increased importance of television deals. Last year, the Rangers inked a 20-year deal worth $3 billion with Fox Sports Southwest. Stadium attendance, which once made up almost all of a team’s revenue, is becoming less and less important in the grand scheme, especially for smaller-revenue teams that receive revenue-sharing assistance beyond what MLB doles out from the central fund.
BLS: Given the financial situations of such franchises as the Dodgers and the Mets, what are the biggest lessons in The Extra 2% that can apply to other teams?
JK: Taking a step back, we don’t really need a baseball book to tell us that trusting an owner who didn’t put a cent of his own money into a baseball team, then proceeded to bleed it dry, is a bad idea. Nor that investing with Bernie Madoff is a bad idea.
That said, there are two major business themes here:
1) Trust the process. Human beings are notoriously results-oriented. We use the term “scoreboard” to wave away any concerns about how we got to the winning result — whether we made dumb moves that worked out anyway, or even cheated, we perceive that none of that matters if those methods lead to a winning result. The Rays don’t think that way. They understand that the right process is critical to long-term success, and that a few short-term successes based on flawed thinking is a trap best ignored. They want to win the World Series as much as anyone else, of course.
2) Learn to wield the power of The Extra 2%. That term comes from something said by Stu Sternberg, the owner of the Rays and a successful Wall Street executive. He said that to beat the Yankees and Red Sox (and everyone else), the Rays need to do everything 2% better than the competition. Scout better, develop better, make out better lineup cards, trade better, spend money smarter, even be more aggressive about little things like post-game concerts. The Rays haven’t yet managed to be better in every area — they continue to have problems drawing fans to Tropicana Field, for one. But they have done so in many on-field areas. That’s how they continue to contend despite running out a payroll that’s a fraction the size of New York’s or Boston’s.