Baseball Spending

[Guest]

How about those Alex Rodriguez Rangers? Waaaaay at the bottom sometimes.

[whitedawg22]

As I mentioned in the Matsuzaka thread, there is very little correlation between wins and spending within any given year. In other words, spending money does not guarantee that your team will be good, just as having a low payroll does not guarantee that it will be bad. This is how we arrive at cases like the 2003 Marlins winning the World Series.

However, over time, payroll has an extremely high correlation to winning. This is a great look at that correlation from 1992-2005, which is about .70 (a very strong correlation, for non-statheads). Qualitatively, that means that in general, although low payroll teams can have individually good seasons, it is very difficult to build sustained excellence with a low payroll. Conversely, if your team has a high payroll, it won't be in the playoffs every season, but it will be right in the thick of things most seasons.

This is an enormous competitive advantage to high-revenue clubs. As Michael Lewis explained in Moneyball, the playoffs are more or less a crapshoot, since the series are so short relative to the regular season and even the best teams lose 30% of the time. Baseball is the only sport in which the high revenue teams spend 10-15 times what the low revenue teams spend, and it doesn't help the popularity of the sport to know that the Yankees/Red Sox of the world can buy their way into contention while the Royals/Pirates of the world get their one breakout season per decade, if that.

[Guest]

I missed the part where the popularity of the sport needs help. Anyone can win in baseball if they spend the money wisely. The Royals aren't out of contention because they're poor, they're out of contention because they don't have the planning and ingenuity to make it work. The Orioles and Cubs don't have planning and ingenuity, so they fail.

[Epiphanic]

You're partly right, Whitedawg. If you give a team more money chances are they will have a better chance of making the post-season. Although I think the evidence of small/mid-market teams (i.e. A's and Twins) that are consistently in the playoff hunt outweighs any correlation. It comes down to getting the most bang for your buck. I'll concede that the Yankees need less bang, but it's no guarantee.