Transcript Of Sandy Alderson's Q&A At Baseball Prospectus' Citi Field Event

On Saturday afternoon, Baseball Prospectus was kind enough to have me out to Citi Field for their event, which featured a panel of their writers and a guest appearance by Sandy Alderson. I'll have a full review of the event soon, but for now, here's the transcript of Sandy Alderson's opening remarks and Q&A session.

First, some highlights.

On Johan Santana's pitch count during his no-hitter:

"Sometimes probabilities, mathematics take a back seat to emotion, take a back seat to the event. The intellectual is overridden by the transcending momentum towards something else, and that’s not to say the concern about pitch count and so forth is not relevant or important. But at some point, you let it ride. You’ve got to go for it. It’s the magic, it’s history, it’s something that’s work taking a chance to achieve."

On the effect of MLB's new collective bargaining agreement on the draft:

"So what you’re really left with, at some point, is an even greater emphasis on scouting and a greater emphasis on the information and the application of the information that is generally more and more available. I think that the margin between the teams that are successful and the teams that are unsuccessful is going to narrow quite a bit."

On insuring contracts:

"...by the way, if you can’t get insurance that should be a red flag about signing the contract."

On signing players from the Domnican Republic:

"One of the unfortunate things in the Dominican in particular is that older players typically don’t get signed. If you’re not 16 or 17, the clubs don’t have interest, and as a result, everybody tries to be 16 or 17, even if they’re 19 or 20. That shouldn’t be the case. If you’re 19 or 20 and a player in the United States, you’re young. If you’re 19 or 20 in the Dominican Republic, you’re too old."

On using data from scouts:

"So there is an attempt to systematically evaluate mechanics as opposed to one scout evaluating mechanics and another scout having a slightly different evaluation."

Full transcript below.

Sandy Alderson: I’m happy to be here. I always learn something at these events, and a number of the comments I heard just briefly after arriving were very relevant. Just a couple of thought, not a speech; I want to talk and then open it up for questions.

Johan’s performance last night, of course, was one of the enchanting things about baseball. You never know what’s going to happen on any given night, and 8,000 games into a Mets franchise, we had a no-hitter. And of course all of the concern this morning, and some of the concern last night, was about the pitch count. Johan had never thrown more than 125 pitches; he got up to 134 or so last night. Sometimes probabilities, mathematics take a back seat to emotion, take a back seat to the event. The intellectual is overridden by the transcending momentum towards something else, and that’s not to say the concern about pitch count and so forth is not relevant or important. But at some point, you let it ride. You’ve got to go for it. It’s the magic, it’s history, it’s something that’s worth taking a chance to achieve. I think that’s what was going through Johan’s mind; I think that’s what was going through Terry’s mind last night. And when he said he couldn’t take him out, he was acknowledging there was a greater force at work. Were we to sit here this morning or this afternoon to talk about how cogent it would have been to pull him after a certain pitch count because of the probability of this or the possibility of that, it would have been at best bittersweet, given the opportunity that existed last night, not just for the organization, more importantly for Johan.

Johan embodied something and was the vessel for the contributions of lots of people in this organization toward the culmination of that event last night, starting with the doctor who performed the surgery who has been maligned in other circles and in this circle, probably, in past years, to the trainers, the physical therapists, all the people that made a contribution getting Johan back to what he was, and then of course Johan himself, with the inherent ability and competitive ethos that he has.

So in that sense, it was a great night. I can’t possibly understand how great it was for the average Met fan because I haven’t been here as long as you have been associated or supportive of the Mets, but I do know it was great. For me personally, I was very happy with an eight-run lead in the eighth inning. And if Elvin Ramirez had had to come into the game, then so be it. I hope he gets into the game today. But it was a great game last night.

It does raise a lot of issues with respect to protecting players who are coming off of injury, which is something that the most recent conversation, there’s very little science that backs up any approach to these things. There are safe harbors, if you will. Those are really based on generally reasonable limitations. I don’t know that they’re based on science. They’re not based on research, they’re not based on sabermetrics, or what have you. In most cases, 160 innings, pitching on six days’ rest, limiting pitches, I think there are some general principles that we all try to follow. For example, the number of innings or pitches that a pitcher might throw from one year to the next, growing to say a 200-inning type of capacity. But by and large, there’s no science behind it. Really, it’s about perception and the protection of an organization by doing something that everybody accepts to be reasonable, whether or not it’s grounded in science. And so that’s why you see a lot of different approaches to it, none of which is foolproof, and none of which are predicated on real hard evidence. There’s still a lot of data and recordkeeping to be obtained. There are some reasons why a lot of it doesn’t exist currently. There are a few doctors that are attempting to collect it, but regarding this group in particular, the greatest change from the time I got into baseball to now is the collection of data.

The amount of data that’s available today as opposed to thirty years ago is just immense. The amount of data, the type of data, not to mention the analysis of that data, just the sheer amount of stuff that’s available means that we ought to be able to begin to draw some conclusions about these things in the area of injuries. But I would say that the application of that information or the use of that information, distillation of that information, and the usable, applicable criteria really hasn’t taken place. We’ll see whether it does over the next few years. It seems that the greatest emphasis of the last few years has not been about injuries, has not been about offense, it’s been about defense, and I’m not sure that we’ve even gotten to a point where there’s a common understanding of how to measure defense and what criteria go into the common standard for that.

But in any event, I appreciate that you’re all here today. I hope some of you were here last night. I’d be happy to answer questions if I can; if I can’t I’ll tell you so.

Question: With the new collective bargaining agreement, how does that change the way you’ve been looking at the draft and strategies that you’ve had in the past with approaching drafting players maybe later rounds, early rounds, and how you’re going to go about figuring out how to do that?

Alderson: As you know, there’s the aggregate signing bonus pool now that’s predicated on individual slot numbers per draft. You’re not limited to the slot per draft round, but you are limited to the aggregate pool amount. This is going to make it — it’s a very different situation than it was before. For example, the Josh Bells of the world drafted in the second round for three or four or five million dollars are simply not going to happen. The only way that can happen is that somebody else, presumably in a higher round, signs for a lot less than that slot represents so that money can be shifted to another slot further down. So it’s going to be much more difficult to outspend the competition, and I think that’s why some teams that had that strategy in the past are going to find it more difficult to take advantage of the draft system.

Again, with the draft, and it’s true also in the international market, there is just a lot more information out there about these potential draftees. And as a result the difference between being successful and unsuccessful in recent years, to some extent, has been throwing money at additional prospects on the theory that if you sign ten of a certain caliber and get a standard return you’re better off than signing five. That approach really isn’t going to work going forward. Not only are you not going to be able to throw money at players in later rounds as easily as in the past; there are going to be fewer and fewer bonus picks so the idea of churning free agents in order to obtain draft picks is no longer going to be possible. So what you’re really left with, at some point, is an even greater emphasis on scouting and a greater emphasis on the information and the application of the information that is generally more and more available. I think that the margin between the teams that are successful and the teams that are unsuccessful is going to narrow quite a bit.

Ultimately, what is this going to do? It might drive more money into the free agent market for older players, which may become the only unrestricted player market that exists. If you think about how to acquire players, there are only about six or seven markets: major league free agents, minor league free agents, non-tendered players, domestic amateurs who come through the draft, international amateurs that come through a newly-regulated market. I like to think that another market is player retention. You know there’s some teams who just can’t afford to keep their own palyers so that’s a distinct market, as well. So as you look at which ones are regulated and which ones are not, at the margins, as more markets become regulated, money is going to move in the direction of the less regulated markets. And ultimately I think that means the money will be going to free agency.

The other thing I think you’re starting to see is what we did with Jonathon Niese, and htat is locking up players at a younger age and service in order to extend control beyond the normal six-year free agency and thereby build some certainty into your budget, at least with respect to that player, and avoid the kind of significant outlay that comes with signing a guy who’s got six or seven years in the major leagues. It’s the difference between the Giants signing Matt Cain and signing [Madison] Bumgarner. I think they realize they made a big mistake with Matt Cain so they went the other direction.

From our standpoint with Jonathon Niese, it was really about, okay, we’re going to extend control, and how do we project this guy’s performance? And how do we protect ourselves if the projection is not accurate? So what we attempted to do was to pay him at a level that would assume consistent, but not improved, performance over the next four or five years. If he just kept doing what he was doing, what would he be worth through arbitration and into free agency? So we took on a lot of risk because a lot of money is guaranteed, but in terms of performance, the contract does not assume that he will get a lot better. It assumes he’ll pitch and be healthy and pitch essentially at the same level that he has today.

As far as the draft is concerned, I think that right now there’s a premium on information, the subjective as well as the objective. You really now have to decide between Player A and Player B. So often scouts like to find the needle in the haystack, but really the most important thing is distinguishing Player A and Player B and making a choice among known commodities.

Question: What are the economics of insuring a contract like that? Do you do that?

Alderson: You can. It’s not a uniform policy that we have. The insurance premiums that we have are based on a variety of elements. First you have, we can protect a player, we can buy life insurance, we can buy accidental death insurance, we can buy permanent disability insurance, or we can buy what’s most common and most expensive, which is temporary disability insurance. So for those of you who know a lot about insurance, it’s all about what risk are you insuring against, and then what are the deductibles, what are the co-insurance payments? So take your health, if you have health insurance, you have a deductible, you have a co-pay, the same principles that apply. With respect to pitchers, maybe pitchers who have been injured in the past, the premiums are very high. You have to decide whether to self-insure or buy the insurance, and…

[pauses to check phone]

My wife and dog have arrived at the ballpark. [laughter from the crowd]

So it really depends on what risk you’re trying to insure and whether you want to self-insure or not. I’ve been in situations where we bought insurance and found it difficult to recover on the insurance because of disputes over the type of injury. It’s like worker’s comp or any other type of insurance. You buy insurance, you think you have coverage, in a dispute over that coverage you compromise the claim, etc. etc. Now in the case of temporary disability, there’s a question of when the player becomes disabled and when he becomes able, no longer disabled. But as I’ve said, it’s very expensive, particularly on pitchers, and you’re best off — by the way, if you can’t get insurance that should be a red flag about signing the contract. [laughter from the crowd] And the premium should be a red flag because the insurers are probably doing a better job, actuarially, than we are because they’re not emotionally invested.

Question: [inaudible question about the effect of the CBA on international free agents]

Alderson: Well, it has a big impact. Every team this year has $2.9 million to spend in the international market. There was a player three or four years ago, one player, how signed for three or four million. So theoretically, it’s not possible to spend that kind of money. One of the issues that baseball faces is how to police and administer that marketplace. We have a pretty big investment in the Dominican Republic, and I think what you’ll find in the international market is that in regards to that 2.9 million, not every team has the same amount this year. It gets graduated next year based on major league team performance so it will be different going into next year. But I think what you may see is many clubs signing players for as much as a million-and-half, two million dollars, and then using the rest to sign additional players. I think you’re going to find a concentration of that signing bonus money in the top fifteen or twenty players. In our experience, we have found pitching internationally at much lower numbers. It’s difficult to predict who’s going to end up throwing 95 at age 16, assuming they are 16. It’s hard to predict who’s going to be good at age 16. There are some exceptions, but I think the Branch Rickey rules applies when you’re signing players of that age. It’s very difficult to project, in part because you don’t necessarily have accurate information.

I think what will happen is clubs will sign one or two high-profile guys and then sign as many for lesser numbers as possible, including players that are older. One of the unfortunate things in the Dominican in particular is that older players typically don’t get signed. If you’re not 16 or 17, the clubs don’t have interest, and as a result, everybody tries to be 16 or 17, even if they’re 19 or 20. That shouldn’t nbe the case. If you’re 19 or 20 and a player in the United States, you’re young. If you’re 19 or 20 in the Dominican Republic, you’re too old.

That’s gradually changing. In fact, we’ve got some young prospects, I believe Rafael Montero, if that name’s familiar to you, was signed at 19, and he’s really in his second full year here in the United States in Savannah, pitching great, who we signed from the Dominican at a very old age.

Question: [inaudible]…will you be able to sign Player A for $2 million and then sign a personal services contract?

Alderson: No. I mean, having been there for a year trying to police some of this, I’m sure there will be all kinds of things that clubs will try to do. It’s astonishing to me how unethical the environment can be there, but a lot of that lack of ethics can be traced right back to the teams. It’s not just a function of culture or whatever, it’s something that could be controlled by teams that isn’t. And I could give you some examples, but I won’t.

Question: [inaudible question on using data from scouts]

Alderson: Well, we take it into consideration. The question is whether you take it into consideration subjectively or try to systematically account for it. What we’re doing, we’re trying to take it into account in a more systematic way. We actually have, I won’t call it a black box; we evaluate mechanics of every pitcher, college or high school, based on the criteria of basically good, indifferent, and bad. And we’ve used it this year, we used it last year, as well. So there is an attempt to systematically evaluate mechanics as opposed to one scout evaluating mechanics and another scout having a slightly different evaluation. We have tried to standardize it, and there are services out there that provide that kind of thing, but there’s no history. Those services are relatively new so it’s difficult to really trust, but nonetheless, we’ve had to rely on some of that, at least, as a backup measure.