The Grad Voice

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As of this writing, the Tampa Bay Rays, long one of the worst franchises in Major League Baseball, have a 3-to-1 lead on the Boston Red Sox in the American League Championship Series. This team, with the second-lowest payroll in baseball, was able to outlast both the New York Yankees (highest payroll in baseball) and the Boston Red Sox (second-highest payroll) in the regular season, and has dominated Boston (the defending World Champions) in games 3 and 4 of the ALCS in Boston. How did this unlikely upstart get to this point when they had finished last place in 9 of their first 10 seasons in baseball? The way I see it, the Rays built themselves a winning team by making smart trades, and buying low and selling high on various players. They won by acting as any smart businessperson does in building a successful company.

First, the Rays took advantage of their lone competitive advantage from their days as a doormat in the difficult American League East division. Due to their poor record, they were able to pick high in the amateur draft each year, and quickly began to stockpile cheap, cost-controlled assets. In 2002, they drafted centerfielder B.J. Upton out of high school in Virginia. In 2006, they took third baseman, Evan Longoria, out of college at Long Beach State. Upton and Longoria have five home runs each in the playoffs this season and have been critical to both the regular season and post-season performance of the Rays (Longoria will likely win American League Rookie of the Year). In a critical extra-inning win in game two of the ALCS against Boston, David Price pitched a scoreless eleventh inning for the win. Price had been drafted out of Vanderbilt in 2007.

In each of the above cases, the Rays used statistical analysis to predict how well each player would perform in professional baseball before drafting him. Both Upton and Longoria demonstrated the ability to command the strike zone and hit for power while playing as amateurs. These abilities strongly correlate with major league success. In the case of the pitcher, Price, his high strikeout rate combined with his low walk rate suggested the ability to get major league hitters out. While no approach to the draft is foolproof, the Rays have demonstrated the ability to pick better than most other major league teams, and their minor league system is considered one of the best in the game.

While the Rays used the amateur draft to build the core of the team, they looked for under-valued players around the major leagues and attempted to trade for them or sign them as free agents. Carlos Pena had bounced around the major leagues without much success, as he struck out frequently and never hit for a high batting average. But he did demonstrate the ability to take walks and hit for power, which are both far more important than a high batting average or a low strikeout rate. After both the New York Yankees and Boston Red Sox released him in 2006, the Rays signed him. He has led the team in home runs in each of the last two seasons. In addition, the Rays picked up Ty Wigginton in 2006 when no other team was interested. Wigginton hit for good power for the Rays until he was traded in 2007 to the Houston Astros for relief pitcher Dan Wheeler. Wheeler has been the ace of a tremendous relief pitching corps this season.

Defensive efficiency is another statistical category that is often incorrectly measured and thus incorrectly valued, but the Rays were able to correctly value it when they acquired shortstop Jason Bartlett from the Minnesota Twins before the 2008 season (pitcher Matt Garza was also acquired in the trade). Bartlett was a key part of the moves made in the field that took the Rays from the worst defensive team in baseball in 2007 to the best in 2008.

In order to acquire Bartlett and Garza, the Rays traded from their stockpile of draft picks and sent 2003 top pick, Delmon Young, to Minnesota. Young was expected by many scouts to develop into a superstar similar to the Los Angeles Dodgers' Manny Ramirez. However, the Rays were disappointed in Young's inability to draw walks and hit for power despite his athletic ability. They sold high on an asset they believed had become over-valued in order to strengthen two weaknesses: pitching and defense. Young has continued to disappoint in Minnesota.

So, in sum, the Rays run of success in 2008 was based on an intelligent business model: they used a competitive advantage to stockpile assets, used some of those assets in trades to diversify themselves, and all along continued to search for under-valued pieces to add. With a tremendous major league team and a deep minor league system, the Rays should be a top major league team for many years to come.

Note: The Devil Rays ended up winning the ALCS in seven games against Boston, and lost the World Series in five games to Philadelphia.

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