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Monday, October 20, 2008
 
2008 MLB Salary Report Card

Since 2005, I have been posting my Annual MLB Salary Report Card, which tends to prove each year a relatively weak correlation between a team's success and its total payroll. [Here are my past reports for 2005, 2006 and 2007.] This year's report leads to the same conclusion (based upon the USA Today salary database and rounded to the nearest million).

I've always thought that there is some threshold level of payroll by which a team is pretty much guaranteed to at least make the playoffs, but I was even proven wrong about that this year. The three teams with the highest payrolls in all of baseball -- Yankees ($209M), Mets ($138M) and Tigers ($138M) -- didn't even make the playoffs this year. [Note that these amounts do not reflect any luxury tax payments.] Last year, the Yankees spent about $20M less than they did this year but made the playoffs. Indeed, the Tigers keep spending more each year and keep doing worse. In 2006 they made the playoffs with an $83M payroll; in 2007 they failed to make the playoffs with a $95M payroll; and this year they finished last in the AL Central with a $138M payroll.

The team with the 4th highest payroll -- the Red Sox at $133M -- just got knocked out of the playoffs by the Devil Rays who advance to the World Series with the 2nd lowest payroll of $44M. And the Phillies advance to the World Series this year and are spending less than $100M with the 12th highest payroll. The Marlins had a very respectable year with the lowest payroll of $22M, finishing third in the NL East with an 84-77 record. But the Mariners really overpaid again this year -- they lost 101 games with a $118M payroll. And then of course there are the Twins who (once again) had a successful year with their low $57M payroll, finishing just one game behind the White Sox who spent more than twice as much ($121M) this year.

It's a shame to see the Indians spend more money this year than usual. Last year, with the 8th 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. And in 2005 they had a 93-69 record with only a $42M payroll. This year they spend $80M and have a mediocre .500 season. Perhaps they'll go back to doing what works and lower their payroll next year.





15 Comments:

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Anonymous anwalt fuer Arbeitsrecht -- 10/20/2008 6:48 AM  


Rick,

I always enjoy these "does spending equal success" posts of yours. My feeling has always been that hard work, solid team camaraderie, and a good GM will yield better results than throwing money at players with ego's that are bigger than the team itself. This year, the Rays (yes, we officially dropped the Devil part of the name.. hint hint) played a great regular season, and a great post-season so far, by working as a team.

The only ego problem I saw during the regular season was B.J. Upton, but he was talked to by both managers and players, and now he is on course to break Bonds post season HR record (thank god!).

Blogger Jimmy H -- 10/20/2008 9:22 AM  


Teams with lower payrolls can be successful but I believe they have much smaller success windows before they drift back to mediocrity. This Rays team is good thanks to many young stars that are unable to demand hefty salaries. But in a few years, just maintaining the same foundation guys will dramatically increase the payroll. So unlike the Yankees who can keep Jeter for as long as they desire, the Rays will likely not be able to keep Upton, Longoria, Kazmir, Garza, Shields and Price together for long. Those 6 players alone will soon be earning $10-$15 million annually.

Anonymous Anonymous -- 10/20/2008 12:39 PM  


Anon,

To some extent that's probably true with teams that have really low payrolls ($20 to $40M). But Minnesota and Oakland have proven that it can be done on a fairly consistent basis in the $50 to $60 range.

Blogger Rick Karcher -- 10/20/2008 2:16 PM  


Minnesota and Oakland also haven't made it to the World Series because even though they might make the playoffs, they don't have the talent necessary to win consistently in the playoffs. They might get there, but the bigger market teams (usually) have the better talent and can afford to pay them, and thus, they get the World Series and win it.

This year with Tampa Bay being in it is an anomaly. Good article though and thanks for posting it.

Blogger Pbenn001 -- 10/20/2008 3:44 PM  


anon (and pbenn)

I think you have a valid point that teams with a lower payroll have a smaller window to achieve ultimate success (in this case the World Series), but those teams can still be successful on a somewhat consistent basis. Teams like the Rays always have a hard time retaining standout players with a small payroll, and thus they are not contenders every year.

However, with good scouting and managing, players are interchangeable, and the stars that leave for free agency can be replaced by other hard working players. It is important to acknowledge that but for a few teams in every pro league, success is measured by even making it to the postseason, not only by championships.

Blogger Jimmy H -- 10/20/2008 9:37 PM  


That "hard work" and "camaraderie" surely worked for the Rays this year -- way to go BJ Upton! Keep running hard to first base, young man.

Also, the comment about lower-revenue teams not having what it takes to advance in the playoffs is silly. Basic probability tells you that even if a team has a 60% chance of winning a single game over another team (which would be quite a generous assumption in a playoff situation), the odds of the inferior team winning a five-game series (remember, all those heartbreaking Oakland playoff losses were in five-game series) are substantial.

The note at the end of the post about the Indians also strikes me as misplaced. First, their performance wasn't that bad: by their component performance, they should have won 84 games. That still wouldn't have gotten them into the playoffs, but they had the same adjusted record as the Angels.

Second, Cleveland didn't open the pocketbooks this year to bring in overpriced and underperforming free agents. The roster was about as stable from 2007 to 2008 as you'll see in MLB. Rather, the offense disappeared: Victor Martinez got hurt, Travis Hafner unexpectedly fell off a table, and Ryan Garko lost his power stroke. And on the pitching side, while Cliff Lee was wonderful, Fausto Carmona and Rafael Betancourt fell apart.

The Indians are the last team that needs to be chastised about their approach to building their roster.

Blogger Jason Wojciechowski -- 10/20/2008 10:47 PM  


Jason,

I'm not "chastising" the Indians about how to build a roster. I certainly don't profess to know how to build a roster because I'm just a law professor. All I said was that it's a shame to see the Indians spend much more money this year than usual because they ended up doing worse (and as my post indicates, the Indians aren't the only ones). It's a FACT that the Indians had a 93-69 record three years ago and this year had a .500 record but with twice the payroll than in 2005. The point of the post simply being that winning is not about the money. You can opine all you want as to the possible reasons for the Indians' decline in performance this year (i.e. injuries, players "unexpectedly falling off the table" or "losing their power stroke" as you suggested). Maybe they had bad luck and poor molecular attraction and star alignment -- who cares what the reason is!

And on the other hand, we can also speculate as to what turned the Rays around this year from a last place finish one year ago. I haven't watched them at all but I will speculate that they have players who know how to win together as a collective unit and do the little things right -- like playing solid defense, getting guys over from second to third with nobody out (as opposed to trying to pull the ball out of the park and striking out or popping out to the left fielder), and performing in clutch situations. That's what wins ballgames (with or without a high payroll). I will speculate even further that they probably don't even look all that great on paper (i.e. their individual stats) compared to most teams. But I'll leave that one to the statisticians.

Blogger Rick Karcher -- 10/21/2008 6:17 AM  


Jimmy, I'm a Braves fans, so I understand that postseason appearances are what matters, but somehow that just isn't enough these days. The ultimate goal is to win the World Series, not just be content with making the playoffs.

Blogger Pbenn001 -- 10/21/2008 9:45 AM  


"[W]ho cares what the reason is!" Someone who points out the relation of salary and performance ought to care. If the reason for the Indians' success had nothing to do with their low payroll and the reasons for their failures had nothing to do with their high(er) payroll, then this is a data point that talking about the effects of payroll on success is a waste of time. Simply pointing out facts of who did well and with what payroll doesn't get us anywhere -- asking how the teams won with those low payrolls and what went wrong with the high payrolls (as your comment's second paragraph attempts to do) gets us somewhere.

As to those "little things", though. First, it's not clear to me why "playing together as a unit" matters in baseball. 90% of the game is in the individual -- there is a team aspect to defense, but even that part is mostly rote: the middle infielders must get to their cutoff spots correctly, double-plays have to be turned crisply, etc. This isn't basketball or football, though, where the unit acts -- it's a battle between pitcher and hitter, and most defense is more or less individual as well.

Speaking of defense, it's beyond me why this would be a "little thing" -- good defense isn't a matter of sound fundamentals and trying hard any more than any other part of the game is. The best defenders are tremendous athletes who have put in the work and pay attention to detail, just like hitting, just like pitching.

Performing in the clutch will win you ball games, it's true, but it's not a repeatable skill. You can't build a team (i.e. make salary decisions) on clutch hitting.

The entire comment, attributing the Rays' success to "the little things" rather than their stellar pitching ("on paper", they had some of the best pitchers in the league) and world-beating defense ("on paper", Evan Longoria and BJ Upton are two of the best defenders in the league at their positions) combined with an average offense, implies to me that you may not really appreciate the role of MLB's salary structure in the issue of salary v. performance.

Good cheap teams aren't so because of the little things, they're so because they have young talent that hasn't hit free agency yet (and ideally, hasn't even hit arbitration) and thus can be paid at below-market rates. This describes the Rays perfectly -- their three best pitchers (Shields, Kazmir, Garza) are all pre-free agency. Two of their best hitters (Upton, Longoria) are pre-arbitration.

It also describes the early-00's A's, who were most certainly not paragons of "the fundamentals" -- that team had Jason Giambi, Miguel Tejada, Eric Chavez, Tim Hudson, Barry Zito, and Mark Mulder, all pre-free agency, and all star-quality players.

Blogger Jason Wojciechowski -- 10/21/2008 10:03 AM  


Jason,

You're missing my point. As I said, I'm purely speculating about the Rays' success this year. I could be totally wrong. My views about what makes a successful baseball team are based primarily on my experiences and what I learned from one of my favorite instructors in the minor leagues -- Willie Stargell. I'll say it again, the point of the post is not to debate what makes a successful team. The point is simply to show that there is a weak correlation between a team's payroll and success.

Blogger Rick Karcher -- 10/21/2008 10:24 AM  


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