Jeff Angus over at Management by Baseball sent me an intriguing update about Billy Bean’s approach to Moneyball. Bean is famous in the baseball world for developing quantitative techniques to help identify players that are underpaid by market standards and for developing a system that enables such “bargain” players to contribute to overall team performance. There are many signs that the system works, for example, Oakland’s cost per win in 2005 was $450,000 in salary, while the New York Yankees paid 1.4 million. The 2006 payrolls (when Oakland had a better season than the Yankees) were about 60 million for the A’s and about 200 million for the Yankees. Bean and his staff do impressive analysis to make decisions that gain them cost advantages and increase their odds of success. For example, they stay away for star players that are coming out of high school and prefer college graduates because only 5% of baseball players drafted straight out of high school are in the major leagues in three years, while 17% of college graduates that are drafted make it to the majors.
Beane watching is worthwhile…