The Have's and Have Not's in Major League Baseball

The baseball post-season has officially begun. Each year at this time I look at which teams made the playoffs, and then I do a comparison of the payrolls of all of the teams to see what kind of impact the payroll disparity in major league baseball has on overall team performance. But baseball teams, just like all other businesses, need to make sound decisions in a cost-effective manner. And whether a team adheres to the Oakland A's "Moneyball" stat-based philosophy or the Atlanta Braves "old-school" scouting philosophy (or a combination of both), all that really matters at the end of the day are results. Because baseball does not have a salary cap, it's really interesting to see at the end of the year which teams did and didn't get "the best bang for their buck".

Here is my summary for this year (using the USA Today salary database and rounded to the nearest million):

1. Most Valuable GM. The MVGM award this year goes to Mark Shapiro of the Cleveland Indians. With the fifth lowest payroll in all of baseball ($42M), the Indians finished second in the AL Central with a 93-69 record and came soooo close to making the playoffs. San Diego GM, Kevin Towers, gets the runner up award as his team has the lowest payroll ($63M) among the eight playoff teams.

2. Underpaid. The teams with the three lowest payrolls in all of baseball -- Tampa Bay ($30M), Kansas City ($37M) and Pittsburgh ($38M) -- finished last in their respective divisions.

3. Overpaid. Seattle, with the eighth-highest payroll ($88M), finished last in the AL West (26 games behind the first place Angels). The N.Y. Mets, with the third-highest payroll ($101M), finished only fourth in the NL East. Philadelphia spent $96M with no playoff spot to show for it. San Francisco ($90M) and the Dodgers ($83M) finished third and fourth, respectively, in the NL West. See also the Chicago Cubs and Baltimore in the next paragraph.

4. Made Good Use of Their Money. Milwaukee had a .500 record and finished third in the NL Central with only a $40M payroll (ahead of the Chicago Cubs with an $87M payroll). Toronto also finished third in its division with a $46M payroll (ahead of Baltimore with a $74M payroll).

5. Spent What Was Necessary. White Sox ($75M), Los Angeles Angels ($98M), Atlanta ($86M), St. Louis ($92M), Houston ($77M) and San Diego ($63M) -- all made the playoffs without breaking the bank.

6. Spent More Than Was Necessary. The Yankees spent a whopping $208M (plus a large chunk in luxury tax) to achieve a marginal first place finish over Boston ($124M), each with a 95-67 record (which was actually worse than the White Sox and Cards, and the same as the Angels).

From this data, it is apparent that a high payroll by no means ensures success. It appears that the teams listed in No. 5 above made the best business decisions of the year, and also that a team probably needs to spend about $60M-$80M to have a decent shot at the playoffs. Now, some of you may be thinking: "But it ain't over yet!" However, the fact of the matter is that each team that makes the playoffs has an equal chance of winning it all (e.g. the White Sox destroyed the Red Sox today with a $50M payroll disadvantage). What separates the winners from the losers in the playoffs has nothing to do with money, win-loss records, player statistics or box scores, but (lawyers and statisticians hate to hear this) has everything to do with strategy, confidence, chemistry, heart and a little bit of luck -- Just ask the Yankees. [Or maybe it would be better to ask the Angels (2002) and Marlins (2003) about that one.]

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