The World Series of Wage Supremacy

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Before the 2009 Major League playoffs officially started, I was listening to ESPN Radio and Bud Selig was being interviewed on the Mike and Mike in the Morning show about the season and the upcoming post-season action.  At one point he was asked about a salary cap as well as an international draft to prevent the inevitable bidding war that takes place between Boston and New York on the top international prospects.  He was all in favor of the international draft which would allow all teams a shot at those players.  He, however, was still opposed to a salary cap and said that it was not necessary to keep the league competitive and pointed out that since 2000, 23 of the 30 MLB teams have made a post-season appearance.  A few weeks later on ESPN Radio I heard Colin Cowherd go on a rant on how a salary cap won’t help MLB and how more money just leads to more problems.  Colin lost me somewhere between comparing team spending to income levels for families and how teams (if a salary cap were put in place) would just spend the money on scouting, coaching, facilities, etc.  I could go on all day on how much I disagree with the sentiments of both Bud and Colin, but that isn’t the point of this article.  I have always been a believer in leveling the playing field in professional sports and think that spending limits are needed to keep “small market” teams competitive.  Hearing the stat about 23 out of 30 from Bud made me think about my stance on the salary cap.  I decided that I needed to do a little more investigation into the numbers behind it to help support, or perhaps debunk, my thoughts on the salary cap and MLB.

For the next part of my research, I definitively put the geek in The Sports Geeks and created a spreadsheet that contains the following for each baseball season since 2000 (since Selig’s comment related to the past decade): team salary and the corresponding percentage it represents, number of regular season wins, number of playoff wins, and the number of playoff series (because a team could get to the playoffs but get swept and then wouldn’t show up in the previous category).  Not being geeky enough, I then took these figures and put them into a statistical software program called SPSS 16.0 which is designed for psychological research statistic calculations, but will serve my purposes just fine here.  Said and done, the results aren’t anything surprising especially to someone who feels that being able to outspend opponents provides a huge advantage over the competition.  I’ll spare you from most of the statistical jargon and provide the results of what I found as well as providing some lists of which teams get the most bang for their buck and the average cost of a playoff win, among others.

To start, money doesn’t buy championships.  I’m sure that’s obvious to most fans otherwise the Yankees would have more than two World Series rings this decade.  That being said, over the last ten years, money doesn’t hurt your championship chances either.  This year the New York Yankees are far away the team with the biggest payroll, $201,449,189, a whopping 7.59% of the salary total paid by all 30 MLB teams combined.  The Philadelphia Phillies weren’t shy in handing out checks either, and their salary total salary was the seventh highest in the league representing 4.26% of the total salary ($113,004,046).

Looking at the previous seasons, there were definitely a few “bargain” teams including the 2003 Florida Marlins (25th highest salary, $48,750,000, 2.29%) and the 2002 Los Angeles Angels of Anaheim of California of the United States of America (checking the source on that title) were able to collect rings with a 3.05% cut of the total MLB payroll ($61,721,667) which ranks them 15th in salary paid for that season.  On the other side of the spectrum, World Series teams of the past decade also accounted for 5.77% (2007 Boston Red Sox), 6.15% (2004 Boston Red Sox), 4.34% (2001 Arizona Diamondbacks), and 5.54% (2000 New York Yankees) of the total salary for the league.  The test that I ran on my program tests for statistical significance at the 99th percentile.  That means that when looking at all the info, there is a less than 1% chance that the results are due to chance.  Over the past decade, money spent does not correlate significantly with World Series championships.  There are enough teams in the league (see: Cubs, Chicago) that pay gobs of money yet have little playoff success which help to make this a non-significant number, but don’t think you’re off the hook yet big spenders, because the rest of my results aren’t in your favor.

Since the start of the 2000 season, money spent correlates significantly with regular season wins, playoff wins, and total playoff series a team participates in.  While a big salary may not lead to a championship, all the numbers show that it definitely increases your odds of getting to the playoffs and beyond.  I look at it as improving your opportunities to win the championship.  Sure, 23 of the 30 teams have made the playoffs since 2000, but only 14 of those have made the World Series.  If you take a look at the number of playoff wins the top two spending teams, NYY and BOS, account for 26% of the win total.  Extending this to look at the top ten spending teams, a third of the league, they account for 64% of the win total.  In the last ten years out of 80 playoff spots, there has only been 14 total times that a team that had less than a 3% share of the overall salary for that specific year has made the playoffs.  Taking it one step further, Minnesota and Oakland represented 10 of those 14 spots.  Those are two teams that are highly praised for their farm club and their ability to essentially do a lot with a little.

Here’s a list of the top five teams that get the most “bang for their buck” followed by the bottom five team who spend the most to get their regular season wins (over the last 10 years, regular season wins):

Top 5:

1) Florida Marlins – $435,099.00 per win

2) Oakland Athletics – $586,251.30

3) Minnesota Twins – $586, 735.85

4) Pittsburgh Pirates – $637,970.37

5) Kansas City Royals – $705,350.20

Top Spenders:

26) Chicago Cubs – $1,123,973.89

27) Los Angeles Dodgers – $1,162,472.53

28) Boston Red Sox – $1,269,820.03

29) New York Mets – $1,320,407.04

30) New York Yankees – $1,712,333.46

As you can see, there are clearly some teams that while having a low amount of cash spent per win have had no post-season success and some of the high spending teams have had very little success as well.  I find it pretty amazing that the Athletics and Twins have been able to maintain moderate levels of regular season success and competitiveness over the years and have made the playoffs in multiple seasons.  Florida is sort of an odd case because they had the one championship year followed by years of mediocrity.  Their number is skewed because during their championship season, they spent more money (by % of league salary) that year than in eight of the other nine years of the decade.

One thing that people tend to point out is that salary cap has the potential to take the money out of the big market cities. While in some respects this may be true let take a look at this from the perspective of the NFL.  The NFL is a money making machine and while there are teams who are perennially good, these teams have to operate with the salary cap in mind and must plan and strategize around this.  Some teams are obviously better at this than others and the same would be true if this were started in Major League Baseball.  Taking a look at the current NFL season and some of the top teams, there are several teams that would not be considered to be in a top media market city.  Taking a look at the top team in each division at this point after week 8 (Philadelphia, Minnesota, New Orleans, Arizona, New England, Cincinnati, Indianapolis, and Denver) only two of these teams crack the top 10 in terms of overall media market television value. Indianapolis, the consistent powerhouse, comes in at number 25 on the list yet are considered extremely successful and widely promoted by the league.  Last year’s Super Bowl champion, the Pittsburgh Steelers play in a city that ranks 23rd in terms of media market.  The NFL has done just fine without a professional football team in Los Angeles, home of the second biggest media market in the country.  I know that they will likely soon be getting one, but they will not adapt or change their salary cap rules in order to allow the Los Angeles franchise to spend tons of money and assemble a squad of superstars.  Colin Cowherd tried saying that the salary cap isn’t effective because there are a handful of teams in the NFL that are still worthless.  The counterpoint is that a salary cap is not made to, and will not, make all teams equal.  It does, however, put limits on those teams that can afford it and have the owners who will spend a lot of money on players.

Another point to be made when talking about whether or not a salary cap takes too much money out of the big media market cities is to take a look at the effect not having one has on the smaller market teams.  By not having a salary cap small market teams have less of a chance of obtaining big free agents and  keeping their own players who grow to be All-Star talent.  In turn, these teams may struggle to fill the seats and keep what is likely a smaller fan base interested.  Conversely, a big market team typically plays in an area of larger population with more media coverage.  While they may draw more fans if they are consistently good, I don’t believe their seats will be empty if they have below-average seasons.  If they don’t sell during the bad seasons, what does that say about the fan base itself?  The New York Yankees will draw fans because they are the New York Yankees.  Even though leading up to this year they were in somewhat of a drought in terms of success, they were able to finance a billion-dollar stadium.  So to tell me that a team that plays in New York or Los Angeles or Chicago will struggle to make money with a salary cap in place is completely ignoring the effect that a salary cap could have on the league as a whole.

I know it may seem that I’m picking on the New York Yankees and, well, I guess I am. They stand out for obvious reasons and considering they spent 64 million more than the next closest team it stands to reason that the debate would start with them.  I know that the Yankees have brought up several great players through their farm system and have made some great pickups and trades.  At the same time, very few teams have the luxury of going out and picking up All-Star talent in one off-season to shore up weaknesses.  To say that this isn’t an unfair competitive advantage is just ridiculous.  When an average spending team has a weakness they will draft at that position, trade to pick up someone at that position, or perhaps pick up a player through free agency who can give them a boost.  When the Yankees have a weak spot in their lineup they go out and get one of the top players, with an emphasis on the plural of players, and pay top dollar to do so.  While an average team may go out and pick up an aging veteran player,  the Yankees can go out and buy C.C. Sabbathia and Mark Texeria.

Think of it this way: Team A has a solid infield with good contact hitter’s but lack a big power threat.  Team A has an average budget so they have to target prospects or risk one of their good infielders in a trade to land a power hitter.  If they go with the option of targeting prospects it could be several years before that player makes it to the big leagues and performs up to their expectations.  In the meantime this good infield could lose players due to free agency, injury, retirement, etc.  Team B has the same situation in terms of talent will but have an unlimited budget.  Because of this, they don’t have to wait on a prospect or risk trading away one of their good players. They can go out and spend money on a big name free agent who is proven at the majors and can come in and make an immediate impact.  Again, if you don’t see this as an unfair advantage, I bet that you are wearing Yankee or Red Sox boxers right now.  I am obviously not a Yankee fan – that goes without saying,- and even if I was I don’t know if I could honestly sit back and believe that my team would experience this level of success if they didn’t have an open checkbook.  Are they playing within the rules?  Yes.  Are there other teams that could go out and spend lots of money? Yes, and there are several others who do.  Does this make it right?  That really, in essence, is the question.

I know that the owners of many teams could spend more money on players, but they don’t and the team and it’s fans are suffering for it.  The big spending teams can afford to sign young, great talent to long term contracts and then place the top free agents around them year after year keeping them top notch in the league.  If a big name turns out to be a big bust, teams like the Yankees and Red Sox can just shrug it off and target the next player.  The small market team doesn’t have this luxury and often can’t take this risk.  I remember back a few years ago when the Twins were debating adding Alfonso Soriano midseason to bolster their infield and provide another power threat.  I drooled over the prospect of a lineup including Mauer, Morneau, and Soriano but in the end it was too good, and too expensive, for the Twins to take on.  If a salary cap was in place and Soriano wasn’t carrying such a heavy contract, maybe things would have been different.  The point is that as long as the MLB allows certain teams to pay ridiculous sums of money to get the best players year in and year out, it’s going to be that much harder for the rest of the league to try to stay and remain competitive for multiple seasons.

In closing, I believe that a salary cap is needed in baseball, and needed soon.  Let’s have teams prove their worth through good management, solid draft picks, timely trades, and building their rosters through a combination of All-Stars and blue collar players.  We fans, outside of New York, Boston, Los Angeles and a few other cities, are tired of having to hope and pray that our big name players will stay with us and pass up a big contract from you guys.  We don’t want to see one team spend five times the amount of another (or more).  We want to see the playing field leveled because David versus Goliath every year is getting old for the rest of us.

Pat Lussenhop - Pat was born and raised in rural Minnesota and is currently living in Cedar Rapids, Iowa. He graduated from St. John's University (MN) with a degree in psychology and went on to get his masters in school psychology at the University of Northern Iowa. He's a lifetime sports fan and follows basketball and football the most. His favorite teams include any team that has "Minnesota" in it's name and he enjoys sports statistics and any good sporting debates. - Follow him on Twitter here

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  • Great article, and well researched. I have also listened to the same Cowherd rants and tend to side with him. Even with a salary cap, the Yankees and Red Sox will still have more money to spend than anyone else because of the passion of their cities and fans.

    The big name players will still end up with the big city teams because of these traditions. Kansas City will never get an Arod, Tex, or CC. Why would anyone choose KC if these other teams come calling?

    If MLB goes to a salary cap, how would these small market teams make up for the loss of the luxury tax revenue the Yanks, BoSox, and others provide? Will a salary cap increase revenues? Say the cap is $100 million. How would that help the teams that already spend under that?

    Again, loved the research and info. I just think you have to look at more than those numbers to see the whole picture. New York will always be New York because they care more about winning than anyone else. No salary cap can change that.

  • Good points, and thanks for checking out the article. I know that NY and Boston fans have a lot of passion and likely always will and I appreciate that. At the same time, fans can be passionate for teams that aren't perennial powerhouses (the Cubs are a good example of that I think). From a pure business standpoint, a salary cap probably doesn't benefit baseball as much as allowing the big city teams to spend as much as they want. But from a competitive standpoint, it hurts the game and there's two ways about that.

    You say that a team like Kansas City will never get an Arod or Tex etc…that may be, but without a cap they have absolutely no chance of doing so and we'll never know. Maybe the top notch players will still end up in LA or NY, but those teams won't be able to nab all the big names/players like they currently do. Teams will be forced to put the other (smaller) pieces in place around their big players.

    New York cares about winning more than anyone else? I bet I can find groups of fans from each team who would strongly agree with you. Having the biggest stage to play on doesn't mean they care the most. There's a huge difference between a city caring and the owner caring enough to spend….and therein lies the problem.

    The luxury tax revenue doesn't disappear with the cap. Teams can still go over the cap, and NY will probably just choose to do so but they will pay a stiffer penalty for doing so and the other teams will still get that kickback.

  • Great article, and well researched. I have also listened to the same Cowherd rants and tend to side with him. Even with a salary cap, the Yankees and Red Sox will still have more money to spend than anyone else because of the passion of their cities and fans.

    The big name players will still end up with the big city teams because of these traditions. Kansas City will never get an Arod, Tex, or CC. Why would anyone choose KC if these other teams come calling?

    If MLB goes to a salary cap, how would these small market teams make up for the loss of the luxury tax revenue the Yanks, BoSox, and others provide? Will a salary cap increase revenues? Say the cap is $100 million. How would that help the teams that already spend under that?

    Again, loved the research and info. I just think you have to look at more than those numbers to see the whole picture. New York will always be New York because they care more about winning than anyone else. No salary cap can change that.

  • Good points, and thanks for checking out the article. I know that NY and Boston fans have a lot of passion and likely always will and I appreciate that. At the same time, fans can be passionate for teams that aren't perennial powerhouses (the Cubs are a good example of that I think). From a pure business standpoint, a salary cap probably doesn't benefit baseball as much as allowing the big city teams to spend as much as they want. But from a competitive standpoint, it hurts the game and there's two ways about that.

    You say that a team like Kansas City will never get an Arod or Tex etc…that may be, but without a cap they have absolutely no chance of doing so and we'll never know. Maybe the top notch players will still end up in LA or NY, but those teams won't be able to nab all the big names/players like they currently do. Teams will be forced to put the other (smaller) pieces in place around their big players.

    New York cares about winning more than anyone else? I bet I can find groups of fans from each team who would strongly agree with you. Having the biggest stage to play on doesn't mean they care the most. There's a huge difference between a city caring and the owner caring enough to spend….and therein lies the problem.

    The luxury tax revenue doesn't disappear with the cap. Teams can still go over the cap, and NY will probably just choose to do so but they will pay a stiffer penalty for doing so and the other teams will still get that kickback.