Due to the lack of a salary cap, Major League Baseball teams are allowed to pay their players as much money as they want. It allows for great diversity amongst the teams' total payrolls. For example, the New York Yankees spent $197,962,289 on their players this season. The Yankees generally spend the most money of any MLB team on their players, and with numerous playoff appearances and World Series titles they reap the benefits on the field. In comparison, teams like the San Diego Padres, Tampa Bay Rays, Pittsburgh Pirates, and Oakland Athletics find themselves consistently at the bottom of payroll lists.
I began looking through the payroll lists* in order to find a trend- some pattern that would prove interesting. First, I used www.Baseballprospectus.com which uses simulations and models to estimate the number wins and losses for each team at the end of the season. Next I plotted each team's 2012 payroll against the number of wins that the guys at Baseball Prospectus estimate each team will have by October 1st. I plotted the best-fit line and even calculated the R squared value. Here are the results:
- The Yankees have the highest payroll in the Majors, and pay about $2,062,107 per win
- The Phillies have the 2nd highest payroll in the Majors, and pay about $2,266,739 per win
- The Padres have the lowest payroll in the Majors, and pay about $781,396 per win
- The Athletics have the 2nd lowest payroll in the Majors, and pay about $661,559 per win
- Finally, the Nationals have the best record in the Majors, and the 19th lowest payroll. They pay about $823,240 per win
So, does money win championships? The answer is sometimes. Does a low payroll filled with young players win championships? Same answer, sometimes. Overall the only question to ask that doesn't incur a similar answer is, "What is the best formula to use?" The only answer to that question is build a smart team. If management makes intelligent decisions that balance spending with results and predictions, it gives an organization the best chance to succeed. Oh, and don't forget about luck.
*All team payroll data was taken from USA Today's tabulation of sports team's payrolls (Link)