Billy Beane and the New Moneyball →

Beane's recent trade is relatively easily explained by the likelihood that Beane is trying to build an A's team that will play deep into the playoffs and possibly win the World Series, something they have not done since 1989. It is also possible that Beane sought to exploit a new market inefficiency-the overvaluation of prospects. The growth of prospect analysis, the knowledge fans have of prospects, and the improvements in scouting and drafting have all contributed to an environment where teams are reluctant to part with their prospects, and covet the top prospects on other teams.

The Trouble with the Moneyball Movie

The movie version of Moneyball, probably due to the necessity of building some kind of dramatic story, pays more attention to Beane and the tension between him and his scouts, rather than to the concepts which underlay Beane’s approach. The problem with this approach is that the movie suggests that Beane’s strategy won out over that of the scouts, thus allowing the A’s to succeed in 2003.

Is Strategy Baseball's New Market Inefficiency?

Michael Lewis’s influential book Moneyball explained the concept of exploiting market inefficiencies in the context of building a baseball team. Exploiting market inefficiencies begins with avoiding paying for the skills or commodities that the market overvalues, while identifying and buying at a discount the skills or commodities that the market undervalues. The example throughout Moneyball was that on base percentage was a historically undervalued skill and players who walk a lot were not compensated in a way consistent with their value. This specific example no longer applies in baseball as many teams now understand the value of a player who can consistently get on base by drawing walks.

Lincoln Mitchell