Can Cubs Front Office Still Exploit Market Inefficiencies? (part 1)

Can Cubs Front Office Still Exploit Market Inefficiencies? (part 1)

Are sabermetrics revolutionary or evolutionary at this point?  

That's the question Christina Kahrl  asked in writing about the end of the annual SABR conference. The consensus seems to be that expanding knowledge of the game was more more the latter than the former.

Moneyball, the most often (mis)used term to refer to sabermetrics, was entirely devoted to the Oakland Athletics' attempt to find market inefficiencies. All teams have now incorporated objective analysis into their baseball departments and knowledge growth in the field is only building upon things we already know. So are there still market inefficiencies left to be exploited?

A little over two years ago, Theo Epstein was officially introduced as the Cubs' President of Baseball Operations. At the time, Jon Greenberg remarked that the market inefficiencies the Boston Red Sox front office pounced on do not exist today. The Red Sox were one of the few teams that valued OBP correctly and managed to snatch up quality players for pennies.

Instead, today, Shin-Soo Choo receives $130 million on the open market. The front office promised to find new market inefficiencies, but how successful has the club been in that area? On the eve of the third campaign under the Epstein regime, is the Cubs front office close to finding any such undervalued commodities?

Pitching Health

Theo Epstein and Jed Hoyer have publicly identified pitcher health as a potential new market inefficiency. The Cubs were actually doing well in this area in the years between 2010 and 2012, during which time they had the second lowest amount of days lost. Only the White Sox had a better run during this time frame. 2012 saw the Cubs suffer the sixteenth most days lost for pitchers in 2012 though, and this trend would only continue to grow in 2013.

The Cubs made a conscious effort to take on high-ceiling pitchers with injury questions since Theo Epstein took over. Arodys Vizcaino was acquired in trade and was only available due to the considerable injury risk his talented arm carries.  In 2012, the Cubs drafted several arms that fell to them due to medical red flags like Pierce Johnson and Josh Conway. Scott Baker’s slow return from Tommy John Surgery in 2013 was another example of the Cubs gambling on health.

The result of this strategy was that the Cubs suffered the ninth most days to the disabled list in 2013; the vast majority of those DL days were spent on pitchers. This should not be a surprise, considering that previous arm injury is the greatest predictor of future arm injuries. The front office is clearly aware of that fact and decided that the upside offered by the various deals outweighed the risk of future injury. Unfortunately, in the case of 2013, those gambles did not pay out for the Cubs.

Groundball Tendency and Defensive Shifting

The Cubs implemented a plan that the Pittsburgh Pirates had used to dramatically improve their run prevention. That plan compromised of two simple components. The first was to increase the amount of groundballs the pitchers generate. That part of the plan was successful for the Cubs as Chris Bosio is apparently groundball magic. The Pirates managed an even greater feat by generating the most groundballs since Fangraphs started keeping track of batted ball data.

The other key part of this plan was to shift the infield defense a lot. The Cubs and Pirates both shifted their infields more than the average team. The Pirates shifted the fourth most times and the Cubs employed the sixth most shifts. The problem is that the Cubs were not as effective in their usage of their shifts like the Pirates were; they actually lost over 6 runs due to shifting. The Pirates, on the other hand, managed to save over 2 runs. The Cubs were once again unsuccessful in exploiting an inefficiency to gain an advantage.

In part two, pitch framing and power will be analyzed.

@dabynsky

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Comments

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  • I'm not sure where the pitching injury market inefficiency gets you. If the Sox are the example, they didn't do too well with Danks and Floyd, and knew what they were getting when they traded for Peavy, and apparently the torn lat resulted from overcompensating for that injury. The Cubs were delayed a year trading Garza because of injuries.

    But I do agree that use of the same metrics by everyone limits the chance for arbitraging market inefficiencies.

  • In reply to jack:

    The White Sox did have a bit of injury problems last year which is why they were much higher in the days lost rankings in 2013, but they are well acknowledged as having a superb track record in keeping arms healthy overall. Even with the rough patch last year, the White Sox still had the fewest days lost on average of the past three seasons. As I mentioned in the article the Cubs took a calculated gamble trying to buy low on guys with injury red flags. Most of the gambles didn't pay off unfortunately, though I am holding my breath on Vizcaino right now.

    The fact that Chris Sale's arm hasn't exploded is still a mystery to me because I am certain he would have become Mark Prior 2.0 had he been here.

  • In reply to Gunther Dabynsky:

    Same here, but I love to watch him pitch.

  • They did pounce on an inefficiency in the international free agent market. And I still think there's value-added to having a front-office, especially one that was hired to rebuild a franchise from the ground up, who think like sabermetricians, rather than a front-office that employs sophisticated analysts but doesn't necessarily think like them, listen to them, or even respect them.

  • In reply to TheThinBlueLine:

    True, do you have any teams in mind that operate like that?

  • Nice piece. I agree that "sabermetrics" opportunities have narrowed. It's like when hedge funds started using computer modeling to identify leveragable arbitrage spreads to exploit. They were at first highly profitable and with amazingly low risk, but once the rest of the market caught up to the innovators, the spreads shrunk and the risk grew until the originators (Long-Term Capital Management especially) became no better than gamblers. Likewise in baseball, those early low-hanging fruit opportunities -- such as the once overlooked OBP stat -- no longer exist. But it seems the biggest remaining opportunities are these:

    1.) Pitching, especially the crazy over-valuing of "power arms" and undervaluing of control arms. Power arms (or as Greg Maddux calls them "brain-dead heavers") remain higher injury risks than control pitchers. And while they have a greater chance of making the majors as relievers, they aren't any greater bets than control pitchers to make and stay in the majors as a much higher valued starting pitcher. So why does everyone froth over power prospects regardless of their high WHIPs? Good question. Thus I believe a minor league system that emphasizes developing "starting" pitching (power and control arms) could take advantage of this market inefficiency by picking up a lot of undervalued control arms. I'd never draft a power pitcher who projects only as or "most likely" as a major league reliever. Along these lines, the comparison of Kyle Hendricks to Vizcaino is an interesting one to follow. I want both to succeed, but even when Vizcaino was injured he was considered the far more prized prospect. However, evaluators project Vizcaino as most probably a 70-80 innings a season reliever at the major league level. Hendricks is considered at best a 180-200 inning a year back of the rotation starter. In my book, that's a huge market inefficiency to take advantage of in terms of trades and development philosophy. For a team, it's all about TOTAL quality innings thrown in a season, and pitchers who gobble up 2 to 3 times more innings are far more valuable than all but a Hall of Fame reliever. (And again the philosophy is not to value control pitchers over power arms. It's valuing potential starting pitching prospects -- ideally an even mix of control and power -- over pure power arms.)

    2.) Leveraging sabermetrics for home field advantages. The classic example was the Whitey Herzog Cardinals in the 1980s. They went for speed, defense, and avoiding fly balls in cavernous artifical turfed Bush Stadium. Finding these opportunities can allow one team to realize greater value in a player that another team would never benefit from (versus everyone chasing after the same high OBP player). When they joined the Cubs, Theo/Jed talked about studying Wrigley from this perspective, but we haven't heard much since. Lets hope they have identified these, but have no need to publicize. Perhaps once they shift from their current prospect acquisition mode to acquiring long-term major league pieces, we'll get a better sense of who are players they feel fit Wrigley better.

  • In reply to SkitSketchJeff:

    Good points here. I'm with you on undervaluing those types of pitchers. I love Travis Wood. He could be with us for years and years. Hendricks another great example. The Wrigley thing, yeah hope they figured something out. Though we know GB and K pitchers and certain types of LHH flourish.

  • In reply to Tom Loxas:

    Travis Wood is another good example. I feel Samardzija is only getting the opening game start for trade value purposes and because if he didn't get that honor, he'd probably sulk. But Wood was obviously our best pitcher last year and has the better career stats. But starting Shark makes better organizational sense.

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