Over this past weekend the Boston Red Sox were swept by the Tampa Bay Rays in a three-game series.
The Rays scored 24 runs over the three games and the Red Sox only scored 5. There were a variety of factors at play. The games were at Tropicana Field in St. Petersburg, so the Rays had the home advantage. The starting pitcher who has been the best for the Red Sox all year, Chris Sale, has been on the disabled list, so the Rays did not have to face him. The Red Sox, who are my own hometown team, have the best winning record in baseball overall this year.
But this is a website about capitalism, not sports, so it's worth noting, too, that the Red Sox have the largest annual player payroll in major league baseball, at $227,835,760, while the Rays have the smallest, at $71,083,023, according to Spotrac.
The Rays ownership team is led by Stuart Sternberg, a Brooklyn-born former Goldman Sachs partner. Its baseball operations are led by Andrew Silverman, another Goldman Sachs alum, who was an economics concentrator at Harvard. The Rays are deliberate about their value-investing approach of getting the most while spending the least. The profit motive and competition have an amazing way of producing risk-taking and innovation, and the Rays have done that by replacing baseball's traditional "starting pitcher" model with a different rotation that they call an "opener." Basically, they plan for one pitcher to pitch the first inning or two of the game. Then they bring in more relief pitchers as the game goes on. This is a revolutionary change. The Economist headlined an article about it by saying, "The Most Influential Role In Baseball May Cease To Exist." The Economist account explains both the baseball reasons and the financial reasons for the change pretty well.
A Boston Globe article reports that the Tampa Bay pitching innovation has reduced the team's overall average of earned runs allowed: "Since the 'opener' debuted on May 19, the Rays have ranked second in the majors with a 3.34 ERA. They were 4.43 prior to that."
Tampa Bay is an expansion team without the long baseball history of say, the Yankees or the Red Sox, and the Tampa-St. Pete's-Clearwater metropolitan area is smaller than New York or Boston, which means fewer potential fans to buy tickets and premium cable television packages. Just as the "moneyball" innovations of emphasizing certain baseball statistics and analytics came from the small-market Oakland A's, the inequality in baseball sometimes helps to enable the improvements.
Naturally people worry about potential downsides. The players' union may complain that "openers" are a devious way to pay pitchers less. If pitching gets too good, some fans may complain that the games are less exciting — too many strikeouts, not enough runs scored. But it seems to me that these Goldman Sachs guys with the low payroll in Tampa Bay are on to something. Don't be surprised to see other teams start to try the "opener" instead of a starting pitcher. If it works, give capitalism some of the credit.
