Build it from within… make every cent count… balance risk.
That might be the best way to describe how Mark Shapiro, the executive vice-president and general manager of the Cleveland Indians, conducts business. Since coming on-board with the Indians in 2001, he immediately set about restructuring the Indians model for success. High salary veteran players were dropped to give payroll flexibility, and the focus was shifted to developing young talent.
Shapiro has seen the game, as worked from outside the lines, since he was at a very young age. His father Ron, was a high profile lawyer in the Baltimore area that shifted to becoming an agent. In an interview on Baseball America, the elder Shapiro said, “For as much as he loved sports, he was disadvantaged in that genetically he was deprived because his father was probably the worst athlete in the world. But exposure-wise, he got to have a unique view of players and their lives outside baseball. I think that gave him a better understanding of how things work right from the beginning."
The rebuilding of the Indians paid off in 2005 when Mark was honored with the Sporting News Sports Executive of the Year by winning 93 games that year, while having a payroll that ranked in the bottom five of the 30 teams.
The following interview focuses on how Shapiro balances the resources that the Indians have available to continue to contend. Unsurprisingly, he mentions Billy Beane (read the Biz of Baseball interview with Beane), and Terry Ryan (read the Biz of Baseball interview with Ryan) who have been able to evaluate undervalued talent with budgets many times lower than clubs such as the Yankees and the Red Sox.
This year sees the Indians in the hunt again. As of this publication they hold a two-game lead over the Tigers for first place in the AL Central, with C.C. Sabathia leading the league in Wins with 12, Victor Martinez seventh in RBIs, and Joe Borowski tied for third in the league with 24 Saves.
Other topics in this interview include his views on the Draft system, whether the Indians will focus on re-signing C.C. Sabathia, how this year’s first draft pick Beau Mills might be developed, how the Indians approach risk as it pertains to pitchers, competing for free agents with a player payroll that is ranked at 23rd by Opening Day payroll ($61,673,267), and much, much more.
Maury Brown for The Biz of Baseball: We’re very near the All-Star break, and with that, the Indians and Tigers are battling it out for the lead in the AL Central. Are you satisfied with where you are at, or are you looking to make a move before the trade deadline?
Mark Shapiro: Well, you know it’s funny; I think in the moment, you’re not satisfied. You feel like you could have been better within the context of the season you played. If you would have flashed back to Spring Training and told me that we would have the third or fourth best record in the big leagues, we’d be fourteen games above .500, I would have signed up for it.
The second answer to the question that you asked is yes, it is our obligations to constantly, regardless of our spot in the standings, be attempting to improve the team. It is a challenging market to do that. The backdrop of our protectiveness of our young players always has to be there because that’s really our greatest ability to compete and win here, but with that being said, we are active, very active, and diligent in the area of trying to secure more talent.
BizBall: We just recently went through the First-Year Draft, and with that changes that were implemented with the new CBA were put in place on how the drafting system functions. What is your take on the new changes? Do you think it works well, or will there continue to be adjustments made?
Shapiro: Time will tell. I think it clearly creates slightly more leverage for the team, but it still doesn’t achieve the end result. Our draft system is extremely flawed. It does not result in the desired outcome, which is the best talent taken, strictly based on ability where it’s spotted on the board. Finances still enter into the equation at a very significant level. It is often the teams that lose the most that aren’t able — if they are a smaller market team — to catch the best player that is on the board at that time. Until that’s the case, I don’t think the draft functions as it’s supposed to with the distribution of talent.
BizBall: With the Draft, the Indians selected 1B, Beau Mills from Lewis & Clark State College with the 13th pick. What kind of player do you see him as, and what roll might he be developed into for the Majors? Do you look for a particular role for him?
Shapiro: I think what we look to do in the first round of the draft is secure some level of talent that we basically have an inability to compete for on a free agent market. So, whether that’s a top of the rotation player, whether that’s a top of a rotation starter, whether that’s a middle of the order run producer, or a middle of the diamond talent, that’s what we’re looking to do. And in Beau we feel like we secured a potential middle of the order run producer and that’s how it will development. I think we’ll find the best fit for him defensively. Initially we feel that’s probably first base, but time will tell defensively. Clearly what we’re looking to get, what we feel most confident of, is that we have the potential to sign a run producing, middle of the order bat.
BizBall: C.C. Sabathia is making a good case for a possible AL Cy Young award. He’s tied for first in Wins with Josh Beckett, Innings Pitched, has two complete games, we could go on… When you have a player of high caliber, which Sabathia clearly is, do you have to consider setting your budget out for the year in case you decide to wrap him up? How difficult is it for a market like Cleveland to retain high quality players as they hit free agency?
Shapiro: It’s a significant challenge for us in the market that we operate within because our threshold for risk has to be so much more finite than a larger market team. We have to be so much more careful and cognizant of what an injury on a large contract or a drop in performance will do to our ability to sustain a championship caliber team. So, I think it’s never a challenge to sign, and secure, and retain talent. The question is, if you do that, are you then creating too big of a challenge in creating a championship team around that player.
In isolation, we can look at retaining any player, the challenge is when you break outside of the isolation, the perspective, can we build a championship team around that player? Are we maintaining the balance to do that?
When I look at C.C. – what I chose to focus on instead – are his progression to a true number one starter. The things he’s accomplished, his maturation from an 18 year-old kid when we first drafted him into a man. He is a guy that is a tremendous father and husband and leader in our club house. His maturation as a pitcher as well, as a thrower, a power guy, to a true pitcher to me it is remarkable. I have immense respect for C.C. and all that he has accomplished. I enjoy watching him pitch now even more knowing the back drop of where he’s coming from.
BizBall: You bring up risk… One of the key acquisitions for the Indians this past off-season was Joe Borowski, who as of this interview is tied for third in the league with 22 saves. The Phillies backed out of a deal for him in the off-season after a physical, citing his shoulder, which was injured during the ’04 season. With small to mid-markets having to make every free agent penny count, are the risks rising when it comes to top or even mid-level pitching talent on the open market?
Shapiro: I think “risks” and “pitching” on the free agent market are just inseparable. You’re just dealing with levels of risk.
I guess I would say this: like Kevin Millwood a few years ago – on a one year time frame – we are much more risk tolerant than we are in a longer time frame. There’s no one year deal that obviously we can’t overcome in time.
So you do two things: You look at the alternative. You look at what’s available out there.
We were going to wade into the waters of risk, but at what level while having to satisfy the back end bullpen issues that we had. There was no non-risk alternative. There was just levels of risk and off setting risks with multiple alternatives and we were well aware of what we were walking into in last year’s free agent market.
BizBall: This past off-season saw a spike in the market for free agents. Whether that was one GM setting the market, or the tone coming out of reaching a new CBA, what have you. What ever it was, the market spiked. You walk into the off-season and have to adjust as the market gets set. If you would, walk us through how you and the Indians go about strategizing and adjusting when the market gets set?
Shapiro: I think you want to internally frame values for players as you head into free agency. Some of that value is built upon external demand and some of that is built on your own payroll structure. You know what portion of that payroll you can allocate to different positions and players — both short term and long term — team building... and growth. And then I think there are obviously sometimes exceptional contributions that you can look at as well; but all of that functions within an imperfect environment because one team’s desire for a player can skew the value and take it out of our realm. But we have to be disciplined when we enter that market.
You know, the Red Sox could value a player identically to us and basically, just with their tolerance for risk and their level of payroll, they could both pay him more and offer him more years within an exact same evaluation.
All that accentuates is that we need to try to stay out of the free agent market whenever possible … and when we do enter into the free agent market, there is hopefully a realistic desire to supplement rather than build the core talent – because I just don’t see us ever being able to compete in the free agent market for core talent … it’s just the very rare, exceptional occasion when that is going to happen.
BizBall: That leads into my next question… Given the costs associated with competing for top-tier free agents and the costs and risks associated to them, is it fair to say that more and more clubs will be working to develop their own young talent, and with that, is there a growing emphasis in areas such as academies in Latin America?
Shapiro: I think what has become increasingly obvious in the last couple years is that regardless of your market, young talent is important. It’s always been obvious to the Oaklands, Minnesotas, Clevelands; it’s our only chance. Not that it’s just important, but it’s our only chance is to sign and develop our own talent and then bring them up internally – at least core talent. Then look for value propositions in free agency. That’s clear. Billy [Beane] knows that. Terry [Ryan] knows that. I know that. Without that internal supply of talent, we cannot compete at the playoff caliber level. I think what’s become increasingly apparent and where the change is, is that regardless of your market, no matter how big your market is, it’s still important to have your own internal young talent and if you have the young talent and you have financial resources, you have a chance to create a dominant team, like the Red Sox are doing now and like the Angels were able to do.
I think that’s where some of the teams that didn’t place as big of an emphasis or maybe lost sight of that importance over time, are realizing that we need to get back into that talent. We need to be more cognizant of that importance, be more careful when we consider trading it and place more emphasis on developing it.
As far as the question regarding Latin American... You’re going to find over time that there’s a lot less efficiency there right now because of the money being thrown out down there and the lack of information we have on the players and the success rate being so small. That is becoming probably more of an inefficient market at this point.
BizBall: Interesting. There has been discussion that given the costs associated with some of the signing bonuses in the drafting process Stateside, you could more economically develop in, say, Latin America. The theory being that regardless of your ability to find good talent -- due to lack of information; what have you -- you may come up with a diamond in the rough by pure volume.
Shapiro: I think that was true years ago and everybody reacted to that by throwing money down there and it has become more competitive by money on top of that money and the signing bonuses escalated as well of the cost of doing business down there escalated, then it became less and less efficient. We’re getting to the point now where I’m not sure if it is an efficiency any more. You might have more efficiency in the draft than you do in Latin America at this point.
BizBall: Many were surprised this off-season when the Giants offered pitcher Barry Zito a seven-year deal. Given the difficulty in projecting pitcher performance and durability the further out in time you go, do you have any hard and fast rules when it comes to matters such as contract length, especially when it comes to pitchers?
Shapiro: I don’t believe in hard and fast rules in this game – it is a game of grays, there are no black and whites. That being said, I’m already being redundant when I state the risk of pitching is evident and clear and with every single individual case that we consider, we will do a very careful risk analysis and risk assessment. I can tell you just based upon the experience of where we end up with pitching in general, is that our tolerance for risk is not going to be high enough to allow for very many long-term contracts in that market, especially of high magnitude
BizBall: Lastly, the Indians recently hired one of my Baseball Prospectus colleagues, Keith Woolner, and I know that Vince Gennaro has worked with the Indians in the past. How do you approach the use objective analysis along with the advice from your scouting department? Some say that it is a black and white area, and it clearly isn’t...
Shapiro: That’s the biggest mistake. I risk the temptation to brand us as one type of organization and just call it a balanced organization.
My philosophy has always been: Why limit yourself to one type of data? Why not seek to get the best information in every area? What we start to do is seek out the best objective analysis available and then frame it properly and utilize it. To seek out the best subjective analysis or scouting information available then frame that and utilize that in decisions. Medical; personality; and psychological; financial – all those variables that exist within a decision making framework. Then with the creative, or when the artistic side of that comes in, that is how you weigh those variables in the decision making process.
- Interview conducted by Maury Brown on 6/29/07
- Transcribed by William Jordan and Michael Elsen
- Edited by Maury Brown
Maury Brown would like to extend special thanks to William Jordan and Michael Elsen for their exceptionally diligent work in the transcription process.
To read other interviews with the likes of Billy Beane, Terry Ryan, Marvin Miller, Bob Costas, Charlie Steiner, Bowie Kuhn, Kevin Towers, and many more, select the Interviews link from any page on The Biz of Baseball.