The Oakland Athletics began this season as one of baseball's laughingstocks, a team seemingly destined to lose 100 games and show the world why small-market clubs can never compete with the Yankees and Red Sox. By the all-star break, after playing with grit and determination for three months, they were a novelty because, unlike the Expos and Twins, they at least had managed to hang around .500 and remain interesting.

These days, they're something else. They're baseball's most surprising team, perhaps its happiest team and certainly one of its most interesting teams as the draining days of summer give way to the crisp afternoons of autumn.

They're a team of power and poise, terrific starting pitching and a relaxed, confident clubhouse that is a near-perfect blend of talented young players and savvy veterans.

"We're having a ball," first baseman Jason Giambi said. "It's like we won the lottery."

Payroll? It's around $20 million -- one of the five lowest in the majors, or about 25 percent of what the Orioles, Yankees and Dodgers are spending.

But the A's show the world every day that some things are more important than money, at least for one magical season when a general manager makes every right move, the manager (Art Howe) has the perfect touch and everything that can go right does go right.

The A's are 80-65 after tonight's 13-6 loss to the Baltimore Orioles that dropped them three games behind Boston in the race for the American League wild-card slot. Since the all-star break, they have accumulated the second-best record in the American League at 37-21 and before tonight were 16 games over .500 for the first time in seven years.

"It's a David-and-Goliath story," Giambi said.

General managers will be spending this winter analyzing how Oakland's Billy Beane constructed one of baseball's best teams from one of its smallest payrolls. They'll see that he did it with perhaps baseball's best minor league system, one that has produced a steady stream of talent, including 1998 AL rookie of the year Ben Grieve and a pair of budding stars, shortstop Miguel Tejada and pitcher Tim Hudson.

They'll see that he signed his two best players -- Giambi and Matt Stairs -- to long-term contracts and then allowed them a hand in the decision-making process. They'll see that he surrounded Giambi, Stairs and the younger players with low-priced veterans such as Tony Phillips and Tim Raines (both are out for the rest of the season).

They'll also see that he got lucky. Designated hitter John Jaha believed his career might be over last winter after being released by the Brewers and rejected by the Red Sox. He went to spring training with the A's because, well, they extended his one and only offer -- a one-year, $400,000 deal. The A's allowed him the time to recover from foot surgery and then stuck him in the lineup when he was ready to play. He paid them back by making the all-star team, and has 32 home runs and 100 RBI.

Finally, they'll see that Beane was as gutsy as he was smart. What other general manager would trade both his No. 1 starter (Kenny Rogers) and No. 1 reliever (Billy Taylor) a few days before the all-star break? Beane was roundly criticized at the time because it seemed he was simply dumping salaries with the A's still in contention.

At the time, he told Giambi and Stairs to be patient because he planned other moves. In the next 72 hours, he overhauled the A's again by trading for starting pitchers Kevin Appier and Omar Olivares, relievers Jason Isringhausen and Greg McMichael, second baseman Randy Velarde and outfielder Rich Becker.

"When we made those trades, we became another ballclub," Giambi said. "It's unbelievable. We put a good team on the field now."

At a time when almost every team is desperate for pitching, the A's have plenty to carry them through a pennant race. Appier and Olivares are a combined 12-4 since arriving in Oakland. Two years after leaving the University of Alabama, Hudson is 10-1 with victories over both Pedro Martinez and Randy Johnson since being called up in June.

"I've never seen a young kid with his mound presence," Giambi said. "He never gets rattled, and he's got unbelievable stuff. Guys on the other team say things like, `Oh my God, he's tough.' He has command of every pitch, and he throws strikes. He's the real deal."

So at a time when the Red Sox are struggling to find five starting pitchers, at a time when the Yankees can't score runs and with the Texas bullpen looking fragile, the A's are positioned to make a run at the playoffs.

"It's as much fun as I've ever had," Jaha said. "I went from not knowing if I'd have a job to a pennant race. We have talent, but we have guys who play the game right."

The A's know this may be a short dance. Despite their success, they have drawn the third-fewest fans in the AL and remain a poster child for small-market problems. They're playing in one of baseball's worst stadiums and facing their third ownership change in a decade.

Financial problems have forced them to say goodbye to Mark McGwire, Jose Canseco, Terry Steinbach and a host of others who had formed the nucleus of teams that won three straight pennants.

At a time when he should be celebrating a job well done, Beane is realistic.

"The stars were aligned for us," he said. "You're not going to find a right-handed DH who drives in 100 runs for $400,000 every year. We're not that good at what we do. To be consistently good, you have to keep your young players. We can't afford to do that."

If the atmosphere is unique, Beane might be the reason. Just 10 years removed from his own playing career, he has shown enough confidence in his own judgment to listen to the opinions of others, including Giambi and Stairs, who were consulted before most moves this summer.

"It's unbelievable to be in this situation, to have your general manager call and ask, `What do you think?' " Giambi said. "I think, in fairness, Matt and I signed below-market contracts because we love it here and have such a great time. We went to Billy after last season and told him we wanted Art back. We told him it wasn't a fair evaluation to judge him on last season because our team wasn't what it is now. We asked him to give him this year and see what we could do. When it was time to make a trade, he called us and told us the choice of guys he could get."

Beane said: "Clubhouse chemistry is a very delicate thing. When you add and subtract players during the season, it can have both a positive and a negative impact. I wanted to make sure the guys in the clubhouse were on the same page. It would have been foolish not to use their knowledge."

Still, for at least one season, the A's are competitive and having fun. With Appier, Olivares, Hudson and Gil Heredia, their starting rotation can hold its own against almost any in the league. Tejada seems on his way to becoming the AL's next great shortstop.

Stairs, Jaha and Giambi have combined for 99 home runs and 310 RBI, leading an offense that's next to last in batting average, but third in runs, first in walks and second in home runs. Their 4.57 earned run average entering tonight's game was third best in the league.

And with Giambi joking, "I'm almost always planning my winter vacation," the A's are scoreboard watching.

"We're relaxed and having a good time," Jaha said. "No one expected us to be here. I think that's why we're playing better each day. There's no pressure at all on us."