Author Archives: Tom

A brief encounter at the SHO driving range

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JIm Hardy 040608 johndalyteeingof 040608 After spending a delightful Friday morning watching Phil Mickelson navigate the back nine during the second round of the Shell Houston Open, my entourage and I grabbed a quick lunch and then headed out to the Redstone Golf Club driving range to watch the players with afternoon tee times prepare for their rounds.

A few minutes after we arrived, 2007 PGA Teacher of the Year and Houston resident Jim Hardy appeared on the range to watch his longtime student, Scott McCarron, warm up for his round. Hardy helped McCarron revive his professional golf career in the mid-1990’s after he had completely lost confidence in his swing. Hardy has helped resurrect the careers of several other PGA Tour pros in a similar manner.

Meanwhile, a few spots down the range from Hardy and McCarron, the mercurial John Daly — who was playing the SHO on a sponsor’s exemption because he has become a shadow (see also here) of the world class golfer that he used to be — began warming up for his round. In between drags on an ever-present cigarette as well as friendly chatter with caddies and other practicing players, Daly somewhat listlessly hit a few wedges and then a few long irons before wailing away with his driver. The man can still hit the ball out of sight.

As Daly began hitting his driver, McCarron finished his practice session and Hardy had a few final words with him. McCarron then left for his tee time and Hardy strolled down the range, stopping 20 yards or so behind Daly. With arms folded, Hardy silently stood watching Daly hit practice drives. I’m not sure that Daly even noticed Hardy watching.

A few minutes later, Daly tossed his driver to his caddy and trudged toward the golf cart that would take him to the 10th tee for his tee time. Hardy walked to the putting green and began working with another player on his putting.

After seven holes of his round, Daly withdrew from the tournament with a balky back that I’m sure wasn’t helped by the chilly rain and 20 degree temperature drop that occurred Friday afternoon. However, in nine tournaments this season, Daly has now missed four cuts, pulled out of another tournament with a rib injury and was disqualified from the Arnold Palmer Invitational because he blew his pro-am tee time. This on top of Daly’s unofficial PGA Tour record of six withdrawals in 2007 and his 581st World Golf ranking coming into the SHO.

The sad reality is that probably even Jim Hardy can’t help John Daly now.

The NY Times discovers that Houston

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houston_skyline 040408is a pretty darn diverse place.

Catching up with Bill James

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Bill James 042208 The beginning of the Major League Baseball season is a good time to check in with Clear Thinkers favorite, Bill James, the father of sabermetric analysis of baseball. Steve Dubner over at the Freakonomics blog recently provided James with this question-and-answer forum and, as usual, James’ observations on baseball are insightful and entertaining. For example:

Q: Using various statistics over a player’s lifetime, and comparing them to “league norms,” is it possible to determine which players may have used steroids?

A: Absolutely not, no. The problem is that many different causes can have the same effects. If a player used steroids, this could cause his home run total to explode at an advanced age — but so could weight training, Lasix surgery, better bats, playing in a different park, a great hitting coach, or a good divorce. It is almost always impossible to infer specific causes from general effects.

Q: Can you tell us about a time when you thought numbers were misleading and why?

A: I would say generally that baseball statistics are always trying to mislead you, and that it is a constant battle not to be misled by them. If you want something specific — pitchers’ won-lost records. And if you want a specific pitcher, Storm Davis, 1989.

For the record, Davis posted a 19-7 record with the Oakland A’s in 1989 while posting a pedestrian 4.36 ERA and giving up 8 more runs that season than a National League-average pitcher would have given up pitching in the same number of innings. Needless to say, a National League-average pitcher in 1989 did not have a 19-7 record. Here’s another of James’ interesting observations:

Q: Generally, who should have a larger role in evaluating college and minor league players: scouts or stat guys?

A: Ninety-five percent scouts, five percent stats. The thing is that — with the exception of a very few players like Ryan Braun — college players are so far away from the major leagues that even the best of them will have to improve tremendously in order to survive as major league players — thus, the knowledge of who will improve is vastly more important than the knowledge of who is good. Stats can tell you who is good, but they’re almost 100 percent useless when it comes to who will improve.

Read the entire post.

It’s 2008 Shell Houston Open Week

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1E2 Fifth Hole Look back better Following on this post from a couple of weeks ago, this week’s Shell Houston Open at Redstone Golf Club has its best field in years (previous posts here), which includes the following top 25 players in the World Golf Rankings: Phil Mickelson (2), Steve Stricker (4), defending champion Adam Scott (5), The Woodlands’ K.J. Choi (7), Geoff Ogilvy (11), Padraig Harrington (12), Angel Cabrera (17), Aaron Baddeley (18), Trevor Immelman (25). Other popular notables in the field include 2003 champ Fred Couples, Houston’s Steve Elkington, Texans Chad Campbell and Justin Leonard, Davis Love III, Jose Maria Olazabal, The Woodlands’ Jeff Maggert and Argentinean hot-shot Andres Romero. For a non-major and non-Tiger event, 10 of the top 25 in the World Golf Rankings and three of the top five provides a very sporty field.

Started in 1922, the Houston Open is tied with the Texas Open as the third oldest non-major championship on the PGA Tour behind only only the Western Open (1899) and the Canadian Open (1904). This is the third Houston Open to be played on the Tournament Course at Redstone Golf Club and the sixth event overall at Redstone, which hosted its first three Houston Opens on the club’s Jacobson-Hardy Course while the Tournament Course was being built. This is the SHO’s second year of being played the week before The Masters and, despite the tradition of some of golf’s all-time greats not to play the week before major championships, the strong SHO field this year is an encouraging boost for a tournament that has struggled generating quality fields ever since leaving The Woodlands’ TPC Course after the 2002 tournament. Although the Houston Golf Association promotes the tournament with players by grooming Redstone’s Tournament Course in a manner similar to Augusta National, the Tournament Course is actually a flat-land course that bears little resemblance to the hilly venues of Augusta.

The following are several posts from over the years that will give you a flavor for the SHO:

The Wall Street Journal’s Enron embarrassment

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Emshwiller033108 In anticipation of the oral argument on Wednesday in New Orleans on former Enron CEO Jeff Skilling’s appeal of his criminal conviction, don’t miss this Larry Ribstein post on Wall Street Journal Enron reporter John Emshwiller’s tardy realization that Skilling may just have legitimate grounds for reversal of his conviction and that the Enron Task Force’s record is not what its sycophants crack it up to be. This comes from Emshwiller after his newspaper last year characterized the Enron Task Force as having "a good record overall."

I can’t improve upon Professor Ribstein’s post regarding the irony of the nation’s leading business newspaper just now realizing that the corporate criminal case of the decade was badly mishandled. However, even before the Lay-Skilling trial, it was clear that the WSJ’s coverage of Enron was open to serious questions (see also here). That the newspaper continues to soft pedal coverage of wide-ranging evidence of serious prosecutorial misconduct in the Enron-related criminal cases reflects a troubling blind spot. Even in the current article, Emshwiller is less than forthright in assessing what is truly going on in the Skilling appeal regarding the Fastow interview notes:

Normally, defense attorneys aren’t allowed to see the raw notes of Federal Bureau of Investigation interviews with government witnesses. But Mr. Skilling’s defense team, led by Daniel Petrocelli, sought them anyway, and the Fifth Circuit agreed to order the federal government to turn over the notes.

Emshwiller fails to explain that the Fifth Circuit granted the Skilling team’s motion to obtain the raw notes because the Enron Task Force took the highly unusual step of providing the Lay-Skilling defense team a "composite summary" of the Form 302 ("302s") interview reports that federal agents prepared in connection with their interviews of former Enron CFO and chief Skilling accuser, Andrew Fastow. Those composites claimed that the Fastow interviews provided no exculpatory information for the Lay-Skilling defense, even though Fastow’s later testimony at trial indicated all sorts of inconsistencies.

In point of fact, the process of taking all the Fastow interview notes or draft 302s and creating a composite is offensive in that it allowed the prosecution to mask inconsistencies and changing stories that Fastow told investigators as he negotiated a better plea deal from the prosecutors over time. Likewise, the Task Force’s apparent destruction of all drafts of the individual 302s of the Fastow interviews in connection with preparing the final composite is equally troubling. Traditionally, federal agents maintain their rough notes and destroy draft 302s. However, in regard to the Fastow interviews, what turned out to be the draft 302s were probably not "drafts" in the traditional sense. They were probably finished 302s that were deemed “drafts” when the Task Force prosecutors decided to prepare their highly unusual composite summary of the 302s.

Meanwhile, while manipulating Fastow’s story, Task Force prosecutors were also preventing other exculpatory evidence from being introduced at trial on behalf of Skilling and Lay by taking the unprecedented step of fingering over 100 unindicted co-conspirators in the Lay-Skilling case (see also here) and implicitly threatening those co-conspirators with indictment if they testified on behalf of Skilling and Lay at trial. 

None of the foregoing is explained in Emshwiller’s article. Regardless of what happens in the Skilling appeal, the WSJ has some deep soul-searching to do regarding its coverage of the aftermath of Enron’s demise. Engaging in media myths and morality plays regarding business interests is bad enough. Ignoring the abuse of the government’s overwhelming prosecutorial power to levy a life sentence on an executive who created enormous wealth elevates poor judgment in business reporting to a much more troubling level. 

Update: Larry Ribstein comments further here, while Ellen Podgor has a pre-appellete argument post for the Skilling appeal here. The Chronicle’s Kristen Hays, who has done the best job in the mainstream media of covering the latest developments in the Skilling appeal, previews the oral argument here.

Batter up! Stros 2008 Season Preview

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Minute Maid Park, Houston Astros 033008 The Stros are on the road for the first week of the 2008 Major League Baseball season, but that’s not a bad thing considering that the optimism usually associated with Opening Day during the Biggio-Bagwell era of the Stros is largely absent around Houston baseball circles these days (previous Opening Day posts since 2004 are here).

As noted in the concluding post on the Stros’ disastrous 2007 campaign, the Stros have been a team in decline for a long time even though generally superior pitching during the 2002-2006 seasons masked that downturn. Unfortunately, after cleaning house toward the end of the 2007 season, not much of what owner Drayton McLane did over the off-season indicates that he understands what the club needs to do to turnaround the downward spiral of the past two seasons. Inasmuch as McLane apparently remains under the delusion that the Stros can contend for a National League playoff spot, the club continues in a syndrome where it tends to take two steps back even after making an occasional good move. For example:

The Good: The Stros finally acquired Orioles star Miguel Tejada for Luke Scott, an injured Troy Patton and a couple of other minor leaguers.

The Bad: The Stros largely blew the benefit of deal by releasing their excellent defensive shortstop, Adam Everett, and placing Tejada at SS rather than 3B where he would be a better fit defensively and offensively. As a result, rather than having a very good defense with Tejada at 3B and Everett at SS, and an improved offense with Tejada’s bat, the Stros will field a terrible left-side of the infield defense and only a marginally-better offense than last season’s National League-average unit.

The Bad: By getting rid of Everett, the Stros appear locked in with 3B Ty Wigginton, who is not likely to be as good either offensively or defensively as former Stros 3B, Morgan Ensberg. Moreover, the Stros reacquired the Ausmusian Geoff Blum, who — along with Jimy Williams — probably cost the Stros a spot in the 2003 National League playoffs.

The Good: The Stros traded basket-case closer Brad Lidge for promising CF Michael Bourn, who will improve the Stros outfield defense, and signed 2B Kaz Matsui, who is a much better defensive 2B at this stage of his career than Craig Biggio was last season.

The Bad: The Stros traded 2B Chris Burke, who was never given a fair chance at his natural position, and paid an absurd $16.5 million over three years for Matsui, who has never played more than 114 games in any one of his four MLB seasons. To underscore this point, Matsui is beginning this season on the disabled list. Matsui’s career hitting stats are .325 OBA/.387 SLG/.712 OPS compared to Burke’s .304/.357/.662. Burke would have cost the Stros a fraction of the salary that they have committed to Matsui over the next three seasons and probably would have produced about the same once he was given an opportunity to settle into the 2B position. Go figure.

The Bad: The Stros traded solid MLB players Lidge, Chad Qualls and Luke Scott without receiving in return any above-average prospects to re-stock their farm system, which is rated by experts to be among the worst in MLB.

The Good: The Stros finally gave up on Woody Williams, who was a dubious acquisition from the start. Without both Williams and Jason Jennings, this season’s pitching staff should be better than last season’s, which gave up 79 more runs than a National League-average pitching staff would have given up in an equivalent number of innings (RSAA).

The Bad: After one of the best starting pitchers in MLB, Roy Oswalt, the following is the Stros’ rotation to begin the 2008 season:

  • Wandy Rodriguez: Rodriguez went from being one of the worst starting pitchers in MLB in 2005-06 to being merely a below-average starter (-7 RCAA/4.58 ERA/182? IP) in 2007. It’s conceivable that he could continue to improve and be a reasonable 4th or 5th starter. Of course, it’s just as likely that he could regress to what he was in 2005-06. That’s the hit-or-miss nature of pitching at the non-elite levels of MLB.
  • Brandon Backe: A fiery personality and a couple of good playoff performances three years ago misleads some addled observers to believe that Backe is a legitimate number two starter. However, he has made just 13 starts over the past two seasons while recovering from Tommy John surgery. In those 13 starts, he struck out 30 and walked 29. Backe’s career -15 RSAA is not the stuff of a frontline National League starting pitcher.
  • Shawn Chacon: Chacon was an inconsistent starter for six seasons before washing out with the Yankees and Pirates in 2006 (-24 RSAA — ouch!). He revived his career last season with the Pirates as a setup man, so what do the Stros do? Insert him back into the starting rotation. This is unlikely to turn out well.
  • Chris Sampson: Given Sampson’s story (revived his career as a pitcher after washing out as a minor league shortstop and coaching for several years at a Dallas community college), everyone
    is pulling for him. But his story is better than his stats. He is a control specialist who doesn’t strike many batters out playing with a left-side infield defense that will struggle to field ground balls. Sampson was going downhill at the time of his injury last season (6.86 ERA over his last seven starts), so don’t expect miracles this season.

The bottom line on all of this is that the Stros’ addition of Tejada’s bat probably will not be what the club’s promoters are cranking it up to be in the pre-season (Baseball Prospectus’ PECOTA prediction model projects Tejada’s 2008 statistics at a rather pedestrian .340 OBA/.428 SLG/.768 OPS with 14 dingers). The subtraction of Biggio, Everett and Brad Ausmus from the everyday starting lineup will probably result in a marginally better hitting club over the National League-average 2007 unit, but the defense and the pitching will likely remain decidedly below-National League average. Accordingly, it is unlikely that the Stros will improve much, if at all, on their 73 wins from last season. I’m putting the over/under on Stros wins this season at 75 and, absent career seasons from about half-a-dozen players, competing for a playoff spot is a pipe dream.

Over the past couple of seasons, I have reviewed the Stros during the season after each 10th (2006) and each 8th of the season (2007). Consistent with my lighter blogging schedule this season, I’m going to post my “Stros 2008 Season Review, Part __” this season after each 5th of the season, which works out to be after each 32 game segment of the season (I will do 33 game segments for the first and last segments). So look for my first season review this season after the first week in May, give or take a few days in the event of postponed games. Given the vacuum of baseball analysis at the Chronicle, check out Lisa Gray’s insightful Stros blog and Alyson Footer’s articles at Astros.com for daily reports on the Stros throughout the season.

Icahn on settling Pennzoil-Texaco with Jamail

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This blog is mostly about business and law, so Carl Icahn’s activities have been a frequent topic. Likewise, this blog also centers on Houston, where the Pennzoil v. Texaco case from the mid-1980’s is a part of the city’s storied legal lore. Consequently, the video below of Icahn doing his equivalent of a standup comedy routine describing how he settled the Pennzoil-Texaco case with famed Houston plaintiff’s lawyer Joe Jamail is an absolute classic for this blog. A very big hat tip to John Carney at Dealbreaker for the link to the Icahn video.

Thoughts about basketball at Reliant

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reliant032908_800 My friend John Stevenson graciously hosted a couple of friends and me at last night’s NCAA South Regional semi-final basketball games at Reliant Stadium.  Although the company and conversation was a solid A+, my grade for Reliant Stadium’s performance in hosting its first big-time basketball tournament is a rather pedestrian C- (the Chronicle’s David Barron has a more favorable review here). Here are my observations:

1.  First, the good. The configuration of the stadium into a 43,000 seat basketball arena is not bad, at least for a football stadium hosting basketball games. We sat in the first row of the club section and the sight lines were fine, although we all used our opera binoculars from time to time. I do think that it would be possible to arrange more seats closer to the floor, particularly on the ends, without giving up much from the nose-bleed seats.

2.  But now for the bad. As has been the tradition at Reliant Park since the opening of the Astrodome over 50 years ago, parking was Byzantine. Although Reliant Park is blessed with plenty of on-site parking, the facility’s parking areas were originally designed with narrow entry points that funnel autos to relatively few parking ticket agents that take a parking fee from the driver of each auto entering the facility. This has always been a horrible idea and it’s incomprehensible that Reliant Park officials have not changed it after decades of fan frustration. With tens of thousands of autos descending upon the facility within an hour or so of a big game, traffic around the facility slows to a crawl as autos line up for miles at the most popular entry points waiting for drivers to stop, pay the parking charge and then move on to park. To make matters worse, the narrow entry points are converted to too-narrow exit points after the game, so traffic also stacks up in the parking lots after the game.

What should be done is simple. All of the entry points should be widened to facilitate traffic flow and, at least for big events, there should be no parking charge taken at the facility (the parking charge should be included in the price of the ticket — with tickets already priced at $156 for the South Regional, charging an additional $20 to park at Reliant is outrageous). With widened entry points and no stoppage for payment of a parking fee, parking lot attendants could then concentrate on moving drivers quickly into the parking areas. Traffic backups would be greatly reduced.

Being old-timers in attending events at Reliant Park, our group avoided the traffic bottleneck by entering Reliant Park off of  little-used Stadium Drive on the north end. However, when we entered an hour before game time, automobiles were already backed up for miles on Kirby and the other west-side entry points. That bottleneck caused many fans to miss a good part of the first half of the opening game between Texas and Stanford.

3.  How on earth could Reliant Stadium not have sufficient concession workers and supplies available for an event as prestigious as an NCAA Regional? In the club section, there were so few concession areas available that the lines required a half hour wait throughout and after the Texas-Stanford game. There were no individual concession vendors. By the time that the lines had dwindled midway through the second game between Memphis and Michigan State, many of the concession areas had run out of bottled water. Finally, although it’s not a big deal with me, isn’t it a bit odd that a fan can’t buy a beer while attending a basketball event that lasts over five hours?

4.  The Reliant Park overhead video screens were nice, but provided sophomoric information about the players and showed too few replays of exciting and controversial plays. The folks at Reliant Park need to check out how the Toyota Center operates its overhead video screens, which provide much better information and more replays.

5.  Pricing of the tickets is definitely an issue. It’s my understanding that Reliant Park and the NCAA priced the tickets for the three South Regional games at a total of $156 on the thought that the basketball configuration would be limited to about 25,000 seats. When hometown favorite Texas was given the second seed in the South Regional and then won a spot in the South Regional semi-finals, Reliant Park and the NCAA modified the configuration to its present 43,000 seat configuration to accommodate the increased demand for tickets from Texas fans (they also sold tickets at $78 for only the two Friday night semi-final games). Although almost 33,000 attended last night’s games, my sense is that even more would have done so if the nose-bleed tickets had been priced at more reasonable levels.

By the way, I’ve got Memphis in my bracket winning the South Regional final tomorrow against Texas. Although the Horns are solid, nothing that I saw in the two Friday night games has changed my opinion that Memphis will prevail.

Thinking about Bear Stearns

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bear_stearns_building Michael Lewis — author of Moneyball and The Blind Side: Evolution of a Game (previous post here) provides this particularly lucid Bloomberg.com op-ed regarding the implications of the Bear Stearns affair to investors generally:

All of this raises an obvious question: If the market got the value of Bear Stearns so wrong, how can it possibly believe it knows even the approximate value of any Wall Street firm? And if it doesn’t, how can any responsible investor buy shares in a big Wall Street firm?

At what point does the purchase of such shares cease to be intelligent investing, and become the crudest sort of gambling? [.  .  .]

To both their investors and their bosses, Wall Street firms have become shockingly opaque. But the problem isn’t new. It dates back at least to the early 1980s when one firm, Salomon Brothers, suddenly began to make more money than all the other firms combined. (Go look at the numbers: They’re incredible.)

The profits came from financial innovation — mainly in mortgage securities and interest-rate arbitrage. But its CEO, John Gutfreund, had only a vague idea what the bright young things dreaming up clever new securities were doing. Some of it was very smart, some of it was not so smart, but all of it was beyond his capacity to understand.

Ever since then, when extremely smart people have found extremely complicated ways to make huge sums of money, the typical Wall Street boss has seldom bothered to fully understand the matter, to challenge and question and argue.

This isn’t because Wall Street CEOs are lazy, or stupid. It’s because they are trapped. The Wall Street CEO can’t interfere with the new new thing on Wall Street because the new new thing is the profit center, and the people who create it are mobile.

Anything he does to slow them down increases the risk that his most lucrative employees will quit and join another big firm, or start their own hedge fund. He isn’t a boss in the conventional sense. He’s a hostage of his cleverest employees.

As noted in this earlier post, nothing is wrong with having compassion for Bear Stearns employees who lost much of their net worth as a result of the firm’s demise. But the reality is that the ones who suffered large losses in their nest egg when Bear Stearns failed were imprudent in their investment strategy. They should have diversified their holdings or bought a put on their shares that would have allowed them to enjoy the rise in the company’s stock price while being protected by a floor in that share price if things did not go as planned. Even though most of those Bear Stearns investors carry insurance on their homes and cars, relatively few of them elected to hedge the risk of their more speculative Bear Stearns investment. Most likely, many of these investors simply did not understand how Bear Stearns created their wealth in the first place. Absent a better understanding of investment risk and how to hedge it, such investment losses will continue in the future, regardless of whatever ill-advised regulations are devised in an attempt to prevent them.

Throes of Democracy

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Throes of Democracy2 One of the best books that I have read over the past several years is Walter A. McDougall’s Freedom Just Around the Corner: A New American History 1585-1828 (HarperCollins 2004), the first book in McDougall’s planned trilogy on American history (Gordon Wood’s 2004 review of Freedom Just Around the Corner is here).

For anyone interested in the development of the market economy in American society, Freedom Just Around the Corner is essential reading. One of McDougall’s central theses is that most of American society’s dynamic successes (and also many of its failures) are attributable to the creative entrepreneurial spirit of its citizens, and that the source of a considerable amount of tension within American society are the forces that attempt to contain this spirit. McDougall sums up his viewpoint in the preface to his widely-anticipated and just-published sequel to Freedom Just Around the Corner, Throes of Democracy: The American Civil War Era 1829-1877 (HarperCollins 2008):

I believe the United States (so far) is the greatest success story in history. I believe Americans (on balance) are experts at self-deception. And I believe the "creative corruption" born of their pretense goes far to explain their success. The upshot of is that American history is chock-full of cruelty and love, hypocrisy and faith, cowardice and courage, plus not small measure of tongue-in-cheek humor. American history is a tale of human nature set free. So how you, the reader, respond to this book will depend in good part on how you yourself (all pretense aside!) regard human nature.

McDougall has a wonderfully engaging style, which is reflected in the following Freedom Just Around the Corner excerpt about the tragic death of Alexander Hamilton in his duel with Vice-President, Aaron Burr. After the Federalist-but-statesman-first Hamilton undermined the rudderless Burr’s Federalist campaign for New York Governor by supporting Burr’s Republican opponent, McDougall described what happened next (pp, 395-96):

When in April 1804 Burr gleaned just 40 percent of the tally, he invoked the code duello and called Hamilton to pistols on the green at Weehawken, New Jersey. Hamilton’s son had been killed in such an affair just a year before and he was well aware of Burr’s marksmanship. But Hamilton consented in July 1804 to perform one last service for his country. He killed Burr’s career by permitting Burr to kill him.

I’ve just started Throes of Democracy, but I have read enough to know that it is going to be a rollicking good ride. Michael Kazin’s somewhat indifferent NY Times review of Throes of Democracy is here.