Moneyball- Sound Business Advice Pretending to be a Sports Movie

I love baseball, but I don't typically think team sports movies are great. I enjoy them as they happen, but the enjoyment quickly fades in reflection as they all have pretty much the same plot: underdog is counted out, manager embraces new idea, team learns to play as a team, team wins and everyone goes home happy. That plotline is in this movie, but as a subplot. The real message of Moneyball is about the relentless pursuit of an idea in spite of its detractors. I have no complaints about the movie itself. It's well written and directed and Brad Pitt gives another strong performance. This post is because Moneyball the movie does not accurately reflect the true message of Moneyball the book.

Watching the movie, you would think the key phrase to the A's success was "on-base percentage," but in the book and in reality it was "market inefficiency." At one point in the movie, Billy Beane shouts "Adapt or die." This is what Moneyball is really all about. In 2002, the market inefficiency happened to be in on-base percentage. But as the book took off and as other teams, especially the Red Sox and Yankees, began to pursue high on-base percentage players, the cost of these players increased, ironically making them less valuable. The A's failed to adapt and in recent years have fallen to irrelevancy.

In 2008, the Rays exploited a market inefficiency in defense get to the World Series. Last year (and hopefully this year), the Rangers reached the World Series on the strength of their traditional scouting and player development system because as statistical analysis came into prominence, traditional scouting became undervalued. (I'm not sure if this was intentional on the Rangers part, but it is what happened.) Neither of these teams had very high payrolls, but they found what everyone else had undervalued and turned it into a championship caliber team.

I have a very good record as a fantasy baseball manager. Traditional fantasy baseball advice recommends not overpaying for player whose primary value is in steals or save. I have won a number of leagues by deliberately ignoring their advice, not because I think they're wrong, but because I know my competitors have read the same advice and that has depressed the value of these players. So while my competition laughs at me for overpaying, I am really getting these players at or below their true market value.

The real message of the book isn't that on-base percentage is the key to the ultimate baseball team, it's that there is always something which is undervalued and if you are the first to find it, you will be successful. And that is sound advice that anyone can use.