What the baseball industry experienced in 2002 is very similar to what the risk pool industry and many other “established” industries are experiencing today. The excerpts below were taken verbatim from Michael Lewis' Moneyball to demonstrate the similarities and opportunities that lay ahead for public entity risk pool executives.
"At the opening of the 2002 season, the richest team, the New York Yankees, had a payroll of $126 million while the two poorest teams, the Oakland A's and the Tampa Bay Devil Rays, had payrolls of less than a third of that, about $40 million. This raw disparity meant that only the richest teams could afford the best players - the people with the most money often win. But when you looked at what actually had happened over the past few years, you had to wonder.
Working with either the lowest or next to lowest payroll in the game, the Oakland A's had won more regular season games than any other team, except the Atlanta Braves. In 2001 the A's had spent $34 million and won an astonishing 102 games and the year before that they spent only $26 million and won 91 games and their division. Over a three year period the A's paid about a half million dollars per win while the most profligate rich franchises paid nearly $3 million per win. Oakland seemed to be playing a different game than everyone else.
How on earth had they done that? What was their secret? How did the second poorest team in baseball, opposing ever greater amounts of cash, stand even the faintest chance of success, much less the ability to win more regular season games than all but one of the other twenty-nine teams?
At the bottom of the Oakland experiment was a willingness to rethink baseball: how it is managed, how it is played, who is best suited to play it, and why. In what amounted to a systematic scientific investigation of their sport, Oakland's front office was liberated from the unthinking prejudice rooted in baseball's traditions. And baseball, of all things, was an example of how an unscientific culture responds, or fails to respond, to the scientific method.
The answer begins with the obvious point: in professional baseball it still matters less how much money you have than how well you spend it."
At Target Safety, we help you take a scientific approach to making the most of your investment. Let us share with you how innovative risk pools are delivering new value to their existing members, attracting new members, and significantly reducing their claims cost.
