The Modern Myths of Baseball – Money Talks

This is the first of a multi part analysis piece I am doing into the modern myths of baseball. We live in a baseball world nowadays where there is such a significant amount of data that any theory about the game can be analysed and its impact determined. Today I am taking a high-level look at money, more specifically team salaries. Future pieces in this series will be about the cost of a win, the draft and tanking.

This analysis all started with the “hot take” of 2018, the AL Central is bad. I mean historically bad. In line for the worst performance by a division since the strike shortened season of 1994, when were saved from the potential of a team below .500 winning a division by the strike. Being an Indians fan, I have defended my division in various ways. But the majority was by talking about that 3 of teams are going through rebuilds and that all teams in the division have below average salaries. Quite a few people responded to my salary comment suggesting that I should look at the Braves and the Phillies, both whom are doing well on modest budgets. Was I right or wrong to assume that a lower budget team would perform worse? How much impact does a team’s salary have on the team’s overall performance?

Salary data is not fully available but there are quite a few sites which track this information, all of the data used in this analysis is based on the team salaries at the start of the season as this data was more readily available for historic years.  So, I took the salaries from 2000 onwards determined their percentage above or below the yearly average and grouped them into buckets. Then I compared that to the number of games won by the teams.

From this we can see that there is a reasonable trend showing that the more a team spends the more wins they are likely to pick up but there is a section in the middle between -10% and +30% where the difference in salary doesn’t have much impact on the overall number of wins.  Too put that in context the average total salary for 2018 is $139m, so the difference between a team on -10% and one on +30% would by $55.5m which is a lot to spend for potentially no gain. One of my later pieces will go into how much you could expect to get for that on the current market.

So, bucketing the info has shown that there is trend but if we just plotted spend over average against the wins above .500 what would the overall correlation look like. That gives you the scatter graph below.

As expected from the bucketed data you can see the times when teams have spent big and have gone on to win more games but this also clearly shows that middle section which has very little correlation. The overall correlation is low but does show that the money spent does impact the no. of wins.

In the previous graph I also highlighted out the all the World Series winners and you can see they have quite a spread.  From 2004 to 2014 we had a stretch of 11 consecutive seasons where the winner’s salary was above average but the last 3 season the Royals, Cubs and Astros had salaries which were below the league average. So, although it looks like money might get you wins, it doesn’t get rings.

A few other performances to take note of: –

• Only twice, since 2000, has the team with the highest salary won the World Series, Yankees in 2000 & 2009.
• When Seattle won a record 116 games in 2001 their salary was just 17.4% above average.
• The 2012 Boston Red Sox hold the dubious record of spending the most over average and still finishing below .500, they were 76.7% over the average but ended up 12 games below.
• In 2013 the Houston Astros total salary was less than a quarter of the average, they lost 111 games that season.
• Of the 10 teams that spent the most over average, 9 of them were the New York Yankees (All years from 2004-2013, excluding 2012). The 2015 LA Dodgers being the other were 9^th on that list.
• Between 2000-2017, four teams (Brewers, Padres, Athletics & Pirates) never spent more than the league average.

Lets answer the question about the 2018 AL Central, does their salaries correspond to their performances so far?  The Indians, Royals and Tigers all sit within -5% and 0% against average so the performances for the Indians and Tigers, +4 and -4 from .500 respectively are in line with the expected. But the Royals are already -21 below .500 which cannot be explained by their Salary, they are definitely under performing.  The Twins are at -10% and currently -5 which is within expectations, if on the lower end, and the White Sox are at -46% and -20 which if this was the end of the season would be reasonable but as we are not even to the half way point they are also under performing even with their lower salary.

So, from all of this I can say that if you are a really big spender then you can get a team over .500 and mostly likely get them into the postseason but it doesn’t mean you win the World Series. But for those teams in the middle you need to very careful and smart about how you spend your money. That is what the next piece will be on, the cost of a win above replacement in the free market and internally.

NOTE: – These salary figures are the total salaries which includes retained and buried salaries, the only figures wildly available.  A more in-depth analysis would look at the roster players available for each game and calculate the correlation between the salary of those individuals to wins.