A shining example
“The Tampa Bay Rays are a shining example to anyone, whether you’re running a professional sports franchise or a Fortune 500 company or a neighborhood gas station… No matter what kind of business you’re trying to run, you should read this book.”
—Mark Cuban, Owner of the Dallas Mavericks
THE EXTRA 2%
How Wall Street Strategies Took A Major League Baseball Team From Worst to First
By Jonah Keri
Forward by Mark Cuban
What happens when three financial industry whiz kids, with no experience in professional sports, take ownership of the worst team in Major League Baseball? In the case of the Tampa Bay Rays, the answer is one of the greatest turnarounds in sports history.
Financial journalist and sportswriter Jonah Keri chronicles the remarkable story of one team’s Cinderella journey from laughingstock to contender in THE EXTRA 2% How Wall Street Strategies Took A Major League Baseball Team From Worst to First (Ballantine Books / ESPN; On Sale now). More than just a tale of incredible baseball acumen, THE EXTRA 2% demonstrates how three financial gurus used the principles they learned on Wall Street to successfully turn around a struggling sports franchise, and how they quantified baseball’s intangibles—that extra 2% that separates a winning organization from a losing one—to deliver something that Billy Beane’s “Moneyball” never brought to Oakland: an American League pennant.
When former Goldman Sachs colleagues Stuart Sternberg and Matthew Silverman assumed control of the Tampa Bay Devil Rays in 2005, it looked as if they were buying the baseball equivalent of a penny stock. But the incoming regime came armed with a master plan: to leverage their skill at trading, valuation, and management to build a model twenty-first-century franchise that could compete with their bigger, stronger, richer rivals (The Yankees & Red Sox)—and prevail. Together with “boy genius” general manager Andrew Friedman, the new Rays owners jettisoned the old ways of doing things, substituting their own innovative ideas about employee development, marketing, public relations, and personnel management. A few of the key principles they implemented were:
• Arbitrage. In the financial world, arbitrage is the act of capitalizing on a price difference between two markets, such as buying Class A shares of a stock at one price while selling Class B shares of the same stock at another price, resulting in a profit. Friedman has expanded the concept to the baseball world, where he’s repeatedly acquired players at a depressed price, sold higher, and earned profits in the form of wins.
• Valuation of defense. Moneyball told the story of baseball’s most underappreciated skill: the ability to get on base. After a few years, teams were focusing so heavily on on-base percentage (and home runs) that they’d begun to neglect one of the most important skills a baseball player can possess: the ability to catch the ball. The Rays jumped on this new market inefficiency, wielding advanced metrics to find, sign, and trade for players whose defensive skills went unappreciated by other teams.
• Rebranding. Under the previous regime, the Devil Rays became the laughingstock of baseball, not only finishing in last place nearly every year, but also fostering a hostile work environment in which employees cowered in fear and the owner hurled insults at his own players from the stands. Under Silverman, the Rays exorcised the Devil from their name and their workplace, changed the way they did business, and energized a community whose baseball fervor had eroded after nearly a decade of losing and mismanagement.
THE EXTRA 2% is about rethinking, retooling, rebranding and what happens when you apply your business skills to your life’s passion. Keri conducted approximately 175 interviews with various players, front-office executives, politicians, fans, media members and other key parties, ultimately creating an informative and entertaining case study for any organization that wants to go from worst to first.
About the Author
Jonah Keri is the co-author and editor of Baseball Between the Numbers: Why Everything You Know About the Game Is Wrong. He has covered baseball and other sports for ESPN.com, SI.com, Baseball Prospectus, The New York Times, The Wall Street Journal, Bloomberg Sports, and other publications, and has written about the stock market for Investor’s Business Daily for more than a decade.
