Friday, October 4, 2013

Money Can’t Buy Happiness; It Can’t Even Buy MLB Championships

If you look at payroll numbers and compare them to what teams made the playoffs, you’ll find very little congruence between winning and size of payroll – at least this year.  The Yankees of course have the mother of all payrolls – at almost $229 million, three and a half times that of the Pirates – and ended up with a mediocre .525 winning percentage and no playoff berth.

Sure, Boston, the LA Dodgers and Detroit, all with hefty payrolls, made the playoffs.  But so did Cleveland, Oakland, Pittsburgh and Tampa Bay, who respectively rank 21, 26, 27 and 28 in payroll among the 30 MLB teams.  (There’s Billy Beane again.) The remaining teams in the playoffs, St. Louis, Cincinnati and Atlanta, are all in the middle third of the payroll rankings, respectively ranking 11, 13 and 18.  Five playoff teams are in the top half of the payroll rankings; five are in the bottom half.

Among the top 10 largest payrolls in major league baseball, Philadelphia, the LA Angels, the Chicago White Sox and Toronto all had losing records, and the poor White Sox had a winning percentage of only .389, close to the worst in baseball.

It’s not so much that spending less increases your chances of having a winning team, it’s that the amount you spend seems to have no bearing at all on how well you do.  There must be some other factor.

People who know more about baseball than I may be able to explain to me why teams win, but it’s at least clear that payroll is not a particularly good indicator.  

Meanwhile, the Buccos are 1 and 1 with St. Louis and headed for home for the next two games (where they usually do much better).  The chance is still there for the Pirates to show in spectacular fashion how money doesn’t matter.

2013 MLB Payrolls*

New York Yankees $228,995,945
Los Angeles Dodgers $216,302,909
Philadelphia $159,578,214
Boston $158,967,286
Detroit $149,046,844
San Francisco $142,180,333
Los Angeles Angels $142,165,250
Texas $127,197,575
Chicago White Sox $124,065,277
Toronto $118,244,039
St. Louis $116,702,085
Washington $112,431,770
Cincinnati $110,565,728
Chicago Cubs $104,150,726
Baltimore $91,793,333
Milwaukee $91,003,366
Arizona $90,158,500
Atlanta $89,288,193
New York Mets $88,877,033
Seattle $84,295,952
Cleveland $82,517,300
Kansas City $80,491,725
Minnesota $75,562,500
Colorado $75,449,071
San Diego $71,689,900
Oakland $68,577,000
Pittsburgh $66,289,524
Tampa Bay $57,030,272
Miami $39,621,900
Houston $24,328,538



James R said...

I'd like to offer a dialectic: Money can buy happiness, but only up to about $60,000 a year. But more on topic: Money can buy championships. However, as you might expect, there are other factors involved.

First of all, I want to point out I have done absolutely no evidential research. This is purely philosophical reasoning, or, as others would say, total bullshit. But I suspect there is no better correlation down through the years than comparing money allocated to the team and team outcome. (OK, there is some evidence: the Yankees are the winningest team in any major sport.)

Consider money not as something profane, but as medium of exchange. Money is how we value concern or effort or what we feel is important. Some cities may value music or fair housing or bridges, and allocate money there; some value baseball more highly and wish to allocate their resources there. And some cities have more resources.

Of course this implies the wise use of money. Money could be spent on gathering great cricket players or dancers or in designing distinctive uniforms in the belief that these win baseball championships, but that would be wasting money. (Again, I have no evidence, this is just reasoning.)

I'm assuming that if teams are unwise in their spending, this will be revealed, and they will spend some of it on educating themselves on what they should be spending it on. (There's Billy Beane again.)

There is the possibility that baseball's economic market is so inefficient that even placing a huge value on a championship still will not bring it about. With the limitations of draft contracts and revenue sharing, there definitely is some inefficiency, but I think in the long run, those who value baseball most highly and vote with their wallets will win championships.

I hope money matters. I hope we have efficient markets that recognize all costs and values and that allocating our resources wisely matters. And yet I realized the game may still be a matter of a lucky gnat's eyelash.

Big Myk said...

Sigh. I suppose that you are correct. I have hardly done an analysis of all teams in all sports in all times thoughout the world. I was really just talking about this year.

I read one article that said that the winning teams this year did it one of two ways: either they spend a lot for their talent, or they've built a roster from several years of high draft picks who are just now coming into their own. The Pirates fall into the latter category. But then the article says, Billy Beane did it his own way. Oakland A's: 2013 Team Again Proves That Billy Beane Is the Best GM in Baseball.

But, if in fact money buys championships, this year's baseball season is an outlier. Which goes to show that nothing is certain in this crazy world and that the Mysterium Tremendum can still play its hand.