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SSTN Interviews Douglas Jordan

Today we bring our interview with Dr. Douglas Jordan.

Dr. Jordan is a professor at Sonoma State University in Northern California where he teaches corporate finance and investments. A member of SABR, he has been a regular contributor to the Baseball Research Journal since 2014. He runs marathons when he is not watching or writing about baseball.

Thanks for that kind introduction, Paul. In terms of my background, I’m originally from the Long Island and did my undergraduate studies in mechanical engineering at Georgia Tech. After four years in the Navy I worked for General Dynamics in Fort Worth, Texas and Boeing in Seattle before going back to school at the University of Texas, Arlington where I earned a doctorate in business administration. Sonoma State University needed someone to teach business at the time I graduated so that is how I wound up in Northern California.

From a baseball perspective, moving around has allowed me to become a fan of different teams over time. Although it can take some time to generate allegiance, I think you have to do that when you move because if you want to talk baseball with people, you have to talk about the local team. I grew up a Mets fan (and still am one) but nobody here wants to talk about the Mets (or Braves, or Rangers, or Mariners) so after almost 20 years here, I’m a full-fledged A’s fan and enjoy talking about the A’s and Giants with other baseball fans.

Thanks for coming to Start Spreading the News. It is great to have this discussion with you.

Thanks for asking me. I think you ask your interviewees penetrating and pertinent questions. I got to watch Nick Swisher when he was with the A’s, so I found the SSTN interview with him very interesting. I hope I can provide your readers with something they find as compelling.

I am sure you will. Absolutely. This is already engaging… and we just started!

As you know I am an educator, like you, who also has a love of baseball. We also share a passion for marathons! (I’ll ask a marathon question later). To begin, let’s talk baseball.

You have written a number of articles that are very relevant to the 2021 Yankees. One of your articles, Home Runs and Strikeouts: Another Look, discusses the relationship between home runs and strikeouts. The Yankees seem to be a team that focuses primarily on the home run as an offensive tool. Do you believe this is a good strategy for building a winning team?

I’m glad you asked about that paper (for reference it is in the Fall 2018 volume of Baseball Research Journal). In the paper I proposed a new metric called HRKAB to measure the effectiveness of power hitters. HRKAB is the difference between AB/HR and AB/K. The idea is that the smaller the HRKAB number is, the more home runs compared to strikeouts a player has per at bat. Therefore, players with smaller HRKAB numbers are more effective power hitters than players with larger HRKAB numbers.

The original article looked at the metric for individual hitters. However, the concept can be expanded to whole teams. The results of that analysis for the 2021 season in the AL through July 19 are shown below.

The data sheds a little light on your question about whether building a team on home run prowess is an effective strategy. The short answer is that it doesn’t look like it. The top five teams in terms of having the lowest HRKAB are not currently playoff teams. The current division leaders in terms of team HRKAB are 6th, 8th, and 12th. This suggests that it’s not necessary to be an effective power hitting team to be a playoff contender. (Editor’s note – we conducted this interview in July.)

I recognize this is not a complete analysis. It’s just offered as a little bit of insight into the question based on this year’s data.

Another topic you have written about, and I have discussed frequently here is on championship windows, such as when does a team’s window close?

I am concerned that the Yankees’ current window is closing, or may have closed already. What was your finding on these “windows?” How can a team keep their window open longer?

The championship window paper was published in the Spring 2018 BRJ. I concluded that the average championship window is about six years. But that result masks wide differences in how long teams stay in contention. Some teams have had championship windows that far exceeded the average. For example, the Yankees had windows that lasted 24, 18, 15, and 20 years. The Giants had a 22-year window. The Orioles had a 20-year window and the Braves and the Royals had 17-year windows. So it is clearly possible for a team to contend for an extended period of time.

That said, how to do it is a harder question. If I really knew the answer, I’d be a GM. I believe the teams cited above have all managed a very delicate balancing act. That is the successful integration of younger talent into a veteran team while at the same time staying competitive. It’s also possible, especially for the Yankees given their financial resources, to bring free agents in to fill holes. But you have to be careful in doing that. Paying too much for a player who has already passed his peak production can lead to longer term problems. I think Giancarlo Stanton is a good example of that for the current edition of the Yankees.

As a long-time Yankees fan, I had to laugh that one of the players you have written a biography on is Jay Buhner. The Yankees traded Buhner, who became an All-Star, for Ken Phelps. That trade was even mentioned on occasion on Seinfeld. Ken Phelps was a (slightly) better player than I think most people realize. His home run rate was among the best ever. Still, it was the trading of a young prospect, for a player at the tail end of his career.

Why do you think the Yankees made that deal? (I would like to nominate you to write the Ken Phelps biography for SABR.)

I’ll start with your comment about writing a Ken Phelps biography. The Buhner biography was the first SABR biography I have written. What I learned from that is that it is actually quite difficult (and time consuming) to write one. When reading the finished product, it looks easy. But there is a lot of research that goes into it. You can’t just look at the Baseball-Reference page for the player and write about the numbers.

I think the Buhner for Phelps trade is only infamous because it was mentioned in a Seinfeld episode. Jerry Stiller (as Frank Costanza) berates Larry David (as George Steinbrenner) with the line, “What did you trade Jay Buhner for? … You don’t know what you’re doing!” But the line has a strong element of hindsight bias.

The trade was made in 1988 and the episode didn’t air until 1996. By that time Buhner was one of the best power hitters in the game and the trade didn’t look very wise. That conclusion can be made easily in hindsight, but all baseball fans know it is common for a contending team to trade a prospect at the deadline for a veteran the team thinks can help them down the stretch that year. Sometimes those trades work out, sometimes they don’t. But I think it’s unfair to malign a GM for making a move that doesn’t work out in hindsight. The GM doesn’t have that luxury at the time of the trade.

That is a great point. At the time, Phelps had one of the top home run to at bat ratios, I believe…ever.

As a professor, you teach about corporate finance. Do your classes ever touch upon the finances in professional sports? As fans, we often note that finances are an important part of each team’s strategy, but we also often focus more on the teams and players on the field. Baseball seems to a sport that may be heading to a labor dispute. Do you think that’s a possibility? If so, what can the owners and players do to come together?

I’m not an expert on team finances so I never brought that topic up in my classes. But it is also true that teams are not very transparent about their financial situations. So that makes it difficult to get actual data. Nor am I an expert in baseball labor relations. But I’m pessimistic about what’s going to happen after this season. It was obvious during the negotiations at the start of the pandemic that baseball and the players union have a highly antagonistic relationship and that neither side trusts the other. They never did agree on how to start the 2020 season. The union finally just said, tell us what to do and we will do it. I think that bodes poorly for negotiations after this season. I don’t know if there will be a strike or a lockout, but I wouldn’t be surprised if it happens.

I hope not.

How closely do you follow the game today?

That’s a good question. I’m not sure if what I’m about to say is more or less than other fans, but it’s what I do. I’m an Oakland A’s fan, so I follow the team pretty closely. During the regular season I don’t usually watch all three hours of a game, but I do try and watch parts (an hour or so) of as many games as I can. I look at the box scores and standings every morning in the newspaper and try and keep track of the leaders in the major hitting and pitching categories. I also get an e-mail from MLB every day with stories about the previous day’s games which I look at frequently.

I have to add one thing about this season. I think what Shoei Ohtani is doing this season is absolutely amazing. He’s doing things that nobody else in the history of the game has done. To have the power to lead the majors in home runs AND be a very good pitcher is astounding. I went to see him pitch in Oakland when he came here just to be able to say I saw him pitch. He’s an incredible player.

There’s a lot of talk about baseball needing to be “fixed.” Is baseball broken? If you were the Commissioner of Baseball what change(s) if any would you make to the current game?

Another good question. I don’t think baseball is broken but like anything else, there are things that could be improved. The length of games is an obvious issue. This fan’s opinion is that that could be addressed most easily simply by making hitters stay in the box. I think that would help shorten games.

But I think the biggest problem in the game is that we have one great game being played under two different sets of rules. It’s beyond me how baseball has allowed that situation to exist since 1973 when the designated hitter was introduced in the AL. Obviously, it can work, but it’s very silly to have two sets of rules for the same game. It seems to me that the easiest way to fix it is to have the DH in the NL. I hope baseball can make that happen sooner rather than later.

I agree. I am all in favor of adding the DH to the National League.

In looking at the history of the Yankees, or baseball in general, what person or event would you like to see a book written about?

I’m going to say something here that I know Yankee fans are not going to like. But since you asked the question, I’m going to answer it. The book I’d like to see written would be about how the Yankees have not actually been a better franchise than any other. I believe their historical outperformance is really just a New York City effect. By “New York City effect,” I mean the money that comes with being in that city (and of course also means paying the highest salaries for the best players).

Here is the data to support that argument (the numbers are preliminary and I could have miscounted). From 1903 – 1957 (when there were just eight teams in each league in order to have the most fair comparison) the Yankees won 23 pennants. But they were the only New York team in the American League. There were two NY teams in the NL, the Dodgers and the Giants. During that time period, the Giants won 14 pennants and the Dodgers won 9 pennants for a total exactly equal to that of the Yankees. Had there only been one NL team in NY, it’s quite likely that that team would have a similar number of pennants as the Yankees. That I think is evidence that the NY location has a lot to do with the historic success of the teams in that city.

But what about the 17 Yankee World Series wins over that time period compared to the six combined by the Dodgers and Giants, you argue. Doesn’t that show the Yankees are better?

I don’t think so. I think that is a short-series phenomena. Anything can happen in a short series and the Yankees have won more of them. That’s all that is.

That’s the gist of my argument. It would take a book to flesh it out completely.

I don’t disagree. I have said, often that the Yankees’ strength is their financial wealth (that comes, in part, from being in New York). The Yankees hurt themselves, when they focus on the luxury tax.

In the book and the movie The Natural, the main character wants nothing more than to walk down the street and have people say, “There goes Roy Hobbs, the best there ever was.” Who was the best baseball player you ever saw?

That’s a very hard question. But if I don’t want to start providing a list and then narrowing it down, I’ll just have to give one name. I’m going to go with Nolan Ryan. I was fortunate to have been living in Fort Worth when he played for the Rangers so I went to see him pitch quite a few times.

I was lucky enough to have seen him get his 5,000th strikeout (Ricky Henderson was the victim) and also lucky enough to have seen him throw the last pitch of his career in his final game in Seattle. His strikeout records (383 for a season and 5,714 career) are records I don’t think will ever be broken. I think that is enough to say he is the best I’ve ever seen.

I have to ask a marathon question or two… How many marathons have you run? Which are your favorites?

I’ve been a runner most of my life but never ran longer distances. In the early 1990s a neighbor hounded me until I agreed to run a marathon with him. The last six miles of that marathon were awful. My thought at the time was that if someone else made me feel this way that it would be called torture (I learned later that that’s just how you feel at the end of marathons, there was nothing unusual in it). I swore I’d never run another marathon. But by about five years later, the memory of the pain had faded and been replaced by the question, “Can I finish under four hours?”

So I ran another (in 4:05) and then started running them more regularly.

That’s a long way of saying I ran my 100th marathon in March of 2020 just before the pandemic shut things down. My favorite is the Napa Valley Marathon. It’s a beautiful point-to-point course through the Northern California wine country. I’ve run that marathon 15 times. I’m a little biased, but I also like my hometown marathon, the Santa Rosa Marathon.

One day I want to run Napa Valley…

Do you have a specific training routine to prepare for the 26.2 miles?

This question actually deserves its own book. But here’s the short version. I believe anybody can run a marathon. You don’t have to be a great athlete to do it. But you first have to want to. And by want I mean that it’s not something you can just go out and do. But if you are willing to train for months, anybody can do it. Specifically, all you have to do is build your mileage slowly. If your current long run is two miles, you push that out to three miles and do that a few times. Long runs are done weekly, shorter runs during the week. After you can do three miles comfortably, you move out to four. You do that gradually until your long run is 20 miles. Then you are ready for the full marathon. There are many books out there with proven marathon training programs. I use the Jeff Galloway method of mixing walking in with running. I find it helps the last few miles.

Thank you.

Please share anything else you’d like with our audience.

Again, since you asked this, I’ll answer with a non-baseball suggestion. As a finance professor I teach that compounding is a very powerful financial tool. If you have kids, you can help them financially in a painless way. Open up an account for your kid and set it up so that $20 per month is automatically deposited into the account from your checking account. Have the money be invested in an index fund that tracks the Standard and Poor’s 500. One fund that does that has the ticker symbol SPY. I’m guessing that for most people, $20 per month will not really be noticed.

But compounding is powerful. The intention of the account is for your kid’s retirement which means it has 50 – 60 years to grow. Assuming the historic 10% annual return going forward, that $20 per month will turn into about $350,000 in 50 years and about $900,000 in 60 years. My twin sons are 14 years old. I opened this type of account for them when they were born. There is now over $5,000 in those accounts and the growth of that $5,000 exceeds the money I put in the account. In my mind, that’s like having a free $5,000 because the cost was essentially invisible to me. I wish my parents had set up an account like that for me. I would have been able to retire earlier.

Fantastic! I love this. That is great advice!

Thank you, so very much, Douglas for taking this time with us. It was great talking baseball (and a little running) with you. Please keep in touch.


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