Indians looking like 'Major League' version, while both World Series teams adopt 'Moneyball' practices

Indians looking like 'Major League' version, while both World Series teams adopt 'Moneyball' practices

The Oakland A’s were not the first MLB team to use Moneyball. It was actually the Cleveland Indians that first used a version of advanced analytics. Well, at least the fictional Indians from the 1989 movie "Major League." The main plot of "Major League" is that a rich widow becomes the owner of the Indians after her husband dies. She wants to move to the team to Miami (which did not have a team at the time), and she intentionally signs players and hires a manager who should cause the team to lose games. Losing games would cause attendance and revenues to decline enough that she could move her team to Miami.

In a deleted scene from "Major League," however, the Indians’ owner actually states this a ruse. In fact, she wanted to create a cover story for why she was signing players that were undervalued using more traditional methods. She says she scouted all the players and the manager personally to find the best possible team for lowest amount of money because the team was broke. She created a narrative using herself as the villain to inspire the players to win to spite her and have the city rally around the team.

For many fans of "Major League," this is an incredible plot twist that changes how they view the movie. What is arguably more interesting is that this is almost a perfect summary about how advanced analytics are used in sports today and in particular by the two teams in the World Series: the Indians and the Cubs. In the movie, the owner’s goal was to find undervalued players that could help her team win games. That is thesis of "Moneyball" and perhaps what the book and movie are best known for by most people. However, another interesting part is that owner scouted the players and the manager, as well. That is something that is a common misconception about "Moneyball." In fact, many teams have actually increased spending and/or relied more heavily on scouting while also using advanced analytics more frequently to evaluate players. 

The Indians and Cubs are good examples of this approach. In fact, the current, real iteration of the Indians is almost eerily similar to the fictional Indians of "Major League." The Indians had the 26th (out of 30) highest payroll for the 2016 season yet had the fourth highest team WAR in MLB (WAR is the most commonly used advanced analytic in baseball). This starts with manager Terry Francona. While he did win two World Series titles with the Boston Red Sox, Francona was let go by the Red Sox after the team lost a nine-game September lead for the American League Wild Card to the Tampa Bay Rays in 2011. This included stories that focused on how players were eating chicken, drinking beer and playing video games during Red Sox regular-season games that year. It is easy to see why many teams thought that Francona’s best managing days were behind him when the Indians hired him in 2013 — similar to Lou Brown of the fictional Indians.

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Francona is not the only similarity between the two Indians teams. Catcher Mike Napoli is almost the spitting image of catcher Jake Taylor. He is a veteran catcher brought in more for his clutch hitting and the way he can handle young pitchers. Pitcher Trevor Bauer’s drone accident prior to his playoff start would remind "Major League" fans the antics of Rick “Wild Thing” Vaughn. Up and down the Indians rosters are players that many baseball fans have never heard of but are delivering significant results to the team.

The team with the highest WAR total and best record in baseball in 2016 is the Cubs. It is easy to think that the Cubs are the exact opposite of the Indians. More specifically, almost every baseball fan knew of Cubs stars such as Kris Bryant, Anthony Rizzo, Jake Arrieta and Jon Lester. Yet, the Cubs only have the 12th highest payroll for the 2016 season. How could that be possible? Many of the Cubs players are still operating on the deals signed as draft picks. Younger players typically are more cost effective than veterans because players need to have six years of MLB service time before they can become free agents. Finding young players who can have significant impact creates extraordinary value for a team. For example, likely National League MVP Bryant is only making $652,000 this year.

Having younger players on your roster that can make an impact is something that most, if not all MLB teams understand. Finding those players, however, is a different story. Cubs president of baseball operations Theo Epstein has excelled at finding these players. Whether it is drafting players such as Bryant or trading for young talent like Rizzo, Epstein has built a team where the oldest starting infielder is 27. In addition, the team prioritized “building an offense from within and a pitching staff from spare parts. This flies in the face of more than a century of conventional baseball wisdom, which states that (1) pitching wins championships, and (2) a team can never have too much pitching.” The Cubs gained an advantage by taking a different approach to the draft than most teams and then developing a scouting department that would find the players needed to compete for championship.

"Major League" might have been ahead of its time in 1989 using Moneyball concepts, but that time has clearly arrived for both the Indians and Cubs. As Taylor said in "Major League," now there is only one thing left to do with this strategy: “Win the whole f---ing thing.”

Adam is the CEO and Founder of Block Six Analytics. He is also a lecturer for Northwestern University's Masters of Sports Administration and the co-author of The Sports Strategist: Developing Leaders For A High-Performance Industry.

Sports business: Using targeted promotions to earn more dollars

Sports business: Using targeted promotions to earn more dollars

In Monday's episode of National Public Radio’s (NPR) Fresh Air Joseph Turow, professor of communications and associate dean for graduate studies at the Annenberg School for Communication at the University of Pennsylvania, ominously "Warns That Brick-And-Mortar Stores Are Watching You."

While this may seem a bit like the real-life equivalent of "Big Brother" from George Orwell's book 1984, Turow is describing the reality that the tracking companies do in e-commerce has moved more fully into the offline stores. Using technology including mobile applications, iBeacons, loyalty cards, geo-targeting, and geo-fencing companies have more information about customers in-store buying and behavioral patterns. This enables companies to design targeted adds and promotions specifically tailored to customers that can increase the likelihood of them making a purchase.

While the ethical implications of this activity would require and entirely separate blog post, Turow and host Terry Gross discussed an important idea that comes from having this technology. In the past, companies have focused on rewarding and retaining loyal customers. Those are the customers that keep coming back and buying a company's products or service offerings. Because the cost of keeping a customer has been much lower than attracting a customer it would seem to make sense that companies would want to focus on keeping the customer's they have.

However, this may no longer be the optimal strategy for maximizing revenue growth. Instead, companies should be focused on the marginal customer rather than the most loyal customer. A loyal customer is loyal for a reason – he / she likes the company's service offerings. Why spend money on advertising and promotions if that person is already likely going to buy the product anyway?

Instead, targeted promotions should be focused on customers that will only make a purchase if they are influenced in the right way. For example, let's say a customer is indecisive about buying a pair of jeans. In the past, this customer may have tried a pair of jeans on and then left the store without purchasing them. Now, a customer can download a company's app to access additional content, deals, and other helpful information. In return for delivering these benefits the company can receive information from the app that shows the location of the person while he/she is in a store. It can then use a geo-fence, a virtual fence that surrounds a geographic area, to determine when a customer leaves a specific geographic area. If this customer leaves the store without making purchase after spending a certain amount of time (i.e. the time to try on the jeans) then the company could send a targeted ad saying that the customer has 15 minutes to come back to purchase the jeans at a 15 percent discount. Essentially, companies now can identify "disloyal" customers and then attempt to bring them back to stores to make purchases.

Using technology to reward "disloyal" customers is something that sports organizations need to increasingly focus on given the demands of the business. More specifically, there are loyal fans that are going to buy tickets, watch games, and purchase merchandise even if they do not see any advertising from a team. These customers add significant value and should not be ignored. However, sports organizations want to focus on targeting the marginal customer using new technology to encourage ticket sales, in-venue purchases and increase game viewership.

The added benefit of using technology and customer outreach in this way is that it should increase sponsorship revenue as well. Not only can sports organizations use targeted promotions to help their current sponsors expand reach, but organizations can also show how these targeted marketing efforts cause lifts in purchasing. For sports teams, clearly communicating how sponsorship/marketing assets are used to create a lift in sales provides powerful evidence of how similar tactics can drive new revenue for partners. Rewarding "disloyalty" seems counter-intuitive, but there are many ways that targeting marginal customers should lead to substantial revenue growth.

Adam is the CEO and Founder of Block Six Analytics. He is also a lecturer for Northwestern University's Masters of Sports Administration and the co-author of The Sports Strategist: Developing Leaders For A High-Performance Industry.

Crain's releases list of 25 highest-paid Chicago athletes

Crain's releases list of 25 highest-paid Chicago athletes

Crain's Chicago Business released their latest list of the 25 highest-paid Chicago athletes this week.

Even though Derrick Rose has been shipped off to New York, a Bulls guard is still atop the list with Dwyane Wade earning the No. 1 spot.

Wade's salary comes in at $23.2 million — the largest in Chicago — but he also nets an estimated $12 million in marketing for a 2016 total income of $35.2 million.

The $35.2 million dwarfs the rest of the Chicago list as the next closest is White Sox pitcher James Shields at $21.3 million. Most of that is salary ($21 million, of which the San Diego Padres are paying a large portion of) and very little is estimated marketing ($250,00).

The Top 10 list includes three Bulls players, three Cubs, two Blackhawks, one Bears and then Shields as the only Sox representative.

Here is the complete list:

1. Dwyane Wade - $35.2 million
2. James Shields - $21.3
3. Jon Lester - $20.9
4. Jimmy Butler - $17.6
5. John Lackey - $16.4
6. Jay Cutler - $16.4
7. Jason Heyward - $15.7
8. Jonathan Toews - $15.1
9. Patrick Kane - $14.9
10. Rajon Rondo - $14.6
11. Miguel Montero - $14.6
12. Melky Cabrera - $14.2
13. Robin Lopez - $13.3
14. Kyle Long - $13
15. Ben Zobrist - $12.9
16. Jake Arrieta - $11.7
17. Alshon Jeffery - $11.4
18. David Robertson - $11.1
19. Jose Abreu - $10.3
20. Leonard Floyd - $10.2 ($9.7 million signing bonus)
21. Danny Trevathan - $10.1
22. Taj Gibson - $9.4
23. Brent Seabrook - $9.1
24. Todd Frazier - $7.8
25t. Pernell McPhee - $7.2
25t. Anthony Rizzo - $7.2

Almost a third of Rizzo's total comes from marketing ($1.8 million) with 19 different affiliated brands including Buona Beef, ESPN Radio, Jewel-Osco (remember RizzOs??) and State Farm.

Crain's Danny Ecker explains how unique it is to see Kris Bryant — one of the faces of Major League Baseball — not on the Top 25 list, but that's due to his $652,000 salary in 2016 despite monster ad deals with Express Men, Red Bull, Adidas and more.

Ecker also provides context for the athletes who were left off the list, including Chris Sale (who was traded to the Boston Red Sox), Dexter Fowler (who signed with the St. Louis Cardinals) and Jason Hammel (who is currently still a free agent). Then there are the guys who left town earlier in 2016, including Rose, Joakim Noah, John Danks, Adam LaRoche and Matt Forte.

Duncan Keith and Marian Hossa are among those who fell off the list despite retaining residence on Chicago's sports teams.

Last year's list looked like this:

1. Derrick Rose
2. Jon Lester
3. Jay Cutler
4. Jimmy Butler
5. Patrick Kane
6. Jonathan Toews
7. Joakim Noah
8. John Danks
9. Melky Cabrera
10. Adam LaRoche
11. Miguel Montero
12. David Robertson
13. Matt Forte
14. Jason Hammel
15. Pau Gasol
16. Taj Gibson
17. Pernell McPhee
18. Marian Hossa
19. Duncan Keith
20. Jose Abreu
21. Corey Crawford
22. Chris Sale
23. Anthony Rizzo
24. Lamarr Houston
25. Jermon Bushrod

Check out more insight on the list from Ecker on ChicagoBusiness.com.