Beyond Moneyball: How the Yankees have changed free agency

The central thrust of Moneyball was an attempt to find qualities in a player that were undervalued by the market at large, and yet could help teams win games. This undervaluing meant that teams with the right information could acquire players with these traits for less cost than they would otherwise and maintain competitiveness despite fewer resources than other teams.

Necessity is the mother of invention, and the Oakland As of the early 2000s needed some way to keep up with the rest of the powerhouses of the American League. Although Michael Lewis’ Moneyball glossed over some of the big keys of those teams’ successes – notably one of the best starting rotations in baseball year in and out – the theory of market inefficiencies has stayed and built a foundation for teams across the game to attempt to edge each other out every offseason.

In the 15 years since Moneyball was published, those attempts have grown more sophisticated and more nuanced, as the information gaps between teams have gotten shorter and shorter. A pursuit of more and more efficient markets and rosters has led teams to focus on value, more than just raw production, and the New York Yankees are a perfect example of that.

Of course MLB wasn’t going to let Oakland get away with Moneyball. Other teams saw the way it helped the As while cutting costs, and because baseball is a copycat game, 29 other teams began to adopt the philosophy of value over production. The difference between Oakland and the Yankees, or the Dodgers, or the Red Sox, is that those big market teams don’t just spend more money on payroll. Deeper pockets mean better and more sophisticated analytic departments, allowing teams to identify market inefficiencies and sources of value easier.

I wrote a couple weeks ago about the Yankees signing Jason Giambi in 2002, one of the precursors of the Moneyball era. They gave Giambi a hundred and twenty million dollars, and it was expected. Of course the Yankees were going to sign the best available free agent, they would simply outbid everyone else on the market.

Giambi put up 21.9 fWAR in his time with the Yankees, and we can assume the market value of a win in the early-to-mid 2000s was about $7 million. That means the Yankees received about $153 million of total value, and $33mm in surplus. Pay attention, because $/WAR and the very notion of surplus value is an example of moving beyond production that I talked about above.

Do you know the last player that was given a contract worth more than a hundred million dollars by the Yankees? It’s Masahiro Tanaka, way back in 2014, for $155 million. He’s accrued $110mm of that in terms of CBT hit, while being worth 15.6 fWAR. When you adjust for the dollar value of a win, now about $8.5mm, Tanaka has provided $23 million in surplus value. With two years to go, he’s been nearly as valuable relative to pay as Giambi was, despite playing two fewer seasons.

The reason I’m using two relatively large contracts is to avoid complaining about a lack of spending on the free agent market. That’s something that, in this 2019 offseason, you can’t really accuse the Yankees of doing. This example, though, does highlight the difference in philosophy over the last decade and a half. Teams care about value, not production, and that heavily influences decisions.

This is also one of the main drivers behind the fateful decision to pass on Robinson Cano once he reached free agency. Cano’s raw production since leaving the Yankees has been strong, but he hasn’t really been worth more than his deal, and that looks less and less likely with each passing year. The Yankees, like most teams, have simply gotten smarter about what value means.

This emphasis on value over production dovetails, perhaps unsurprisingly, with a decreased reliance on older players. As baseball has moved away from the steroid era and careers follow a more…natural aging curve, teams have also allocated less and less playing time to players on the north end of 30. This naturally has led to a loss in production from those players:

The “share,” or percentage of total PAs and fWAR from players 30 and over, has decreased pretty consistently since the turn of the century, and of course so have FA dollars allocated to players in that age bucket. The Yankees are well in line with the rest of baseball here, as only 22.5% of their current 40 man roster is 30 or older, and three of those nine players are exactly 30.

The Yankees weren’t the first team to emphasize value over production, but they were the accelerant because of their financial reach and international profile. This emphasis in and of itself isn’t even a bad thing – why pay more money to players that are worth less? Baseball is NOT “a business like any other,” but that’s one of the few regular business practices that really does carry over.

The problem with baseball writ large though, is that teams are both increasingly unlikely to spend more on players worth less, while doing everything they can do spend less on players worth more. On Thursday we’ll delve into that at length, and just like the changing nature of free agency, the Yankees have played a huge role in the shakeup of the market.