THT book review: The Extra 2%

The comparison must be made since Jonah Keri’s The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First is a book about a small market team that targets players that other teams undervalue. But, where Moneyball: The Art of Winning an Unfair Game almost deified Oakland A’s G.M. Billy Beane, to the point that only a Hollywood A-lister like Brad Pitt could portray him in the movie, Keri stops short of venerating Tampa’s triumvirate of Stuart Sternberg, Matthew Silverman and Andrew Friedman.

Yes, Keri paints the trio that took control of the Tampa Bay franchise in 2005 in a favorable light, especially in comparison to previous management. Keri’s heroes are lauded for changing not only the methods of the franchise, but its organizational behavior as well. But, his descriptions of the methodologies of other organizations show less of the disdain for scouts and rival G.M.s than Michael Lewis passed along in his offering.

In another example of restraint, readers of this David versus Goliath tale are not left with a feeling that the profiled underdogs will continue to lay waste to their intellectually inferior, yet more financially fortunate adversaries for the foreseeable future. Instead, we’re left with the knowledge of what the Rays had to go through to compete in the American League East the past three years, as well as the obstacles facing them the next 30 years.

The Extra 2% tells the story of the takeover engineered by Sternberg, Silverman and Friedman as the first instance of Wall Street going to the ballpark. Where the A’s used one main business concept (market inefficiencies) to target less toolsy players who excelled in other areas (specifically on-base percentage), the men who engineered the Rays turnaround brought their entire repertoire of business ideas with them. The title of Keri’s book refers to one of those strategies, arbitrage, where the new owners used their business experience to acquire and deal assets for even the slimmest of advantages—even if it netted them only a 2 percent gain.

Despite Keri’s relatively even-handed portrayal, one person does take a heavy dose of criticism. Keri criticizes the initial owner of the Rays, Vincent Naimoli, and describes him as a penny-pinching micromanager. The author provides motive for his foil by pointing out that Naimoli contrasted with extravagant CEOs in the business world who spent company money lavishly just before the economy collapsed. Keri also points out the lack of a consistent plan in the early years of the Tampa Bay franchise, and places much of the blame on the owner.

Naimoli had fought hard to bring a Major League Baseball team to St. Petersburg. But, along the way he often unwittingly played the role of the “stalking horse,” as Keri describes it. For years, other ballclubs used Naimoli’s desire to host a team in St. Pete to pressure their current cities into kicking in for stadium funding. The story of professional baseball moving to the Florida Suncoast is very interesting, and provides a nice set up for the struggles the Rays’ original owner would suffer after finally getting the team there. The reader gets the sense that if Naimoli had resisted the urge to micromanage and was fortunate enough to place the right people in charge, the Rays could have succeeded earlier, eve in a city that is a logistical nightmare for professional baseball.

This is because Naimoli, though described as inept, is reluctantly given credit for his regime picking almost all the talent that Tampa Bay would ride to its two playoff appearances. This, of course, is due in large part to the Rays’ last place finishes year after year, providing them with high draft picks in the draft every June.
For everyday readers of websites like this one, The Extra 2% mentions very familiar names, such as Baseball Prospectus, Tom Tango, Fangraphs and John Dewan. The Hardball Times even merits a significant storyline: A former THT contributor played a role in the Tampa Bay turnaround. The references to research ranging from PITCHf/x to statistical analysis may not be as in depth as most people familiar with these writers and blogs may be used to, but the narrative should appeal to broader audiences as well.

For proof that this book appeals to thoughts shared by many readers here, consider Keri’s observation that “There is no commodity in baseball more pointless than a high-priced, veteran closer on a bad team.”

One main theme in the book is the Rays turnaround as byproduct of a shift in the franchise’s organizational behavior. The Rays’ early years saw not only an influx of Wall Street strategies, but a stark turnaround in how the company operated as well. New ownership spent money on updating the ballpark, working with local Little Leagues, and training staff in customer service techniques borrowed from nearby Disney World. Management even dropped the “Devil” from the team name in a move that while difficult to quantify, signaled a new beginning for the franchise.

Tampa Bay’s stadium woes almost ensure that the Rays will ironically make the same threats against St. Petersburg that other teams made during their many flirtations when Naimoli was looking to bring in a franchise to Florida. It remains to be seen if baseball can succeed there long term when three years of winning still leave thousands of empty seats for most games.

What the Rays ownership has done so far is impressive. It’s a great story about baseball outsiders who nonetheless have a passion for the game. It’s about exploring many ideas, no matter how strange they may seem at first. It’s about putting the right people in charge, including a baseball lifer who’s willing to stray from age-old in-game managerial moves. But whether owners can continue to successfully combine concepts from business and baseball, like arbitrage, marketing and scouting, to keep the Rays in contention is difficult to foretell.

In this regard, Keri’s book may someday find a spot on the syllabus of a management or marketing course just as often as it will on a baseball lover’s bookshelf.

References & Resources
The Extra 2% comes out today, March 8.

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Comments

  1. Bob Rittner said...

    “This is because Naimoli, though described as inept, is reluctantly given credit for his regime picking almost all the talent that Tampa Bay would ride to its two playoff appearances. This, of course, is due in large part to the Rays’ last place finishes year after year, providing them with high draft picks in the draft every June.”
    _________________________________________________
    My copy has not arrived yet, so I do not know if Keri says this in his book, but it is a misleading statement in two ways.

    The first is that the Rays 3 years of success was due to its high draft position. In 2008, only 2 first round picks, Longoria and Upton were crucial to their division championships with Price adding some value late in the season. Since then they have added Niemann in 2009 and Davis in 2010. You could add Garza as he was acquired for first round pick Delmon Young, but that was part of a larger deal including Bartlett that might not have occurred had the Rays not done some smart dealing before.

    The second is that it was the Naimoli regime that acquired that first round talent; both Longoria and Price were taken by the Sternberg people.

    In truth, while Naimoli and LaMar certainly deserve credit for building a strong farm system, the winning teams were constructed from intelligent trades (Bartlett, Zobrist, Kazmir, Howell), smart signings (Iwamura, Floyd, Pena) and reclamation projects (Benoit, Balfour) as well as prospects discovered in later rounds (Shields, Sonnanstine, Crawford). And among the strengths of the present leadership has been the ability to find useful complementary players such as Gross, Aybar, Hinske and others to create a deep and flexible roster.

    Certainly the high draft position helped, but it should not be over-stressed. And certainly Naimoli and LaMar deserve credit for filling the farm with prospects, but much of the talent that led to winning in the majors was acquired by Friedman and company.

  2. David Wade said...

    Bob-

    Keri does cover pretty much all of that- you sure you don’t have your copy yet? 

    I meant to convey the author’s attempt at fairness, I suppose.  Believe me, Naimoli does take a beating throughout. 

    But to me, Keri seemed careful to cover the part you agree with- Naimoli’s management team building up the system and stockpiling first round picks. 

    Keri specifically used Delmon Young to show how new ownership used a Naimoli first round pick to get Garza and Jason Bartlett.

    In short, I think you’ll see that the draft picks acquired under Naimoli were not overstressed.

    Thanks for commenting.

  3. philosofool said...

    If Moneyball deified Beane, he was one of those flawed Gods of greek literature. He was petty, prone to violent outbursts, and heartlessly self-interested, in addition to being a genius who knew no equal at his craft.

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