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Tuesday, October 02, 2007
The 2007 MLB Team Payroll Report Card

At the end of each regular baseball season, I compare the payrolls of all the teams to see what kind of impact payroll disparity had on overall team performance for the year. [See my 2005 annual report card and 2006 annual report card.] This year's report card, once again, reveals that high payroll simply does not equal success. For purposes of this report, I measure success by which teams make the playoffs because I truly believe that each playoff team has an equal chance of winning the World Series. Once you get to the playoffs, it becomes a matter of timing, luck, molecular attraction and star alignment (in support of this proposition I cite to Annie Savoy from Bull Durham).

Here are this year's results (using the USA Today salary database and rounded to the nearest million):

1. Most Valuable General Manager. The MVGM award this year goes to Mark Shapiro of the Cleveland Indians. With the eighth lowest payroll in all of baseball ($62M), Cleveland breezed through the AL Central by an 8-game margin and tied Boston for the best record in all of baseball. By the way, Shapiro also received the MVGM award in '05 with a $42M payroll and 93-69 record.

2. Underpaid. The teams with the lowest payrolls in all of baseball -- Tampa ($24M), Florida ($31M) and Pittsburgh ($39M) -- all finished lowest in their respective divisions. By the way, Tampa and Pittsburgh made this category on my '05 report card.

3. Overpaid. A lot of clubs made this category this year.
The White Sox, with the fifth highest payroll ($109M), finished 24 games behind Cleveland in the AL Central. As they spend more each year, they do worse. In '05 they won it all with a $75M payroll. Last year they spent $102M and didn't even make the playoffs.
The Dodgers, with the sixth highest payroll ($108M), finished eight games behind Arizona in the NL West and then watched Colorado and San Diego battle it out last night for the remaining playoff spot in their division. The important piece of data here is that the Dodgers spent twice as much as all three of them! Arizona spent $52M, Colorado $54M and San Diego $58M. Last year, the Dodgers spent $10M less than this year and made the playoffs.
San Francisco, with its $90M payroll and finishing 19 games behind Arizona, made the overpaid category and watched the game last night too.
Baltimore spent $94M and finished 27 games out.
Seattle broke the $100M mark ($106M) and didn't make the playoffs.
St. Louis ($90M) and Houston ($88M) had really mediocre seasons finishing third and fourth, respectively, in the NL Central.
The Mets ($115M) had the third highest payroll in all of baseball and didn't even make the playoffs. Last year, the Mets spent $15M less than this year and made the playoffs.
Finally, I'm going to put Detroit in this category. They spent $13M more than last year, but made the playoffs last year and were not even in the race this year finishing eight games behind Cleveland.
By the way, the Dodgers, San Fran, Baltimore, Seattle and the Mets made the overpaid category on the '05 report card.

4. Made Good Use of Their Money. This category represents those teams that did not make the playoffs but came real close, without breaking the bank. San Diego ($58M) made this category, and so did Milwaukee which finished just 2 games behind the Cubs in the NL Central with a $71M payroll.

5. Spent What Was Necessary. This category represents those teams that made the playoffs without breaking the bank. This year, half of the teams making the playoffs fall into this category: Arizona ($52M), Colorado ($54M), Cleveland ($62M) and Philadelphia ($89M)

6. Spent More Than Was Necessary. The Yankees ($190M) and Boston pretty much own this category. Boston, with its $143M payroll, spent $23M more than last year to increase its chances of making the playoffs this year. Keep in mind that these numbers don't reflect the additional money paid in luxury tax.

I walk away with the same conclusion each year. The $50-$70 million range seems to make the most business sense. Looking at the salary data on an aggregate basis, only four of the eight teams in the playoffs are in the top 1/3 in payroll (more than $90M). And three of the eight teams actually fall in the bottom 1/3 in payroll (less than $70M).



Thanks for the comments. I'll be the first to say that sports is big business and, as in any business, there are all sorts of factors that come into play in decisions that are made in operating the business. But when I say, "the 50-70 million range seems to make the most business sense," I'm just merely countering the notion that high payroll equals success on the field.

Blogger Rick Karcher -- 10/02/2007 11:10 AM  

In that context, much agreed. And, it's been an especially painful week for me to acknowledge as much, being a die-hard Mets fan.

Blogger Marc Edelman -- 10/02/2007 11:53 AM  


While I would agree with you that the Yankees definitely increased there equity regardless of whether Roger Clemens brought them wins or not, this hasnt always been the factor in bringing fans to the ballpark. Wins will bring people to the ballpark, which would bring mroe money to the ballpark. So if a Mark Shapiro can get more wins with less money spent on his players, it is essentiatlly saying he is bringing in more money at the gate, than spending on his players, because the fans will come for the wins. I hope I explained that.

See ya soon,


Anonymous Anonymous -- 10/02/2007 1:32 PM  

The economics of baseball have grown so much since the 80's and early 90's and have become more complicated every year. Baseball players are now making millions of dollars to do something that most of us would jump at the opportunity. It’s not their fault the money they can receive has reached the million mark, even for some of the less talented of players. This has happened to all sports, but especially to the America's pastime, baseball. Baseball is more of a business than just a game and many things have made it this way. A lot of reasons have contributed to the rising salaries there is today and it will not stop there. The amount on baseball contracts will keep rising each year.

Blogger Norb -- 10/02/2007 11:33 PM  

I agree that fans want wins and I agree that teams who are winning will be able to profit more from fan attendance, etc... However, as a person who doesn't particularly like baseball, I only watch baseball games when big name players are playing. In other words, I always watch the Yankees because they always have big name players on their team. I buy Yankee shirts, hats, etc... simply because they have big name players on their team. I know that my minor contributions are nothing compared to the hardcore fans who go to every game and spend lots of money, but I just wanted to point out that the Yankees are the only team that some of us watch or support because they always spend lots of money on big name players. Otherwise, I agree with with what this post is saying.

Anonymous Jordan Ash -- 10/04/2007 11:43 AM  

Yanks might have started the year with a $190 million payroll, but the signing of Clemens brings it above $210.

Anonymous Anonymous -- 10/09/2007 3:46 PM  


Great point about the Yankees' payroll this year. And they just got knocked out of the first round by a team with half the payroll....

Blogger Rick Karcher -- 10/10/2007 1:04 PM  

"They spent $13M more than last year, but made the playoffs last year and were not even in the race this year finishing eight games behind Cleveland"

Hmm..IMO, the Tigers WERE in the CD/WC race nearly the entire season, until the latter half of September.

Anonymous Anonymous -- 10/12/2007 1:44 AM  

the only reaon the yankees lost in cleveland because the indians had a bug problem so they migh want to fix that

Blogger ben -- 10/12/2007 9:46 AM  

The claim that "each playoff team has an equal chance of winning the World Series. Once you get to the playoffs, it becomes a matter of timing, luck, molecular attraction and star alignment ... " is commonly made by apologists for the current unfair system of allowing George Steinbrenner to buy a playoff berth for his team every year, much like I buy a bag of onions every few weeks at the supermarket. If that's true, how come the low-payroll teams never advance? Oakland has gotten into the playoffs repeatedly but has never gotten past the big-spending Yankees and Red Sox. Cleveland eliminated the Yankees but could not get past the Red Sox. The current system is unfair, and bland assertions that any playoff team can win don't seem to match up with what really happens.

Blogger Cleveland Okie (Tom Jackson) -- 10/22/2007 1:53 PM  

Also i'd like to mention that the Boston Red Sox won their 2nd World series in four years and have the second highest payroll in baseball. They dont spend to much if they can accomplish that. Please note that the Yankees didn't even make it past the ALDS this year and they spend the most out of anybody.

Anonymous Anonymous -- 10/30/2007 10:09 PM  

No the Yankees just suck, that's why they lost to Cleveland. Also b/c Cleveland is the better team.

Anonymous Anonymous -- 10/30/2007 10:11 PM  

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