‘Tis the (off)season when baseball teams make strange moves. A couple of weeks ago, Matt Swartz took aim at one particular type of move: the proverbial “team going nowhere” who signs an expensive free agent. He will not lead them out of the forest, but will take a lot of green with him. Matt made the argument that, from a financial standpoint, this type of move makes sense for a team on the cusp of contention, but not for a team who doesn’t have much chance to contend. The Baltimore Orioles‘ signing of Mike Gonzalez seemed to be more of the “team going nowhere” type than on the cusp of contention. The Orioles are a re-building team playing in the AL East, wherein live the 2009 MLB Champion Yankees, the 2008 AL Champion Rays, and the 2007 MLB Champion Red Sox. True, the Orioles have a number of talented young players, but coming off a 68-94 season (their 12th straight losing campaign), it’s unlikely that they will be challenging for a playoff spot next year.
Why sign the costly Gonzalez for two years, $12 million when that job in the bullpen could be given to a 23-year-old making $500,000? True, having Gonzalez to turn to in save situations will probably net the Orioles a couple more wins than they otherwise would have gotten, but even with Gonzalez, some of their young players maturing and maybe a little luck, that brings them to… 75 wins? Or maybe 80 wins? I have to think that the Orioles understand this on some level. It doesn’t take an MBA to figure out a marginal revenue curve, at least on an intuitive level, and I’m guessing that someone in the Orioles’ front office went to business school. Why the irrational behavior?
In the comments following Matt’s piece, I noticed two themes offered as possible explanations for the signing. One is that the Orioles’ top brass are making a move strictly to placate the fans to get them to come out to Camden Yards. (“Hey, look! We’re doing something!”) Indeed, importing a closer is kinda like eating a whole carton of ice cream. It tastes great, relieves your anxieties, and, in the end, makes you fat. You know you shouldn’t do it, but… it’s mint chocolate chip.
The Orioles do have a small stable of young talent, which may end up maturing into the core of a really good team in two or three years. At that point, it may be logical to add a piece like Mike Gonzalez. The problem is that by that point, the money’s already been spent and Gonzalez is now a free agent again. Putting that money away for two years down the road might be a better idea in the long run, but it means that the fans will have to wait a bit longer for their day in the sun. If the Orioles don’t magically turn into a 100-win team this year, management can say “… but we went out and got Gonzalez!” and then, the four most powerful words in the English language: “It’s not my fault.”
But then there was another reason floated for the singing: Mike Gonzalez will make the Orioles a better team than they were, and that it’s important for the development of those aforementioned young players that they not grow up in a “culture of losing.” In essence, the Orioles are counting not so much on the direct effects of Gonzalez’s performance, but on the indirect effects. The Orioles will win a few more games, and finishing 75-87 versus 72-90 will be the difference between Nick Markakis and Matt Wieters giving up on baseball and fulfilling their full potential. The money spent on Gonzalez should be seen as an investment in the future performance of the kids.
Now, we’ve moved into decision-making on the basis of amateur developmental psychology. Well, I’m not an amateur. Let’s take a look at whether this “culture of losing” idea withstands exposure to the data.
Are players who “grow up” on losing teams adversely affected later in their career? On the surface, this reasoning has a certain logic to it. It’s common sense (and good science) that childhood trauma, such as suffering abuse or living in a war zone, can affect someone adversely later in life. There’s also a theory of why clinical depression happens called “learned helplessness.” It was first discussed by psychologist Martin Seligman after a series of experiments involving dogs. In the experiment, Seligman delivered mild electric shocks to dogs, with no chance of escape. Later, when Seligman opened up an escape route for the dogs, they just stood there and took the shocks anyway. He hypothesized that the dogs had learned to feel helpless and like there was no escape. I’m a little wary of ascribing human motives to animals, but studies on humans (no, they didn’t shock the humans) have shown this effect as well. People who are put into chronically stressful situations sometimes begin to believe that nothing will ever change. Will baseball players show the same effect?
I found all players who, over the last 20 years, had three (or more) seasons before the age of 26 in which they logged at least 250 PA with one team. Players who get significant playing time at such a young age are generally the good prospects about whom GMs and fans alike sit up nights worrying about. I tabulated their aggregate stats over the course of those years (i.e., I lumped their age 23-25 seasons into one big pile.) I also looked at the teams on which they played and tabulated the winning percentage for those three team-seasons. Now, we have a baseline for what our player was doing as a youngster and a measure of how good the teams were on which he played early in his career.
Then, I looked at his stats (where available) during his peak years, age 27-29, again in the aggregate. I looked at two basic measures, OBP and SLG, as my main indicators. (There are several holes that one can poke in this methodology. If I may answer all those critiques now: “Direction before precision.” For the curious, there were 85 players in my sample.) I ran a regression with OBP at ages 23-25 and team winning percentage experienced at 23-25 predicting OBP at 27-29. I repeated the process for SLG. In this way, I could control for where these players started and observe the effect of early winning percentage.
Except there wasn’t one. Not even close. As you might expect, early SLG predicted later SLG and the same with OBP, but the “culture,” be it of winning or losing, in which the player matured professionally was irrelevant to his future individual performance. It seems sensible that there would be an effect, but none appeared. Why not?
The problem with using the cognitive/learned helplessness theory is that most people haven’t read the rest of the book and gotten the details. The details make all the difference in this case. The idea behind the “culture of losing” argument is that a player will get so used to losing, perhaps despite his best efforts, that he will learn to not give his all. What’s the point if the team is going to lose anyway? Except that his team will not lose all the time. Even the most horridly bad teams win 50-60 games a year, roughly one in three. One therapy technique with folks who fall into learned helplessness is to look for counter-examples to such thoughts as “I’m always going to lose, it doesn’t matter what I do.” At that point, a person can appreciate that there will be victories along the way, and that there are other factors, often beyond their control (being stuck on a lousy team?), that play into their current state in life. If the team is winning at least once in a while, it shouldn’t be too hard to find a counter-example or five where the player worked hard and the team won. Aside from that, it’s fairly easy for a player to look at his individual stats and figure out that if he could only find his way to a good team, he might do a little more winning.
And therein lies what management means about wanting to avoid building a “culture of losing.” Losing doesn’t feel good; winning feels better. A player may not blame himself for all the losing, but he might begin to associate all that losing with the franchise. He’ll do just fine in his own development, but when he gains free agency, will he want to get out of town if he thinks his current team is a loser? The Magic 8-ball says, “Yeah, probably.”
The Orioles might (or might not) believe that Gonzalez will put them into the playoffs next year. He probably won’t. They might (or might not) believe that winning a little more will make their young players better in the long run. It won’t. But perhaps they realize that signing Gonzalez now does something else for them in three or four years. At that point, the kids will have a decision to make: Should they stay or go? From the Orioles’ perspective, if they leave, that’s a lot of resources that they’ve put into these kids walking out the door. If the Orioles can convince them that they really are building a “culture of winning,” (“Remember when we got Gonzalez?”) maybe they’ll be more likely to stick around. So, maybe the $12 million spent on Gonzalez has more to do with discussions that will happen well after he has moved on to another team. It’s a rather big insurance policy to take out, but after twelve straight losing seasons in Baltimore, maybe there’s a certain necessity and logic to it.
Or maybe they just made a silly move.
Russell A. Carleton, the writer formerly known as ‘Pizza Cutter,’ is a contributor to Baseball Prospectus. He can be reached here.
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Gonzalez is signed for two years, so either this July or next July, he might end up in a trade package, but why not save the money now, bank it, and in 3-4 years when you need that fully developed piece, you have the cash. In the free agent market, you are buying relative certainty of what you're going to get. When you're on the steep part of the marginal revenue curve, would you rather then plug in that "maybe" or would you rather a guy with a track record. A lot depends on your time horizon.
Shoud it be:
a) Get to the playoffs as soon as possible, even if it's a one-time deal
b) Get to the playoffs (or at leat be in serious contention) for an X-year stretch within Y years.
An annoyance (or maybe the missing piece) is what should be the goal of say Dayton Moore be?
Does George Sherrill really need to be replaced? Maybe. But what about thinking about it from another direction? Maybe it's best to take the short term hit of a lousy bullpen if it means a better chance at winning down the road. The answer may come out to be that to sign Gonzalez is the better plan. But a simple reflexive "Sherrill left, need a closer" over-simplifies all of the options available to a team and cuts off what might be a better option to pursue.
Can they?
After all, every other team had a chance to sign him as well and passed on it. It's possible that events could conspire to raise Gonzalez's value to the teams that passed on him - he could pitch exceptionally well and raise his perceived value, or there could be a shortage of relievers available and a team could be desperate for a "proven closer" to fill a hole caused by injury.
But I don't know that either of those scenarios are particularly likely, and I don't think it's a good investment for them to sign free agents with the expectation that they can "flip" them later. (We have some pretty strong evidence, in fact, that the Orioles put a higher value on his services than any other team, and thus may have a hard time persuading other teams to take on the contract AND give up something of value for him. If Gonzales isn't worth 2/$12 to you now, why is he worth that AND a prospect with upside six months from now?)
But unless the Dodgers (who seem to overpay in prospect deals - aside from Bell for Sherrill, they got crap from the Rays for Navarro and E.Jackson, gave up Carlos Santana for Casey Blake) suddenly need *another* reliever next year, they're going to be disappointed in what they're offered.
Regarding the prospects, an interesting theoretical question could be "Is it more efficient/effective to have a second round pick with no pro experience (and pay his signing bonus) or spend a bit more ($6 million) to potentially acquire an extra prospect or two who have already been stress-tested through one or more minor league seasons?"
http://baseballprospectus.com/article.php?articleid=9263
They do and should value the player more in July. The reason is that the odds of a player worth X wins making the difference between making the playoffs and not are low in April because one team can sink or run away with it, but the later in the season, the more likely one win makes a difference for some teams. Imagine if teams could have traded pitchers to Minnesota or Detroit last October for game 163. You wouldn't exactly prorate the player's value to value them for one game.
Whether it's a good idea to sign players to flip them later was something I looked at here:
http://baseballprospectus.com/article.php?articleid=9869
Basic result was that you need to have at least an outside shot and it needs to be a flippable player like a pitcher rather than a 3B for which you don't know if there will be a team in a pennant race with a need for him.
The Orioles traded their closer last July. Subsequently their bullpen blew some late leads. In all of this verbiage, you'd think those two relevant facts could have found a place.
I don't know what city this writer lives in, but it clearly isn't Baltimore, and he clearly isn't reading the Baltimore Sun. It's much easier to mock the anger of fans at a franchise when you're not reading those fans on a daily basis.
Please understand that I'm not necessarily defending the signing. But this weak column doesn't point out its only real flaw -- that the Orioles will surrender the No. 3 pick in the second round. The $12 million is small change to a team that is below its payroll from several years ago.
Please read Christina Kahrl. She tends to see transactions from the teams' points of view. You might learn something.
Let me add this: My goal in writing this piece isn't so much to tweak the Orioles' management for the signing (OK, maybe a little). What's done is done. But there's another team out there thinking of doing this same type of thing right now. I want people not to evaluate moves based on the assumption of a steady-state past. I'd rather that they took a broader view of the options available to them and projected those into the possible future.
What makes you think that money saved from payroll in 2010 can be used in 2012? That may be how home finance works, but it's not generally how business works, and it's especially not how baseball works.
Once again I think your lack of the big picture hurts your overall argument. If you were analyzing the Giants, a team that claims it's too poor to pursue Matt Holliday, then it's fair to say they shouldn't spend money on Mark DeRosa.
But the Orioles just offered $140 million to Mark Teixeira last year and were rebuffed. If you don't believe Scott Boras (and I don't), they haven't made any large offers at all this offseason. So they still have that Teixeira money sitting around -- the warchest is already full.
I repeat one thing I said earlier: $12 million over 2 years isn't much to this Baltimore team.
I also want to point out that picking on the Orioles, in your first column no less, is so 2003. This isn't the management team that signed Marty Cordova.
They wanted a closer. They had the money. They could've signed Fernando Rodney or Brandon Lyon; instead they got somebody who looks like a pretty good pitcher at least. The only real issue is that 2nd round draft pick.
Let's assume that the Teix money (17.5M per year) is still in the warchest. Why spend it on someone who won't get you into the playoffs this year, and instead bank it until 2012, when you can have all that saved money to spend to add pieces to a team which has naturally grown to the point where those moves make sense? I can understand that this is not a pleasant thought of having to endure another couple of losing seasons, but as a therapist, sometimes you have to tell people things that they don't want to hear.
I actually rather like Gonzalez himself as a pitcher. If the goal was "get a closer", then the Orioles did well in that regard. I'm questioning the underlying assumption that "we need a closer."
The draft pick is an issue, but it's a cost of doing business. I think that the "draft picks are gold/draft picks are toothpicks" pendulum has swung a little too far in the gold direction. Yes, there's nothing better than a draft pick who works out. There's nothing more frustrating that a draft pick who doesn't. A draft pick is a high-stakes coin flip, not a guaranteed future star who will only make $500K per year and take us to the World Series in the process. He might become that. He might flame out in AA.
It really seemed to be money looking for a FA to spend it on, like the concept of saving it was not a possibility to them
Moreover, you picked on the wrong signing. Garrett Atkins -- that makes no sense. Gonzalez is a pretty good pitcher who might provide good value for the money he's signed for. It's a short term deal that won't hamstring them. And how quickly people forget that the Orioles turned a lesser lefty bullpen arm into a Proven Closer and flipped him for a legitimate prospect. When the Bedard deal was made, most analysts I read here said, "Great deal, but why bother with Sherrill?"
But back to the lack of perspective. It's easy, sitting in Cleveland or New York or San Francisco, to say, "The Orioles should just find the next Ryan Kohlmeier and make him closer at the major-league minimum. Why spend money, even if you can afford it, on trying to make a few more games pleasant for your fans?"
This is the kind of philosophy that gets a GM fired, unless he's Billy Beane.
I also think somebody smarter than me could show this to be a fiscally smart move. If the Orioles turn out to be competitive in 2010 or 2011, they will draw more fans and have more money to spend. Gonzalez, if he helps in that resurgence, will add revenue. If they are not competitive, it's only $12 million, which is not a big gamble for them.
You can't compare this to Jose Guillen. It's a short contract and not much money.
The Orioles had a woeful bullpen last year. Failure to make a "meaningful" attempt to address that weakness would have cost them more long-term and non-marginal dollars than the relatively marginal cost of $11 over minimum for two years' service by an untested rookie.
We have to bear in mind that all teams must always, always, always be competitive. True - not every team can compete for the playoffs every year, but every team must compete throughout the baseball season, at least through 162 games in the regular season. Fans must always feel like their team has a chance of winning any given game at a rate approaching 50%.
I get the point of your article, and I agree that the idea of a "culture of winning" seems like a silly argument without support. However, I think Hookieball's comment is on the mark. The idea of signing Gonzalez was not because the Orioles intend to complete in 2010 or to create a culture of winning. I think reason that the signing is good is that it helps improve the Orioles's record over the next two years. If the record improves, when the Orioles young core is good enough to contend with some free agent signees, those free agent signees will be more likely to sign with the Orioles than they would be if the Orioles lose 90+ games the next two seasons. IIRC, the Orioles made a competitive offer for Teixeira last off-season, and Teixeira didn't seriously consider it because the Orioles were such a bad team. They don't want that scenario to repeat itself.
Personally, I think the Marlins experience provides the possible counterargument. No, spending money on Gonzalezes won't bring many extra fans to the ballpark. But does doing nothing of the sort destroy the fan base? Ballclubs themselves seem to act that way.
How extensively this could be researched, I don't know. But I think the possibility has to be acknowledged, so long as actual ballclub managements believe it.
Of course, I thought that was what they Royals were trying to do when they signed Gil Meche, so it all depends on execution of all aspects of a plan. And the Orioles were never as bad as those Tigers teams.
As far as signing gonzalez in the hopes of trading him for prospects either this season or next season, I'm not sure that's a terrible idea. You get some performance now, which may not improve your team's chance to win a world series, but might provide a few more wins now (and thus provide a bit more short term revenue since I think we can assume that more fans come to see teams that win more games, even if they are winning 78 instead of 72) while also being able to turn some of that money into, effectively, an amateur signing. The Orioles turned Sherrill's salary into Josh Bell. How much would it have cost to sign an international free agent who was the same age as bell and had the same upside? The fact that sherrill was still arbitration eligible changes the math a bit, but I think that the general idea of signing a free agent, extracting some short term value from him in propping up fan interest in a losing team, and then turning him into good prospects is fairly sound assuming you are confident that the player can be turned into a decent prospect (package). Of course, that's a fairly big assumption.
I may be off the geeky deep end, but I'd be interested in seeing the actual numbers you came up with, in support of your conclusion. A regression diagnostic or two.
Regarding the "fungibility" of payroll money: I have never worked for a sports franchise, but the companies I have worked for have certainly not set operating budgets based on carrying over all unspent funds from the year before. If a given year's budget was not fully spent, management did not automatically add the surplus to what they made available for operation in the coming year, at least in the industries I've been exposed to. It went to profit, debt paydown, other business activities, lots of other things.
Whether the saved payroll money would have been spent elsewhere is something only the O's know for sure, but theoretically, it could have simply been banked. Or spent on minor league development. Someone might make the case that this sort of spending would actually be more beneficial in the long run.
Early winning percentage correlates with early OBP at .234 and SLG at .191. Those are significant numbers, although not compellingly large. Players on better teams are better, but better players make for better teams. It becomes a correlation-causation trap.
Another interesting study might be "Do good players on bad teams tend to remain on bad teams, or do their teams improve?"
Nice article.
I read the comments above and am a bit confused why we're discussing was it a good signing or a bad? I thought the point of the article was to examine a commonly held point of view (losing hampers player development) and go at it with some sort of expertise instead of armchair psychologist. I'm trusting Russell that he has some sort of experience to bring to the discussion when he says "Well, I’m not an amateur." If he doesn't, well, then shame on him and boot him out of here for implying such. I'll allow that the main thrust isn't quite clear though.
In the State of Prospectus thread, pizzacutter (aka, Russell) asked what we're asking for iin the comments. Well, for me, this is actually kind of it. Ahh, irony. Statistically informed? Yep. Attacks an issue from a new angle? Yep. Some humor? Yep (if a bit light on it).
I'm working my ass off to give the new folk a chance. Frankly, a (not so) little piece of BP has died as each of the old vanguard have left. This article at least gives me some hope. It isn't the best piece of BP writing I've ever read (that's not an indictment of Russell, it's mad props to some of the brilliant writing we've been lucky to experience here), but it's the kind of writing/analysis I come here for.
I promise I'm not an amateur. I have a Ph.D. in clinical psychology (hence, Baseball Therapy) with an emphasis on children and adolescents. A lot of the stuff that I have written in the past and will continue to write will be looking at a number of commonly held beliefs about baseball which are really just bad amateur psychology. But I trust that means I won't get booted out? ;)
FWIW, I hope you keep reading. As someone who read BP for a long time before I got hired here, I miss a lot of those first generation folks too. They wrote some really cool stuff and I enjoyed reading it too. In fact, one of the coolest moments in my life was actually getting to meet Dan Fox at the BP event in Pittsburgh this past summer and having him say "Oh yeah, I've read your stuff, it's really good." I'll do my best to carry on the proud tradition.
And, as you say, direction first, but weren't there some players who fit the first part of the sample and didn't make it to "peak" seasons? I guess I'm asking - does your mini-study have survivorship bias?
Thanks & I look forward to reading more of your work.
The point about negatively skewed feedback is well-taken. I hope to do some more writing on the subject soon. Blown leads in the ninth subjectively hurt more than a vlown lead in the sixth inning, but the result is the same objectively. I think this disparity drives a lot of silly decisions in baseball. Could it have an effect here, especially around Gonzalez? Maybe. That would take a little more data digging.
MIGHT the Orioles be making a legitimate bid to hold on to Wieters et alia circa 2012 by adding a few wins via Gonzalez?
I can't imagine too many players would want to go to a losing team that doesn't appear to be in a position to win in a few years... I mean look what's happening with Washington. They sign Dunn and Pudge and now you have guys like Capps who *want* to play for them.
Having said that, I don't like the Gonzalez signing because it costs them a draft pick. Find some other former Pittsburg reliever who won't cost as much and let him fail at less cost. I'm betting that Stan Belinda is probably still available.
Another way to try to get the hometown discount is to literally draft and sign hometown kids. Kids who grew up as fans. I think they are more likely to sign at a discount than kids who grew up thousands of miles away and as fans of another team.
Yet another way is the "culture of winning" issue addressed in the article. When deciding where to play next, I'm sure probability of making the playoffs is a fairly important consideration for most players.