May 30, 2011
by Serenity Summers
Money can’t buy love or happiness, but it does not stop people from trying. Last week, we broke down baseball’s compensation system. This time around we will take an in-depth look at money and baseball, or more specifically, payroll and winning. It is said that money makes the world go round, but is that true for baseball, too?
Let’s examine the playoff teams of the past seasons (Rodríguez Cup winner boldfaced and highlighted in red).
2007
Bakersfield Bears – 108 wins, $134,342,481
Charleston Statesmen – 96 wins, $89,975,846
Crystal Lake Sandgnats – 102 wins, $84,938,218
Kalamazoo Badgers – 100 wins, $93,676,002
New Jersey Hitmen – 108 wins, $83,420,692
New Orleans Trendsetters – 103 wins, $90,585,265
Palm Springs Codgers – 97 wins, $107,771,897
San Antonio Calzones of Laredo – 95 wins, $112,999,058
Out of the 8 playoff teams, 3 teams had a payroll under $90 million. New Jersey, with an $83.4 million, payroll wins it all. This certainly gives hope for mid-market teams. Using the 2011 financial information, an $83 million payroll would rank 14th out of the 24 teams. This certainly is proof that a mid-market team can win it all. One could argue though that the data may not mean much since it was the inaugural season, where things are just settling in. Let’s take a look at the 2008 season.
2008
Arlington Bureaucrats – 94 wins, $92,394,600
Aurora Borealis – 112 wins, $103,632,050
Bakersfield Bears – 100 wins, $108,758,100
Crystal Lake Sandgnats – 118 wins, $110,097,900
Gloucester Fishermen – 91 wins, $69,872,702
New Jersey Hitmen – 97 wins, $137,757,400
New Orleans Trendsetters – 96 wins, $111,727,112
Palm Springs Codgers – 93 wins, $123,289,800
This time around, only 1 team below $90 million made the playoffs. However, this lone team made it with a $69.9 million payroll! In relation to the 2011 season, this payroll would rank 20th. This is proof that a smaller market team can make it to the playoffs.
2009
Aurora Borealis – 125 wins, $123,923,100
Bakersfield Bears – 95 wins, $117,325,540
Charleston Statesmen – 111 wins, $86,330,196
Crystal Lake Sandgnats – 112 wins, $133,649,400
Manchester Maulers – 92 wins, $78,809,867
New Jersey Hitmen – 88 wins, $142,163,000
New Orleans Trendsetters – 106 wins, $139,891,250
Palm Springs Codgers – 106 wins, $131,246,100
2 teams with a payroll of under $90 million made it to the postseason. Charleston‘s $86.6 and Manchester‘s $78.8 million payrolls rank 13th and 18th in comparison to the 2011 numbers.
2010
Aurora Borealis – 120 wins, $125,270,000
Charleston Statesmen – 99 wins, $103,995,308
Crystal Lake Sandgnats – 103 wins, $94,480,500
Fargo Dinosaurs – 91 wins, $64,539,880
Florida Featherheads – 104 wins, $70,680,800
London Underground – 90 wins, $46,486,391
New Orleans Trendsetters – 87 wins, $119,830,640
Palm Springs Codgers – 100 wins, $128,779,400
The trend continues to improve in 2010. 3 out of 8 teams made it to the playoffs with a payroll under $90 million dollars. Florida‘s $70.7 and Fargo‘s $64.5 million payrolls both would rank 20th in comparison to the 2011 numbers. More impressively, London‘s 46.5 million payroll ranks 24th in comparison to the 2011 finance report! Only Kentucky‘s $40.1 million payroll is lower. London is an inspiration for small-market teams!
Critics never argued that small and mid-market teams can be successful. They acknowledge that these teams can be successful. The PEBA proved this with the likes of London, Manchester, Gloucester and the 2007 New Jersey Hitmen. We’ve seen it historically in the defunct MLB. The Minnesota Twins and Oakland Athletics proved it with their successful run in the early 2000s. The Florida Marlins even won the World Series twice.
Winning and being successful is not the problem for smaller market teams. Critics argue that the ability to sustain winning is the problem. For smaller market teams, the window is much smaller. Here’s a fun fact: No PEBA team has made two consecutive trips to the playoffs without spending more than $100 million dollars. Manchester‘s $78.8 million payroll in 2009 garnered the team with its first ever Pan-Atlantic Division Pennant. However, Manchester failed to recapture the success the following season and consequently finished last in the division. Gloucester made it to the 2008 playoffs with a $69.9 million payroll but failed to repeat in 2009. It was not due to a lack of trying, though. Gloucester increased its payroll to $98.8 million in 2009, but that was not enough to make it to the playoffs.
Let’s take a look at the graph below:
This graph plots the average payroll versus wins of all PEBA teams from 2007 to 2010. As you can expect, there is a noticeable trend. The red trend line shows the correlation between wins and payroll. The vertical line indicates the average 81-win season. The horizontal line indicates the average payroll of the 24 teams. The most successful teams are usually the ones who spend the most money. As one can expect, “Evil Empires” Aurora and Crystal Lake top the list in terms of both wins and payroll. Palm Springs, New Jersey, Bakersfield, and New Orleans are up there too, but tend to be overspending for their wins. Charleston appears to be getting the most bang out of the buck, as they are clearly below the trend line. Kentucky and Tempe are significantly below the trend line, too, but that is nothing to boast about since both teams have average less than 70 wins. Canton and Duluth have overpaid for their wins. Surely their fans won’t be too happy about that.
Based on this graph, the correlation coefficient value, r, is 0.81! A value close to 1 means there is more likelihood that the two variables are related to one another. Equally alarming is the coefficient of determination, R2. The R2 value is 0.658. This means that about 66% of this data can be accounted for. In other words, payroll accounts for 66% of a team’s win total! Luck, injuries and other random variables must account for the other 34%.
Below are similar charts that focus on each season rather than the collective average.
2007 Season
The inaugural season, 2007, has the lowest R2 value at 0.3919. This is not all too surprising. This was the inaugural season of the PEBA. Essentially, you can consider this the “big bang” season. Aside from the Inaugural Draft, there was little flexibility and control that a team and its General Manager could exert. The free agent market was bare since all the players were already pooled in the Inaugural Draft. It is the subsequent seasons that teams can really put a mark on their organization.
Based on the 2007 chart, you can see that there was a little bit of everything. Low-spending teams like London and Omaha can be considered overachievers. Even moderate spenders (Charleston, New Jersey and Crystal Lake) got good value out of their money. Big spenders like San Antonio, Bakersfield and Palm Springs earned a trip to the playoffs, but you can see they earned it by considerably overpaying. Bakersfield was an extreme outlier with a $134.3 million payroll.
2008 Season
There was much more correlation in the 2008 season between winning and payroll. Teams with spending power began to flex their muscles. The R2 value jumped from 0.3919 to 0.5333. Last season’s spending outlier, Bakersfield, cut its salary from $134.3 million to a “modest” $108.8 million payroll. Not surprisingly, the win totals dropped accordingly. Bakersfield won 8 fewer games in 2008 (100 vs. 108).
The extreme spender this season was the inaugural champs, the New Jersey Hitmen. Perhaps winning it all made everyone in the New Jersey camp enthusiastic and therefore more willing to open up the pocketbooks to defend their title. The increased payroll did not improve New Jersey‘s win total, but it did secure the Hitmen another trip to the playoffs.
Just like the 2009 Manchester Maulers, Omaha is a classic case of overachieving with an average payroll. In 2007, Omaha won 85 games with a $50.6 million payroll. In 2008, Omaha won only 61 games (24 fewer games) despite increasing its payroll to $61.4 million.
The biggest improvements have to be the Aurora Borealis and Crystal Lake Sandgnats. Aurora went from an 87-win team to a whooping 112 wins! The team salary also increased $11 million, from $92.5 million to $103.6 million. Similarly, Crystal Lake increased their win total by 16 games (102 vs. 118). Furthermore, the Sandgnats increased their payroll from $84.9 million to $110.1 million.
The biggest surprise comes from Gloucester. The Fishermen earned their first trip to the playoffs with a 92-win season, an 18-game improvement, despite reducing their payroll from $80.7 million to $69.9 million. Gloucester‘s amazing success can be attributed to the breakout season of Vicente Bernal during his first stint in the PEBA. Lorenzo Torres contributed mightily to the offense, too.
2009 Season
Similar to the 2008 season, the R2 value remained steady at 0.5236. Last season’s surprise team, Gloucester, failed to make the playoffs. Gloucester increased its payroll from $69.9 million to $98.8 million but won 7 fewer games (84 vs. 91).
The biggest improvements came from Charleston and Manchester. Barely missing the playoffs in 2008, Charleston returned to the playoffs in 2009 with an impressive 111-win season on an equally impressive $86.6 million payroll. How did Charleston do this? It was cheap homegrown talent maturing that did this. Pitcher Dean O’Monahan ($390K salary) had a breakthrough season, going 26-3. His teammate Carlos Cervantes went 27-2. Those two pitchers combined for a 53-5 record! That’s a winning percentage of over 90%. 53 wins is 47.7% of the 111-team-win total!
Manchester‘s $78.8 million payroll was good enough for 92 wins and a trip to the playoffs. In 2008, Manchester only won 72 games with a paltry $39.8 million payroll. Money and luck certainly helped Manchester‘s case. Although not on O’Monahan’s level, SP Ryuichi Yamauchi stepped up for Manchester to help push the team to the playoffs.
The 2009 season also saw Aurora increased its budget considerably. Already an established playoff team a year ago, Aurora increased its payroll from $103.6 million to $123.5 million! This $20 million increase rewarded the team with 125 wins, which was 13 more wins than the previous season. The increased spending also earned the team its first championship.
2010 Season
The 2010 season saw the R2 value decreased moderately from the 0.50s to 0.4542. Does that mean that payroll was having a less effect on win totals? Probably not. It just means that there was a little bit of luck involved. The decrease in the R2 value can be attributed to six teams: Florida, Fargo, London, New Jersey, New Orleans and Palm Springs.
The trio of Florida, Fargo and London greatly overachieved and exceeded expectations. All three teams made it to the playoffs despite payrolls of $70.7, $64.5, and $46.5 million respectively. Florida‘s 104 wins (a 23-game improvement) can be mostly attributed to homegrown talent maturing and cost-effective free agent signings. Featherheads prospects such as Tsumemasa Morimoto, Kevin McNeill and Jesse Powell had tremendous All-Star seasons. Cheap free agents Eduardo Carbajal and Carlos Mostas boosted the offense.
Like Florida, Fargo used its homegrown talent to propel the team to its first ever playoff appearance. Fargo won 91 games in 2010 – an 18 game improvement from 2009. The collective pitching hydra group of Javier Encarnación, Armando Gallegos and Anastasio Juárez helped paced the team. All-Stars Raúl Pinto and Ramón Flores provided major contributions in as well.
London is perhaps the most interesting case of the three. The 2010 London Underground were a classic case of luck and collective career years by their players. Just like players can have that anomalistic season where they play way above their heads, teams can play way above their heads for a season, too. Pitcher Anthony Cox went on to have a career year and won the IL Golden Arm Award. Cox’s 60.7 VORP was higher than his last two seasons combined! All-Star outfielder Rémi Young had a career year for the ages. All he did was hit .305/31/112. His 57.8 VORP was three times more than that of last season! It’s unsure if London‘s case is a good example of a low payroll team being successful or rather more of a case for the fact that luck can help any team make a playoff run.
If you want to talk about luck, then take a look at Manchester. An outlier in 2009, Manchester reverted back to obscurity in 2010. The team saw its win total drop by 30 wins despite having a similar payroll of ~$75-80 million. Ryuichi Yamauchi’s fall was indicative of the team’s fall. Lady luck had run out.
New Jersey, New Orleans and Palm Springs paid a significant amount money for their wins. New Orleans and Palm Springs were probably okay with that since they made the playoffs, but the same cannot be said for New Jersey. With a $122.2 million payroll, New Jersey only collected a measly 77 wins. Is this really proof that money can’t buy wins, though, or proof of bad spending? Alejandro Ortega, Daniel Ríos, Jun Saikawa, Kenny Parker and Dan Schaffner were all overpaid. Their production was definitely not worth their paycheck.
So what to take out of this? Definitely, there is a correlation between money spent and winning. It makes sense. Unless it is cheap, young, homegrown talent, more talented, established stars usually command a higher salary. Not only can money get (and keep) you talented players, but it can help to provide you insurance too. Aurora signed talented outfielder Yasushi Kobayashi and Juan Suárez midway through the season for the 2009 playoff stretch run. Similarly, Matsusuke Nakayama signed with Charleston in the middle of the 2009 season.
Money cannot buy you a championship. Just ask the 2009 New Jersey team. Money cannot make a person smart, but rather it is the smart people that make the money. Crystal Lake and Charleston are two exemplary organizations that are living proof of this. Both teams started the inaugural 2007 season with payrolls of under $90 million. Fast forward to 2011 and both teams are capable of raking in over $100 million dollars.
So yes, money helps, but rather than blame the system, learn how to work within the system just like Crystal Lake and Charleston. For those teams looking to be like those model franchises, be creative and smart. Money comes and goes, but a person’s wit stays with him forever.
