Tipping Pitches: Sports: Money Doesn't Guarantee Success, BUT...

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Monday, November 9, 2009

Sports: Money Doesn't Guarantee Success, BUT...



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In my never ending quest to spotlight the gross economic inequities in Major League Baseball, today I'm going to show the direct relationship between money and success.

Before now, I've focused instead on the lack of parity in baseball compared to the NBA and NFL. Additionally, we snapped our fingers and observed what baseball would look like if it mimicked the NBA's financial disparities.

Still, we've yet to show the direct correlation between money and success (as obvious as it may otherwise seem). So let's do that.

We know that money does not guarantee success. And not spending huge sums of money will not guarantee failure. Particularly covering a one or two year time frame.

However, over a five or 10 year period, I'm confident that we can reasonably expect that the vast majority of teams that succeed have spent money and the vast majority of teams that fail will spend the least.

Below is a chart of all teams during the past 10 years, their record, win/loss rank, average payroll, and payroll rank.

Team
10 yr %
$ Avg
W/L Rank
$ Rank
Diff
NY Yankees
.598
$167,123,746
1
1
0
Boston
.568
$116,826,442
2
2
0
St. Louis
.564
$83,161,682
3
9
6
LA Angels
.556
$88,366,382
4
7
3
Atlanta
.551
$92,756,206
5
5
0
Oakland
.550
$52,293,616
6
24
18
LA Dodgers
.532
$100,205,132
7
4
-3
Minnesota
.532
$50,235,304
7
25
18
San Francisco
.529
$78,967,826
9
11
2
Chicago Sox
.529
$77,392,133
10
12
2
Philadelphia
.525
$79,506,314
11
10
-1
Seattle
.517
$88,143,915
12
8
-4
Houston
.514
$77,137,108
13
13
0
Cleveland
.504
$65,073,842
14
19
5
NY Mets
.504
$108,669,499
14
3
-11
Florida
.502
$35,286,529
16
30
14
Chicago Cubs
.499
$90,704,693
17
6
-11
Toronto
.497
$67,931,916
18
18
0
Arizona
.497
$73,153,640
19
16
-3
Texas
.479
$75,197,417
20
15
-5
Colorado
.474
$60,999,990
21
20
-1
San Diego
.474
$54,458,302
22
22
0
Cincinnati
.464
$58,340,608
23
21
-2
Milwaukee
.458
$52,893,517
24
23
-1
Detroit
.450
$76,179,991
25
14
-11
Washington
.439
$46,455,467
26
27
1
Baltimore
.432
$71,776,769
27
17
-10
Tampa Bay
.429
$40,130,874
28
29
1
Pittsburgh
.421
$43,445,782
29
28
-1
Kansas City
.415
$47,399,533
30
26
-4

Let's talk about what this means. As I've said before, spending money offers no guarantees. Some teams will spend money and fail because of poor decisions. Other teams will not spend money and find other ways to succeed.

In my opinion (though this is far from scientific), you can reasonably expect your spending rank and winning percentage rank to be close to one another, falling within about 10 spots of one another.

As you can see by the chart above, seven teams were able to fall outside of that expected range. Three teams (Oakland, Minnesota and Florida) have been able to succeed far above their expected rate despite a lack of significant spending.

Three other teams (New York Mets, Chicago Cubs, Detroit Tigers and Baltimore Orioles) prove that spending money must be complemented by sound decisions. These teams fell far below their expected rate of success.

Just as important as these results is that the two teams that spent the most money during the past 10 years (New York Yankees and Boston Red Sox) are also the two teams with the best winning percentages during that time.

Coincidence? I think not.

The Yankees also had the highest payroll in each of those 10 years. In fact, they've had the highest payroll in all but three seasons dating back to 1993, and in each of those three seasons they finished in the top three.

While we've previously talked about the appearance of more parity in baseball during the past five seasons, that isn't true in this study. Here are the stats for the past five years:

Team
5 yr %
$ Avg
W/L Rank
$ Rank
Diff
NY Yankees
.590
$200,627,941
1
1
0
LA Angels
.586
$108,674,798
2
4
2
Boston
.577
$128,353,439
3
2
-1
Philadelphia
.552
$96,899,494
4
10
6
St. Louis
.541
$89,702,917
5
13
8
Minnesota
.533
$62,650,708
6
22
16
Chicago Sox
.529
$100,771,666
7
7
0
NY Mets
.527
$120,957,962
8
3
-5
LA Dodgers
.519
$101,788,768
9
6
-3
Cleveland
.510
$63,951,300
10
20
10
Detroit
.510
$99,931,115
10
8
-2
Chicago Cubs
.507
$106,856,519
12
5
-7
Atlanta
.507
$92,599,372
13
11
-2
Toronto
.507
$75,581,900
13
15
2
Milwaukee
.505
$65,921,933
15
18
3
Oakland
.503
$61,462,581
16
24
8
Houston
.499
$89,803,266
17
12
-5
Florida
.498
$32,911,967
18
30
12
Texas
.494
$65,657,492
19
19
0
Colorado
.492
$57,533,700
20
25
5
San Diego
.490
$61,741,871
21
23
2
Arizona
.488
$62,760,063
22
21
-1
San Francisco
.472
$85,937,185
23
14
-9
Seattle
.470
$99,749,130
24
9
-15
Cincinnati
.465
$67,876,655
25
17
-8
Tampa Bay
.463
$39,270,833
26
29
3
Baltimore
.426
$74,870,527
27
16
-11
Washington
.424
$52,872,200
28
27
-1
Pittsburgh
.409
$44,154,273
29
28
-1
Kansas City
.404
$56,011,267
30
26
-4

This time, there are only five teams that fall outside of their expected window of success. The Twins, Indians and Marlins found ways to succeed beyond their payroll while the Mariners and Orioles have failed despite shelling out large dollars.

Also, three of the top four in spending (the Mets excluded) have had the three best winning percentages during the past five years.

Are teams that spend money guaranteed to succeed? No, but the likelihood is much greater that they will.

Are teams that don't spend large sums of money guaranteed to fail? No, but they are not able to build teams the way that big spenders can and must get creative to exceed expectations.

In either case, the outliers are rare exceptions. During the past 10 years, 23 of the 30 teams have win/loss and spending ranks that fall within a +/- 10 rank window. During the past five years, 25 teams qualify.

While spending money wisely should be a factor in resultant success, the amount of spending should not be a determinant.

Unfortunately, that's currently the case. Without a salary cap or other structure to modify the current payroll disparity, a minority of teams will continue to spend more to give them a built-in advantage.

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