Tuesday, November 17, 2009

baseball: spending and winning

The Yankees spend a lot, but there's more to winning than spending and overcoming the luxury taxes on "excessive" spending on salaries.

A lot of teams get a lot of money-- through revenue sharing-- that they don't bother to spend, so why doesn't anyone talk about them?

From Andrew Zimbalist in the WSJ...

Are the championship rings the players will take home simply a byproduct of the largest payroll in Major League Baseball? And if so, how come the Yankees haven't won the fall classic since 2000, even though the franchise led the way in payroll each year and actually spent more last year (when it missed the playoffs) than it did this year?

It's a little surprising, but the statistical relationship between a team's winning percentage and its payroll is not very high....

More precisely, depending on the year...between 15% and 30% of the variance in team win percentage can be explained by the variance in team payroll. That means between 70% and 85% of a team's on-field success is explained by factors other than payroll. Those factors can include front office smarts, good team chemistry, player health, effective drafting and player development, intelligent trades, a manager's in-game decision-making, luck, and more.

Wealthy teams do have an advantage, but it is not true that they can buy championships. Further, although the cries for parity among teams are loud, MLB has a good deal of competitive balance. Since 2004, 20 of baseball's 30 teams have made the playoffs....


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