The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First, by Jonah Keri. New York: Ballantine Books, 2011. 272 pp. $26 (hardcover).


For ten years, the Tampa Bay Devil Rays ambled up to home plate and struck out. They were the worst team in Major League Baseball, averaging ninety-seven losses per season and finishing last in nine out of ten. They were, in short, the laughingstock of the league—not to mention late-night TV.

In a 2003 episode of the Late Show with David Letterman, Roger Clemens read from the list of the “Top 10 Things Baseball Has Taught Me.” Checking in at number four: “The best practical joke? Tell a teammate they’ve been traded to the Devil Rays.” (p. 5)

But the problem with the Devil Rays was not just that they always lost or that the entire league laughed at them. The team’s owner was a notorious cheapskate with a volatile temper whose antics were so terrible that he turned the team’s hometown against them.

It would have been hard for things to get worse. Indeed, they got better—and Jonah Keri tells how in The Extra 2%: How Wall Street Strategies Took a Major League Baseball Team from Worst to First.

The book starts like a typical Hollywood script, with a businessman playing the role of villain. Keri tells how Vincent J. Naimoli came to own the Tampa Bay Devil Rays and details the ways Naimoli was “the Wrong CEO” for the team.

For one, Naimoli was a miser on the order of Ebenezer Scrooge, penny-pinching even at the price of employee productivity and happiness. Naimoli reused paper when writing memos, refused to buy Internet access for the office, and forced staff to bring a satchel of mail with them when traveling to a company branch (owing to the cost of stamps). And, as Keri says, “he was damn proud of it” (p. 34).

Further, Naimoli took bids from dozens of vendors for everything, requiring them to purchase season tickets first, and then created enemies by pitting them against each other and negotiating for ever more price cuts without knowing when to quit (p. 36). He received a salvo of negative publicity for inviting the local high school band to play the national anthem and telling the kids at the last minute that “they would have to pay to get into the ballpark” (p. 39). And when attendance dropped in the wake of such actions, Naimoli instituted a crackdown on fans who brought in food from outside—turning gate agents and ushers into “unflinching supercops” and creating a miserable ballpark experience for many.

As Keri shows, Naimoli’s pursuit of wins on the baseball field was similarly shortsighted. Naimoli was adamant from the start that the Devil Rays make it to the playoffs within five years. “But,” says Keri, “five years was an unrealistic projection for an expansion baseball club in the Devil Rays’ position” (p. 51)—even more so given the general manager who Naimoli chose, and kept, despite his poor performance. That general manager, Chuck LaMar, botched a number of important decisions. Keri points out that LaMar overlooked talent, paid too much for expensive veterans in hopes of meeting Naimoli’s playoff aspirations, and “threw in preference for players with Florida connections, foolishly surmising that such connections would bring in lots more fans, even when the product on the field remained lousy” (p. 57).

After nearly a decade of this sort of management, the Devil Rays had earned their reputations as perennial losers, and the ballclub was almost perfectly set up for a turnaround.

In the typical Hollywood movie the Scrooge counterpart might have handed over the reins to someone unconcerned with money, but what happened in Tampa Bay was different and far more interesting.

With the Devil Rays having hit rock bottom, three men—Stuart Sternberg, Matthew Silverman, and Andrew Friedman—bought Naimoli’s stake. The ball club’s new owners, hailing from Wall Street, certainly did not shun profits. In contrast to Naimoli, however, they devised a realistic, long-term plan for gaining them, making decisions along the way with their heads rather than their guts.

Sternberg, Silverman, and Friedman made a commitment from the start to track the effectiveness of their decision-making. Draft picks would need to be scrutinized several years out, to see how the scouting staff could have done better. Ditto for trades, business partnerships, ticket sales strategies, and other decisions. Making mistakes was acceptable. Failure to learn from those mistakes was not.

“We’re constantly assessing what we’re doing,” Friedman said. “After we make decisions, we postmortem them at a later date. We keep copious notes on the variables we knew, everything we knew going in. Then we go back and look at it to review the process. It’s something we’re continuing to refine and will be in perpetuity.” (p. 101)

Keri shows how this approach completely changed the organization. The trio hired new employees or retrained old ones, delegated responsibilities to those employees instead of micromanaging them, and rewarded rather than punished independent thought and initiative. Keri shows the effect these decisions had on everything from the friendlier behavior of ushers to the name of the team—which was changed to the Tampa Bay Rays after a “Drop the Devil” campaign.

Perhaps the trio’s most important new hire was Joe Maddon. Keri relays Maddon’s history, showing how he “became a near-overnight success—thirty-one years in the making” and how he was a “field manager version” of Sternberg, Silverman, and Friedman. Maddon, says Keri, craved information and based all of his decisions on it. Like the trio, he was obsessed with finding information that would give him the slight edge—what Keri calls the extra 2 percent—that separates winners from losers (p. 118).

Together, the newly branded Rays would make a series of game-changing decisions, drawing from lessons learned on Wall Street. “At the heart of that approach,” according to Keri, “was a practice known as arbitrage.”

Arbitrage refers to any financial transaction in which you simultaneously buy one thing and sell another. The thing you’re buying is cheaper than the thing you’re selling, thus netting you a profit. An arbitrageur can complete such a transaction using any number of financial instruments, including stocks, bonds, derivatives, commodities, and currencies. He always believes he has better information than the other guy and can thus make the best trades—of equities, of gold . . . or of cleanup hitters. (p.149)

Of course, ball clubs have always pursued the strategy of trading a less valuable player for a more valuable one. But increasingly better data was starting to change how that was done. For example:

When the A’s, Red Sox, and a handful of other teams went searching for undervalued baseball commodities, they stumbled upon on-base percentage—especially players who produced high OBPs by dint of hefty walk rates. Load your roster with a bunch of players who knew how to take ball four and you’d score more runs, wear down opposing pitchers more quickly, and, best of all, do all of that without busting the payroll. (p. 147)

What the Rays discovered was that in the collective rush to pick up such players, defensive ones were often overlooked—and were very cheap. Keri relates how the Rays exploited this fact, and more, how they went on to use different statistics to sign advantageous deals, to prevent their pitchers from being injured, and even to change their in-game strategy against opponents.

As Keri relates how these and other efforts led the Rays to both profits and wins—and then to a victory over the Boston Red Sox in the League Championship Series—readers will likely cheer. Better still, they will understand the causes for that victory and be able to apply its lessons toward goals of their own.

Unfortunately, The Extra 2% has some flaws that detract somewhat from the story and its lessons. Keri reduces the emotional impact of the dismal Naimoli years by repeatedly foretelling how things got better. This decreases the story’s natural tension and robs readers of much of the elation that would otherwise have been theirs when these same things turn around for the Rays. Keri also ends the book with a chapter on how tough the Rays’ league is and another on how bad their stadium is. The facts he cites are incontestable, but placing them at the end leaves readers bored with minutiae rather than inspired by the drama.

Despite these flaws, The Extra 2% is a worthwhile (and easy) read. It is neither the best business nor the best sports book ever. But for readers involved in either endeavor, the details of how the Rays went from worst in their league to first will undoubtedly prove useful. Every 2 percent counts.

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