Penny Pinchers Vs. Big Spenders

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Penny Pinchers vs. Big Spenders
The year was 1975, a year in which Baseball and the way it’s players would be compensated would forever be changed. Pitchers Andy Messersmith, 30, of the Dodgers and Dave McNally, 33, of the Expos decided to play the 1975 season without contracts, then demanded the right to put themselves on the open market. In 1976 they took their case to an arbitrator who ended up ruling in their favor ultimately putting an end to the Reserve Clause in Baseball and opened the floodgates to the Free Agency we know today. Since then players contracts have become longer and more lucrative every year, with the climax being in 2012 when Albert Pujols of the St. Louis Cardinals inked a 10 year, 240 million dollar contract with the Los Angeles Angels of Anaheim. Currently it is the largest, at least monetary wise contract in the history of the MLB and will probably be eclipsed in the near future.
What does this have to do with the teams you may ask? Now more than ever teams must decide if they have the resources to dish out multi-million dollar free agent contracts or develop talent from within and splurge occasionally. This has created distinct levels of teams from the big spenders such as the New York Yankees, Los Angeles Dodgers and Los Angeles Angels of Anaheim to the penny pinchers of the Oakland A’s, Tampa Bay Rays, and Florida Marlins. Although this division of money and ability to purchase the best talent would seem to skew the amount of wins, playoff appearances and World Series in the favor of the deep pocketed teams that is not always the case.
More money spent = more wins?
According to Forbes, in the 2013 MLB Playoffs only 3 of the top 5 highest payroll teams made the playoffs, while 5 of the 9 playoff teams were from outside the top 12 highest payrolls. As you can see in the chart below three of the playoff teams came from the bottom nine of the cost per win category while 4 of the teams came from the top nine of the cost per win category. In an age of increasing statistical dominance in the scouting and evaluating process teams like Oakland, Tampa and Pittsburgh are able to compete with the big spenders.
MOST AND LEAST COST-EFFECTIVE TEAMS
LOWEST PAYROLL EXPENDITURES PER WIN
1 Houston $321,583
2 Miami $481,182
3 Oakland $742,851
4 Tampa $767,145
5 Pitt $860,504
6 Minn $869,013
7 SD $877,737
8 Arizona $920,562
 9 Colorado $950,976
HIGHEST PAYROLL EXPENDITURES PER WIN
Rank Team Payroll Cost per Win
1 Yanks $2,690,228
2 Dodgers $2,653,601
3 Philly $2,096,436
4 SF $1,823,930
5 Boston $1,787,655
6 Texas $1,687,494
7 Detroit $1,651,659
8 Angels $1,563,439
9 Toronto $1,531,307
Sure the Yankees are the franchise everyone wants to be, they are flashy, a global brand, and loved by a rabid fan base whose “27 Rings” excuse that comes up every time they don’t make the playoffs, but are they the most productive given the exorbitant cost they pay for success?
In speaking in solely terms of “bang for your buck” the Yankees would not even come close to the most productive. Who is the most productive then? The Red Sox? The St. Louis Cardinals? What if I told you that neither of those are true and that the actual winner is the Miami Marlins. According to a formula created by Matt Clark called the “Payroll to Results Rating” that takes into the average payroll of the teams, total wins and playoff success, the Marlins come out on top followed closely by the St. Louis Cardinals. Although the Marlins were the laughing stock of the MLB last season, during the period of time from 2000-2012 the Marlins averaged a payroll of 36 million, yet they were able to somehow come up with 5 seasons of 80 or more wins and a World Series title. The Cardinals who came in second on his list have an average payroll half as much as the Yankees, yet they have won the NL Central 8 times, the NL Pennant 4 times and the World Series twice since 2000. If that is not productivity on a budget, I don’t know what is.
A wise man by the name of Ben Franklin once said “A penny saved is a penny earned” and in the case of the MLB’s Oakland A’s this statement could not be more true. In what is the epitome of penny pinchers the Oakland A’s have made the playoffs 6 times since 2000 and last year won the AL West with an average payroll of a minute 53 million dollars. In what is known around the world of baseball as “Moneyball,” Billy Beane and his trusted advisors use their knowledge and superior tactics of statistical analysis to wheel and deal and get the most out of their players and so far much to the chagrin of “traditionalists” it has worked relatively well.
Is there evidence to back this up?
    In what might be a shocking trend to some people the average payroll rank of playoff teams has been steadily decreasing since 2004 a year that was dominated by wealthy teams. In today’s game, payroll no longer matters nearly as much as it once did for a plethora of reasons. From revenue sharing and exorbitant luxury taxes for teams that go over the cap to teams beginning to win from within outrageous payrolls, while not a thing of the past have become a diminishing factor in the number of wins a team has. Not only have these aforementioned factors created a lot of the parity throughout Major League Baseball as a whole, the recent downturn of our economy cause many smaller market teams to cut back in order to keep their bottom lines still profitable.




















Payroll and its Future Impacts
    Although payroll is playing a decreasing role in how many wins and playoff appearances a team has every year, the influence of it will never go away. The Yankees will spend, spend, and spend some more as they have the resources to do it, yet the small market teams such as the A’s or Rays who benefit now from revenue sharing will still be able to compete. While they don’t have the exorbitant amounts of funds the Yankees do, that extra money might let them go out and sign a free agent or multiples that fill team needs and allow them stay with the likes of the Yankees and Dodgers night in and night out. The Yankees will always be in the playoff hunt year in and year out, but in the end a Cinderella team with a low payroll always makes for a more intriguing story.
Big Spenders
Living for the Moment
    Since Major League Baseball took the monumental turn to Free Agency in 1976, the price of a guaranteed salary has only risen.  Some may argue that the talent has risen also, but that is for a different day.  The major concern for all Major League organizations is to win.  That is the goal each and every season, and some are willing to do whatever it takes to be holding the trophy at the end of the year.  Teams like the Yankees, Red Sox, Cardinals, Dodgers, are all teams that have dug deep into their wallet and it all seems to have paid off.  Many people argue that they are winning the unconventional way, and they are failing to realize that the “true” way to win is through your farm system, waiting until minor leaguers eventually become stars that can turn your whole organization around.  I know right, who has time for that?
    Although it might be disappointing to conclude, but paying for championships lately seems like the only way to turn.  Let’s look at the previous World Series winners and their payroll ranks from the years 2004-2013.  

 

    You will notice that since 2004, there has not been a World Series winner outside the top 13 in the payroll rankings.  The Red Sox sealed the deal this year with the 3rd highest payroll respectively.  The price to win is evident, and maybe if teams come to realize this they won’t be out on the golf courses so early next year.

No Money, More Problems
    Let’s look at the two teams that had the lowest payroll expenditures per win, the Houston Astros and the Miami Marlins.  They went for a combined record of 113 wins to 211 losses!  Okay how about this, if I asked you to name five players from each team, could you even do it easily?  Most people probably couldn’t, to be honest.  That’s a major problem!  What fan in their right mind wants to see their baseball team continuously lose year after year?  The stadium is empty, and when it does fill up it’s because teams like the Yankees are in town and most of the fans aren’t even there cheering on the home team.
    You know, most of the blame can’t be put on the organizations that don’t have the proper budget to fund a championship-caliber team.  If you were a superstar baseball player heading into free agency, where would you want to play; The Oakland Athletics team that offers you a 5 year, $50 million dollar contract or a Yankees team that will most likely offer you a 7 year, $105 million dollar deal?  Chances are, unless you have some weird tie to the Oakland area, which splits the field with the football team, you will choose to migrate to New York.  Did I mention they have 27 rings to aid their pitch to land you as a player as well?  
    The truth is, these “trust the system” approaches are growing old, fast.  The main priority for any major sports league is to win championships, no matter what it takes.  If it takes the highest payroll to do it, so be it.  Do you think that fans will complain about overspending if their team is in the playoff hunt year after year?  In the end, no one cares about how many times you “almost made the playoffs” with such a low budget, all they will care about five years later is how many rings they have.  The world is changing, and the price of the dollar is becoming more expensive by the year.  No one cares about the “intriguing story” or “Cinderella story”.  As a fan, I want teams that will attract a crowd and play to the level they’re capable of.  If that takes multi-million dollar deals and big signings in free agency, let it be!  Teams like the Yankees, Dodgers, Angels, and many more will never change their ways.  They have a history of winning and they would like to keep it that way for the future.  It looks like it’s time for the other “low-budget” franchises to step up and make some major moves.  Either that, or they can have fun counting how many times they almost won.
 


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