The Extra 2% (2 page)

“Nobody with the Devil Rays had ever said that,” said Marc Lancaster, then a beat writer with the
Tampa Tribune
, “because it was ridiculous.”

If a baseball team merely lost more games than it won every year, it wouldn’t become cannon fodder for everyone from Gold Glove center fielders to talk show hosts. But the Devil Rays had much bigger problems than perennial losers like the Kansas City Royals or the Pittsburgh Pirates. They were more heavily mocked in their own community than even the biggest sad sacks in other sports, like the NBA’s Los Angeles Clippers.

At the heart of the Devil Rays’ failures was the team’s owner, Vincent J. Naimoli. The New Jersey native had made his money as a turnaround specialist. When a company started hemorrhaging money, Naimoli would swoop in, slash expenses to the bone, ride out the worst of the business cycle, then reap the benefits of a lean, mean operation when the economy recovered. Unfortunately for Naimoli and fans in the Tampa Bay area, this was a terrible way to run a Major League Baseball team.

Dumping pricey, unproductive veterans and building with younger, cheaper, homegrown talent was a frugal, sometimes effective way for teams to turn their fortunes around. But Naimoli didn’t stop there. A micromanager of the highest degree, Naimoli looked for any and every opportunity to save a few bucks, or find a few. The boss never considered—or cared to consider—the consequences of his extreme austerity. When Naimoli harangued the local Dillard’s department store for using the Devil Rays logo without his permission, Dillard’s responded by yanking all Devil Rays gear out of their
stores. The St. Petersburg High School marching band was slated to play the national anthem before a game—until Naimoli told the school it would have to buy tickets to get into the park. The band canceled the gig, and the resulting firestorm over Naimoli’s cheapskate tactic rankled locals. The boss’s volatile temper and distrust of the media also hurt his reputation, and the team’s. No reporter seemed to go more than a few months without Naimoli tearing him to shreds, usually over a trivial matter or a story that was factually correct.

The fans, already weary of a losing team, lost interest in forking over ticket money to the penny-pinching, cantankerous owner who ran the Devil Rays. More than that, some stayed away out of principle. A lousy team breeds apathy. A lousy team with a jerk for an owner makes people stay away in protest.

On the field, the Devil Rays found some success in the amateur draft, which should happen when you’re picking in the top five nearly every year. Still, one can’t help but wonder how the team might have fared had it ponied up for top talent.

In 2001, Tampa Bay owned the third pick in the amateur draft. The consensus best talent left on the board was switch-hitting Georgia Tech slugger Mark Teixeira. Everyone in baseball knew Teixeira wouldn’t come cheap, and indeed, the four-year, $9.5 million major league contract that superagent Scott Boras landed for him was unorthodox and expensive. But the D-Rays had already spent tens of millions on aging sluggers like Vinny Castilla, Greg Vaughn, Fred McGriff, and Jose Canseco. Why they would suddenly refuse to spend an extra couple million for a potential cornerstone player made no sense; future washout pitcher Dewon Brazelton was the team’s reward for its cheap approach. Would the Devil Rays’ fortunes have changed if they’d spent more money on the amateur draft, scouting international talent, opening baseball academies abroad, and signing premium prospects from around the world? Almost certainly.

Naimoli compounded the team’s problems with some perplexing hires. For the team’s first general manager, Naimoli tapped
Chuck LaMar. At the time of his hire, LaMar owned a solid track record in scouting, minor league operations, and player development. He had presided over a Pittsburgh Pirates minor league system that fueled three straight division winners at the start of the 1990s. Next, working under John Schuerholz in Atlanta, LaMar played a key role in launching a Braves dynasty that would yield fourteen division titles in fifteen years. Despite his early-career success, though, LaMar was ill suited to run a big league team. What the Devil Rays needed, other than a new owner, was a general manager with a strong personality who could curb Naimoli’s mood swings and push his own plan for the team, no matter how much the boss protested. LaMar wasn’t that man. When the D-Rays predictably suffered through two losing seasons to start their history, Naimoli grew impatient and demanded that the club spend tens of millions of dollars to try to win immediately. LaMar could do nothing to curtail his boss, and Naimoli’s plan failed spectacularly.

The Devil Rays’ biggest problem under Naimoli, though, wasn’t the owner’s cheapness, his hiring and then keeping LaMar far too long, or even his legendary temper. It was the organization’s complete lack of a coherent plan. Looking back on the Naimoli era years later, no one would ever believe this was the same franchise. In fact, Naimoli’s biggest weakness was also the biggest strength of the people who would eventually take over the team. Every decision the new regime would make, right down to the smallest acquisition of a utility infielder or touch-up on the stadium’s paint job, was part of a master plan to turn the D-Rays into winners.

That would take years, though. With Naimoli and LaMar in charge, the team flip-flopped between patient youth movement and the win-now mentality, frugal roster-building and reactionary free-agent binges. Off the field, Naimoli urged his charges to run the Devil Rays the way he’d run Anchor Glass, Doehler-Jarvis, Harvard Industries, or any of the other companies he’d resuscitated: on a shoestring budget, cutting as much inventory and overhead as possible. Naimoli failed to realize that a baseball team is very different from, say, a glass company. The Devil Rays fielded awful clubs.
Tropicana Field became a dreary, dirty, neglected building. Fans stayed away. National media mocked the franchise.

By 2005, Naimoli’s final year as managing partner, the only question still hanging over the Devil Rays was why Major League Baseball hadn’t followed through on its plan to fold the team three years earlier and put the good people of St. Petersburg out of their misery.

The Extra 2%
is the story of how the laughingstock of professional sports rose to the top of the baseball world. The Tampa Bay Devil Rays went from worst to first in one season, transforming themselves from perennial losers to American League pennant winners. They won a second AL East division title just two years later, establishing their bona fides as long-term contenders. This wasn’t just any old Cinderella story. No team in any major North American sport faces a tougher task than the Rays and their division mates in Baltimore and Toronto. In toppling the New York Yankees and Boston Red Sox, Tampa Bay took down the two marquee franchises in the game, two teams with mind-boggling fan bases, never-ending revenue streams, stratospheric payrolls, and front offices willing and able to make intelligent, aggressive decisions. In the process, the Rays established the makings of a national brand and laid the groundwork for a young, talented team that figured to win for years to come.

After the 2005 season, a new owner took over and made radical changes to the front office. By the time that new brain trust grabbed the reins, baseball had already gone through big changes. A statistical revolution had been bubbling beneath the surface for many years before Michael Lewis’s
Moneyball
began its assault on best-seller lists. Teams began building predictive models and huge databases to store, manage, and manipulate data. The Oakland A’s, led by general manager (and
Moneyball
protagonist) Billy Beane, embraced a new era of analytical thinking, becoming merely the most obvious example of a baseball team that could overcome
limited revenue streams to achieve on-field success. While Beane’s rapid adoption of statistical analysis made him a bit of an outlier in baseball circles, his was very much an insider’s pedigree. Beane was a superstar athlete in high school, coveted by multiple teams in multiple sports. Though his big league career didn’t last long, he still reached the Show. That made it easier for him to approach Sandy Alderson, the A’s GM, in 1990 and ask for a job as a scout. Beane’s scouting experience led to a front-office job as assistant general manager. Four years later, Alderson was gone and Beane was running the Athletics.

Unlike Beane and the heads of other major league front offices, the architects of the Rays’ success weren’t steeped in baseball. In fact, the franchise’s top management team consists of the biggest group of baseball outsiders the game has ever known.

Andrew Friedman, the team’s executive vice president of baseball operations, played college ball at Tulane, patrolling the outfield until injuries ended his playing career. That was the extent of Friedman’s baseball experience before the Rays hired him as director of player development in 2004, with an eye toward eventually giving him control over the baseball side. Team president Matt Silverman never played, scouted, coached, managed, or performed any significant baseball functions in a high-level league. His baseball experience consisted of helping his former boss buy a share of the Rays, then assuming controlling interest in 2005. The Rays’ owner, Stuart Sternberg, grew up a big baseball fan in Brooklyn. But his ability as a player never caught up to his passion for the game. Sternberg’s closest brush with competitive baseball, other than his purchase of the Rays, has been coaching his sons’ Little League teams.

In fact, the trio landed in baseball straight from jobs on Wall Street. Sternberg started as a part-time equity options trader in college, moved on to one of the largest specialist firms on the New York Stock Exchange, joined Goldman Sachs’s merchant banking division, then struck out on his own and continued in private banking. Silverman worked with Sternberg at Goldman, coming up as an investment banker before teaming with Sternberg to arrange the
purchase of a minority share, and later majority control, of the Rays. Friedman started as an analyst with Bear Stearns before moving on to the private equity firm MidMark Capital, where he worked as an associate. Though their backgrounds were somewhat different, all three men shared an ability to recognize value in a company and to pull off successful deals.

When Sternberg bought his initial stake in the team, he brought Silverman and then Friedman along with him. Since Naimoli remained the controlling partner, the three men couldn’t make the sweeping changes they wanted—not all at once anyway. But the organizational culture started changing incrementally. For years, Naimoli looked for cost-cutting measures, for the sake of pocketing a buck. The Wall Street guys embarked on their own, constant quest for value. In their case, though, decisions boiled down to improving the
team
. If that meant spending significant money on a player or a new computer system or even new furniture, that was fine—as long as the organization came out ahead in the cost-benefit analysis.

Sternberg finally took over as managing general partner in October 2005. Silverman was named team president, while Friedman became the man as close to the general manager’s title as Sternberg’s Goldman Sachs habits would allow. The changes quickly accelerated. Where Naimoli used to preside over even the tiniest decisions, Sternberg, Silverman, and Friedman aggressively pursued top talent on both the business side and the baseball operations side, then delegated tasks accordingly. Where everyone from division heads to assistants had walked on eggshells in the old regime, fearful of a random Naimoli tongue-lashing, Sternberg and company used calculated, pragmatic techniques to solve problems. The results of the administration’s more cerebral approach were most apparent on the field, thanks to the new GM.

To Friedman, every trade, signing, and draft pick was part of a greater process. The Rays searched for ways to create situations of, as Friedman called it, “positive arbitrage.” In financial markets, arbitrage refers to the concept of simultaneously buying one asset and
selling another, where the asset you’re buying is cheaper than the one you’re selling; an example would be buying Class A shares of a stock and selling Class B shares of that same stock, for a profit. Technically that kind of transaction wasn’t really possible in baseball. But the basic idea remained the same: the Rays would look for value everywhere.