What Beer Can Learn From Baseball

In a couple of days, it seems like the Toronto Blue Jays expanded their payroll from just north of $80 million last year to possibly $120 million in 2013 (depending on arbitration eligible players and further signings/trades). A number of key positions were filled through a trade with the Marlins bringing in Jose Reyes, Josh Johnson, Mark Buehrle, John Buck and Emilio Bonafacio, plus the signing of Melky Cabrera. While the changes were staggering based on the number of players involved, the other big issue (for both the Jays and Miami Marlins) was the amount of money involved. Four of the five players the Jays got from the Marlins make $6 million or more, while the most expensive player going to the Marlins makes $5 million. The trade was as much about the money as it was the players.

The Jays, owned by multimedia giant Rogers, had said for years they would be willing to spend money on payroll when the time was right. That time is clearly now, but this isn’t the first time the Blue Jays have played around with trying to go from small market salaries to big spenders. In fact, the reason Alex Anthopoulos has the GM job is because his predecessor, JP Ricciardi, went from being a Moneyball-esque GM (Ricciardi worked under Billy Beane in Oakland) to spending lavishly on spectacular failures like Frank Thomas and BJ Ryan. After enough miscues, Ricciardi was given the boot and Anthopoulos was brought in to rebuild the franchise through draft picks, scouting and international signings. Free agent signings have been small, especially as the Jays have said they would not sign any contracts for longer than five years at a time when seven to ten year contracts are not unheard of for top tier talent. The best Jays players (Bautista, Romero, Encarnacion) were resigned to short but reasonable contracts. It was a patient, gradual rebuilding process, one that was not afraid to spend money but chose to do it wisely and within reason.

That is why the sudden change in payroll is so surprising for the Blue Jays. Yes, the bump comes through a trade and not free agency, but Buehrle and Reyes were big free agent signings for the Marlins last season and are still owed about $150 million in their combined contracts. The Jays gave up some decent prospects, which become the cheap players that help teams keep their payroll down when other players leave for free agency or are traded away. The Jays should be a more competitive team now and will have more depth in case another rash of injuries threatens another season. But they are also heading down the same path that doomed JP Ricciardi when he started spending big money.

I’m not saying that trade is terrible or the Jays will be $120 million losers, but just that history has a way of repeating itself and it wouldn’t surprise me if this change in direction is the eventual downfall of Alex Anthopoulos. (For the record, I’m expecting the Jays to be in a playoff game next season. At the very least, it will be a lot of fun to see Reyes and Bonafacio join Rajai Davis on the basepaths.) One of the problems the Jays have had in the past nineteen years since the first World Series championship is that they can’t decide if they are a small or large market team. They start to spend, then back off when things don’t work out. There is no consistent long term plan for the team and it has shown through two decades of meager baseball.

(What does this have to do with beer? Not a whole lot, really. I mainly just wanted to talk about baseball for a bit and give some context for everyone going nuts over the trade. But if you’ll allow, I will try to connect this to the world of beer. My apologies if it is a stretch.)

As craft beer grows through North America, breweries are experience similar the same problems as they are no longer small market breweries, but also nowhere near the size of the MolsonCoors or InBevs. The term microbrewery no longer applies to Lagunitas, Sam Adams, Sierra Nevada or Stone. A number of breweries in Ontario may start to experience this soon, if they haven’t already. The important question as these breweries grow is how to retain the principles you had as a smaller company while still being competitive as the brewery increases in size and market share.

I’ve been enjoying a lot of the Kensington Brewing blog posts lately and Mike from KBCo had written about “Embracing Our Smallness” at the beginning of October. Craft breweries, like small market baseball teams, have to find different ways to beat the big guys. Most of the ways don’t involve a lot of money, but emphasizing all the differences between craft beer and adjunct lagers and the differences between supporting a multinational corporation versus the people who live in your city. I was surprised recently to find six packs of a local beer being sold with little two ounce samples of whiskey, which seemed like a terrible instance of trying to imitate the larger multinationals. I don’t know how the cost works out in these promos (I assume the brewery is assuming the costs), but it seems like a bizarre thing to do with a craft beer. In the short term you might sell some extra six packs, but if someone is buying a product because they get a shot of whiskey too – well, that’s not a sustainable model for a craft brewery. People switch to drinking craft beer for many different reasons, which likely include the flavour, higher quality and the philosophy of eating/drinking local. They are willing to pay more for a higher quality product. Someone who thinks, “Sweet, free booze when I buy this beer!” is not really the kind of person a craft brewery should be targeting.

It’s not a perfect analogy – there is no bias to baseball teams once they reach the diamond, whereas there is no level playing field in beer. Every baseball team puts nine men on the field and in the lineup and whatever happens after that is a mix of skill and chance. Yes, you can spend on rosters, a fancy stadium and advertising, but that doesn’t guarantee victory. Things are different in the world of beer. Breweries can buy tap lines, space on shelves, distribution channels, advertising and even whole retail stores to give them an advantage. Nothing is equal between the large breweries making adjunct lagers and the small guys trying to make the best damn beer possible. (I think adjuncts like corn syrup equal steroids in this comparison, or I’m completely losing track of my point.) Playing by their rules only gives them an even greater advantage. Smaller breweries need to take the Moneyball approach – find the inefficiencies of the multinationals and exploit them.


3 responses to “What Beer Can Learn From Baseball

  1. I think the Jays discovered that there were only so many market inefficiencies to exploit. MLB keep changing the rules where only payroll dollars were effective. MLB changed draft pick compensation, international signing limits, fixed draft budgets which all hand cuffed the Jays. Finally, their initial crop of rookies (Gose/Hechevaria/Rasmus/Lawrie) didn’t really play up to expectations or at least the rest of the team wasn’t there to mask the fact they were relying on rookies. I love baseball but I’m not sure how to tie this back into beer.

  2. The only way I’d be fine with a whiskey sample packaged with a craft beer is if it was a bourbon barrel aged stout/barley wine where the original bourbon is provided for comparison…

  3. Beer and baseball. I’ll admit that I wasn’t sure what to expect from this particular post. That only has slightly to do with the fact that I don’t pay attention to baseball unless there is a game on in front of me.

    But, I did enjoy your attempt at tying them in together. I was impressed.

    And that does sort of answer my question of how the Jays’ haven’t been doing particularly well in the last decade or so (since I started at least watching games).. I can’t imagine, how, in a city the size of Toronto, they can’t figure out their market identity. It isn’t like the Jays’ are this city’s only professional sports team since they still have the Raptors,, Maple Leafs, and Argos. I’d be interested in seeing if their other pro teams have similar identity issues (although I’d assume basketball would have its own issues with being the only professional Canadian basketball team)…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s