89. Moneyball

Note: This post is the eighty-ninth in a series about government and commercial ethics. Click here for the full listing of the series. The first post in the series has more detail on the book 'Systems of Survival' by Jane Jacobs which inspired this series.

Just a short, light-hearted post this week, as vacation calls (next post will be on May 17).

I've been reading the book 'Moneyball' by Michael Lewis. When I started reading it, I didn't do it with the intention of relating it to this series of posts, but I couldn't help myself (yes, it's possible that I should seek help of some sort).

Moneyball tells the story of how the Oakland A's were able to succeed at Major League Baseball, despite having less money to spend on players than their competition, by innovating in their approach to winning games.

Baseball, like most sports, is in essence a guardian activity, fulfilling the guardian precept to 'make rich use of the leisure', by the same token as the 'shun trading' precept led to the establishment of the Olympics only for amateurs, not for professional athletes. Of course the Olympics is a long way from only allowing amateurs to compete, and professional baseball is even further away from shunning trading in any form.

But still, there is certainly respect for tradition in baseball, and deceit for the sake of the task (hiding signals, stealing bases, etc.), loyal fans, fortitude, fatalism, hierarchy and so on.

But out of the pro sports, baseball least resembles a traditional battle for territory where strength and perseverance in the face of the opposition is required. To a large extent, baseball consists of specific tasks that don't involve direct contact with the opposition players and which are amenable to detailed statistical analysis.

In Moneyball, we see how the management of the Oakland A's takes advantage of the statistical nature of baseball to introduce rational commercial syndrome analysis in order to be efficient at the business of translating dollars into wins.

An early chapter, "How to Find a Ballplayer" outlines the clash between the traditional way of scouting and the new, disruptive, innovative approaches taken by the A's.

"Reason, even science, was what Billy Beane was intent on bringing to baseball."

"Billy had taken to saying, "We take fifty guys [in the draft] and we celebrate if two of them make it. In what other business is two for fifty a success? If you did that in the stock market you'd go broke."

"It was only baseball tradition that allowed scouting directors and scouts to go off and find the ballplayers on their own without worrying too much about the GM looking over their shoulders. And if there was one thing [scouting director] Grady knew about Billy, it was that he could give a fuck about baseball tradition."

It's not just tradition vs. innovation, there was also the related battle between guardian virtues of loyalty and presenting a united front vs.the commercial precept of dissent for the sake of the task

"The old scouts aren't built to argue; they are built to agree. They are part of a tightly woven class of former baseball players."

One of the key points the A's focussed on was to look at the actual factual record of each player's accomplishments rather than focussing on how much they 'looked' like an athlete, like someone you'd wanting fighting with you in a war, as opposed to someone who can stand in the batter's box and tell balls from strikes.

"Over and over the old scouts will say, "The guy has a great body," or "This guy may be the best body in the draft," And every time they do, Billy will say, "We're not selling jeans here"

A final element of the commercial syndrome was 'Collaborate Easily With Strangers and Aliens.' The first person to send the A's down the road of change was Sandy Alderson. In describing t

he difficulty in changing the way things were done, Alderson explained that, "I had credibility problems. I didn't have a baseball background."

So I found it interesting to see the same inroads made by innovation into the traditional way of doing things that Weber described in 'The Spirit of Capitalism' echoed so closely in a book about baseball.

But for all that, the most compelling part of Moneyball as entertainment is a chapter entitled, "The Human Element" which follows A's general manager Billy Beane as the A's, looking to set a record for consecutive wins, first take the lead in a game 11-0, then end up tied at 11 and finally win 12-11. Even in a story about the rational, commercially minded approach of investing in players who are productive, and being innovative and throwing tradition away and being efficient and thrifty, it's still the dramatic elements, the moments when rationality fails that draws us in and moves us. Moneyball works, but it's just business.

Leafs Strategy Session for Upcoming Season

So the list of rule changes for the upcoming NHL season has been posted.

There will be no more ties as all games which are tied after regulation will go to overtime and then a shootout which will go on as long as necessary to force a winner. A team which loses in overtime or a shootout still gets a single point.

So here's my proposed strategy for the Leafs this year. At the beginning of the game get together with the coach of the other team before the puck drops and agree to tie the game (through regulation). Of course, it may be necessary to make some pretense of playing for the purpose of entertaining the fans. In fact the two teams could play an entertaining wide open game subject to the unspoken rule that if one team gets ahead by 2 then they have to let the other team score. With 5 to 10 minutes left the game should be tied up and then the remaining 5 minutes played out with no effort to score by either team. Once regulation is over, the two teams can play a first-goal-wins game, safe in the knowledge that the 'loser' will get a point.

Assuming that the outcome of a short overtime followed by a shootout is pretty much random, a team following this strategy would expect to win half its games and get one point in the rest making for a total of 123 points (41 wins and 41 ties/one point losses). In the last NHL season, Detroit was first with 109 points. Assuming that they would have won 6 of their 11 ties that year in shootouts, they would have got 115 points under the new scheme.

So the Leafs can be expected to place first overall with this strategy despite only winning half their games. Failing getting agreement from the opposition to play to a draw on purpose, the best way to implement this strategy would be to play an extremely defensive, hyper-obstructionist game which forces as many low scoring games (and hence ties after regulation) as possible.

Even if they only manage to force 41 low scoring tie games, they should get 62 points from those 41 games. Based on the 2003-4 standings and adjusting for the new no-tie regime, a team will likely need about 96 points to make the (still 16 teams for this year) playoffs. So in the 41 games not tied, the Leafs would only need 34 points, or a record of 17-24.

Now imagine if the Leafs run and gun and only end up tying (after regulation) 10 games. These 10 games would give them 15 points (5 two point wins 5 one point 'losses') and they would need to get 81 points from the remaining 71 games, which would require a record of 41-30.

So a record (through regulation) of 17W, 24L 41T is equivalent to a record (through regulation) of 41W, 30L, 10T. In other words - you don't need to win, just don't get beat. Certainly if a game is tied in the third period, you might hope that both teams could just ease up and wait until OT/shootout to decide things.

So congratulations to the NHL brain-rust who've decided to walk all over the beauty and simplicity of the game with shootouts and goalie trap zones and 2 line passes in their quest for more offense (and more money) while simultaneously (and presumably without even realizing it?) bringing in changes which will reward defense far more than offense.

Maybe some day in the future the league will have repealed some of the dumb rule changes and kept some of the smarter ones (smaller pads for goalies, discretion on unintentional icing) and we can look back at this era like some kind of teenage acne transitional phase but for now I'm just hoping there isn't too much scarring.

Idiots.

A Quick Hockey Question

Now that the NHL has reached a deal between the players and owners, the focus will likely shift to what rule changes, if any, the league will make to try and make hockey back into the exciting fast-paced game that is used to be back in the 1980's.

So here's my question: what is holding the NHL back from switching to 3 points for a win instead of the current 2. Giving 3 points for a win encourages offense because it penalizes teams which tie a lot of games and defensive teams tend to tie a lot more games than offensive teams. In effect, as the clock ticks down in a tie game, teams face a situation where the reward from scoring (2 extra points) is double the penalty of being scored upon (1 point lost) which will (over time) make offensive strategies more successful than defensive ones.

I guess traditionalists might argue that it will skew the point totals for teams based on what they were in the past, but changes to the number of games in the season and the idiotic 1 point for an overtime loss rule have already done that. Mysterious.

OK, I have a second question. I see from some recent reports that the NHL is considering expanding the playoffs to 20 teams (with an extra preliminary round to see who makes the final 16). So my question is: are they insane? There probably shouldn't even be much more than 20 teams in the league, never mind 20 making the playoffs. Having the season end in July instead of the current June is not the right road to be on. What is wrong with these people?

'Sports' on Cable

I was thinking, it would be nice to have a sports channel that doesn't show any actual events but just has highlights all the time. I mean, if we can have a channel that seems to show nothing but horse racing, poker and wrestling 24/7 surely there's room for a highlight channel as well?

(stupid CRTC)

He'd Be My First Pick at the Playground*

Congratulations to Steve Nash on winning the NBA's most Valuable Player Award. See here for the hometown boy makes good take and see here for a premature but dead-on basketball take. On or off the court, Nash is the kind of guy who makes you proud to say, 'he's a Canadian'.

Update on May 11: I was remiss in not noting that the Canadian Cynic went into more details on why Steve Nash is a great role model off the court in this post from a few weeks back.

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* Assuming we had a ref at the playground - otherwise I'd take Shaq :)

The Trouble With Professional Hockey....

So what's the problem with the NHL these days? The owners and players are all idiots? Perhaps, but it wasn't that long since we were in the same mess with largely different owners, management and players. And not too long since we had similar problems with baseball, and certainly most pro sports have had their share of this type of trouble.

In fact, it seems like pro sports leagues head to a breakdown anytime the owners don't have the players under their thumb. So while it may be tempting to write off the current NHL lockout as Bettman's fault or Goodenow's fault, or collectively the fault of all involved, it seems more logical to look for a systematic explanation of why these problems keep recurring.

If the NHL is a professional league, with the price of everything involved (tickets, merchandise, franchises, etc.) set by market forces, why does the whole thing fall apart if player salaries are also set by market forces?

The problem as I see it, is that a franchise is a business, but whereas the goal of a business is to make money, sports franchises have a dual goal of making money and winning championships. Because teams are not just businesses but represent the 'pride' of a city or an owner, they are willing to pay overly high salaries and take on losses in an effort to win. And whereas in a normal industry, if some of the companies simply had too small a revenue base to compete, they would merge, be taken over or fold, that isn't allowed or considered acceptable in sports leagues.

A salary cap can prevent the problems of owner overspending but it brings with it its own questions. Why should owners of clubs with higher revenues basically be given a license to print money? Doesn't it seem a little artificial to force everyone to be equal? Why should ticket prices and other revenues be set by market forces if the costs (salaries) aren't?

If you're like me, there's a fundamental sense of confusion and conflicting priorities which underlies almost every aspect of the NHL that involves the commercial side of the game. We feel that an owner should make an effort to win and not just try to make as much money as possible. We feel that small market teams should have a fighting chance even though their economics don't justify it. We don't respect a player who leaves for another team because they can pay more money, at least not in comparison to the player who takes less money to stay with the team he likes. We feel that places where people care passionately about the game should have teams over places where people don't really care, even if the disinterested have more money to support a team. The same goes for ticket prices where the wealthy, leave-a-tie-game with-ten-minutes-left corporate seats in the front with the poor but enthusiastic fans in the back row just seems wrong.

All these questions come back to the same issue. On the one hand, hockey is a game which we all instinctively feel should have a certain moral code to it but at the same time hockey is a business and there are certain rules that govern how you run a sensible and ethical business. These two sets of ethics do not match.

Now, if you read my earlier post on corporate subsidies, you have probably already guessed where I am going with this (if so, you may want to skip the next three paragraphs). For those who didn't, here's a recap:

Back in 1992, Jane Jacobs wrote a book called, Systems of Survival in which she built on Plato's Republic to argue that humans have two ways of making a living: our traditional one based on control of territory and a somewhat newer one based on trading. Each of these ways of making a living has it's own set of ethics, with ethical trading relying on shunning the use of force, competing, honesty, openness to novelty, invention, collaboration with strangers and a bunch more.

In contrast, ethical territorial (or 'guardian' as Jacobs calls them) activities (such as government) rely on a different set of values including shunning trading, respect for hierarchy and tradition, loyalty and a bunch more.

In Jacobs' view, unethical behavior inevitably arises when values which are ethical in one way of making a living are used in the other way. i.e. When the two ethical systems are mixed together. An example she gives is organized crime, where the mixture of legitimate commercial activity with activities that normally only a government is allowed to perform (such as use of force) leads to a 'monstrous hybrid' of the two ethical systems.


Now suppose, for the sake of argument, that Jacobs' theory is true. That is, we have a system of ethics based on control of territory and a different, conflicting set of ethics for commercial enterprises. And that we inevitably run into problems when we mix the two.

This raises the question: Is hockey naturally a business which has been corrupted by introducing the ethics of guardian (government/military/territorial) activities or is it naturally a non-commercial enterprise which has been corrupted by the introduction of commercial values.

It seems like a no-brainer to me (but in case you need more info to make your decision I included the full list of ethics for each ethical system from Systems of Survival at the bottom of the post). I would say that from backyards, to minor hockey, to the junior leagues, to the college leagues, and even to the Olympics, hockey clearly shows itself to be naturally successful as a non-commercial enterprise.

And in fact, commentators often point to the purity of non-commercial leagues as a contrast to the impurity of the professional NHL (where people just care about the money).

So from my point of view, the true solution to the NHL's problems is to remove, as much as possible, the commercial aspect of the game. i.e. Make it an amateur league. Good modern examples of thriving amateur leagues would be the collegiate sports systems in North America (especially in the U.S.), the sports leagues for Hurling and Gaelic Football in Ireland (in which each county has a team made up of modestly paid players from that county, or the kids and adult recreational leagues in just about every sport in just about every country around the world.

Imagine for a moment, a league where if you lived in Winnipeg you would have a team made up of players from the Prairies (we'd probably give 'em Northern Ontario too), who would play for the team for their whole careers. If you had a bunch of good players in the same era from your region, you could build a dynasty; if you didn't you might face some lean years. The players would be paid enough not to need to take another job but that would be all. The team would be owned by a public body with any revenue beyond what was needed to run the team either folded into general government revenue, used to support minor sports leagues or just given to charity. The lure of big money would be reduced by keeping ticket prices as low as possible without creating big scalper markets, giving away TV rights in return for a promise to show the games with minimal commercials, and the removal of advertising from the rinks.

Sounds pretty good to me.

Even if we acknowledge that it is unrealistic to ever have that occur with the NHL, I still think it is worth knowing why it is we have the problems we do, and how, in an ideal world, they would be fixed.

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For the record, I tend to sympathize with the players in the current dispute and favour a gradually steepening luxury tax (reaching punitive levels and possibly even a hard cap up around the very highest payrolls) as the best solution (among our shortsighted options) for the current problems. I might have more sympathy with the owner's need for cost certainty if they were willing to adopt revenue certainty as well and give away any revenues beyond a certain amount.

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Commercial Moral Syndrome:

Shun Force
Come to Voluntary Agreements
Be Honest
Colllaborate easily with strangers and aliens
Compete
Respect Contracts
Use Initiative and Enterprise
Be Open to Inventiveness and Novelty
Be Efficient
Promote Comfort and Convenience
Dissent for the sake of the task
Invest for Productive Purposes
Be industrious
Be Thrifty
Be Optimistic

Guardian Moral Syndrome

Shun trading
Exert Prowess
Be Obedient and Disciplined
Adhere to Tradition
Respect Hierarchy
Be Loyal
Take Vengeance
Deceive for the sake of the task
Make rich use of leisure
Be Ostentatious
Dispense Largesse
Be exclusive
Show Fortitude
Be Fatalistic
Treasure Honour