[WSJ] Luhnow and Morey talk about risk and thought processes in building teams

The Good Stuff

 

Can I get that transcript?

 

No one wants to interview Bill O’Brien about team building.

 

He is far being from 'renegade' though.

 

While Daryl & Jeff worked their way up, I just whispered sweet things into Cal's ear and he gave me all the power Brian.
It's my show Brian. Doesn't matter what or how much I gave up.
Got our guys Brian.
And if I don't like you, I'll have you on the first flight out of IAH.
All in the best interest of the team Brian.

 

Rule 1: Find a dumbass owner.
Rule 2: Eliminate all people who would check your power.
Rule 3: You either win the Game of Thrones or you die. BRIAN.

 

I wish I could read this.

#FireBillObrien

 

The Texans are an embarrassment to H-Town

 

Google Morey Luhnow WSJ. When you click on it you should be able to read the entire article at least once. You can do that on most sites that require a subscription to finish an article.

@napalm06

 

HOUSTON—A deal for star guard Russell Westbrook could shift the NBA’s balance of power. A deadline trade for ace pitcher Zack Greinke might decide the Major League Baseball season. And the people responsible for these daring acquisitions happen to work a few blocks from each other.

Rockets general manager Daryl Morey and Astros general manager Jeff Luhnow have more in common than the location of their offices. They both have MBAs. They both found their way into sports after working at high-powered consulting firms. They both run their teams with a heavy emphasis on analytics and an enormous appetite for risk. The biggest difference between them is that Luhnow built the Astros roster that won the World Series in 2017, while the Rockets under Morey haven’t won a title.

Their shared philosophy has resulted in a series of blockbuster trades in pursuit of a championship. Not every move has gone smoothly. Morey watched one strategy blow up in spectacular fashion as the Rockets missed a staggering number of 3-pointers against the Golden State Warriors, and Luhnow faced scrutiny when he acquired closer Roberto Osuna after he’d been suspended for 75 games for violating MLB’s domestic violence policy.

But the reason that Morey and Luhnow have frequently clashed with the establishment in their sports is that most of their biggest gambles have paid off.

We invited these two executives to lunch here earlier this month to have a wide-ranging discussion about their jobs. It was a curious time for both teams. The Astros are perhaps the favorite to win the World Series as playoffs begin next week. The Rockets are starting training camp with the NBA landscape wide open for the first time in years. Morey ordered chicken marsala, Luhnow a salad topped with salmon, and off they went for the next 90 minutes.

This conversation has been condensed and edited, and it will be featured in an episode of The Journal podcast next week.

WSJ: What is going through your mind in the 10 minutes before a big trade?

LUHNOW: I doubt whether or not this is the right move to make. Any trade that a contending team in baseball makes involves giving up future value to get better in the present, and it’s just a matter of how much future value you’re willing to give up. The hardest thing to do in these jobs is to look out for the long term while you’re improving the short term, because all the pressure from the media, from the fans, from the ownership, from everybody else, is all about short term. You feel like you’re the only person defending the long term. It’s hard not to get swept up and be so excited about all the great articles that are going to be written about the fact that we have increased our chances of winning the World Series this year by X percent and not think about the cost of that. Because the bill comes due in two to three years. And that’s probably the thing that makes me doubt any of these big deals.

MOREY: I have that same doubt. What I was going to say is I’m always wondering at that moment if it’s going to happen at all.

Both of you have been aggressive at times when many of your peers have not been. Where does that come from?

LUHNOW: It comes from a desire to win a championship. You need to have really good players to win a championship. In baseball you need more than you do in basketball, but you still need stars. You need lots of them. When you’re in a position to have a good outcome this particular season, adding a really good player that increases your chances even just 3% or 4% is a huge gain. You go from 26% chance of winning to 29-30% chance of winning. It doesn’t feel like a lot, but it is an enormous amount. If you don’t take that chance, and you don’t win, you’re probably going to regret it.

MOREY: It’s actually way more extreme in basketball. Teams should be even more aggressive.

 

Is there a specific number you have in mind to justify those moves?

LUHNOW: It’s a feel. In 2016 at the deadline, our chances of making the playoffs were roughly 29%. That didn’t feel high enough for us to go out and make deals that would mortgage our future, so we stood pat. Instead we traded for a young man named Yordan Álvarez from Cuba.

MOREY: There you go.

LUHNOW: But according to FanGraphs and other publicly available sites, our chances of making the playoffs this year have been close to 100% throughout the whole season. So then it’s a matter of who are we facing in the postseason, what are our chances against them, and how much does Zack Greinke help us.

MOREY: I would dream of 26% odds. Those would be awesome.

Daryl, is your number really 5%? If you have a 5% shot at a championship, you need to do everything in your power to win that year?

MOREY: I think so. I don’t know about everything. Maybe you’d want to be closer to 20% to do everything. Ultimately you want to optimize championship probability over some window. But if you literally take that to the logical extreme, you would be doing crazy stuff. And maybe we should at times. You can also just be depressed constantly. Because when you’re close, you probably should actually trade everything in your future and just put it all in the middle and then build yourself back up to that same moment again -- if everyone was acting rationally.

We have to care what our fans think sometimes. But other teams—who cares?

—Houston Rockets general manager Daryl Morey

Jeff, do you think the gap between the 30 front offices in your sport is closer than in his sport?

LUHNOW: It has tightened up in the past five years dramatically.

MOREY: As far as I can tell, the baseball teams are run pretty darn well. I’m sure there’s some better and worse, but I don’t ever see a baseball team anymore and go, “They’re absolutely insane.” You tell me, but it seems like almost all of them are pretty smart.

LUHNOW: I wonder about the teams that seem to hover around .500 for a decade. I think that’s becoming less the norm. It used to be more the norm: Just stay relevant, and you’ll fill the stadium.

MOREY: I guess in baseball you can justify it more. You have a better chance if you make the playoffs.

LUHNOW: But these days there seem to be more teams that are realizing, to get to the top, you have to do some things short term that are painful. Hopefully it comes to fruition. But it may not. There are so many teams following that path now. When we did it, it was three teams.

MOREY: You and the Cubs, basically?

LUHNOW: And we both had success. I’m not sure with eight teams doing it, it’s going to work quite as well.

 

What’s the biggest strategic risk each of you has taken in Houston?

MOREY: The one we just did.

So why trade for Westbrook?

MOREY: Because even if we were literally the same team, I would take the variance. I need the top end of the tail to win. The bigger the trade, the more risk. He’s got multiple years at a very high number. He’s got a long track record of being very good, so that mitigates it. But you never know how the aging curve is going to apply to different players. We feel good about all these risks. They’re all smart risks. But they’re for sure risks.

You must’ve thought that there was something about the way that Westbrook plays that you can enhance here.

MOREY: That’s been our big thing for awhile now. It’s similar to what has gotten a lot of attention with the pitching stuff the Astros have done recently. We don’t know exactly how it’s going to work, because you don’t until you really put it on the floor. But that’s definitely one of our hypotheses is that he’ll be enhanced here.

LUHNOW: The biggest risk we took was really the approach we took from 2011 to 2014. Instead of going out and spending $20 million on a player that would help us go from 51 wins to 60 wins, we decided to spend our money on prospects, to spend our energies developing our farm system and our capabilities internally, knowing that there were going to be fans that were not going to be happy about that. We were going to be having to try and get them back in a few years when we were turning the corner. And we didn’t know. Houston is a great sports town, but it’s a fickle sports town. If you’re not winning, they’re not going to show up, and they didn’t show up. As soon as 2015 came around, we got to the playoffs. They came back. And now for five years all they’ve known is winning Astros baseball.

MOREY: Now you’re like the Spurs. People are like, “Wait until the playoffs.”

LUHNOW: People get upset when you lose one game.

MOREY: I’ve seen this year, you lost a few in a row, and it’s like the world is ending. “What’s happening? Luhnow has lost his mind!”

I try and force myself to think about how I can be an outsider every year, because I feel like I’ve gone native on some aspects of it, and that worries me a little bit.

—Houston Astros general manager Jeff Luhnow

You both prefer to have as much information as possible, right?

MOREY: No. More than everyone else. Actually, more info can be worse for us. The only time information is really an edge is if you either have more or you’re using it better. I do think we generally use it better, but not for sure. Having it when no one else has it is a bigger edge. I think it was better to have worse data that only we had than better data everyone had.

Is that true?

MOREY: I’m actually certain that’s true.

LUHNOW: I agree with that.

MOREY: That said, as an analyst, it’s more fun to have the good data, because you can do fun stuff with it. We used to be very frustrated with our bad overhead camera data or XY data, because it would be wrong. But we’d have it, and no one else did.

Do you care what other teams think of your decisions?

MOREY: Definitely not.

LUHNOW: No.

MOREY: We have to care what our fans think sometimes. But other teams—who cares?

LUHNOW: Only inasmuch as you don’t want them to think that you withheld information. There’s a certain level of trust between general managers that needs to be there. But in terms of how we manage our own operation and our strategy and all of that, I don’t care. I don’t talk about it, and it doesn’t bother me, what other teams think.

 

Did winning a World Series validate your approach to the outside?

LUHNOW: I do think so, yeah, just like winning the World Series in St. Louis in 2011 validated a lot of the things that I contributed to there. That’s what helped me get this job. But we’re in a zero-sum world, so the less others know about what we’re doing, the more advantage we can get from it. If you’re always doing things the way the rest of the industry expects you to do them, you’re probably not disrupting it enough to create yourself an advantage. I think that’s something that doesn’t always go over well in the industry, when you reorganize scouting, and you change roles, and you change the nature of what they’ve been doing for a long time. But we’re not doing it just to disrupt. We’re doing it to create significant competitive advantage for ourselves.

MOREY: It’s double bad when someone leaves, because you lose someone very good, and then you add a good player at the poker table. It’s almost like it cuts your advantage in half. It’s terrible, actually. You guys are really down to minute edges, although it seems like you found some really cool ones recently. But it feels like every new edge is a little bit less of an advantage.

Are there any parts of each other’s jobs that you’re jealous of?

MOREY: I’m jealous of his large roster size and minor leagues.

LUHNOW: Daryl gets to go to Vegas for a couple weeks at a time.

MOREY: I think our sport is way more interesting to watch.

LUHNOW: His games are shorter, so he gets home a little earlier.

MOREY: As far as I can tell, they don’t watch every swing, whereas I do.

What is your demeanor like during a game?

LUHNOW: Pretty calm. With 162 games, you’re not going to react too much to anything that’s happening. But we want to win every game, so I’m in a much better mood when we win than when we don’t.

Have you ever not been able to watch a game?

LUHNOW: There have been times when I was maybe out scouting.

No, I mean are there any times that you physically can’t watch the game?

LUHNOW: No.

MOREY: No, he’s way more smart.

Why is it hard for you to watch games?

MOREY: Because I’m stupid. Every one of our games matters more. I can’t get out of my head how much they matter, and I just find that I’m reacting to the dumbest stuff.

Like what?

MOREY: We do everything right, and then we miss, and so I’m just really angry that we did everything right. Or some bad shooter on the other team is hitting shots on us. And I’m like, well, what the f— is happening? We’re following everything, and it’s still not working.

LUHNOW: How often do you have games where you know the outcome after the first quarter? Does that ever happen?

MOREY: Never.

LUHNOW: OK, that’s a difference. There are enough games in our world where you pretty much know you’re going to win the game or lose the game by the third inning.

MOREY: I’m excited for your playoffs. I couldn’t stand your playoffs, though, because even though you’re so much better than some of the other teams, it’s still just—

LUHNOW: Well, it’s so random.

 

Realistically, what are the odds of winning a five-game series against any team?

LUHNOW: I don’t think it can be higher than 60-40 at any point in time.

MOREY: Wow. That’s got to be so frustrating. I would definitely not be watching that. It’s good for your sport, though. It’s better to have more variance.

LUHNOW: I think it is.

Do you still feel like outsiders in your sports?

LUHNOW: I don’t think I’m an outsider anymore. In fact I try and force myself to think about how I can be an outsider every year, because I feel like I’ve gone native on some aspects of it, and that worries me a little bit. If you look at the profile of general managers that have been hired in the last 10 years in baseball, I fit that profile a lot more than I did 16 years ago when I came in. So not so much anymore. But the outside perspective is still really valuable.

MOREY: That’s interesting. I ask all our new employees to write down everything that seems really stupid for their first month—and don’t tell me until the end of the month. I find myself sometimes sounding really bad. People ask me why we do this, and I will never say the words: “Because we’ve done it that way.” But in my head, as I’m saying it, I’m like, “I sound like the guy when I first got in the league.” It’s sort of scary. I think there’s a bit of a tribalism in the league in terms of how you came into the league. I think people naturally tend to root for people with similar backgrounds.

But how do you combat not becoming your father, so to speak?

MOREY: My dad was pretty cool, so I don’t know. I think it comes back to people. You just have to hire smart people who are willing to say, “Hey, we should be doing something different.”

Do you look at each other’s sports and say, “Why don’t teams do this?”

MOREY: It just seems like such a waste to have the pitcher hit ever.

LUHNOW: I’d love for you to talk to Verlander and tell him he’s coming out in the third inning because we’re going to pinch hit for him.

MOREY: My plan would be to convince Kate [Upton] and then have her tell Justin.

LUHNOW: No, we’ve tried that one.

 

Every time I'd read Morey's responses I would hear it in his voice but with a mouth full of chicken marsala.

 

You didn't see O'Brien's answer to the same question? He said:





"Doesn't matter Brian. Division champions Brian."

 

Someone stick a toothpick in BOB's chin, please.