The MLB Payroll Question: Can a Team Simply Buy Wins?

By: Oscar Rzodkiewicz, @ORzodkiewicz on Twitter

By the numbers, a small market team can still win plenty of games in the MLB, but the success is definitively limited.

Major League Baseball remains as the only professional sports organization in America that does not enforce a salary cap for teams, allowing bigger market squads to spend more money on talent than others. Ever since the introduction of this practice in the NFL, NBA, and NHL, fans in smaller cities hold gripes with the idea that puts their baseball teams at a serious disadvantage against places like New York, Chicago, and Los Angeles.

The policy puts a damper on the World Series hopes of the less-profitable franchises, but the relation between payroll and wins is less linear than expected. In fact, many teams have broken the narrative created by their perceived ceiling and proven that a few extra bucks do not create wins in the modern era and low-budget teams can still defy the odds. At the same time, many of the teams in upper echelon of spending continue to flaunt their ability to sign big names and ignore the farm system en route to their pennants.

How much does a win cost?

Baseball is a game of numbers, and that does not stop when it comes to the cost of players. With each team having such drastically different payrolls, a closer look into the success of each market is almost necessary to understand how far a dollar can go in the MLB.

Looking at each team’s cost per win cannot be considered the culminating statistic for a team’s ability to manage money effectively, but it provides a deeper dive into individual organization’s abilities to field a team with the resources they have.

Brewers 2017 Opening Day
Courtesy of Dylan Buell/Getty Images

The average cost per win for the 2017 season was around $1.69M league-wide, but some teams were able to finish well-below that figure and still have positive seasons. For example, the Milwaukee Brewers amassed 86 wins last season despite having a measly payroll of a shade under $61M, bringing their cost per win to around $707K. On the flip side, some teams failed miserably with their money, like the Detroit Tigers, who spent an average of $3.12M for each of their AL Central-worst 64 wins.

However, not every team saw the same results with similar spending. The San Diego Padres spent only $865K per win but finished well below .500 at 71-91, while the Los Angeles Dodgers spent more than double that at $2.17M in payroll per win but had an MLB-best 104 wins in 2017.

Even some teams in similar spending categories varied with similar figures. Two of 2017’s three 100-win teams, the Indians and the Astros, ranked 18th and 19th respectively in payroll and both spent around $1.2M per win, while the Pittsburgh Pirates used the same amount of cash per victory and finished with only 75 wins.

Many teams, though, saw less of a relationship between a change in spending from the 2016 season to 2017 and their win column.

The league-average change in payroll came to an increase of about $6.1M from the 2016 season to a year later, and after factoring in that adjustment, many teams did not see the results that would perpetuate the idea that spending more wins more games and vice versa.

Out of all 30 MLB teams, nine spent more on player contracts in 2017 than the year prior after the statistical adjustment and finished with fewer wins while nine other teams actually spent less and won more games.

Of the nine that spent more for less success, seven of them still ended up in the top-half of the payroll rankings, but only one, the Chicago Cubs, managed to make it to the postseason. In fact, the Cubs spent only $500K adjusted more from 2016 to 2017, the second-smallest change in payroll below the Toronto Blue Jays.

Alternatively, six of the nine teams that finished with a better record by spending less cash on players ended up in the bottom-half of MLB payroll, yet two of those six, the Minnesota Twins and the Arizona Diamondbacks, made the playoffs this past season.

Jose Altuve
Courtesy of Ronald Martinez/Getty Images

A win cannot so much be defined by how much a team spends for each, but what the team spends that win on. For example, the 2017 MLB WAR leader, Jose Altuve, made just under $4.7M in 2017 to add 8.32 wins to the World Series-winning Astros, essentially paying just $565K for each victory’s worth of work. That may seem like a lot, but compared to somebody like Yoenis Cespedes, who finished with a respectable 2.1 WAR, was being paid upwards of $13.8M for each win he provided to the New York Mets this past year.

The money discrepancy between teams is real

Yes, teams are spending drastically different figures to field teams; that comes as no surprise. The highest-spending team in baseball to open the 2017 season, the Dodgers, spent over $164M more on players than the lowest-paying team, the Brewers.

That gap is huge, and on the surface, it proves to be a much larger leap for smaller markets to win on a wide scale.

Half of the MLB has competed in the postseason in the past two seasons, and out of those 15 teams that have lasted to see October, most ranked high in total payroll.

Four of the five teams that made the playoffs in both 2016 and 2017, the Dodgers, Cubs, Boston Red Sox, and Washington Nationals, ranked in the top 10 in Opening Day payroll. In fact, the only team that ranked in the lowest-five payrolls in baseball but still managed a postseason was the 2016 Cleveland Indians, who began the season with the 27th ranked payroll and ended up in the World Series later that year.

That being said, even the Indians went the expensive route during the offseason, increasing their payroll by 44.3% between 2016 and 2017, the second-highest in the MLB.

Postseason appearances are not the only signs of the lack of equity in MLB cash flow.

Since 1998, only three teams have simultaneously ranked in the bottom half of Opening Day payroll rankings and won the World Series. The 2003 Florida Marlins,  2015 Kansas City Royals, and 2017 Astros began the year ranked 25th, 16th, and 18th respectively, while every other winner in that span was 15th or higher, including seven squads in the top five and three with the number one spot.

MLB World Series Winners by Payroll Rankings

On an even simpler scale, regular season win totals are more easily predicted by where a team begins the year in terms of payroll.

The 15 highest-paying teams in 2017 won just 1.2 more games on average than the 15 lowest-paying teams, but that number expands to 7.2 when comparing the top 10 money blowers to the 10 biggest penny savers.

The figures for 2016 showed an even greater difference, with the upper half of MLB spenders finishing with an average of 14.5 more wins than their lower half counterparts.

Spending more is not sinful

Clearly, dipping more into a team’s salaried performers typically brings more success, as it should. That follows suit with any professional sport.

The Golden State Warriors and the Cleveland Cavaliers of the NBA, the two teams that have faced off three consecutive years in the NBA Finals, have the two highest team salaries in basketball. Eight of the NFL’s 12 playoff teams in 2017 fell in the upper half of the league in total salary this year. The problem is an MLB team’s ability to move on that ladder.

The difference between the Warriors’ highest 2017 NBA payroll and the Chicago Bulls’ league-low is about $53M. If the Padres, who ranked 29th in payroll to open 2017, were gifted $53M in funds to sign more players, that would move them up only eight spots to sit behind the Seattle Mariners at 21 and still about only halfway to the Dodgers in first. In fact, that $53M range captures only the top seven teams in terms of player spending in the MLB, so while the Warriors could buy a little less than 1.5 of the Bulls’ entire team with their money, the Dodgers can buy nearly four of the Padres’.

The other issue is which teams are able to spend that money. Some owners are known for being frugal, like the Pirates’ Bob Nutting, but most markets simply cannot sustain the kind of spending the upper tier of teams can. The New York Yankees and the San Francisco Giants ranked 3rd and 4th respectively in 2017 payroll, while their football counterparts in the New York Jets and the San Francisco 49ers ranked as the lowest spenders in the NFL in the same time frame. It’s nearly impossible for the Minnesota Twins to spend more money than Boston Red Sox because of the difference in their markets, but it’s very easy for the Minnesota Timberwolves to pony up more dough to players than the Boston Celtics, as they did in 2017, because of cap restrictions and team revenue sharing.

Shaming teams for spending cash to win would be misguided, and it makes sense for profitable cities in the MLB taking advantage of the money at their disposal. The issue is the systematic flaw that automatically disqualifies certain teams from participating in the spending sprees.

A change in Major League Baseball’s salary cap-less system should not be expected, and until it is, the big markets of the association will likely continue to be the most successful. The correlation between spending and winning in the MLB is relatively sound, but the outliers certainly give the small teams hope. That does not mean that your local baseball squad cannot find success: just don’t buy your World Series tickets quite yet.

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