Short Hops and the Extra 2%

The Stanley Cup playoffs are an arduous test of will and endurance, with each team leaving everything on the ice in pursuit of the 16 victories required to carry Lord Stanley’s cherished chalice in celebration.

That journey has just begun, and it will be nearly two months before we know which team will get its players’ names etched onto the Cup.

Leading up to this furious charge, GMs across the league did their best to ensure a predictable result, assembling the roster they thought would give their organization the best opportunity for playoff success. Some moves will pan out, while others will get universally panned, but an overriding question must be asked: just how much control do the GMs have over the final result?

In his recent (and absolutely excellent) book release, The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First, Jonah Keri takes an in-depth look at the success of Major League Baseball’s Tampa Bay Rays.

Keri breaks down the successful steps their current ownership took to eradicate a decade of failure en route to assembling a team that somehow manages to compete in the American League East despite having a payroll dwarfed by that of the New York Yankees and Boston Red Sox.

By utilizing a Wall Street-style approach to team management, the Rays have managed to put together a competitive organization, able to handle the departures of seemingly essential players by replacing them with some of baseball’s finest prospects.

Now, there is obviously a critical difference between hockey’s and baseball’s Collective Bargaining Agreements: the presence of a hard salary cap (and payroll floor) in the NHL. By restricting team payrolls, the NHL has essentially created a system where teams can’t consistently outspend opponents (a la the Yankees and Red Sox), but there are still some pretty significant disparities in team payrolls.

The New York Islanders, with a league-low $40.3 million payroll, predictably missed the postseason. So did all of the other teams that spent under $50 million (Carolina, Florida, Edmonton, St. Louis, Colorado, and Atlanta). Meanwhile, of the 17 teams that spent $55 million, 13 are participating in the postseason.

In many ways a successor to Michael Lewis’s Moneyball: The Art of Winning an Unfair Game, The Extra 2% takes a look at how teams can capitalize on market inefficiencies to remain competitive under less than ideal conditions. Perhaps the best example of this is the Rays’ contract with Evan Longoria, signed just days after the star third baseman made his MLB debut.

A six-year deal worth $17.5 million, Longoria’s contract also contains three club options at the end, making the total deal worth $48 million over nine years. To put that into perspective, the Red Sox have finalized a seven-year deal with Adrian Gonzalez worth $154 million. Based upon FanGraphs’ win values measurement, Longoria has already earned nearly $85 million for Tampa Bay (in terms of the value of his production) only three years into the deal.

The Rays signed Longoria to that deal in 2008. Two years earlier, an NHL team made a similar maneuver, locking up a young star to a very lengthy deal. At the time, the player was amongst the top 10 in the league at his position, but he signed a deal that was to pay him an annual average salary that was at the time of the signing slightly less than the average salary for starters at his position.

In other words, even if the player was no better than average, simple inflation would have turned the contract into a huge value for his team. And if the player – like Longoria – performed at the expected high level, the deal would have been an absolute steal for his team.

Unfortunately, that player was the New York Islanders’ Rick DiPietro, and five years into his 15-year, $67.5 million deal, it’s looking like the Isles got the short end of that deal.

Injuries have severely curtailed DiPietro’s production, forcing him to mis large swaths of the past three seasons, and unless he returns to health (and form) the deal will go down as one of the biggest mistakes in NHL history. It’s unfortunate that the Isles are lambasted for the deal, however, because the strategic principles at play were right in line with what’s worked so brilliantly for the Rays.

At an average salary (cap hit) of $4.5 million, the DiPietro deal left the cash-strapped Isles with enough payroll flexibility to surround him with quality (if not elite-level) talent. But because of the injuries – and because the Isles made other, questionable choices with regard to roster assembly – they haven’t been able to capitalize on what could have been a revolutionary (in a good way) contract.

Meanwhile, in Tampa, Longoria is dealing with an oblique injury that’s forcing him to miss much of the first month of the season, and it’s no coincidence that Tampa is off to a slow 4-8 start. But the Rays have already gotten so much value for Longoria – already nearly double what they’ll pay him over nine years, with six years still to go, and without taking into account merchandise sales – that the deal is an unquestionable success.

Bad luck – like the Isles have experienced with DiPietro – and other statistical anomalies is a big part of the premise of another very compelling book, The Beauty of Short Hops: How Chance and Circumstance Confound the Moneyball Approach to Baseball, in which authors Sheldon and Alan Hirsch take aim at Lewis’s presumption that baseball is essentially a series of highly predictable results. They call into question the value of many of the advanced statistics that have popped up in recent years (like UZR, “Ultimate Zone Rating”), correctly pointing out that it doesn’t take more than a handful of short hops (or bad bounces) over the course of a season to yield dramatically different ratings/rankings/statistics. And they watched every game the Red Sox played in 2009, breaking down all of the various aberrational plays that served to undermine the notion that baseball is inherently predictable.

If the book has a flaw, it’s that they didn’t use statistics to further prove their point.

By watching the Red Sox’s 2009 season, they saw enough to be able to define just how much the players’ stats were impacted by the short hops.

In short, The Beauty of Short Hops provides a clear, defined reason to watch the games. No matter how much preparation goes into constructing a team, one couldn’t have predicted that the seemingly indestructible Red Sox – fortified by the additions of $154 million man Gonzalez and $142 million man Carl Crawford (formerly of the Rays) – would begin the 2011 season with a shockingly bad 2-9 record.

Even more compelling are these arguments applied to hockey, for things like save percentage, shooting percentage, or even the Corsi Rating don’t mean much on a game-by-game basis when evaluating the Stanley Cup playoffs.

It’s easy to look at the Bruins and Canadiens and conclude – especially after Boston’s 7-0 trouncing of the Habs last month – that Montreal doesn’t stand a chance. But after seeing the Habs perform the rope-a-dope to perfection in front of the scintillating Carey Price in Game 1, it’s quite clear that the predicted result often isn’t the actual result.

While money can buy you a higher spot in the standings, it doesn’t make as much of a difference in a seven-game series, particularly when it takes only a couple of overtime puck deflections to turn a series in an unexpected direction.

Indeed, the difference in the playoffs is often more grit than grace, third-liners battling to the front of the net and batting a loose puck past a screened goalie. It’s often more luck than skill, a 65-foot shot flitting through the legs of a startled goalie who’d stop that puck 999 times in 1,000 chances. It’s the puck taking a funny hop off the end boards and finding itself on a hard charging power forward’s stick, ripe for a quick wrist shot past a defenseless netminder. And it’s that goalie spinning on his back and wildly throwing his leg into the air, kicking away at the last second what would have otherwise been a series-ending goal.

All the data in the world can’t predict when players will (and won’t) be at the very tops of their games, and something as simple as a flu epidemic can throw the best-constructed team’s plans completely out the window.

Enjoy the playoffs. In the spirit of The Beauty of Short Hops, there’s virtually no way to predict what will happen. And isn’t that what makes playoff hockey so very special?

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One Response to “Short Hops and the Extra 2%”

  1. Tom Stanek
    April 15, 2011 at 3:09 pm #

    Very true Kevin. Anything can happen during the NHL Playoffs, and usually does.