The New Market Inefficiency

Friends, Mets Fans and Metsmerizers, lend me your ears. I hope all of you enjoyed your holidays and let me wish you all a belated Happy New Year.

I want to share an article I read with all of you on the perceived virtues of small market strategies, but first I must chime in on the top Mets story of the last 24 hours.

Look, I am no expert in financial matters and I’ve always been terrible at making predictions (just ask my wife). But here is my take on this whole ball of wax. Whether the Mets owners file for bankruptcy and sell the team, or whether they avoid bankruptcy and sell the team, it’s still a good thing for our fanbase. And, if by chance the current ownership group finds a way out of this messy affair and gets back on solid financial footing, it’s still a good thing for team and fans, isn’t it?

Basically what I’m saying is that finally everyone knows there’s a problem and one way or another this problem will get fixed. The ultimate goal is to get the Mets back to behaving like a large market team and making better player decisions. So here’s the good news:

1. Hiring Sandy Alderson was a good decision and will lead to better decisions in the future.

2. The Mets are taking steps to stop the financial bleeding which will ultimately get us back on the right track.

So take it from an oaf like me, better days are on the way.

Now on that note, here’s a quote from Jonah Keri on a must-read article at Grantland:

Smaller-revenue teams have a tougher time signing premium free agents, or retaining their own top players past their initial six years of team control. That puts extra pressure on these poorer teams to bring up a bunch of great prospects all at once, then hope they get good at the same time before they get expensive.

But far more often it’s a bullshit excuse. It’s a vague, faraway goal that always seems several years out of reach. It’s a cover for cheap, greedy ownership, lousy scouting, drafting, and player development, and myopic trades. It’s a weak attempt to placate a fan base screwed over by years of management incompetence and indifference.

Keri is referring to the windows smaller market teams refer to as far as getting competitive and maintaning that competitiveness. Exploiting market inefficiencies worked well for a little while until slowly but surely the rest of the league, including large market teams, caught on. Keri explains:

For years, Beane had prided himself and his staff on their ability to sniff out young talent and acquire it cheap. But other teams’ increased recognition of said talent and its value put a major dent in Oakland’s plans. “Is it a more challenging environment? Absolutely,” Beane told SI‘s Tom Verducci. “Ten years ago teams didn’t value young players, other than as chips or assets to get the players they needed. Now, even the large-market teams with great resources, everybody values their young players.

So true. Every team is feeling the crunch in this economy. I read the other day that the Yankees have only spent $4 million dollars or something like that this offseason. The Red Sox will have a lower payroll too in 2012, it’s not just the Mets. The times they are a changin’.

This article focuses mostly on the A’s, but you can seriously apply the lessons learned to any major league team, and the Mets in particular.

The old ways of doing business for both small, mid and large market teams is dead.

Small market teams have no more inefficiencies to exploit and large market teams are unable to spend like drunken sailors every offseason. Middle market teams might have the advantage and it’s mostly because they always devoted ample money to the draft and player development, but also made better and more cost effective free agent decisions than their large market brothers.

Now getting back to the Grantland article, I found this to be one of the more interesting quotes from Billy Beane and I included the lead-in so you don’t lose context:

You can excuse the A’s for falling back after their great eight-year run. You can even understand them taking a step back in the face of fierce intradivisional competition. But let’s not kid ourselves about what’s going on here. Years of iffy personnel decisions have turned the A’s into a bad team with little hope for the foreseeable future. Yet they’re spinning this as something else.

“I don’t think there was a move we could have made that would have put us in position to compete with Anaheim and Texas and what they have,” Beane said after the Gonzalez trade.

OK, sure.

“For us to compete, we’re going to have to have a new stadium.”

Ahh yes, the new stadium. Hey Billy, is that the new market inefficiency?

Brand new, tax payer-funded stadiums have always managed to fix a team’s financial problems and lead to world series titles, right? Sure they do, just ask Fred and Saul.

Look there are 30 MLB teams out there who all want their chance at the brass ring. So far the only thing that seems to work is a great vision and a front office that is committed to improved scouting, solid player development, and spending wisely on the right players to fill in the gaps in your roster. A team that can do all of those things very well is the new market inefficiency.

Anyway, read the full article and let me know what you think.