Baseball Follies Blog –January 16, 2018

by Daniel Lile

How does one evaluate how well a team’s front office is doing? One of the most interesting is Marginal Cost per Marginal Win. Occasionally, you’ll see the metric “Cost Per Win”, where the total team salary is divided by the total number of wins. Unfortunately, this metric doesn’t value discretionary spending, which is the essence of being a general manager.

New Jersey is going to be able to spend more than Palm Springs. London is going to be able to spend more than Crystal Lake. Some GMs get a stack of dolla dolla bills and others have to shake the piggy bank until it squeals. Some teams will find it easier to buy wins than other teams, because they have greater spending power. We would expect a high-spending team to be able to buy more wins, so how do you take this ability into account when evaluating front office performance?

Cost per win doesn’t do it. The first problem is that there’s a minimum cost that every front office has to spend. (Consider it the cost of doing business in PEBA). That cost is easy to calculate – $490,000 is the minimum salary in the major leagues. A major league roster will be assumed to have 25 players on it. Therefore, the rock bottom payroll that any team can spend on players is $12,250,000.

The closest any team got to this number was the Codgers, who spent $20,116,000 on payroll. In Codgertown, the discretionary spending on players was $7,866,000 – the amount they spent over and above the absolute minimum amount. This is the marginal cost of the player payroll.

So what about wins? Just as there’s a minimum possible salary, there are a minimum number of expected wins. (“Sometimes you win, sometimes you lose, sometimes it rains.”)   Sometimes you just have a bad day at the office, and sometimes the other team has the bad day.   But how many wins could the worst of teams possibly have?

We’re talking PEBA, of course, and PEBA has had some historically bad teams, some Cleveland Spiders-level teams. (Yuma had five straight years without breaking forty wins.) But if you’re not from Yuma, how bad should the worst teams be?

Let’s assume a team with a cup of coffee players has approximately a .300 winning percentage. That’s pretty bad, 48 total wins. We assume that this is the number of wins a normal team can stumble into without displaying any talent. Any win beyond 48 is a win that the team actually earned, by displaying talent on the field. These wins – called marginal wins – are the ones a team is paying for.

Dividing marginal cost by margin wins gives Marginal Cost Per Marginal Win. This calculation actually measures what teams have paid for.

So which team had the lowest MC/MW in 2017?

Which front office got the most bang for the buck? It was Yuma, believe it or not! Sure, the Bulldozers only won 66 games. But they basically paid nothing for their roster, spending only $637,000 for each win they got past #48.

And now, the teams with the highest MC/MW….

The Bureaus paid close to six times as much per win as the Dozers did. The Charlotte Statesmen ended in up third place, making one wonder if a government-based name makes you open your pocketbook.

Before Dozer fans begin cheering over their front office efficiency, remember that wins are the name of the game. In which case, you’d have to give the award to Reno. Reno had the third lowest MC/MW in the league, and the Zees got within one game of going to the Planetary Extreme Championship Series (PECS). For a casino town, it looks like Reno was the best spender of 2017.