The NL West: Time Zones, Ballparks, and Social Investing

I think the National League West is the most idiosyncratic division in baseball. Note that I avoided a more disparaging term, like odd or weird. That’s not what I’m trying to convey. It’s not wrong; it’s just…off. Not bad–it’s home to 60% of the last five World Champions, right?–but different. Let me count the ways. (I get three.)

Time zones

EAST COAST BIAS ALERT!

It is difficult for people in the Eastern time zone to keep track of the NL West. Granted, that’s not the division’s fault. But 47% of the US population lives in the Eastern time zone. Add the Central, and you’re up to about 80%. That means that NL West weeknight games generally begin around the time we start getting ready for bed, and their weekend afternoon games begin around the time we’re starting to get dinner ready. The Dodgers, Giants, and Padres come by it naturally–they’re in the Pacific time zone. The Diamondbacks and Rockies are in the Mountain zone, but Arizona is a conscientious objector to daylight savings time, presumably to avoid prolonging days when you can burn your feet by walking barefoot outdoors. So effectively, four teams are three hours behind the east coast and the other team, the Rockies, is two hours behind.

Here’s a list of the number of games, by team, in 2015 that will be played in each time zone, ranked by the number of games in the Mountain and Pacific zones, counting Arizona among the latter:

Again, I’m fully on board with the idea that this is a feature, not a bug. But it’s a feature that means that a majority, or at least a solid plurality, of the country won’t know, for the most part, what’s going on in with the National League West teams until they get up in the morning.

Ballparks

OK, everybody knows that the ball flies in Coors Field, transforming Jose Altuve to Hack Wilson. (Check it out–they’re both 5’6″.) And the vast outfield at Petco Park turns hits into outs, which is why you can pencil in James Shields to lead the majors in ERA this year. But the other ballparks are extreme as well: Chase Field is a hitter’s park; Dodger Stadium and AT&T Park are pitchers’ havens. The Bill James Handbook lists three-year park factors for a variety of outcomes. I calculated the standard deviations for several of these measures (all scaled with 100 equal to league average) for the ballparks in each division. The larger the standard deviation, the more the ballparks in the division play as extreme, in one direction or the other. The NL West’s standard deviations are uniformly among the largest. Here’s the list, with NL West in bold:

• Batting average: NL West 10.1, AL West 7.2, AL Central 6.5, AL East 5.8, NL East 5.2, NL Central 1.6
• Runs: NL West 26.5, NL Central 7.9, NL East 6.9, AL East 4.0, AL Central 2.8, AL West 2.7
• Doubles: AL East 20.3, NL West 11.3, NL East 6.2, NL Central 5.9, AL Central 5.1, AL West 2.9
• Triples: NL West 50.6, AL Central 49.5, NL East 33.6, AL West 28.3, AL East 27.8, NL Central 11.1
• Home runs: NL Central 30.2, NL West 23.9, NL East 20.0, AL East 18.7, AL Central 11.3, AL West 11.2
• Home runs – LHB: NL Central 31.6, AL East 27.4, NL West 25.6, NL East 21.7, AL West 14.7, AL Central 11.7
• Home runs – RHB: NL Central 32.1, NL West 24.0, NL East 20.0, AL East 14.4, AL Central 13.6, AL West 10.2
• Errors: AL East 17.7, NL West 12.2, NL Central 11.6, NL East 11.5, AL West 11.2, AL Central 8.2
• Foul outs: AL West 36.2, AL East 18.3, NL West 16.0, NL Central 15.2, AL Central 13.8, NL East 6.2

No division in baseball features the extremes of the National League West. They ballparks are five fine places to watch a game, but their layouts and geography do make the division idiosyncratic.

Social Investing

You may be familiar with the concept of social investing. The idea is that when investing in stocks, one should choose companies that meet certain social criteria. Social investing is generally associated with left-of-center causes, but that’s not really accurate. There are liberal social investing funds that avoid firearms, tobacco, and fossil fuel producers and favor companies that offer workers various benefits. But there are also conservative social investing funds that don’t invest in companies involved in alcohol, gambling, pornography, and abortifacients. This isn’t a fringe investing theme: By one estimate, social investing in the US totaled $6.57 trillion at the beginning of 2014, a sum even larger than the payrolls of the Dodgers and Yankees combined.

Here’s the thing about social investing: You’re giving up returns in order to put your money where your conscience is. That’s OK, of course. The entire investing process, if you think about it, is sort of fraught. You’re taking your money and essentially betting on the future performance of a company about which you know very little. Trust me, I spent a career as a financial analyst: I don’t care how many meals you eat at Chipotle, or how many people you know at the Apple Genius Bar, you can’t possibly know as much about the company as a fund analyst who’s on a first-name basis with the CEO. So there’s no sense in making it even harder on yourself by, say, investing in the company guilty of gross negligence and willful misconduct in a major oil spill, if that’d bother you.

Note that I said that with social investing, you’re giving up returns. Some social investing proponents would disagree with me. They claim that by following certain principles that will eventually sway public opinion or markets or regulations, they’re investing in companies that’ll perform better in the long run. That’s a nice thought, but social investing has been around for decades, and we haven’t yet hit that elusive long run. The Domini 400 Index, which was started in 1990, is the oldest social investing index. It started well in the 1990s, but has lagged market averages in the 21st century. Now called the MSCI KLD 400 Social Index, it’s been beaten by the broad market in 10 of the past 14 years. It’s underperfomed over the past year, the past three years, the past five years, and the past ten years, as well as year-to-date in 2015. The differences aren’t huge, but they’re consistent. Maybe for-profit medicine in an aberration, but acting on that meant that you missed the performance of biotechnology stocks last year, when they were up 47.6% compared to an 11.4% increase for the S&P 500. Maybe we need to move toward a carbon-free future, but stocks of energy companies have outperformed the broad market by over 100 percentage points since January 2000. I think that most social investing investors are on board with this tradeoff, but some of the industry proponents have drunk the Kool-Aid of beating the market. That’s just not going to happen consistently. In fact, a fund dedicated to tobacco, alcohol, gambling, and defense (aka “The Four B’s:” butts, booze, bets, and bombs) has outperformed the market as a whole over the past ten years.

OK, fine, but what does this have to do with the National League West? Well, two of its members have, in recent years, made a point of pursuing a certain type of player, just as social investing focuses on a certain type of company. The Diamondbacks, under general manager Kevin Towers and manager Kirk Gibson, became a punchline for grit and dirty uniforms and headhunting. (Not that it always worked all that well.) The Rockies, somewhat less noisily, have pursued players embodying specific values. Co-owner Charlie Monfort (a man not without issues) stated back in 2006,  “I don’t want to offend anyone, but I think character-wise we’re stronger than anyone in baseball. Christians, and what they’ve endured, are some of the strongest people in baseball.” Co-owner Dick Monfort described the team’s “culture of value.” This vision was implemented by co-GMs (hey, Colorado starts with co, right?) Dan O’Dowd and Bill Geivett. (OK, O’Dowd was officially GM and Geivett assistant GM, but the two were effectively co-GMs, with Geivett primarily responsible for the major league team and O’Dowd the farm system).

Now, there’s nothing wrong with players who are also commendable people. You could do a lot worse than start a team with Clayton Kershaw and Andrew McCutchen, to name two admirable stars. Barry Larkin was a character guy. So was Ernie Banks. Brooks Robinson. Walter Johnson. Lou Gehrig. All good guys.

But holding yourself to the standards set by the Diamondbacks and Rockies also means you’re necessarily excluding players who are, well, maybe more characters than character guys.  Miguel Cabrera has proven himself to be a tremendous talent and a somewhat flawed person. Jonathan Papelbon has a 2.67 ERA and the most saves in baseball over the past six years, but he’s done some things that are inadvisable. Carlos Gomez, a fine player, second in the NL in WAR to McCutchen over the past two years, has his detractors. Some of the players whom you’d probably rather not have your daughter date include Babe Ruth, Ty Cobb, Rogers Hornsby, Barry Bonds, and many of the players and coaches of the Bronx Zoo Yankees.

I want to make a distinction here between what the Diamondbacks and Rockies did and the various “ways” that teams have–the Orioles Way, the Cardinals Way, etc. There’s plenty of merit in developing a culture starting in the low minors that imbues the entire organization. That’s not what Arizona and Colorado did. They specified qualities for major leaguers, and, in the case of the Diamondbacks at least, got rid of players who didn’t meet them. I don’t know what’s wrong with Justin Upton, but for some reason, Towers didn’t like something about him, trading him away. The Braves make a big deal about character, but of course they traded for Upton, so the Diamondbacks went way beyond anything the Braves embrace.

In effect, what the Diamondbacks and Rockies have done is like social investing. They’ve viewed guys who don’t have dirty uniforms or aren’t good Christians or something the same way some investors view ExxonMobil or Anheuser-Busch InBev. Again, that’s their prerogative, but it loses sight of the goal. Investors want to maximize their returns, but as I said, most social investors realize that by focusing on only certain types of stocks, they’ll have slightly inferior performance. They’ll give up some performance in order to hew to their precepts. Baseball teams want to maximize wins, and there really isn’t any qualifier related to precepts you can append to that.

The Rockies and Diamondbacks were living under the belief that by focusing on only certain types of players, they could have superior performance. It’s like the people who think they can beat the market averages through social investing. It hasn’t happened yet. And, of course, the Diamondbacks and Rockies were terrible last year, with the worst and second-worst records in baseball. Just as social investing doesn’t maximize profits, the baseball version of social investing didn’t maximize wins in Phoenix or Denver.

I’ve used the past tense throughout this discussion. Towers, Gibson, O’Dowd, and Geivett are gone, replaced by GM Dave Stewart and manager Chip Hale in Arizona and GM Jeff Bridich in Colorado. (The Monforts remain.) Last year, the Diamondbacks created the office of Chief Baseball Officer, naming Tony LaRussa, a Hall of Fame manager who’s been less than perfect as a person and in the types of players he tolerates. These moves don’t change that these are both bad teams. But by pursuing a well-diversified portfolio of players going forward, rather than a pretty severe social investing approach, both clubs, presumably, can move toward generating market returns. Their fans, after all, never signed on to an approach that willingly sacrifices wins for the sake of management’s conscience.