Front-Office Efficiency (FOE): How much can $1M get you?

Being a small-market franchise, the Rays need to be especially careful with how they're spending their money.  Simply put, we cannot compete with the Yankees and Red Sox if we attempt to run our team the way they do, a concept our front office knows incredibly well; however, I feel that not all Rays' fans fully appreciate the sacrifices that come with being a small-market team.  While this blog's readership is among the enlightened few, let's take a second to look at many of these principles.  

In order to be a succesful, competitive franchise, small-market teams must be: 

 

  1. Strategic.  Large-market teams can use their money to purchase high-end talent without having to worry about how much payroll space they have.  If small-market teams want to splurge, they need to figure out who's going to be leaving to create the necessary space.
  2. Willing to assume more risk than large-market teams.  Low risk, high reward players command serious bucks, so small-market teams are forced to rely on high risk, medium-to-high reward players.  These are your Carlos Penas and Jason Isringhausens - players that may or may not pan out, but are cheap and worth the gamble.  This also includes doing things like trading veteran players for prospects.  It's an inherently risky thing to do, but one that is necessary to keep payroll low while maximing your talent on the field.
  3. Ahead of the curve.  Find a market inefficiency that allows you to get a valuable player for cheap.  Discovering the value of on-base percentage before anyone else did allowed Bill Beane to keep the Oakland A's competitive from 1999 - 2006.  Well, that's simplifying matters, but you get the gist.
  4. Maximizing their returns.  While large-market teams can afford to pay market value for talent, small-market teams simply can't.  For example, the Rays have currently produced 44.4 WAR of value this season.  If they were to pay market value for that talent (the going rate for one win this past off-season was around $4.6M), their payroll would need to be $204M.  The Rays need to get the most bang out of their buck possible.
I'm sure I'm missing things (feel free to add your own additions in the comments), but I bring this up because I really want to stress bullet point #4: The Principle of Maximizing Returns.  In my eyes, this principle ties all of the other bullet points together.  How do you maximize returns?  By assuming risk, staying ahead of the curve, and being strategic in your planning.  But at the end of the day, all that matters is how much value you're getting out of every dollar you're investing into your team.  In other words, how efficient is your franchise?

Since money and efficiency are key concerns of the Rays' front office, let's evaluate how well our team has done this past year using a metric called Front Office Efficiency (FOE).  It's my own creation (although I'm sure others have done similar things in the past), so feedback and/or suggestions are definitely welcome.

I came up with the idea for FOE the other day when I was pondering about the Rays' front office (FO) and the moves they've made this year.  While we praised the Rays' FO this offseason for signing Pat Burrell and Joe Nelson, in retrospect those moves have turned out less than stellar so far.  Also this off-season, the Edwin Jackson trade was fiercely debated at the time and the Sonny vs. Edwin debate refuses to die to this day.  And with the Scott Kazmir trade most recently completed, I found myself turning a critical eye towards our FO for the first time in a while.  That's not to say that I disagreed with the trade or was unhappy with the return; simply, I wanted to critically evaluate how effective our FO has been during its tenure.  Our FO has been very active again this year, and maybe I was giving them too much credit in the past and not being thorough enough in my analysis.

So here's how FOE works.  The idea behind it is to determine how much value a franchise is getting for every dollar invested in a player, so to calculate this, I took a player's total number of Runs Above Replacement (RAR) and divided by their salary.  I then multiplied that number by $1M, so the final FOE score would equal the number of runs contributed per million dollars spent.  The break-even point is about 2 runs per million, since a win (ten runs) is worth approximately $5 million.  In other words, higher than 2 FOE and a player has been worth more than he's been paid.  To get an idea of the metric, check this out:

The 2009 Rays' roster with FOE values included.

Ben Zobrist is ridiculous, but Longoria, Garza, Upton, and Howell aren't too shabby either.  As you can see, league-minimum salaries are really helpful because even relatively modest performances can get you a high FOE rating.  Remember, FOE isn't about who helps the team the most, but it's about value.

The Rays' roster doesn't say a whole lot that we didn't already know, though.  We already knew that Zobrist and Longoria are incredible values (although I was surprised by Upton's strong showing and Crawford's middle-of-the-pack finish).  It's tough to get a hold of this metric without some broader comparisons, so let's look at how the Rays have done as a whole this year:

 

Positions

Pitchers

Total

RAR

308.8

135.6

444.4

Payroll

$38,346,868

$28,557,100

$63,313,034

FOE

8.05

4.75

7.02


Okay, so we've been more efficient with our position players than pitchers.  Pitchers are much more volatile and less easy to predict than hitters, so that makes sense.  Next, this upcoming chart shows the Rays' FOE over the last 5 seasons.  Remeber, this season is still not finished and RAR is a counting stat, so our FOE is likely to be slightly higher by the end of the season.

Year

RAR (Pos.)

RAR (Pitchers)

RAR (Total)

Payroll

FOE

2009

308.8

135.6

444.4

$63,313,034

7.02

2008

311.4

178.6

490

$43,745,597

11.20

2007

171.9

114.3

286.2

$24,123,500

11.86

2006

119.6

103

222.6

$35,417,967

6.28

2005

204.4

64

268.4

$29,679,067

9.04


Looking at this data, ever since the new ownership took over, our franchise has markedly increased in efficiency.  This is quite awesome.  Not only does it show that our FO knows what it's doing, but it also shows that it's been rather successful in increasing payroll yet still remaining efficient in spending.  This year has been a challenge to them, though, with our pitchers really dragging down the overall efficiency of the team.  Who's to blame?  Our SPs or RPs?

RAR

Payroll

FOE

SP

108.60

$11,336,733

9.58

RP

24.00

$17,220,367

1.39


Gee golly!  Our bullpen is atrocious!  We're spending an inordinate amount of money there, especially considering that one really can't expect to receive much in the way of value from even the best relievers.  Thankfully, we've got Percival, Bradford, and Izzy coming off the books after this year, with potentially Joe Nelson and Brian Shouse as well.  We are stuck with Dan Wheeler and his .66 FOE, though...

So now we've got a good idea of where the Rays stand, but we have no idea how they compare to other teams.  Let's take a look at two teams: the 2009 Yankees and the 2002 Athletics.  I chose the current Yankees because I feel that they're most likely a good example of a team with a low FOE score (really, the Yankees are a good bet to have a low FOE score every year), while I chose the 2002 Athletics because that was one of the pinacle "Moneyball" years for Billy Beane.  His Athletics went 103-59 (Pythagorean W-L: 96-66) and had a payroll around $40M.  This team would be a good example of what peak FOE scores look like.

Yankees

Positions

Pitchers

Total

RAR

315.9

161.9

477.8

Payroll

$137,194,100

$65,217,589

$202,411,689

FOE

2.30

2.48

2.36


Oakland - 2002

Total

RAR

486

Payroll

$40,004,167

FOE

12.15


When you look at the Rays in the context of these two clubs, you begin to realize how incredible our FO has been these last few years.  Like you'd expect, the Yankees are just barely above the 2 FOE mark, meaning they're paying just about market rate for all their talent.  And Oakland, on the other hand, had an incredible 12 FOE and received huge amounts of surplus value from their players.  The Rays' FO, though, has come very close to matching Oakland's FOE score twice (11.20 and 11.86), which strikes me as very impressive.

Looking at this year again, I'm only mildly bothered by the decrease in our efficiency.  In part, this can be explained by our FO needing to invest in key players in order to keep them around.  We've had to pour significant money into players like Carlos Pena (3.5 FOE) and Carl Crawford (5.82 FOE), and deals are normally back-laden.  As you become competitive, more investment is needed to maintain that level of competitiveness, although this comes at the cost of some efficiency; however, I do think that our FO can improve upon the amount of money they have sunk into our bullpen.  Our FO appears to have a propensity to offer relievers decently large contracts (see: Wheeler, Percy), only to then regret it a year down the road.  

Our FO has chosen to expand our payroll quickly and dramatically, with only a modest decrease in efficiency.  This is a really impressive accomplishment, but the road simply gets harder from here on out.  Our best players are going to continue to get more expensive, while the ownership group is going to need to be realistic about how much money it can afford to spend going forward.  I can't claim to know if we're going to need to scale back our payroll this off-season, but at the very least our team has hit its cap at around $70M.  In this context, trades like the Scott Kazmir deal are not only necessary, but vital to the team's continued success.  Kazmir was no longer efficient enough for us.  Notice that I didn't say "cheap".  Efficient.  And that's what the bottom line is.
* All contract information in this post was taken from Cot's Baseball Contracts and all statistics were taken from Fangraphs.
X
Log In Sign Up

forgot?
Log In Sign Up

Please choose a new SB Nation username and password

As part of the new SB Nation launch, prior users will need to choose a permanent username, along with a new password.

Your username will be used to login to SB Nation going forward.

I already have a Vox Media account!

Verify Vox Media account

Please login to your Vox Media account. This account will be linked to your previously existing Eater account.

Please choose a new SB Nation username and password

As part of the new SB Nation launch, prior MT authors will need to choose a new username and password.

Your username will be used to login to SB Nation going forward.

Forgot password?

We'll email you a reset link.

If you signed up using a 3rd party account like Facebook or Twitter, please login with it instead.

Forgot password?

Try another email?

Almost done,

By becoming a registered user, you are also agreeing to our Terms and confirming that you have read our Privacy Policy.

Join DRaysBay

You must be a member of DRaysBay to participate.

We have our own Community Guidelines at DRaysBay. You should read them.

Join DRaysBay

You must be a member of DRaysBay to participate.

We have our own Community Guidelines at DRaysBay. You should read them.

Spinner.vc97ec6e

Authenticating

Great!

Choose an available username to complete sign up.

In order to provide our users with a better overall experience, we ask for more information from Facebook when using it to login so that we can learn more about our audience and provide you with the best possible experience. We do not store specific user data and the sharing of it is not required to login with Facebook.

tracking_pixel_9351_tracker