The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First by Jonah Keri
Ballantine Books/ESPN Books, 2011
List Price: $26.00
When expansion brought baseball to Tampa Bay and Arizona in 1998, both clubs started out on even footing. The Devil Rays set a goal of not losing 100 games in their first season, barely meeting it by going 63-99. Hardly anything to celebrate, but it was only two games worse than the Diamondbacks and not out of line for a first-year franchise. But while Arizona defied expectations the following season, winning 100 games and capturing a division title, Tampa Bay continued to struggle.
The D’backs proceeded to reel off five consecutive winning campaigns. The Rays, meanwhile, took out a mortgage on the basement of the American League East. They weren’t just bad. They were laughable. Players from other clubs around the league used the Devil Rays as a punch line in appearances on national television, with Angels outfielder Torii Hunter claiming he’d rather take a Randy Johnson fastball to the head than play for Tampa Bay. The club had become a joke along the lines of the old New York Mets.
Former Goldman Sachs colleagues Stuart Sternberg and Matthew Silverman saw opportunity where others saw a lost cause when they took over after Sternberg purchased the club in 2005. Despite the franchise’s short history as the doormat of the AL East, they were confident they could apply many of the lessons acquired as investment bankers to turn the Devil Rays from laughingstocks into contenders.
The duo lured their friend Andrew Friedman away from his position as a partner at a private equity firm with the promise that he could eventually run the baseball side of operations in Tampa. It was a dream job for the former Tulane outfielder, though he labored over the decision to walk away from his lucrative career.
None of the three have any regrets now, after accomplishing the unthinkable: winning two division titles and an AL pennant in the last three years. Jonah Keri, who has covered both baseball and finance for a variety of publications ranging from ESPN.com to Investor’s Business Daily, details exactly how they pulled off the turnaround in “The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First.”
The extra 2 percent referenced in the title isn’t part of a new sabermetric formula. It’s actually Sternberg’s way of quantifying the small advantage, the 52-48 edge, the organization can find by approaching everything smarter and more creatively than their opponents. They have to do everything 2 percent better than everyone else. Given the huge disparity in cash flow between the Rays and their division rivals, those little advantages all have to add up in order to level the playing field.
If this sounds at all reminiscent of “Moneyball,” well, that might be by design. Michael Lewis’s book on the Oakland Athletics’ efforts to compete in “an unfair game” is referenced both in the book and its accompanying marketing materials. “The Extra 2%,” however, isn’t “Moneyball.” Keri wasn’t embedded in the Rays draft room or hanging out in the team’s video room during games. In fact, the Rays brass was reluctant to assist, though Friedman and Silverman did agree in the end to be interviewed.
Keri takes a much more holistic approach than Lewis took in “Moneyball.” To fully appreciate what the Rays have accomplished since the ownership change, one must understand what a complete and utter mess original owner Vince Naimoli made of the club. Keri runs through the history of the Tampa/St. Petersburg area’s efforts to acquire a team, and how Naimoli, a local businessman who had made his fortune by taking over struggling companies and slashing expenses, had been a key player in landing an expansion club after several failed efforts to lure teams from other cities.
Naimoli’s thrift grew legendary soon after the Devil Rays joined the AL in 1998. He demanded a local Dillard’s department store pay for the right to sell team-related products. Instead, they pulled the line from their shelves. The team invited a local high school band to play the national anthem, but earned a black eye when Naimoli expected the kids pay their way into the park. Stadium personnel were tasked with catching any and all fans attempting to smuggle in food, under threat of firing if someone successfully snuck in a snack. As if the team’s poor performance on the field wasn’t enough to tamp down attendance, Naimoli gave fans ample reason to stay away. And they did.
When Sternberg and Co. took over, they had to win back a community that had grown apathetic in less than a decade. They spent money sprucing up Tropicana Field, which had aged terribly since it was built in the mid 1980s. They cast the Devil out of the team’s name and traded in the fish logo for a fresh one accented by a sunburst. They made the workplace fun and invited feedback from employees who had been too frightened to speak up during the Naimoli regime.
Transforming the roster was an entirely different task. The new front office relied on a practice called arbitrage, which player-personnel-wise boils down to acquiring an asset for less than it’s worth. Of course, buying low is hardly a unique theory. The challenge for the Rays brain trust was determining who those undervalued players were. The A’s had attempted to cash in on a market that didn’t properly value on-base percentage, but as the rest of the league caught on, the cost of hitters with above average on-base skills rose.
Tampa Bay identified another market inefficiency: defense. While the Moneyball A’s declared defense didn’t matter, the Rays found it could make a tremendous difference. Shortstop Jason Bartlett, who was regarded by many as a throw-in in the deal that sent Delmon Young to Minnesota for pitcher Matt Garza, was a huge upgrade over Brendan Harris in the middle of the infield. Akinori Iwamura took over at second base, bumping B.J. Upton to center field. Rookie Evan Longoria stepped in at third. Overnight the Rays went from one of the most porous fielding teams in the league to one of the best.
Friedman also applied the arbitrage strategy to build an effective bullpen on the cheap. Bargain additions J.P. Howell and Grant Balfour gave skipper Joe Maddon something to work with in the late innings, as the Rays shocked the AL by winning their division and advancing to the World Series in 2008.
Of course, it’s hard to construct a team out of cast-offs, and thanks to years of early first-round picks, the Rays had a nice nucleus of young talent, including Longoria, Upton, Carl Crawford (who left after the 2010 season), and James Shields. Still, as Keri points out, that core could have been even stronger if not for some costly first-round misses, such as 2001 No. 3 overall pick Dewon Brazelton. Even some of their hits failed to pan out, such as Josh Hamilton, who didn’t blossom until after the Rays gave up on him, and Rocco Baldelli, whose multiple health issues forced him into early retirement.
This offseason has seen plenty of turmoil in Tampa Bay, as the Rays lost most of their bullpen in addition to Crawford and first baseman Carlos Pena. Despite the club’s success on the field, its revenue hasn’t risen accordingly. The team is hampered by a long-term lease at the Trop, which in addition to being a bad venue was built in a poor location, on the wrong side of Tampa Bay. Keri goes into great detail on the mistakes that were made when the stadium was built and the subsequent, unsuccessful, efforts to correct this.
What Keri does particularly well in “The Extra 2%” is provide a broad view of the many challenges that confront a small-market front office, even aside from the obvious ones such as building a roster. He captures the entire arc of the organization’s history, hitting both the often-entertaining lows of the Naimoli era and the inspiring highs of recent seasons.
Readers looking for the heavy sabermetrics of “Moneyball” may not get their fill here, though there are several chapters that discuss some non-traditional stats the Rays have put to good use. Will the team be able to maintain its upswing longer than the A’s did in the seasons following Lewis’s release? We’ll find out. Of course, if things go wrong, they can always blame Keri for giving away some of their secrets.
James Bailey reviews books for Baseball America. He can be contacted at email@example.com.