Billy Beane’s Three Fundamental Insights On Baseball And Investing – ValueWalk Premium
Billy Beane

Billy Beane’s Three Fundamental Insights On Baseball And Investing

How did Billy Beane come up with “moneyball” approach to evaluating baseball players? Though Brad Pitt’s depiction of him in the film Moneyball suggests he was an overconfident maniac, it was Beane’s failed career as a baseball player that led him to transform the way teams construct their rosters.

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Billy Beane

By Silent Sensei from Santa Cruz, USA (Oakland A's) [CC BY 2.0 ], via Wikimedia Commons

Beane is the executive VP of baseball operations for the Oakland Athletics and a former first-round draft pick. He is the subject of Michael Lewis’ bestselling book, Moneyball: The Art of Winning an Unfair Game, which was made into a 2011 film starring Brad Pitt as Beane.

Beane delivered a keynote speech at the Orion Ascent National Conference in Miami on September 7. This year, Orion’s Ascent user training conference was combined with their FUSE financial services technology gathering.

Under Beane’s leadership, the Oakland Athletics have established themselves as one of professional baseball’s most consistent winners. His leadership transformed professional baseball, and you can read more here about how sabermetrics have since been used to win the World Series.

Today, Beane’s moneyball philosophy has been adopted by businesses across all industries, as a way to more efficiently manage assets and profitably leverage big data analytics.

I will review three main ways Beane’s executive leadership led to Major League Baseball’s (MLB) analytics revolution. But first, let’s look at how Beane came up with Moneyball by learning from his failures as a MLB player.

How Beane’s “bankrupt” MLB player career led him to moneyball

Beane started his keynote address by highlighting failures from his career as a baseball player, modestly sharing the personal experiences that led him to come up with moneyball.

Before Beane worked in the Oakland A’s front office, he had a 10-year career as a professional baseball player.

He explained that he was drafted second in 1980 as one of the top high-school baseball players in the country, and then showed his major league baseball (MLB) player career performance statistics.

Billy Beane's MLB Player Career Stats
Stats AB R H HR RBI SB AVG OBP OPS
MLB Player Career 301 30 66 3 29 5 .219 .246 .542

Source: Major League Baseball

After being a first-round pick in the MLB draft by the Mets, he said, he went on to underperform throughout his 10-year player career. “For non-baseball fans, that’s essentially ‘Chapter 11’ if you’re an MLB player,” Beane said with a smile

“I played in the major leagues but by no means should I have been drafted that high,” he said. “That was what really started my thinking.”

As a draft pick out of high school standing tall at 6’4 and 185 lbs., “I passed ‘the eye test,’” Beane said.

“I had a great vertical jump, I looked terrific in a baseball uniform, and I was the homecoming king of my high school,” he said. “All things that have absolutely nothing to do with being a baseball player.”

Beane explained that he looked like an athlete and ran fast. Those measures might apply to being a good football player, he said, but aren’t good predictors for baseball.

Every team in MLB was investing multi-million dollar payroll budgets into players based on biases. “We invested in assets that looked the part,” Beane said. They ignored what data, collected on baseball players for 150 years, was saying about skills.

“I’m proud of the fact that I played in the major leagues, but the matter of fact is that I was not the second-best player in that draft,” he said. “They were measuring the wrong things.”

Beane said his MLB career had a huge impact on how he viewed the business when he took over the Oakland A’s.

Read the full article here by Marianne Brunet, Advisor Perspectives

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