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Who are the Best Baseball Clubs Dollar-for-Dollar? UPDATED: February 15, 2004 Any baseball fan beyond a one-hundred mile radius of New York City will tell you that payroll is the number one factor in winning baseball games. Yankee fans will of course dispute this fact, usually by arguing that "a high payroll does not guarantee success." That much is true as the Baltimore Orioles and Los Angeles Dodgers have proven time and time again. However, having a big payroll puts a team at an enormous advantage over the competition. At the same time, a small payroll gives a team very little chance to compete for a World Championship or to maintain success over a long period of time. Many small market teams have been able to develop great young talent but once these players reach arbitration, and thus the big-money contract, the club will have no choice but to trade them, usually for fifty cents on the dollar to a big-market team like the Yankees. In addition, the small to middle market teams are not able to stock up on expensive veteran talent at midseason as the rich clubs have done in recent years. To be perfectly honest, not all of the recent Yankee success has been completely payroll driven. Many of the key players on the 1998 Yankee club that won the World Series and dominated baseball were young players developed in the Yankee farm system (Jeter, Rivera, Posada, Williams). At that time, New York was second in the league in Opening Day payroll behind the Orioles, only 57% above the league average and very close to that of Atlanta and Cleveland (and 23% higher than the Red Sox). I hate to say it, but the Yankees earned the rings in 1998. In 1999, however, the Yankees began buying championships. Their offseason spending skyrocketed and their 1999 midseason shopping spree was legendary. I'm certainly not trying to claim that the Yankees do not deserve any credit for their post-1998 success. The data presented below shows that the Yankees have been a better than average club even after adjusting for team payroll, but clubs like Oakland, Seattle, Houston and Atlanta would be winning the championships if there was anything close to payroll equity among Major League Baseball teams. For example, if the Mariners had the Yankee budget, they may very well have been able to keep Randy Johnson, Ken Griffey Jr and Alex Rodriguez. With those three players in the fold (or even two in the fold), it would have been very difficult for New York to beat Seattle in 1999 and 2000. The Yankees barely squeezed by the Oakland A's - a team with a payroll one-third of New York's - in the first round of the playoffs in 2000 and 2001. If the Red Sox had an extra $50 million to spend in 2003, Boston would not have lost to New York in the ALCS no matter what foolishness Grady Little provided. In 2003, the Yankee Opening Day payroll was 215% above the league average and 59% higher ($58 million) than the average of teams ranked 2-10 in league payroll. That leads me to the point of this discussion: what is the value of a dollar (or should I say, a million dollars) in Major League Baseball? My objective in the following analysis was to rate each team's success as it relates to their payroll. The first step was to calculate each team's expected number of wins based on their total Opening Day payroll using a simple linear regression model. For example, a team with a $50 million payroll should, on average, win 76 games, a team with a payroll of $80 million should, on average, win 83 games, and so forth. I used data from 1995 to 2003, converting 1995-2002 payrolls into 2003 dollars (using the average 2003 team payroll) and adjusting the number of wins for teams that played fewer than 162 games. I then compared each team's actual win total to their expected wins by season. For example, the 2003 Cubs had a payroll of $80 million which meant that their expected wins based on that payroll was 83. The Cubs won 88 games last year so their total +/- score for 2003 was +5 (88-83). I then calculated each team's average +/- score for the period between 1995 and 2003 (and also 1999 to 2003) and ranked the teams 1-30 (see tables below). Keep in mind that I only had access to Opening Day payrolls so midseason acquisitions are not factored in. This means that scores of large-market teams will be overstated. For instance, the Yankees average +/- score will look much better than it should and the Cincinnati Reds (aka The Big Market Midseason Relief Fund) score will look worse than it should. My original theory was that the Seattle Mariners and Oakland A's would rank as the best organizations in baseball dollar-for-dollar. Oakland did in fact rank #1 between 1999 and 2003 with an average +/- score of +21 (Moneyball indeed). The Mariners ranked third in both the 1995-2003 and 1999-2003 time frames. San Francisco ranked second over the past five years and Atlanta edged out Oakland in the 1995-2003 time frame. Notorious underachievers Baltimore and Texas joined the pathetic Devil Rays and Tigers in the bottom four. The best single season performances when adjusted for payroll were the 2001 Mariners (+33), the 1995 Indians (+30) and the 2001 A's (+29). The biggest flops were the 2003 Tigers (-33), the 1995 Blue Jays (-27) and the 2003 Mets (-25). Here are the complete rankings:
* Because of the 1994 strike, teams played only 144 games in 1995 |
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