NEW YORK (CNN/Money) - Those who argue that money is the key to winning in baseball are only half right.
Winning teams aren't the ones who just throw money at players. Often, they're the ones who spend money wisely and efficiently.
We now have a way to judge -- in wins and losses, that is -- return on investment, or how effectively teams spend their money. As it turns out, ROI is as important as RBIs in determining whether a team will still be playing in October.
Thanks goes to Doug Pappas, a New York attorney and expert on baseball economics, who heads the business of baseball committee of the Society of American Baseball Research. Looking at payrolls and won-lost records, Pappas has sorted out the effect of marginal spending on players.
He starts with the reasonable premise that a team is required to spend a minimum of $8.4 million on player payroll, even if it fills its roster with nothing but rookies making the league minimum.
Based on past history, even such a bare-bones team is likely to win 30 percent of its games. So rather than just divide team payroll by the number of wins, Pappas set about to measure how much each team spent above the $8.4 minimum for each win they achieved above that 30 percent level.
His analysis for 2003 ran into one problem. The Detroit Tigers -- who made a run at the worst record in major league history -- ended up about six games short of the .300 winning percentage. But measuring bang for buck for the other 29 teams is instructive.
Four of the 10 teams that spent the least amount for every extra win last year made the playoffs, including the World Series winning Marlins, who were the fourth best team. Another three of the top 10 narrowly missed the playoffs, and two more had winning records.
The only financially efficient team with a losing record was the Tampa Bay Devil Rays, whose roster was nearly filled with minimum-pay rookies. They spent only $779,861 for each extra win. But the Oakland A's were close behind, spending only $885,250 for each extra win. They made the playoffs for the fourth consecutive year.
| SportsBiz
|
|
| Click here for SI.com sports coverage
|
|
|
|
Among the 10 teams that spent the most for every extra win, eight had losing records and only one -- the free-spending Yankees -- made the playoffs spending $2.7 million for every extra win. The Mets, meanwhile, had the worst return on their payroll dollars, about $6.1 million for each extra win.
Should have chased Beane
A lot was made of the Yankees off-season acquisition of Alex Rodriguez. But if it really wanted to insure success, the team should have tried to land Oakland A's general manager Billy Beane, the sport's best advocate for spending money wisely rather than freely.
| Related columns
|
|
|
|
|
|
If the Yankees could spend their available payroll as efficiently as Beane spent the A's money, it would have translated into 208 wins in the 162-game season.
Obviously, that's an impossibility. But it is a sign of the advantage waiting for the first deep-pocketed team to really embrace Beane's philosophy.
Executives at the Boston Red Sox at least talk the same game that Beane plays, but the numbers suggest they're closer to the spendthrift Yankees than the bargain-hunting A's. The Red Sox spent $1.9 million per extra win, right around the league average.
The franchises that have done the best job of following Oakland's strategy of winning on a shoe string are Florida and Minnesota. Both teams had fewer fans and lower gate receipts than even Oakland last year, yet which both made it to the post-season.
Salaries around the league are in retreat, thanks mostly to the new collective bargaining agreement. And while it may be difficult to notice amid all the dollars and championship banners flying around Yankee Stadium, this is probably the start of an era of unprecedented success by small-market teams.
If you want to see that theory proved out, just keep your eyes on the bottom line.
|
