Business of baseball

[formerlurker]

chart:

http://www.bizofbaseball.com/docs/2008MarginalPayroll.pdf

Efficiency and effectivity; two words that are the hallmarks of any well run organization. In Major League Baseball, often times, you can win the World Series, and have one but not the other.

In a league where there is a soft salary cap in the form of the competitive balance tax, or as it is more commonly known, the Luxury Tax, clubs that have deep pockets to work from can spend far more on player payroll than the majority of the other 30 clubs in the league. As an example, the New York Yankees had an Opening Day payroll that was almost as much as the player payroll for the bottom six teams by player payroll combined (Nationals, Pirates, Athletics, Rays, and Marlins).

But, as we saw this year, all that money could not get the Yankees’ foot in the door of the playoffs. As the old adage goes, it’s not how much money you spend, it’s how well you spend it.

With that, we can look at how much a team spends per win – a bang-for-the-buck metric called Marginal Payroll/Marginal Wins.

The formula works like this.

As a baseline, we’ll create a fictitious marginal team. Even the worst teams made up of near minor league players would not lose every game. So, we’ll say that a truly mediocre team would win only 30 percent of their games. For salary, we’ll set every players at the league minimum, which for 2008 was $390,000 . And finally, we’ll make the roster 25, plus 3 replacement players to allow for the DL..

By having this baseline team, we can use the winning percentage for each team in MLB for 2008 at the end of the season, along with their Opening Day payroll to determine what their marginal payroll would be and how much it costs a club per marginal win. We'll use Opening Day payroll instead of end of year payroll as a measurement of the intent of the club's spending as the season started. The formula, created by the late Doug Pappas, looks as follows:

(club payroll - (28 x major league minimum) / ((winning percentage - .300) x 162)

So, the lower the figures derived out of this formula, the better. In other words, if your cost per marginal win is lower, you are spending less per win – you’re efficient.

But remember, being efficient isn’t always being effective. As an example, Oakland spent $1,387,533 per marginal win this season based upon the third lowest Opening Day payroll of $47,967,126. The problem is, the A’s were second to last in the AL West with a 75-86 record. It didn’t cost the A’s much per win, but then again, they didn’t win enough games to make the playoffs.

On the other hand, you can be effective but inefficient. The Dodgers spent $3,040,001 per MW and won the NL West, but they spent nearly twice as much per win as the Diamondbacks ($1,655,171 per MW), who just missed the playoffs.

And, then there is the ultimate yin and yang of this formula: those teams that spent little per marginal win, but still won enough games to reach the playoffs, and those that spent a truckload of cash on player payroll only to sit at the bottom the standings.

http://www.bizofbaseball.com/index.php?option=com_content&view=article&id=2568:inside-the-numbers-ranking-the-30-clubs-by-marginal-payrollmarginal-wins&catid=29:articles-a-opinion&Itemid=41

[USA4ME]

I quit watching MLB around 10 years ago.  There aren't 30 decent players in the whole league, and since they expanded they're even spread more thin than they were.

I remember when I quit watching.  Somewhere around 95 or 96 I was looking at the Tigers lineup and the only names I even recognized were Trammell and Fryman.  And even then they had moved Trammell from short-stop to 2nd base.  I suppose that was so he could be closer to the exit.

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