Monday, November 9, 2015

By David Saltzer, Senior Writer - 

I’ve been thinking about this for a while, but finally decided to write something about the subject based on an article written by Nick Cafardo. You can read the article here.

There’s no doubt that baseball has been undergoing a revolutionary change in how teams are assembled. Before free agency, teams were mostly developed internally. An organization had a system—a way of playing the game—that it taught all of its players from the Minor Leagues to the Majors. Under this system, players had distinct roles that they played on a club, and mastered specific skills to fill those roles. Players were promoted and played based mostly on how well they fit into that system. Scouting played a pivotal role in developing a championship club because it was the scouts who found and developed the players into a specific mold. Clubs that could do that the best often succeeded the most. Think of this as the traditional manufacturing plant that made all of the parts that went into a final product. 

But, once free agency was allowed, organizations had a new method for creating a team—assembling it from parts from multiple organizations around the game. Under this system, players had specific skill sets, and organizations patched together the pieces that they wanted to make their clubs better. Organizations that could assemble the best parts together had an advantage, and often succeeded the most. Think of this as the free-trade manufacturing style of today, when a final product is assembled from parts made all around the world.

It’s not surprising, then, that since the rise of free agency that statistical analysis has risen in importance for baseball. As the cost to acquire a free agent has increased, the need to identify those players who give the most value for their contracts has become of paramount importance. Maximizing value and return on investment has become critical for organizations, particularly those who have lower payrolls, and cannot afford one or two bad contracts. This view is what was mostly popularized by the book “Moneyball” with the idea being that clubs should use modern statistical analysis to identify undervalued skill sets to achieve greater performance on the field while ignoring most of what physical scouting would say about the players. 

As clubs have adapted and shifted in the rising baseball economics, a split has developed between the so-called “traditional” analysis (focusing primarily on scouting) and the “new” statistical analysis in most front offices and amongst baseball fans in general. While the casual baseball fan might identify this as a result of “Moneyball,” or a more serious fan would identify with Bill James and his “Baseball Abstracts”, this change was destined to come for reasons that have nothing to do with the book or the rise in sabermetrics. Instead, this split has everything to do with the rising economics of the game specifically due to free agency and the lifetime earnings of today’s baseball players.

In 1976, the last year before free agency, the average baseball salary was approximately $50,000/year. In 2015, the average baseball salary eclipsed $4 million/year. This year, the average salary will rise again. What this means is that prior to free agency, players on average that paid an average of several years’ worth of salary for an average American, but not enough to guarantee a lifetime of never having to work again. (We can discuss and debate the fairness or ethics about this another time—that’s not the point of this article). 

More importantly, though, look at the rise in the Major League minimum salaries. In 1975, it was $16,000/year and in 2015 it was $507,500. This is far more important for understanding why baseball analytics will win and scouting will lose in the long run.

Think about it, who have been the most consistent and important group of scouts over the years? Invariably, it has been players who had a few years of Major League service who still needed to work to provide for their families. 

Imagine a player who played 5 years in the Major Leagues in the late 1960s. During his time in the Majors, he got exposed to the best of the best players, and got to learn first-hand what it took to be a successful player in the Major Leagues. More importantly, he got to see and learn what it took to win at the highest level of the game. And he did so, by most likely earning less than $125,000 over that time period. While that was a nice sum compared to an average American’s salary at the time (again, without discussing the equity or fairness of the issue), it was not enough to guarantee that he would never have to work again. It definitely was not more than the average American would earn during a lifetime of work, and often he had to take a variety of difficult jobs to support his family throughout the rest of his lifetime.

Now, imagine a current player who will have the same 5-year span in the Major Leagues. Due to arbitration and raises, he mostly will earn more than $3 million, and possibly closer to $4 million. Due to the modern Collective Bargaining Agreement, he will have lifetime health benefits and a retirement plan in place. Seeing how that’s more than average American earns in a lifetime, that amount is enough to guarantee that a player does not ever have to work again in his lifetime (if he chooses and manages his finances). At the very least, it guarantees that a player with 5 years of Major League time can choose not to have a difficult job that requires massive travel, often alone, catching 2 to 3 high school or college baseball games a day.

Having talked with many scouts, I know that the job requires a lot of hard work. Scouts can drive hundreds of miles in a day trying to catch as many games as possible, and then many more hours in the evening logging reports. They often live out of their cars, are typically alone for most of the time, and live on a fast-food. It’s a long season for them, and they don’t get a lot of credit for which they are due.

Now, prior to the dramatic rise in player salaries, many former Major Leaguers would take the job because they needed the income. And in doing so, they brought along something critical—institutional knowledge of the game. I am a big believer in the importance of institutional knowledge. It’s what separates people who are effective at a job and those who just work the job. 

But thanks to today’s baseball economics, today’s players don’t have to take a job that puts them on the road for most of the year. They don’t have to take such a difficult position to support their families. If they wish to stay involved in the game, they can coach at the collegiate level, where their seasons are shorter, and the demands are less. And as a result, their institutional knowledge is lost. Their baseball earnings guarantee them the luxury to be a bit more choosy about which jobs to take.

Ask yourself, which Major League players today will become tomorrow’s baseball scouts? 

Since fewer and fewer current Major Leaguers are going into scouting as a career, the majority of today’s scouts are often former Minor Leaguers or collegiate athletes who made far less than their Major League counterparts. Unfortunately, that means that from the outset, they have less institutional knowledge about what it takes to play and succeed in the Major Leagues because they did not directly experience it and learn it themselves. 

When one attends gets to know the scouts, one of the biggest differences between the gray-haired and dark-haired scouts (or no-hair or full-hair scouts) has to do with the amount of Major League playing time that they had. Most of the older scouts had a decent Major League career; most of the younger scouts have not. Talking with each group brings a distinctly different experience. The older scouts focus more on the technical skills of the players, the younger ones talk more about statistical projections. 

Previously I wrote about an experience I had with Jim Fregosi at an Angels game. I can’t imagine from today’s Angels team who will continue to scout games like Jim Fregosi did into his 70s. But, talking with him throughout a game, and learning how he saw the game, was an eye-opening experience for me. He saw things that I didn’t see, and yet, we were watching the same play. That’s what years of success at the Major League level taught him, and that’s what helped him analyze players in a way that younger scouts mostly could not. 

Since the newer scouts don’t have the experience to rely on to hone their analysis of the game, they have only one place to turn to justify their opinions—baseball analytics. The pure numbers help offset the lack of organizational knowledge that they have. More importantly, it dovetails into the ever-increasing risk associated with the rising cost of player salaries. With millions of dollars per year on the line, a scout can always point to the data to justify an opinion on a player. In the past, when the risk and salaries were lower, a scout could focus more on the intangibles of a player to justify an analysis because they knew how important those intangibles were to creating a championship club. 

It’s no different than the ever-increasing importance of SAT Exam scores and GPAs for college admission officers, and less and less importance for personal statement essays, letters of recommendation, and interviews. With less and less institutional knowledge of college admission officers, and less and less time to get to know the individual applicants (due to more and more applications), an admissions officer can always justify an opinion with the “raw numbers”. 

As baseball organizations have fewer and fewer options to retain the organizational knowledge that a Major League player learned while playing, clubs have no choice but to turn to those scouts who bring the best baseball analysis. This does not mean that baseball analytics are the better approach. It definitely does not mean that one approach is right and one is wrong. What it means is that the game is changing, and that change is driven by the lifetime earning of current players.

Personally, I believe that baseball scouting has an integral role in the game. Knowing how players will react to situations, knowing which players can adjust to the game as it continues to evolve (such as with the more prominent role for shifts), knowing who can come through in clutch situations, and who can execute when called upon has an incredible role in the game. Understanding player chemistry and developing a team identity makes for championship clubs. I personally wish that more and more of today’s Major League players continued to scout and pass along the organizational knowledge that was given to them so as to make the game greater for all fans.

That’s not to say that baseball analytics are less important. They are very important to the game, as players who can’t overcome the shift have shown. But to truly make a championship club, in my opinion, a front office needs a healthy dose of baseball scouting by those who have the knowledge of Major League success to understand how players will continue to adapt as the baseball analytics cause the game to evolve.

The difference between baseball analysis can be summed up as the difference between intelligence and wisdom. If the baseball statistics are the “intelligence” of the game (they are the raw bits of information), then the organizational knowledge is the wisdom that scouts have to use the “intelligence” correctly. Sadly, this type of organizational knowledge is not something that can be easily taught or learned easily in any way other than by experiencing it at the Major League level. 

One more thing: I want to make something clear. I have never met a scout, young or old, who doesn’t know or understand the statistical analysis of the game. Anyone who wants to argue that anyone in the game isn’t aware of and well versed in the numbers is making a foolish argument. They all do. The difference between traditional scouting and modern analysis is that one group focuses more on how those numbers came to be and another group tries to predict what those numbers will do in the future. This is also what makes scouting an art, and not a science. There is a science to scouting, but the best scouts know have mastered the artistry of the game. 

Love to hear what you think!

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