Every year we attempt to measure how well MLB teams did in spending money to procure wins. Here’s this year’s ranking, and, to no one’s surprise, Oakland excels.
With the 2013 season completed, it’s time to look at how well MLB team did in translating payroll to wins. Despite what many fans think, there’s not necessarily a correlation between payroll and winning: as any New York Yankees fan knows, spending money doesn’t guarantee a playoff berth. The more important measure is how efficiently a team managed their resources: coaxing the most wins for the least amount of money.
A very crude measure of this is cost per win, as presented here with payroll information from USA Today (playoff teams in bold):
|Tampa Bay Rays||$57,895,272||92||$629,296|
|San Diego Padres||$67,143,600||76||$883,468|
|Kansas City Royals||$81,491,725||86||$947,578|
|New York Mets||$73,396,649||74||$991,847|
|St. Louis Cardinals||$115,222,086||97||$1,187,857|
|Boston Red Sox||$150,655,500||97||$1,553,149|
|Toronto Blue Jays||$117,527,800||74||$1,588,214|
|Los Angeles Angels||$127,896,250||78||$1,639,696|
|San Francisco Giants||$140,264,334||76||$1,845,583|
|Chicago White Sox||$119,073,277||63||$1,890,052|
|Los Angeles Dodgers||$216,597,577||92||$2,354,321|
|New York Yankees||$228,835,490||85||$2,692,182|
Not a bad measure: put together a young team with a low payroll, add a savvy older manager to the mix, and you’ve got a pretty good shot at making the playoffs. Conversely, if you’re a major-market team, you have a pretty good shot at spending enough to be competitive. With the Yankees and the Phillies, spending on payroll is a given; the cost-per-win numbers probably aren’t causing any loss of sleep for executives from those teams. if you’re Jerry Reinsdorf, you should be questioning what you get for your money.
But there’s a better way to evaluate how well MLB spent their money. The late Doug Pappas put together a formula to measure Marginal Dollars per Marginal Win. The assumption is that a terrible team in baseball, made up entirely of minimum-wage players, would still manage to win a third of their games, so the true measure of success is how efficiently a team spent to procure wins past that minimum. In short, a successful team would spend the fewest marginal dollars to procure the most marginal wins; conversely, an unsuccessful team would overspend to procure a relatively few number of wins. They wasted their money.
Here are the numbers for the 2013 season. The formulas are not too complex, but they bear some explanation.
We begin with payroll numbers from the USA Today database, considered to be the most reliable out there. We then list the team’s winning percentage. MWs refers to Marginal Wins: the assumption is that a terrible team made up of minimum-wage players would win a third of their games, and the Houston Astros came dangerously close to this baseline. The formula, as set forth by Pappas: ((Pct – .300) x 162). We’re calculating 25 players on an active roster plus three on injured reserve, with an MLB minimum salary of $490,000. MP refers to Marginal Payroll; the amount a team spends beyond the MLB minimum of $490,000 per player on a 25-man roster with three on injured reserve (in other words, the total payroll minus $13,720,000 — the cost of a team totally comprised of minimum-payroll players.) CPMW refers to cost per marginal win: marginal payroll divided by marginal wins. In this ranking, the poorest-performing teams are at the bottom; the better-performing teams are at the top.
|Tampa Bay Rays||$57,895,272||0.564||42.77||$44,175,272||$1,032,905|
|Kansas City Royals||$81,491,725||0.531||37.42||$67,771,725||$1,811,013|
|San Diego Padres||$67,143,600||0.469||27.38||$53,423,600||$1,951,333|
|St. Louis Cardinals||$115,222,086||0.599||48.44||$101,502,086||$2,095,505|
|New York Mets||$73,396,649||0.457||25.43||$59,676,649||$2,346,334|
|Boston Red Sox||$150,655,500||0.599||48.44||$136,935,500||$2,827,026|
|Los Angeles Angels||$127,896,250||0.481||29.32||$114,176,250||$3,893,877|
|Toronto Blue Jays||$117,527,800||0.457||25.43||$103,807,800||$4,081,458|
|San Francisco Giants||$140,264,334||0.469||27.38||$126,544,334||$4,622,118|
|Los Angeles Dodgers||$216,597,577||0.568||43.42||$202,877,577||$4,672,876|
|New York Yankees||$228,835,490||0.525||36.45||$215,115,490||$5,901,660|
|Chicago White Sox||$119,073,277||0.389||14.42||$105,353,277||$7,307,066|
The lesson: spending on payroll certainly doesn’t equal success. The top five teams on the list made the playoffs; committing to youth and keeping payrolls down made the teams financial successes when it came to performance on the field.
In this case, the clear leader is the Oakland Athletics, as GM Billy Beane managed once again to put together a winner with limited resources. Also a clear winner: the Pittsburgh Pirates, who built through the draft throughout the years and made the playoffs with a young team augmented with veterans like Justin Morneau and Marlon Byrd.
At the bottom of the list, the 10 teams spending the most per marginal win had to be disappointed with their seasons, save the Dodgers. The Yankees really are impervious to analyses like these; the team’s payroll is what it is and the team’s revenue structure makes spending on marginal wins a meaningless number. The same goes for Philadelphia.
But for the White Sox, Cubs and Giants, these numbers are deadly. All three teams had disappointing seasons at the box office, and all three team are in markets where there’s lots of competition, so efficient spending on winning is all.
Obviously there are limits to this kind of analysis. Payroll is a crude measure; just as important, we’d argue, is revenue, but MLB teams zealously guard revenue data, so we can’t throw it into the equation. In general, a large-market team will generate more revenue than a small-market team — duh! — but there are many shades between a New York Yankees and a Kansas City Royals when it comes to revenues, and there’s some fluidity in where a team ranks in revenue production among its peers. Of course, that’s a whole other can of worms.
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