What does it take to build a winner in baseball? Certainly money is a part of it, but it doesn't guarantee success, just as a lack of it doesn't guarantee failure. Luck is also a part of it. But being creative--a leader in trends--is the third and only controllable way. I think Nationals GM Mike Rizzo may being skewing this method of winning in favor of his team.
The baseball draft is a little different from other drafts in that money plays a larger role. Some teams actually pass on draft picks because they'd be too expensive to sign. Often you'll hear of a player who fell, sometimes very far, due to "signability" issues. "Signability" is a word Rizzo doesn't comprehend. Signability? What signability? Have you met my billionaire friend, Ted?
But seriously, in football you take the next player for your team off the board round after round. That's also how it works in basketball. In baseball, a team may choose to skip the next best player because they'll have to spend more money to convince him to not go to college. Other times a player has signability issues because he's been hurt, and he thinks that if he goes back for another year and proves he's healthy, he'd make a lot more money.
Those are opportunities Rizzo drools over. He drafts like it's a football draft. Rizzo is excited when a guy the Nats rank as a first rounder falls to them in the fourth round, because he doesn't care that he's still got to pay him first round money. And neither does his boss. That makes two smart guys in the room.
The Nats are paying a premium based on where the player was drafted, but believe they are getting a discount on the player's actual worth. In the investment world, everything is about paying for risk (and having the cash to make the upfront investment, which the Nats have). If an investor thinks risk has been incorrectly priced, there's an opportunity. There are enough teams who avoid players who need more money than their draft position would indicate because of cash issues that there is probably price imperfection in the market.
There's another important factor, and that's MLB's recommended salary slots. While there's no requirement to follow them (and certainly some teams ignore them a little), there is pressure among owners to follow them to some degree because all owners benefit from lower salaries. For some reason it's completely ok for the Yankees to drive free-agent prices through the roof, but it's bad if smaller-market teams ignore salary slots to their advantage. The Nats recognize that baloney and are happy to take advantage of it.
Finally, I'll bet owners are particularly bothered by the Nats being in bed with mega agent Scott Boras. Owners are convinced he's been at least somewhat responsible for driving up player salaries. The Nats are riddled with his clients, and three of our first four picks were his clients. What does it take to be the top agent baseball? Luck, good negotiating skills, and a convincing sales presentation are all important, but most important is how they judge talent. They find an athlete early that they think will be a star. They invest time in the kid and if they are right, their investment pays off. Boras' client list is riddled with All Stars. Some stolen, but most developed. So teams view him as the enemy because he drives up prices, while we view him as an asset. I have to think we benefit from others' prejudices here. Boras will want to steer us clients to keep his current clients on our roster happy (winning), so we have a great baseball mind on our side.
With any investment there is risk of failure. It's possible that none of the Nats' first four picks will see much time in the Majors, but I'll stand by the fact that it seems the Nationals have spied an investment strategy based on a market failure, something that doesn't happen that often baseball. Maybe Boras is doing no more than using us to drive up his commissions, but I'll bet that it's this misunderstanding that will net us success. Good investment theses, Mr. Rizzo. Here's hoping they bring high yields.
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