Are Overvalued Prospects, The New Market Inefficiency?

Feb 18, 2014; Phoenix, AZ, USA; Oakland Athletics general manager Billy Beane speaks to the media during MLB media day at Chase Field. Mandatory Credit: Mark J. Rebilas-USA TODAY Sports

One could argue the most stabilizing thing a baseball club could do is get to the postseason every year.  Not win everything, just get to the playoffs.  Sorta like the Oakland A’s.  The A’s GM Billy Beane has done a lot of great things for the small market Athletics.  According to an article over at the great Five Thirty Eight Sports by Benjamin Morris the best General Managers in baseball are underpaid.  In Beane’s case, amazingly so.

Looking at what has happened in Pittsburgh since 2000, the study shows that the Pirates GM’s have not been overpaid.  But looking at what has happened in Oakland the past 15 years shows a much different picture.  The A’s GM currently gets paid a $1 million a season.   And that’s a joke.  It could easily all change this year.

Morris writes that Beane has given the A’s $1.38 billion (with a B) in additional win value during the last 15 years.  That’s more than the value of Babe Ruth,  Barry Bonds, and while it’s just a study…it sure does open eyes.  It’s an interesting study just loaded with numbers and mirrors what Deadspin’s analysis recently discovered.

Baseball GM’s, especially those like Beane and Neal Huntington are in charge of finding the next market inefficiency.  You know what?  The front offices could very well be the next market inefficiency. When you start to think about how much technology has driven the sport of baseball in recent years, it’s not hard to imagine the very best GM’s to be paid as such.  In that regard, Forbes had an interesting take on GM’s and the future of what MLB front offices will look like.

Jul 25, 2014; Arlington, TX, USA; Oakland Athletics starting pitcher Jason Hammel (40) pitches against the Texas Rangers during the first inning at Globe Life Park in Arlington. Mandatory Credit: Jerome Miron-USA TODAY Sports

The Pirates have been at the forefront of interesting programs in the past like Hoka Hey! and the predominant use of video to magically heal pitchers.  Let’s trust the team gets ahead on just how much impact technology will have in the sport as Billy Beane wrote in the Wall Street Journal recently.     But keeping an eye on what Beane is doing this season is something I find fascinating.

In years past, Beane has always made deals.  A. Lot. Of. Deals.  Something like 21 of the players on the current roster are brought via trade, not up through the system.  Of course, everyone knows what the A’s did this year.  Waaaay before the deadline too.  It looks like they have noticed something different.  The A’s gave up their best prospect this time and traded the young Double-A shortstop to the Cubs in a package for two of the best arms in baseball currently.

Jul 18, 2014; Oakland, CA, USA; Oakland Athletics starting pitcher Jeff Samardzija (29) pitches the ball against the Baltimore Orioles during the sixth inning at O.co Coliseum. Mandatory Credit: Kelley L Cox-USA TODAY Sports

Why would Oakland do this?

Well obviously, the team hasn’t won the World Series since 1989.  But the bigger reason just might be that the value on prospects has never been higher.  Fans know about prospects now.  Everyone has their own ranking of the top prospects in the game.  Websites such as the great Pirates Prospects employ people to write reports on all levels of the Pirates system.  Print magazines and television shows focus on prospects and the awareness has never been higher, while in years past, it was a joke to get a high level young player for a talented big league player.

So we see it this way.  The A’s used prospects to become one of the favorites to win the World Series in 2014 and 2015.

Meanwhile the Pirates have used prospects to survive and thrive in small market Pittsburgh.

Thanks to Andrew McCutchen the team is back among the contenders in the National League.  Neil Walker, Pedro Alvarez, Gerrit Cole,  Jordy Mercer, Starling Marte, Gregory Polanco…. the list just keeps going on and on.  The Pirates are the anti-A’s.  The Bucs draft, develop, draft, develop, eventually promoting players and watch them thrive once they make it to Federal Street. It’s a systematic approach that has been successful.   The Pirates are home grown and the organization doesn’t believe in a window of opportunity.  They want to be successful long term, but it was obvious that making deadline deals like they did last season, made Huntington uncomfortable.

Meanwhile, Beane boldly makes baseball trades to bolster the roster while Huntington hordes prospects like the lady down the road has a love of cats.  Should the Pirates continue down the prospect collection road, it will be interesting to compare which GM got it right two years from now.

With the A’s loaded with starting pitching, my money is on Billion Dollar Billy in the playoffs.  Luck my ass, the A’s get this shit right and it’s going to be interesting to see how successful the Pirates approach will be.

Overvalued prospects the next inefficiency?