Payrolls and parity, in context

Rory from PAAPFLY has an interesting piece up, where he introduces a way to calculate how well a team uses its resources. We’ve all seen stuff like cost per win,  but that overemphasizes at the expense side of the ledger and doesn’t put teams in proper context against each other. His idea is fairly simple. Payroll ranking, minus win ranking. Teams that spend heavily and wind up in last place (like last year’s Mets) will fare worst with this formula, while the Yanks and Sox wind up somewhere in the middle. Here’s his post:

If money meant everything and every team who spent the most always had the most wins, you would expect that every single team would fall in line with their average payroll and average number of wins. Of course, we know that’s simply not true. Some teams have terrible GM’s. The Mariners had Bill Bavasi at the helm for several years, for example, while others have exceptional GM’s. Billy Beane – the obvious choice – of the Oakland A’s is regarded as one of the very best. I’ll also note that Tampa Bay has an exceptional (acting) GM in Andrew Friedman, unfortunately, he’s only been at it for a few years and thus his genius won’t quite be reflected in the results. Any who, once I had ranked each team by their wins and payrolls; I simply subtracted their win rank from their payroll rank to see whether they were positive or negative (+/-). What do I mean by positive or negative? Well, I wanted to see which teams had leap-frogged the ranks. Meaning, which teams had won more games than the field despite having spent less and thus won more games than expected were money the only factor in acquiring wins

Within the MLB, 17 of 30 teams (57%) fell within 3 teams (10%) plus or minus of where they should have been. 22 of 30 teams (81.25%) fell within just 5 teams (17%) of where they should have been. So there definitely seemed, to me at least, that there was a correlation between money spent and wins. The 8 teams that were essentially outliers and didn’t fall within 5 teams (17%) of where they should have were the 4 best teams and 4 worst teams in MLB, as follows:

Best                                                  Worst


1. Oakland Athletics (+15)               1. Baltimore Orioles (-15)
2. Cleveland Indians (+12)               2. Chicago Cubs (-13)
3. Florida Marlins (+9)                     3. New York Mets (-10)
4. Minnesota Twins (+8)                  4. Detroit Tigers (-9)

Here’s the part Yankee fans will want to see:

I like it, it’s a balanced approach to the old argument where one side only looks at payroll and the other side gives all credit and blame to management. It treats teams like the Yanks and Red Sox fairly. Yes, they have a competitive advantage but they’re also smart and utilize their resources well.