Thursday, February 04, 2010

Hey Neukom! My Business Plan: Draft Philosophy and Strategy

This is the latest in the series that I've been publishing (but it's been a looong while since I added one), here is a link to the Table of Contents, which I just put together recently and will updated as necessary when I add to this series or update any of the chapters.

The MLB Amateur Draft Is Worse Than Most Think

As I have posted before, the draft is a crapshoot (I wrote this under a previous handle). When you are winning, you have lousy draft position, the most you can hope for is around a 10-15% chance with your first round pick in the last third of the round of locating and selecting a amateur who will have the necessities to become a good to great player. Even when you are losing hand over fist, the first pick overall is not even a coin flip on whether he would be a good player or not, though close. Thus, you need a strategy that maximizes your draft picks for finding players for your 25-man roster, no matter where you pick in the first round.

Draft Picks, Like Any Rare Resource, Must be Maximized

With a scarce and rare resource, like a draft pick, you need to maximize it by focusing them on something and you need a strategy that will do that. Focusing on pitching, like the Giants have since almost when Sabean took over (and basically after Dick Tidrow became his VP of Player Personnel) is probably the best way to do it. With the success rate falling exponentially, even when you select the 50 total overall picks most teams select, you are not going to find a good player after the first round very consistently at those odds. It is even worse than a crapshoot, it is finding the proverbial needle in the haystack.

Given such a poor success rate with the first round pick when you are winning, you can only hope to find one good player with your first round pick every decade that you are winning consecutively. That is not a very good replacement rate.

The fact is that the historical performance is even worse after the first round. Just making the majors is a pretty low success rate, somewhere in the 10-15% range. Even at a 1% success rate for finding a good player after the first round, at 50 picks per year, that is a good player every 2 years, only 5 in a decade. Plus the one a winning team would pick on average, that is 6 good players in a decade.

However, there are 13 starting positions on a team plus a closer, and not all good players last for a whole decade. With maybe 6 good players drafted in a decade, that means that less than half of a starting team can be replaced in a decade, assuming you started out with good players at each position. Thus, no team is going to fill in all their starting positions with good players via the draft alone when winning. There is not enough talent in the prospect pool each year to fill up all the spots with good players. Thus, each pick needs to be maximized.

In addition, a consequence of this dearth of talent is that any strategy for building a winning team has to assume that you will be using free agency to fill in the gaps in your roster. And as long as you sign good players to free agent contracts, the picks you give up is a small price to pay for a good player because the odds of getting a good player is much greater when you sign one than when you pick one, even a pick in the last half of the first round.

Pitching, Pitching, Pitching

As shown in the plan so far in the other chapters, pitching is key to building a more successful team in the playoffs. So it would make sense that one might then focus on pitching in the draft. This way, you control the supply of the critical skills necessary for building a team that maximizes their possibilities of success in the playoffs. However, there is another good reason: roster makeup and flexibility.

Pitching Provides More Options

Let's say you are drafting and have a choice between two guys you think will be equally great, but one is a 1B and one is a starting pitcher. However, what you see is not what you get: sometimes (actually, almost all the time) the prospect fails. Getting a starting pitcher gives you options.

Many a failed pitcher can go to the bullpen. Not only can he go to the bullpen, he can be your long man, middle-innings, set-up, or sometimes even closer. So even when a pitching prospect fails to become a starter, he could fill in up to four other spots on the MLB roster.

Now lets say that both were a success, you now have a great player. If you have the 1B, and another great player is playing 1B, you now have a dilemma (see Giants McCovey/Cepeda and Rangers Teixiera/Gonzalez/Hafner) that does not always resolve itself nicely. If you have a starting pitcher, however, depending on how good he is, he can fill one of up to five spots in the rotation.

A pitcher could fill one of up to 12 positions on the MLB roster, a position player can fill maybe 2 positions relatively evenly, and at best 3, maybe 4, and that usually means you take a hit on defense if he is playing out of position.

Thus, focusing the draft on starting pitching gives you much more flexibility in filling spots in your 25-man roster, helping you fill up more spots and in a faster timeframe. Any pitcher should theoretically fill at minimum the last two spots in the rotation (or more if better) and somewhere in the bullpen outside of the closer and two set-up men, another 4 spots (or more if better). The majority of position players can fill at best 3 spots in the field (the three OF spots or 2B/3B/SS) and most really only can play 2 spots generally at the most. That will help fill your MLB roster with home-grown prospects faster and to a great extent than if you focused on position players or evenly between the two.

Focus, Not Exclusively

Now this is very obvious, but I am not advocating that a team should draft only starting pitchers, that would be suicide. You should never draft based on filling a spot in your lineup, you must always respect the talent that is available to you with any draft pick. Thus, if there is a hitter available who is clearly the best player, then you should pick him, even if you are focusing on pitching.

However, there will be cases where the prospect is just one of many who appear to be equally talented, or closely so. And in those cases, you should go for the starting pitching. Given equally talented prospects, the flexibility in filling the pitching staff is an advantage that tips the scales towards selecting the pitcher.

And by the time you get to anywhere around the 3-5 round (I would guess-timate), when the odds of finding a good player falls to roughly 1% or less, the odds of finding a good player is so low that there should be some competitive advantage gained by a team that focuses on one particular skill particularly well, such as pitching.

Pitching Is the Key

Focusing on pitching works in so many ways. As Baseball Prospectus and The Hardball Times showed, success in the playoffs can be positively influenced by good pitching and fielding whereas offense plays no significant part. But pitching also works in building up a team in a faster and more efficient manner.

Another thing I would posit is that this strategy is even more effective for NL teams to follow. AL teams have a position that NL teams don't worry about: DH. A good hitter who cannot field any position acceptably is useless and thus of little value to an NL team, but he would have value, potentially good value, for an AL team. Thus, over time, AL teams will have a subtle preference for hitters who might not be good fielders, and when they are selecting this player, that will sometimes leave a more valuable pitcher (from the NL team viewpoint) still on the board for the NL team to select. That would give NL teams an overall talent boost in terms of available pitching talent when it is their turn to select and a AL team ahead of it selects a hitter that is of lesser value to the NL team over a pitcher that would have been otherwise selected and of greater value to the NL team.

Overall, finding good players is such a crapshoot that you cannot effectively plan for building a team. When you find one, you can only shout "Eureka!" If a team focuses on position players or split it evenly between position and pitching, there will be the times when you find out that you developed multiple players who can only play one or two positions. That forces you to play someone out of position, which weakens one of the key qualities of a successful team in the playoffs - fielding - or forces you to trade for what you need, and as the history of baseball shows, trading is not a science, a lot of mistakes are often made.

By focusing on pitching generally in your overall draft, you can mainly improve your team over time. No matter how good your future ace looks like (for example, Matt Cain), if you find another future ace (for example, Tim Lincecum), you can easily slot him into the rotation and move everyone else down. And if your awesome starter can't handle starting, then you throw him into the bullpen, where maybe he can be a closer (for example, Brian Wilson). And as you build the pitching staff over time (Jonathan Sanchez and Madison Bumgarner), you could reach the point where you have so many good pitchers that you can start trading off starters to boost up your lineup and/or your farm system greatly without missing a beat in the pitching staff.

The Giants are reaching such a point in their rebuilding cycle, as Jonathan Sanchez is looking more and more like a potential ace in the making, and with another good season under his wing in 2010, and with Bumgarner basically ready to take Sanchez's place, he could be traded, like Dan Haren was, for a bushelful of good and nearly ready prospects who would restock our farm system for the next 3-4 years plus supply one or two prospects about ready to start in the majors. And with Wheeler hopefully coming down the pike in 2-4 years, that could open up another trade possibility within the rotation, and we have another delightful dilemma coming up in the future.

12 comments:

  1. Thanks for the great draft insights, OGC. You look at the draft unlike almost anyone else on Giants fan sites.
    I really like the choices the Giants have made the past few seasons. I don't even mind their selection of Wheeler over Matzek despite the almost universal rankings of Matzek over Wheeler since it seems our pick has a potentially higher ceiling to go with the seemingly lower floor.
    It seems like a number of writers like their drafts as well, especially Andy Seiler of mlbbonusbaby.com, whose analyses I am quite impressed with.
    Personally, I hope they continue with their philosophy of drafting high ceiling talent that has fallen out of favor, since, as you say, the draft is such a crapshoot anyway, why not take some chances.
    My question to you is whether you think the Giants alter their draft philosophy now that they are likely going to be picking later in the draft in the coming years. Do you think they go back to a pitching-heavy draft, a signability draft (e.g. Torcato), a "Sabean style Tucker draft style", or do you see them maintaining their current philosophy?

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  2. The reason I look at it differently is because I've actually went through all the draft data and see how difficult it is to find and draft a good player.

    And I'll immodestly add that I'm different from any other analyst out there because all the other analysts look at the average when it is the distribution that is most important point to know. None of them even bother to see what their average means. If you look at the average, you'll find that the average player drafted, even up top, is someone like Marquis Grissom or Michael Tucker.

    I assume that you are with me that they do not represent what I would hope to get out of the draft, particularly with my first pick.

    I also have no problem with passing over Matzek over Wheeler, Wheeler seems like a stud too, so I'll defer to the Giants brain trust that they think he's better for the money.

    And that is another key point there, Matzek was not an easy sign, do we really want to risk losing the pick? We still get a pick in the next draft, but what if the choices aren't what you think you could get with Wheeler? Plus, that's another year of development lost, one later year we might get someone to help us.

    Plus we don't know what Matzek might have told teams. Maybe he told certain teams not to bother drafting him, for whatever reason. Maybe he gave the Giants a larger number than what he eventually signed for.

    Thanks for pointing out mlbbonusbaby, I'll have to check them out.

    I think that they have done that with their drafts for a while, looking for high ceiling talent. They took a risk with Ishikawa late in the draft (at the time, the highest bonus given anybody after, I think, the 10th round), Marcus Sanders (had surgery in high school), EME (injuries, poor defense), then of course the last couple of drafts.

    And really, with everyone a question mark, I like that they swung for the fences with Gillaspie, Kieschnick, Crawford, Dominguez, Stoffel, etc.

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  3. About your question, I think the Giants will not alter their philosophy now, particularly now. They want to build a pipeline of young talent rising and becoming either trade fodder or starters, as they have shown with their last few drafts, and I don't expect that to change.

    Part of the reason why is because Neukom looks like he will not allow money to become the reason why we did anything. I don't think the Tucker/Durham draft pick punting costed the Giants in real terms talent-wise, but it clearly costed them image-wise, and I think Neukom will find the money somewhere to fund whatever the Giants need.

    Hence his edict that Sabean not be boxed in entirely by a budget figure that he needs to target, but if he needs money, make the baseball argument why the Giants need to do it, and if Neukom agreed, he would make it happen. Magowan instead penny-pinched when we could have at least tried to sign Vlad Guererro or whoever you want to chose in those years to sign.

    That philosophy would also preclude a signability draft, though I would note that I researched the draft as far back as Baseball America had bonus data for, and during the 2000's, there was only one draft where the signing bonuses were significantly below what other players around that pick was getting. I can dig up that post if you want to see all the gory details, but basically, if the Giants were doing signability, they still signed players who got the same amount of money other players in that draft range was getting.

    About pitching-heavy drafts, even the past couple of years, with the clear emphasis on selecting position players early in the draft, the Giants have still drafted almost as many pitchers than hitters overall, 24 pitchers vs. 26 hitters in 2009, 22 pitchers vs. 28 hitters in 2008. John Barr, who is suppose to be more of a position prospect expert, took over with the 2008 draft. In 2007, they selected 29 pitchers vs. 23 hitters.

    Pitchers who made the Top Giants prospects acknowledgement by Minor League Baseball Analysts from the last two drafts include: Zach Wheeler, Edwin Quirate, Jason Stoffel, plus one traded away, Scott Barnes. And there are people who really like Matt Graham, but he'll have to do well in 2010 to get top prospect recognition. And others who had good 2009 seasons include Ryan Verdugo, Craig Westcott, and Jeremy Toole.

    And there are a number of players we did not draft in the first round on our pitching staff, Jonathan Sanchez (27th round 2004), Brian Wilson (24th round 2003; just had TJS when we drafted him, if I remember right, or not that long before we drafted him), Sergio Romo (28th 2005), Dan Runzler (9th 2007), Alex Hinshaw (15th 2005).

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  4. Also forgot to mention that just because Neukom has a more open purse does not mean that the Punt a Pick philosophy might not happen if the free agent is worth giving up a pick for. Giving it up for Tucker doesn't excite the fans, but if they were to sign a top free agent, that would be another matter, I think.

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  5. I am wondering if this is the best philosophy for the Giants considering that they play in a pitcher-friendly park. The Giants seem to have great difficultly signing stud position free agents, but much less difficulty signing stud pitchers. I suspect that Brad Penny came here last year due the pitcher's park. Wouldn't it make more sense for the Giants to draft position players and go after free agent pitchers?

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  6. Please read my whole business plan series for a more complete explanation about why pitching is so important in the playoffs.

    First, it is not pitcher friendly per-se any more. Look in Baseball Prospectus, Bill James, and Baseball-Reference.com, and you will find that AT&T is now a slightly above-average park for offense. Bill James's makes it much more clearer that the park punishes HR hitters, so the park does help any flyball pitcher while mainly punishing LH HR hitters not named Barry Lamar Bonds.

    That said, let's assume that your premise is correct that the park is a pitcher's park. In your scenario, we would pursue starting pitchers and relievers while focusing on position players. While pitchers would be willing to come here, you'll notice that the top pitchers will be wanting their fair share, they aren't going to give any discount. We'll be paying top dollar for the free agent pitchers we pick up.

    Now, in my scenario, we supply almost all our pitching internally. Basically, we are almost getting to the point where we have a rotation that nobody can buy, not even the Yankees. When you have a great defense in pitching and fielding, you don't need a great lineup to win a division, you only need a roughly average one. You do not have to pay top dollar for average players.

    Now in your scenario, we could scale back the spending and not get the best pitchers (which you assume would be on the market but are not always there, whereas average position players usually are).

    But, my premise for all my theories is based on BP's and THT's studies that it is pitching and defense that contribute to winning in the playoffs. They found that offense is not a statistically significant contributor to winning in the playoffs. So you will need to get the pitching if you hope to match my team.

    Now, if you don't believe that, then yeah, I can see your point.

    But I totally believe in my theories about winning in the playoffs. If you have been following my studies on the Giants PQS for their starting pitching, you can see that the best pitchers can semi-reliably deliver good starts on a regular basis. For mediocre pitchers, you are basically flipping coin what will happen, that accounts for a lot of the back and forth that happens in series in the playoffs.

    For what I envision with this strategy, see the Dodgers of the 60's with Koufax and Drysdale an incredible 1-2 atop their rotation. When you have great pitching like that, they can dominate the games they are in, and when you have a rotation like that, you can dominate series like that.

    In today's game, that is not possible with two, that is why I wanted to keep Sanchez around and not trade him as others want to, because when he is on, he has a very high PQS DOM% too, like Cain.

    And if we add Bumgarner to the rotation by season's end, and he does as well as Cain did when he first came up, we might be able to roll through the playoffs, particularly if Bochy did the bold move of using Bumgarner instead of Zito, though I doubt that would happen.

    And if you look at this using a business strategy perspective, you want to get resources that provides your team a competitive advantage. According to the studies, having pitchers gives you that in the playoffs, so why not focus your draft on obtaining them?

    And as I noted, it would be cheaper to fill a team with average hitters to go with your superior pitching than to fill your team with good pitching to go with your superior offense.

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  7. Penny came here because he wanted to stick it to the D-gers by helping the Giants beat them for the division title. And it was not for lack of trying, he did great for us.

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  8. I don't have a problem with your thesis here. The Giants drafted Matt Cain, Brian Wilson, Jonathan Sanchez and Sergio Romo all before they drafted Tim Lincecum in 2006. It's not like the Giants just woke up and discovered drafting in 2006. How many teams out there would be deliriously happy to have those 4 pitchers to show for their draft and farm system?

    I do think that there is a role for balancing your system. Now, that is different than drafting for need at the MLB level which is lunacy given how long it takes for a draftee to develop and the low rate of success. Again, you take the best player available, but often there is a choice of several approximately equal players. I like that the Giants have emphasized position players a bit more in recent years. At this point, they are in position to truly take that BPA, but they may be actually a bit thinner in pitching than hitting in the system now.

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  9. Thanks for your comment, DrB, I always respect your opinion.

    I agree, most teams would be very happy with finding such a crop of players. I would also include Lowry and Accardo in there too, both were good players at one time, perhaps again someday.

    Yes, thanks for pointing out balance, that is the problem sometimes, not capturing all your thoughts in a post.

    My assumption was that the first pick will usually be the one where there is some balance between pitching and position players, which would work out on overall balance in your talent pool because the highest odds of talent being developed is with your first round draft pick.

    Still, the overall emphasis would still be pitching, in my theory, and BPA should be the rule for any pick, not just the first pick, just that in cases of ties or very close in talent players (as judged by your scouts and presumably you as GM), you always go with the pitcher. That should give your overall draft a pitching oriented lean that I think is optimal.

    I too like the Giants emphasis on position players in recent years, and I agree that we are very thin in pitching relative to hitting in the system right now, though Wheeler helps to balance that nicely with his potential.

    With our pitching staff rounding out very nicely, though, I would say that their timing was almost perfect, almost prescient, in that many of those recent hitters drafted should be coming up to the majors over the next two seasons, Posey, Crawford, Kieschnick, Noonan, plus guys from prior drafts, Bowker and Schierholtz and Neal.

    I like that they took chances on position players who had first round talent at one point in their background but had fallen to them in later rounds for whatever reasons. The Giants need to take calculated chances like that.

    With the staff pretty set, top to bottom, for the next few years, we only need one or two pitchers to make the jump each year, like Runzler did last year, so that pitching thinness is OK for the next few years, as long as the emphasis on pitching keeps the production of pitching from the later rounds percolating upwards.

    And all we need are big hits like Sanchez and Wilson from the later rounds once in a while to boost up the overall talent in the pitching staff and free up pitching talent for trades for bigger bats or to replenish the farm system, or to replace talent that might be leaving for free agency.

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  10. Thanks for your reply. I have been busy at work for the last couple of weeks and just got a chance to read it.

    Unfortunately, I did not make my premise clear. I don't believe the park is particularly pitcher friendly, however I think that Major League hitters believe it. I can not prove that, since I can not see into their minds. However, I have seen enough free agents take less money to play elsewhere that I believe it to be so.

    And yes, I am guilty of not reading your business plan. Hopefully in the next week or so, I will get some time.

    Finally, I still believe that the park was a factor in Penny's decision to come here. You are absolutely right that he wanted to get back at the Dodgers. He was also looking to become a free agent at the end of the year and wanted to prove that he was still a first rate pitcher. During 2008 and 2009 in Boston, his numbers were not very good. Unfortunately, I can not prove this either.

    Anyway, maybe the answer is to draft for pitchers and publish the park numbers to all free agent hitters! Or maybe if some of the young Giants (not named Bonds or Sandoval) can put us some nice batting numbers, then the reputation will change.

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  11. No worries Steve, I got work too.

    The problem with the park is that while it is no longer pitching friendly, it is still unfriendly to homerun hitters. Homerun hitters, particularly those who are big RBI guys, are what we need and they will shy away from SF if they need a place to show off their good form in order to get a good free agent contract the next year or two.

    That is why we can sign the guys who are not big HR hitters but whiff on those who are, because they are too afraid about the park. Plus, at that time, we were not that great a team, too, so that worked against us too.

    I think with another good year in 2010, we will be able to attract a good hitter who would be willing to be that "final" key to getting us over the World Series hump, there are egos big enough to see that big picture rather than the small picture loss in HR power.

    No worries also about the business plan. I know it is huge, but my theory on how to run the team has been built up over time, and hence why I refer to that instead of repeating myself over and over again, as I have oftentimes in the past. Now I can direct people to the easy linky.

    I think that Penny both wanted to take on the D-gers plus do well in becoming a free agent. Returning to where he is familiar with both the parks and the hitters was key for him doing well in September. Plus, we were battling for the playoffs then too, while Colorado has the horrible park for pitchers and the D-backs and 'Dres were not in the race at all, though the 'Dres would have been OK as they have a severe pitchers park too. But I think he wanted 1) to do well overall, 2) win some games because there are execs who think that way, 3) have a chance to make the playoffs, which would get him more money, 4) stick it to the D-gers. The Giants made too much sense compared to another team.

    I too can't prove what Penny was thinking, but if he was only worried about pitching well, he should have joined the 'Dres, as they have an extreme pitchers park.

    I don't think we need to attract big hitters to our team, though that would be nice. We have Posey looking to join the group soon and nice looking hitting prospects in Schierholtz, Bowker, Neal, Noonan, and maybe Kieschnick and Crawford, that should fill out even more of the lineup in the next couple of years.

    With our pitching we don't need great hitters, we only need average hitters like DeRosa, Huff, Sanchez, Rowand, Renteria, Molina who can play OK enough to good defense, plus Sandoval and Posey. But if someone big comes out on the free agent market, hopefully the Giants can go after him.

    I think Teixiera would have been pursued if he didn't make it clear that playing in the East near family was very important to him. That burned the Giants with Carlos Lee, who really wanted to play near his huge ranch in Texas.

    But with our pitching looking to become so good over the next 3-5 year period, I think that will be good enough (with enough money of course) to get one more plus hitter to join Sandoval and Posey in our lineup. We don't need great hitters up and down our lineup, three should be plenty enough as long as the rest are average in order for this pitching, if it is as good as it appears to be, to win.

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  12. I agree with everything you say, except I would not count Posey as a plus major league hitter yet. I think Posey should be a plus hitter, but he still has to prove it at the major league level.

    Therefore, I would have said that we need 2 plus hitters to join Sandoval. Posey may be one of those two.

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