{"id":17390,"date":"2016-11-18T02:58:51","date_gmt":"2016-11-18T07:58:51","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/moneyball2-how-the-houston-astros-are-using-statcast-to-generate-wins-and-profits\/"},"modified":"2016-11-18T13:33:04","modified_gmt":"2016-11-18T18:33:04","slug":"moneyball2-how-the-houston-astros-are-using-statcast-to-generate-wins-and-profits","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/moneyball2-how-the-houston-astros-are-using-statcast-to-generate-wins-and-profits\/","title":{"rendered":"Moneyball^2: How the Houston Astros are Using Statcast to Generate Wins and Profits"},"content":{"rendered":"

The Houston Astros shocked the baseball world in 2015 by making the playoffs with an 86-76 record after going 70-92 and 51-111 in the prior two years. The Astros\u2019 owner, Jim Crane, was not surprised in the slightest. The once dominant franchise had been running a $10MM+ annual deficit when he purchased it in 2011 for $680MM. Mr. Crane installed a new front office that emphasized brain power and analytical ability over actual baseball experience. He believed that a radical new business and operating model would be needed to return the Astros to their former glory. Jeff Luhnow, a Kellogg MBA with startup and consulting experience was hired to be the GM. He surrounded himself with NASA engineers, Ivy leaguers, data scientists, and consultants1<\/sup>.<\/p>\n

The quickest way to boost profitability in baseball is to make the playoffs. Vince Gennaro found that playoff appearances result in a 20% increase in same-year net income and positive externalities for attendance, ratings, sponsorships, and concession sales over the next \u00a0five years2. <\/sup>As such, the new Astros business model was to field a cheap team capable of overperforming to reach the playoffs. The tool they were going to utilize to find those players was Statcast.<\/p>\n

Statcast, Major League Baseball\u2019s new tracking technology, had recently been installed in all 30 MLB stadiums. The technology combines radar (from Trackman) and cameras (from ChyronHego) to measure the location and movement of the ball and every player on the field. It works by utilizing two camera arrays installed 45 feet apart. The positions give the cameras stereoscopic vision to judge depth and movement accurately. The radar is used to track every nuance of the baseball\u2019s movement. Because the cameras record the position of every player 32 times per second and the radar samples the flight of the ball 20,000 per second3<\/sup>, the system generates 7 terabytes of data each game.<\/p>\n

\"Source:<\/a>
Source: Wired<\/figcaption><\/figure>\n

Jim Crane and Jeff Luhnow correctly recognized that teams better equipped to handle and manipulate large amounts of data had an edge over teams that valued traditional scouting and baseball knowledge. With 2,430 games and 750,000 pitches per season, the Astros built its operating model to tackle this massive digitized source of information by making a substantial investment in computing power. The Astros dug into the data to construct a cheap team in 2015 that they believed would significantly outperform their market value, as evidenced below:<\/p>\n

\"Source:<\/a>
Source: Fangraphs<\/figcaption><\/figure>\n

On the pitching front, the team analyzed perceived velocity, pitcher release point, delivery time, horizontal and vertical ball movement, and the spin rate of each pitch4<\/sup>. Acting on this data, they acquired Colin McHugh for free after the Colorado Rockies released him due to his 0-8 record and 8.94 ERA (2+ deviations below the mean). Statcast showed that despite his poor results, he possessed a world class spin rate on his curveball (~2,000 RPMs vs. 1,500 RPMs) (source: source: http:\/\/www.bloomberg.com\/news\/articles\/2014-08-28\/extreme-moneyball-houston-astros-jeff-luhnow-lets-data-reign). The Astros harnessed the data to optimize his repertoire and he won 30 games (16 losses) with a strong 3.39 ERA in the two years following the acquisition. They also realized that hard throwing pitchers were overvalued, and targeted soft tossers who generated low exit velocity contact from hitters (ranking # 1 in the MLB in 2015)5<\/sup>.<\/p>\n

Statcast data of fielders\u2019 acceleration, speed, distance travelled, and route efficiency was also used to optimize the team\u2019s defense. The Astros charted spray charts for every hitter against every pitcher to determine the optimal way to position its defenders. The Astro\u2019s abandonment of tradition positions shook the baseball world, but resulted in a top defensive unit in 20156<\/sup>.<\/p>\n

The brain trust also analyzed new metrics for hitters including exit velocity, launch angle, and vector of the ball off the bat to build a cheap lineup that struck out a lot but generated excess value by hitting the ball extremely hard (6th<\/sup> best in 2015)7<\/sup>. This culminated in the Astros reaching the playoffs for the first time in 10 years and generating the 2nd<\/sup> highest profits in all of baseball ($67MM)8<\/sup>\u00a0<\/strong>It\u2019s franchise value has doubled to $1.1B while the Rockies\u2019 value has lagged to 5th<\/sup> worst in the league. However, the Astros\u2019 success causes challenges for the team including retaining analysts (Stearns has since been poached) and staying ahead of the curve (all teams have access to Statcast).<\/p>\n

Suggestions for the Future:<\/strong><\/p>\n