The Cautious Optimist - The Mets Are Doing Something Special (Part I)

Reasons to be Cheerful: Part I

The upcoming season will be played under the cloud of a potential lockout as the current CBA expires.The current off-season spending of the Los Angeles Dodgers has sparked increasing concerns about the possibility of ownership pushing for some sort of salary cap, an option the player’s association is likely to reject unequivocally. To some a lockout is inevitable.

I am cautiously optimistic that a lockout can be avoided.

Whatever the eventual outcome of a new CBA, the Mets are poised to meet their stated goals of consistently competing for World Championships and collecting their share of titles. Like many fans, I would welcome their doing so prior to my expiration date! 

This is my first post on Mack’s Mets, part of a series analyzing and interpreting what the Mets are doing and why I am optimistic that it will be successful.

Fans experienced a flurry of emotions when Cohen purchased the Mets, none stronger than relief that the Wilpon era had ended. Relief was accompanied by the kind of blind faith in Cohen's stewardship usually reserved for saviors.

The faith was based more on Cohen’s wealth than on the skillset he deployed to amass it. That would prove to be something of a misread of the situation, giving rise to a spate of awkward moments in their relationship.

Because the optimism was grounded on Cohen’s apparently unlimited ability to spend on the team, it was naturally undercut by every pass the FO has taken on a potential free agent the fanbase coveted. The signs that it has been replaced with an all too familiar pessimism have been everywhere this offseason – beginning with the loss of Alonso and Diaz in free agency and cemented by the team’s failure to win the bidding for Kyle Tucker's services in a head-to-head battle with the new ‘evil empire’ Dodgers.

Collective fan pessimism remains tempered, however, if only by hope. Hope may spring eternal, but in baseball, it has sell-by date of mid-July. My goal in this series is to replace that hope with reason: reasons to be cheerful (and optimistic).

Fans can be forgiven for the mistake of valuing Cohen's wealth over his skillset that enabled him to amass it. Among the various ways to acquire wealth, inheritance remains the preferred option, followed closely by the wisdom required to hire an engineer capable of solving a coding or other tech problem. Achieving wealth, however, requires a skillset, not just a lineage or the judgment to make a good hire. 

Skillsets travel.

In the order of explanation having the right strategy and excellent judgment are the keys to sustained success. Don't get me wrong.  As my dad taught me, rich or poor, it's better to have money. Money has its place.  It simplifies strategy implementation, offers insurance against setbacks, enables seizing opportunities, and helps address both expected and unexpected gaps.

Spending money is not a plan, and it was never the Mets’ plan. Money is an asset, not a strategy. If money was never the plan, what is the plan? No one outside the organization knows for sure, but if the FO behavior is any indication, I have a reasonable hypothesis about what the strategy is – and I am optimistic about its likely success.

The heart of the Mets strategy is the view that an organization can add value, more value, in fact, than an average hitting or pitching coach. Every company or organization faces a set of problems. The three most important of these are: (1) Allocating decision making authority and defining its scope, (2) Identifying who is accountable for which outcomes, as well creating appropriate forms of accountability, and (3) Developing the information on which organizational decisions by those in authority are made. 

Organizations add value by solving for these issues. While you might think the answers to these questions are straightforward, you would be sorely mistaken. In many organizations, the information is developed close to the ground, while authority is vested at the top of the pyramid and accountability often falls to those in middle management.  This allocation of benefits and burdens has the familiar feature of satisfying the interests of the respective parties, but does little to benefit the organization as a whole. The incentives created often work against advancing the organization's interest.

For example, middle management, those doing entry level hiring, or awarding and overseeing consultancy contracts are accountable for consultancy agreements and hires that don't work out, even if poor development of the talent they source or if some in the company misunderstand or misuse the information the consultant has provided.  Situations of this sort are replete and have led to phrase at least some of you may be familiar with: 'no one has ever been fired for hiring McKinsey as consultants.'   Every graduate of Yale Law and Harvard Business Schools gets a job: a very good one in fact for much the same reason. 

This is what happens when information, authority and accountability are inadequately linked in an organizational structure. 

You might be surprised to learn how often organizations fail to settle on the scope of decision making authority, not to mention who has decision making authority in the first place. Not a problem with the Mets. Every fan has wondered from time to time, who is accountable for a season gone south. If you have not yourself experienced this uncertainty about accountability in the organization of your team, feel free to connect with a Yankee fan looking to understand what has happened in the past half dozen years or so.. I don’t think Cohen has been anything but crystal clear about who is accountable for which outcomes.

This leaves the issue of identifying the information needed, sourcing it, developing plans around it, and implementing those plans.

My bet is that Cohen is aware both of the ways in which organizations can add value and what investments need to be made to ensure that an organization that can add value does so.  And that he has invested his resources accordingly.

Organizations are like people. They work best when they have cultivated good judgment, devised instruments to collect and analyze information that insures that their judgments are well-informed, when they devise plans to overcome obstacles, minimize disappointments and achieve their goals. They have a DNA, display intentionality, and respond appropriately and efficiently to changes in the environment. 

My focus in these posts is on strategies surrounding information gathering. Every baseball organization needs information that contributes to cultivating its capacity to assess baseball talent.  Different information and practices built on that information are required to devise and implement approaches to developing that talent.  And yet other information is required to increase one's confidence in judgments about the floor and ceiling of the talent: what I call, its 'projectability.'  

The overall focus of this series is the role of information in strategies developed around roster construction in the modern era. This post focuses, however, on the origin story of modern roster construction. Hope you find it interesting. In upcoming posts, I explore some of the ways in which the Mets have equipped themselves as an organization to add value, especially their abilities to assess and develop talent and to reduce uncertainty and increase confidence about its projectability. 

How Curt Flood and Charles O. Finley Created Modern Era Roster Construction

Roster construction in the four major team sports in the US (and Canada) – baseball, basketball, football and hockey – involves deploying a mixed strategy of players under contract and free agents. We can now add the major college team sports -- football, basketball, and baseball to the list.

The framework is so pervasive in sports today that one could be forgiven for thinking that it was always thus. In fact, matters were quite different a mere half century ago (what feels like yesterday for some of us).

For most of the latter half of the previous century, baseball reigned supreme among professional sports leagues, hailed as the American Pastime – as distinctly American as apple pie. So central to the public’s self-conception was MLB that it was treated as if it were a kind of public good, a veritable national treasure. It was even granted an exception to prevailing anti-trust legislation, thus allowing it to function as a monopoly, a status typically reserved for the providers of national defense, enforcers of laws and housers of convicts – public services essential to individual safety and national security – with which it had little in common.

A more cynical observer might suggest that MLB exemption from anti-trust law had more to do with the outsized political influence of ownership than the extent to which baseball had been woven into the fabric of the American way of life. No matter. There is likely some truth in both accounts, though the cynic will remind us of the comfort so many find in locating a moral principle available for citing in defense of behavior that might appear to those of us suffering from less well-developed moral sensibilities as a simple money grab.

Curt Flood

In 1969, centerfielder Curt Flood of the St. Louis Cardinals, was traded to the Philadelphia Phillies. The Reserve Clause (RC), a fixture of every player contract, included a team option for an additional year of service to the team. The only constraint on management was that in exercising that option it was prohibited from reducing a player’s salary by more than 20%. Flood had signed his contract for the 1969 season in effect granting the Cardinals control over him which included the right to trade him to another team.

Flood refused to report to the Phillies and in doing so violated the terms of his contract.

With the support of Marvin Miller, the head of player’s association, Flood filed suit against baseball arguing that the RC violated prevailing Anti-Trust law (arguing in effect that Congress had been mistaken in exempting MLB from them), the Thirteenth Amendment to the Constitution (prohibiting indentured servitude as well as slavery) as well as a number of civil rights legislative acts, including, notably the recently passed Civil Rights act of 1964.

The case reached the Supreme Court, where Flood, represented by Arthur Goldberg, who would later be named to the Court, lost in a split decision (5-3). Flood was out of baseball before the case reached the Court, but he will always be remembered as the person who gave up his career for the benefit of others, the vast majority of whom he would never know.

Sadly, no major leaguers appeared as a witness on his behalf or as a supporter attending court proceedings.

Flood lost, but good lawyers always turn their attention from the outcome of a case to the grounds on which the courts reached their decisions in the hopes of finding a different pathway for litigating the same underlying issues. The Court’s decision ruled out relying on the arguments that Flood’s attorneys advanced.

What pathways remained?

In 1975, two pitchers, Andy Messersmith and Dave McNally, agreed to play for their respective teams without signing a contract that governed the conditions under which they would do so. When the season ended, they declared themselves ‘free agents.’

Their argument was simple but subtle. They had played under contract in 1974 and acknowledged that the RC in those contracts gave their respective teams an option to their performance for 1975. As a result both played without having signed a new contract. There was no 1975 contract and so come 1976 they reasoned that they should be free agents.

MLB argued that the RC created a year-to-year claim in perpetuity. The dispute would be resolved in the first instance by an arbitrator, Peter Seitz, who had been hired by MLB.

Decisions reached by arbitrators are often subject to appeal in the courts, but an arbitrator’s decision is generally respected when courts are asked to review it.

Fearing a Seitz decision in favor of the players, then baseball commissioner, Bowie Kuhn, called upon the owners to fire Seitz – even as he was reviewing materials submitted by both sides. Concerned about negative optics, ownership declined to do so.

Seitz ruled in the players’ favor, declining to grant teams the right to control a player in perpetuity merely in virtue of his having signed a one-year contract to play for that team. MLB pursued appeals through the courts without success. The dam had broken. Ballplayers had found a path to free agency.

Soon other pathways emerged. Catfish Hunter found his way to free agency – again by narrowly focusing on the terms of his contract with Charlie Finley’s Athletics. The contract he signed called for him to receive a bonus payment with which team owner failed to comply. The contract breached, Hunter found himself a free agent, and soon thereafter, signed a 5-year contract with the Yankees for 3.2 million dollars. The average salary for major leaguers only four years earlier was under 50k/year.

The Hunter signing only exacerbated ownership concerns that free agency would prove disastrous to their financial well-being.

Charlie Finley

Charlie O, he of the colorful uniforms and the orange baseballs was, in his own way, a futurist. Looking into the future, Finley saw money changing hands – from owners to players – not his or his fellow owners' preferred direction. Owners were attached to the dollars they had amassed, and while Finley found most of the other owners unimaginative, stuffy and backward, he was as fond of his fortune as they were of theirs, and, unlike them, savvy and entrepreneurial.

Rather than fighting the future to protect the past, Finley decided the way forward was to embrace it. If it is freedom that players crave, then let’s give them what they want. He proposed that all players should be granted free agency every year. Finley proposed 'universal free agency.'

Under Finley’s plan, all players, no longer chattel of ownership, would become masters and managers of their respective futures, or so baseball players might think. 

His fellow owners could be forgiven for thinking that Finley had lost his mind – something many were inclined to believe even before being presented with this most recent evidence. If the problem with free agency was that it transferred wealth from owners to players, Finley’s proposal would do little more than exacerbate the situation, or so they thought.

Neither side understood the devilish brilliance of Finley’s idea, surprising because it relies on little more than the basic 'rules' of supply and demand.

If you are ownership and you want to suppress player salaries, you have at least two options. The first is represented by the RC and the asymmetrical bargaining power it creates. The second relies on creating a highly competitive supply side market. And that is exactly what Finley’s proposal was designed to do. 

Monopolies can secure pure profits because they are unique providers of services or producers of goods that people (we assume) need. But a monopoly is just the limiting case in which demand exceeds supply. The RC is designed to replicate this economic framework. The opposite is true in a highly competitive market of service providers. Providers compete with one another for limited business opportunities driving prices down to the buyer's advantage.

If there are a small number of players in free agency relative to the number of potential buyers (with needs at various positions), prices will be likely high -- good for the players, but not for the owners.  High demand relative to supply. On the other hand, if you hold the number of buyers constant but dramatically increase the number of free agents, then you reverse the economics and drive prices down to the owners’ benefit.

The RC may well be the best option from the owner’s point of view, but that has been taken off the table. The second-best alternative is to maximize supply relative to demand. And the cleanest way of doing that is by adopting universal free agency.


From then to now

I leave open the question of whether a system of universal free agency would be desirable. My initial thought is that it would not be – especially from the point of view of fans, who might find it hard to maintain an allegiance to a team constantly in flux. I am less sure today than I was just a few years ago that a team constantly in flux is difficult to love. This certainly doesn't seem to be the case in college or professional football. What makes one think baseball would be any different?  

Even so, it is worth noting that there are many factors that would contribute to softening the blow of universal free agency. Baseball players are all, to varying degrees, unicorns as athletes, but they are, at the end of the day, just people. We can assume that like the rest of us they are willing to trade some freedom of movement for both stability and security.

More importantly, and here the college portal/NIL system, which together constitute the analog of universal free agency and the money available to free agents, is illuminating. Access to the portal makes every college player a free agent every year, and while there is considerable movement, surprisingly few of the players that do move enjoy generous NIL benefits having done so. There’s lots of money available through NIL resources, but it tends to get distributed according to the relative importance of different positions and the number of players available at those positions.

The same is true of free agency in baseball. Starting pitchers, closers, shortstops and centerfielders are more highly valued position players. At one time, leadoff hitters commanded a premium but no longer do.

There always seems to be a plethora of middle relievers available in free agency every offseason, so much so, that they are paid as if they were largely fungible goods. A decent relief pitcher, especially a lefty, can have a long career -- perhaps even one that extends through his first social security benefit check --but he should probably have a moving company on speed dial and a good investment advisor.

Baseball could have gotten along even had some version of the universal free agency Finley advocated been adopted. Television contracts and other sources of revenue swamped the differences that either the RC or the Finley ‘portal’ would have made. But that is not where we are today.

Instead, where we are is a place in which strategies for constructing rosters relies on a mix of talent sources, shaped by a confluence of events and the people who figured most prominently in them – Curt Flood, Marvin Miller, Peter Seitz, Bowie Kuhn, Charles O. Finley among others – as much by accident as by self-serving  behavior.

The focus in this post has been on the events that led to the modern labor market in baseball, and in doing so sets the stage for the next posts that explore the relationship between the risks associated with talent assessment, development, the and its projectability and the ways in which avoiding or minimizing risk impacts roster construction. That said, it would be a moral failing to forget or minimize the courage displayed by Curt Flood, a very good ballplayer and an even better man. It all began with his simple statement that should be etched into every ballplayer and fan’s mind:

“I do not feel like a piece of property to be bought and sold.”

All the more poignant coming from a black man at that point in our history and in the history of baseball.