Monthly Archives: March 2008

Batter up! Stros 2008 Season Preview

Posted on by
Reply

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

Posted on by
2

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

Posted on by
2

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

Posted on by
Reply

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

Posted on by
Reply

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.

Reliant Stadium, South Regional-style

Posted on by
Reply

reliant030108_800 Check out the Chronicle’s nifty rendering of the new basketball configuration that will be used this weekend at Houston’s Reliant Stadium for the NCAA Basketball Tournament South Regional. The Reliant Park ticket seating chart for the basketball configuration is here.

This particular configuration provides about 40,000 seats for the South Regional. A different configuration that will seat 72,000 will be used when Reliant Stadium hosts the NCAA Final Four in 2011.

The Enron Task Force Exposed

Posted on by
3

In this previous post on former Enron CEO Jeff Skilling’s Supplemental Brief regarding prosecutorial misconduct in connection with covering up exculpatory evidence contained former Enron CFO Andrew Fastow’s interview notes, I noted that the Skilling brief would likely have a ripple effect on the re-trial of three former Merrill Lynch executives in connection with the Enron-related criminal case known as the Nigerian Barge case.

Well, based on an extraordinary motion filed on behalf of former Merrill executive James Brown, that ripple effect has turned into a tsunami of evidence that includes, but is not limited to, the Fastow interview notes.

As with the Lay-Skilling case, the Nigerian Barge case has long represented much of what is wrong with the Department of Justice’s regulation of business-through-criminalization approach in the post-Enron era.

After prosecuting Arthur Andersen out of business in the intensely anti-business, post-Enron climate, the Enron Task Force threatened to do the same to Merrill Lynch unless the firm served up some sacrificial lambs, which it did with Mr. Brown, Daniel Bayly, Robert Furst and William Fuhs.

Through a deferred prosecution agreement with Merrill, the Task Force then proceeded to hamstring the defendants’ defense by limiting access to other Merrill Lynch executives involved in the barge transaction. Moreover, the Task Force intimidated other potentially exculpatory witnesses by threatening to indict them if they cooperated with the defense.

After bludgeoning a couple of plea deals from former key witnesses Ben Glisan and Michael Kopper, the Task Force proceeded to put on a paper-thin case against the defendants, which was good enough to obtain convictions in the hyper-anti-Enron climate of Houston in 2004.

Of course, most of the convictions were vacated on appeal (and in Fuhs’ case, reversed and rendered), but not before each of the former Merrill defendants and their families had incurred the incalculable human cost of these misguided prosecutions.

Now, Brown’s motion provides a specific and detailed case that the Enron Task Force engaged in not only a wide-ranging cover-up of evidence that was exculpatory to the Merrill defendants, but also offered testimony at trial that the Task Force lawyers knew was contradicted by evidence and testimony that they had in their possession.

The lives and careers that have been damaged in the Nigerian Barge case are the inevitable carnage that results from giving incentivized prosecutors the overwhelming power of government to paint transactions as frauds and manipulate ignorance about them as a means to regulate merely questionable business transactions. A truly civil society would find a better way.

Update: As usual, Ellen Podgor asks the key question — why are the Fastow notes so late in coming?

Update 2: The Chronicle’s Kristen Hays has an article on the Brown motion here.

Is this the key year for the SHO?

Posted on by
Reply

Adam Scott wins the SHO The Shell Houston Open has been a frequent topic on this blog, particularly the tournament’s troubled recent history (see here, here and here). This year’s tournament is coming up during the week of March 31-April 6 and, for the first time in years, the SHO’s projected field contains several top 10 players in the World Golf Rankings. In fact, the SHO’s field looks as if it will be about as good as any of the PGA Tour’s tournaments that currently exist in the Tiger Chasm:

Steve Stricker, No. 4 in the world golf rankings, is the latest PGA TOUR player among the Top 10 to commit to tee it up in the Shell Houston Open the week of March 31-April 6 at Redstone Golf Club – Tournament Course.

Stricker joins No. 2 Phil Mickelson, No. 3 Ernie Els, No. 5 Adam Scott (defending champion) and No. 6 K.J. Choi in the field. No. 11-ranked Padraig Harrington of Ireland, the current British Open champion, and No. 16-ranked Angel Cabrera of Argentina, the current U.S. Open champion, are also in the fold.

Of the above-described players, only Scott has been a regular participant in the SHO. Thus, this is a key year for the tournament. If the top players give the Tournament Course at Redstone (see also here) good reviews, then that will bode well for the SHO going forward, particularly if the tournament can maintain its warm-up date the week immediately before The Masters. On the other hand, if the key players pan the new course, then the SHO will probably fall further into the Tiger Chasm and have a very difficult time climbing out.

The ignorance of costs

Posted on by
2

cell phone distraction I don’t particularly like the distraction of talking on a cell phone while driving, so I avoid it as much as possible. It’s also not enjoyable avoiding other drivers who are not paying full attention while chatting on the cell phone.

However, I also recognize that cell phone usage while driving has facilitated beneficial communication exponentially. Thus, whenever I see creeping paternalism such as this, it gets my attention:

West U. eyes ban on calls while driving
Cell phones in school zone lead to ‘near misses’

Houston-area officials are watching West University Place as elected officials there consider banning cell phones in the school zone near the community’s lone elementary campus.

The move would put the affluent suburb on the map as the first Houston-area municipality to take a stand against drivers talking on their phones as children travel to and from school. The community is following in the footsteps of Dallas and several North Texas suburbs that have recently approved bans. [.  .  .]

West University proposed the ban earlier this month after conducting a study to determine how often drivers were spotted chatting on their cell phones in active school zones. Over three weeks in February, police counted 297 drivers on their phones.

Six of the drivers violated traffic laws by creeping into intersections while children and crossing guards were present, West University police Lt. Thad Olive said.

Although neither Olive nor HISD police officials could recount an incident when a child was seriously injured in a school zone because of a driver on a cell phone, they said this type of ordinance could prevent tragedy.

"There’s been a lot of near misses," Olive said. "It definitely has distracting effects. If I can take one element of risk away from the children in that school zone, then it’s a good thing." [.  .  .]

Kenneth Jones, who oversees HISD’s crossing guard department, said he’d love to see the ban enacted citywide.

"If you’ve got that phone in your hand, I don’t think you have your mind 100 percent on driving," he said.

Kelli Durham, an assistant superintendent in the Cypress-Fairbanks school district, was one of several educators to suggest widening the ban to include all drivers, regardless of whether they’re in school zones.

"If cell phones shouldn’t be used for safety reasons in school zones, should they be used anytime on our streets and highways?" Durham asked.  .  .  .

So, if "one element of risk" can be taken away from children in a school zone, then that’s sufficient justification for regulation of a hugely beneficial communication device? Does this mean that the next initiative will be to ban conversation between a driver of a car and a passenger while in a school zone? That’s also distracting, perhaps even more distracting than talking on a cell phone. Should we also ban distracting billboards, signs, automobiles and lights while we’re at it?

What is most disturbing about all this is the utter ignorance of the bureaucrats proposing these regulations of the cost of the regulation relative to the benefit. Wouldn’t it be prudent at least to perform a meaningful cost-benefit analysis of the probable impact of outlawing a valuable improvement in communications before foisting yet another regulation on the public?

T-Mac for MVP?

Posted on by
1

richardjustice032008 The incongruity of Chronicle sportswriter Richard Justice writing about sports has been a frequent topic on this blog, so I don’t much bother anymore keeping up with his often baseless observations about the local sporting scene. However, on the heels of the Houston Rockets’ recent 22-game winning streak, I did a double-take when Justice jumped on the bandwagon and started promoting the Rockets’ Tracy McGrady for the NBA’s Most Valuable Player Award this season.

As noted in this earlier post, as of December 30, McGrady was barely better than a league-average NBA player. There were dozens of players in the Western Conference alone who were having demonstrably better seasons than McGrady. So, at least as of that date, there was simply no objective basis for McGrady being considered the MVP of the NBA this season.

But perhaps McGrady elevated his performance tremendously during the Rockets’ subsequent 22-game winning streak? Maybe that improved performance justifies Justice’s advocacy of an MVP award for McGrady?

Sorry. As this Dave Berri post points out, McGrady’s production in the second half of the season is essentially the same as it was in the first half. Thus, McGrady is not the reason the Rockets went on their 22-game winning streak. Rather, the primary reason for the Rockets’ transformation was the improved play of Carl Landry, Rafer Alston, Shane Battier, Luther Head, Luis Scola and Dikembe Mutumbo, not McGrady.

Berri backs up his position with objective statistical analysis. Justice backs his up with subjective blather. Is that what the Chronicle prefers?