Last year, I introduced a new measure of a team’s efficiency: marginal dollars per marginal win. An article by Michael Lewis in the March 30 New York Times Magazine excerpted from his forthcoming Moneyball: The Art of Winning an Unfair Game, used my analysis to illustrate how Oakland gets so much more performance than other teams out of its low payroll.
Lewis wrote:
“A leading independent authority on baseball finance, a Manhattan lawyer named Doug Pappas, pointed out a quantifiable distinction between Oakland and the rest of baseball. The least you could spend on a 25-man team, if everyone was paid the minimum salary, was $5 million, plus $2 million more for players on the disabled list and the remainder of the 40-man roster. The huge role of luck in any baseball game, and the relatively small difference in ability between most major leaguers and the rookies who might work for the minimum wage, meant that the fewest games a minimum-wage baseball team would win during a 162-game season was something like 49. The Pappas measure of financial efficiency was this: How many dollars over the minimum $7 million does each team pay for each win over its 49th? How many marginal dollars does a team spend for each marginal win? Over the past three years Oakland has paid about half a million dollars per win. The only other team in six figures has been the Minnesota Twins, at $675,000 per win. The most profligate rich franchises–the Baltimore Orioles, for instance, or the Texas Rangers–have paid nearly $3 million for each win, or more than six times what Oakland paid. Oakland seemed to be playing a different game from everyone else.”
Here’s the data underlying Lewis’s conclusions.
In the tables below, the first three columns present each club’s record and winning percentage for the 1999-2002 seasons. The fifth column is its Opening Day payroll for these seasons. The remaining columns present the team’s performance, spending and efficiency compared to a hypothetical team of replacement-level players earning the major league minimum.
For these purposes, I’ve set replacement level equal to a .300 winning percentage. That’s worse than any actual major league team since the 1962 Mets; it’s roughly equal to a 49-113 season. Marginal Wins (MWs for short) are thus computed according to the formula ((Pct – .300) x 162). In 1999 the Atlanta Braves, with MLB’s best record, posted 54.4 MWs, while the Minnesota Twins, with the worst record, managed only 15.2 MWs.
Marginal payroll measures the amount of each club’s discretionary spending on players. A roster composed entirely of players making the major league minimum would cost about $5,600,000, assuming three players on the DL in addition to the 25-man active roster, so the sixth column, marginal payroll, equals a club’s actual Opening Day payroll, minus $5,600,000. The final column, “Marginal $/Marginal Win,” simply divides marginal payroll by a club’s marginal wins to compute the cost of each marginal win.
Thus in 1999 the Baltimore Orioles and Pittsburgh Pirates finished with almost identical records: 78-84 for the O’s, 78-83 for the Bucs. But since Baltimore spent over $56 million more to achieve the same result, each marginal win cost the Orioles almost $2.5 million, compared to just $555,000 for the Pirates. Despite the majors’ highest payroll, the world champion Yankees spent less per win than the 74-88 Padres, even without taking into account the money the Yankees earned from the postseason.
(When I performed this analysis for the 2001 season, I adjusted for playoff performance by subtracting each club’s reported postseason revenue from its payroll. Since this information isn’t available for other seasons, for consistency the figures below ignore the postseason. The 2001 figures suggest that making the World Series is worth about $14 million per team, making the LCS is worth at least $4 million, and losing in the first round is worth about $2 million.)
1999 Opening Day Marginal $/ Team W L Pct MWs Payroll Marginal $ Marginal Win BAL 78 84 .481 29.4 $78,902,282 $73,302,282 $2,493,275 BOS 94 68 .580 45.4 $59,553,500 $53,953,500 $1,188,403 NYA 98 64 .605 49.4 $85,034,692 $79,434,692 $1,607,990 TBA 69 93 .426 20.4 $33,952,500 $28,352,500 $1,389,828 TOR 84 78 .519 35.4 $44,509,333 $38,909,333 $1,099,134 CHA 75 86 .466 26.9 $24,560,000 $18,960,000 $ 705,729 CLE 97 65 .598 48.4 $68,061,627 $62,461,627 $1,290,529 DET 69 92 .429 20.8 $34,104,666 $28,504,666 $1,368,537 KCA 64 97 .398 15.8 $23,706,000 $18,106,000 $1,146,130 MIN 63 97 .394 15.2 $19,242,500 $13,642,500 $ 898,272 ANA 70 92 .432 21.4 $51,830,166 $46,230,166 $2,160,288 OAK 87 75 .537 38.4 $23,234,333 $17,634,333 $ 459,227 SEA 79 83 .488 30.4 $49,963,503 $44,363,503 $1,459,326 TEX 95 67 .586 46.4 $74,834,931 $69,234,931 $1,492,132 ATL 103 59 .636 54.4 $73,585,000 $67,985,000 $1,249,724 FLO 64 98 .395 15.4 $18,876,000 $13,276,000 $ 862,078 MON 68 94 .420 19.4 $16,175,500 $10,575,500 $ 545,129 NYN 97 66 .595 47.8 $62,450,427 $56,850,427 $1,189,217 PHI 77 85 .475 28.4 $30,297,500 $24,697,500 $ 869,630 CHN 67 95 .414 18.4 $60,191,500 $54,591,500 $2,966,929 CIN 96 67 .589 46.8 $33,162,761 $27,562,761 $ 588,809 HOU 97 65 .599 48.4 $51,629,000 $46,029,000 $ 951,012 MIL 74 87 .460 25.9 $41,395,762 $35,795,762 $1,384,233 PIT 78 83 .484 29.9 $22,197,666 $16,597,666 $ 555,394 SLN 75 86 .466 26.9 $45,698,333 $40,098,333 $1,492,540 ARI 100 62 .617 51.4 $66,078,999 $60,478,999 $1,176,634 COL 72 90 .444 23.4 $55,864,837 $50,264,837 $2,148,070 LAN 77 85 .475 28.4 $79,265,953 $73,665,953 $2,593,872 SDN 74 88 .457 25.4 $47,828,346 $42,228,346 $1,662,533 SFN 86 76 .531 37.4 $44,943,557 $39,343,557 $1,051,967
In 1999, the clubs which spent less than $1 million/win fell into three camps. Oakland
and Cincinnati had good, cheap teams; Houston fielded a very good team on a moderate payroll; the White Sox, Twins, Pirates and three-fifths of the NL East were both bad and cheap. None of the five clubs spending more than $2 million/win won more than 78 games, with the last-place Cubs coming close to breaking the $3 million/win barrier.
2000 Opening Day Marginal $/ Team W L Pct MWs Payroll Marginal $ Marginal Win BAL 74 88 .457 25.4 $81,447,435 $75,847,435 $2,986,119 BOS 85 77 .525 36.4 $77,940,333 $72,340,333 $1,987,372 NYA 87 74 .540 38.9 $92,538,260 $86,938,260 $2,232,600 TBA 69 92 .429 20.8 $62,765,129 $57,165,129 $2,744,554 TOR 83 79 .512 34.4 $46,238,333 $40,638,333 $1,181,347 CHA 95 67 .586 46.4 $31,133,500 $25,533,500 $ 550,291 CLE 90 72 .556 41.4 $75,880,971 $70,280,971 $1,697,608 DET 79 83 .488 30.4 $58,265,167 $52,665,167 $1,732,407 KCA 77 85 .475 28.4 $23,433,000 $17,833,000 $ 627,923 MIN 69 93 .426 20.4 $16,519,500 $10,919,500 $ 535,270 ANA 82 80 .506 33.4 $51,464,167 $45,864,167 $1,373,179 OAK 91 70 .565 43.0 $31,971,333 $26,371,333 $ 613,783 SEA 91 71 .562 42.4 $58,915,000 $53,315,000 $1,257,429 TEX 71 91 .438 22.4 $70,795,921 $65,195,921 $2,910,532 ATL 95 67 .586 46.4 $84,537,836 $78,937,836 $1,701,246 FLO 79 82 .491 30.9 $20,072,000 $14,472,000 $ 468,491 MON 67 95 .414 18.4 $34,807,333 $29,207,333 $1,587,355 NYN 94 68 .580 45.4 $79,509,776 $73,909,776 $1,627,969 PHI 65 97 .401 16.4 $47,308,000 $41,708,000 $2,543,171 CHN 65 97 .401 16.4 $60,539,333 $54,939,333 $3,349,959 CIN 85 77 .525 36.4 $46,867,200 $41,267,200 $1,133,714 HOU 72 90 .444 23.4 $51,289,111 $45,689,111 $1,952,526 MIL 73 89 .451 24.4 $36,505,333 $30,905,333 $1,266,612 PIT 69 93 .426 20.4 $28,928,333 $23,328,333 $1,143,546 SLN 95 67 .586 46.4 $61,453,863 $55,853,863 $1,203,747 ARI 85 77 .525 36.4 $81,027,333 $75,427,333 $2,072,179 COL 82 80 .506 33.4 $61,111,190 $55,511,190 $1,662,012 LAN 86 76 .531 37.4 $88,124,286 $82,524,286 $2,206,532 SDN 76 86 .469 27.4 $54,821,000 $49,221,000 $1,796,387 SFN 97 65 .599 48.4 $53,737,826 $48,137,826 $ 994,583
The 2000 Cubs achieved what their predecessor could not, shattering the $3 million/win mark with a season that saw them finish with the NL’s worst record but seventh-highest payroll. Baltimore, Tampa Bay and Texas weren’t far behind. Two of the AL’s three most cost-effective teams, the White Sox and Athletics, qualified for the playoffs, while Minnesota and Florida showed that even a bad team can be efficient if it just cuts payroll far enough. The 2000 Yankees, who lost 15 of their last 18 games before awaking in time for the playoffs, became the first playoff qualifier to spend more than $2 million/win. Notwithstanding the Commissioner’s laments about competitive balance, MLB was as balanced as it’s ever been: No club finished with a winning percentage above .599 or below .401.
2001 Opening Day Marginal $/ Team W L Pct MWs Payroll Marginal $ Marginal Win BAL 63 98 .391 14.8 $ 72,426,328 $ 66,826,328 $4,517,947 BOS 82 79 .509 33.9 $109,558,908 $103,958,908 $3,065,792 NYA 95 65 .594 47.6 $109,791,893 $104,191,893 $2,189,480 TBA 62 100 .383 13.4 $ 54,951,602 $ 49,351,602 $3,682,955 TOR 80 82 .494 31.4 $ 75,798,500 $ 70,198,500 $2,235,621 CHA 83 79 .512 34.4 $ 62,363,000 $ 56,763,000 $1,650,087 CLE 91 71 .562 42.4 $ 91,974,979 $ 86,374,979 $2,037,146 DET 66 96 .407 17.4 $ 49,831,167 $ 44,231,167 $2,542,021 KCA 65 97 .401 16.4 $ 35,643,000 $ 30,043,000 $1,831,890 MIN 85 77 .525 36.4 $ 24,350,000 $ 18,750,000 $ 515,110 ANA 75 87 .463 26.4 $ 46,568,180 $ 40,968,180 $1,551,825 OAK 102 60 .630 53.4 $ 33,810,750 $ 28,210,750 $ 528,291 SEA 116 46 .716 67.4 $ 75,652,500 $ 70,052,500 $1,039,355 TEX 73 89 .451 24.4 $ 88,504,421 $ 82,904,421 $3,397,722 ATL 88 74 .543 39.4 $ 91,851,587 $ 86,251,587 $2,189,127 FLO 76 86 .469 27.4 $ 35,504,167 $ 29,904,167 $1,091,393 MON 68 94 .420 19.4 $ 34,774,500 $ 29,174,500 $1,503,840 NYN 82 80 .506 33.4 $ 93,174,428 $ 87,574,428 $2,621,989 PHI 86 76 .531 37.4 $ 41,664,167 $ 36,064,167 $ 964,283 CHN 88 74 .543 39.4 $ 64,015,833 $ 58,415,833 $1,482,635 CIN 66 96 .407 17.4 $ 45,227,882 $ 39,627,882 $2,277,464 HOU 93 69 .574 44.4 $ 60,382,667 $ 54,782,667 $1,233,844 MIL 68 94 .420 19.4 $ 43,089,333 $ 37,489,333 $1,932,440 PIT 62 100 .383 13.4 $ 52,698,333 $ 47,098,333 $3,514,801 SLN 93 69 .574 44.4 $ 77,270,855 $ 71,670,855 $1,614,208 ARI 92 70 .568 43.4 $ 81,206,513 $ 75,606,513 $1,742,086 COL 73 89 .451 24.4 $ 71,068,000 $ 65,468,000 $2,683,115 LAN 86 76 .531 37.4 $108,980,952 $103,380,952 $2,764,197 SDN 79 83 .488 30.4 $ 38,333,117 $ 32,733,117 $1,076,747 SFN 90 72 .556 41.4 $ 63,332,667 $ 57,732,667 $1,394,509
As salaries continued to rise, 2001’s most efficient teams stand out like sore thumbs. Oakland won 102 games with the majors’ second-lowest payroll; Minnesota contended all season with the lowest. Seattle won 116 games with a payroll lower than Toronto’s. Bad spending by Tampa Bay and Pittsburgh pushed them over $3.5 million/win, while the old, overpaid Orioles staggered home at $4.5 million/win. In the NL, the big-spending Mets and Dodgers missed the playoffs, while the Phillies contended all season despite spending less than half as much.
2002 Opening Day Marginal $/ Team W L Pct MWs Payroll Marginal $ Marginal Win BAL 67 95 .414 18.4 $ 60,493,487 $ 54,893,487 $2,983,342 BOS 93 69 .574 44.4 $108,366,060 $102,766,060 $2,314,551 NYA 103 58 .640 55.0 $125,928,583 $120,328,583 $2,186,212 TBA 55 106 .342 6.7 $ 34,380,000 $ 28,780,000 $4,269,007 TOR 78 84 .481 29.4 $ 76,864,333 $ 71,264,333 $2,423,957 CHA 81 81 .500 32.4 $ 57,052,833 $ 51,452,833 $1,588,050 CLE 74 88 .457 25.4 $ 78,909,448 $ 73,309,448 $2,886,199 DET 55 106 .342 6.7 $ 55,048,000 $ 49,448,000 $7,334,741 KCA 62 100 .383 13.4 $ 47,257,000 $ 41,657,000 $3,108,731 MIN 94 67 .584 46.0 $ 40,225,000 $ 34,625,000 $ 752,982 ANA 99 93 .516 34.9 $ 61,721,667 $ 56,121,667 $1,606,632 OAK 103 59 .636 54.4 $ 39,679,746 $ 34,079,746 $ 626,466 SEA 93 69 .574 44.4 $ 80,282,668 $ 74,682,668 $1,682,042 TEX 72 90 .444 23.4 $105,302,124 $ 99,702,124 $4,260,775 ATL 101 59 .631 53.7 $ 93,470,367 $ 87,870,367 $1,637,463 FLO 79 83 .488 30.4 $ 41,979,917 $ 36,379,917 $1,196,708 MON 83 79 .512 34.4 $ 38,670,500 $ 33,070,500 $ 961,352 NYN 75 86 .466 26.9 $ 94,633,593 $ 89,033,593 $3,314,008 PHI 80 81 .497 31.9 $ 57,955,000 $ 52,355,000 $1,641,382 CHN 67 95 .414 18.4 $ 75,690,833 $ 70,090,833 $3,809,284 CIN 78 84 .481 29.4 $ 45,050,390 $ 39,450,390 $1,341,850 HOU 84 78 .519 35.4 $ 63,448,417 $ 57,848,417 $1,634,136 MIL 56 106 .346 7.4 $ 50,287,333 $ 44,687,333 $6,038,829 PIT 72 89 .447 23.8 $ 42,323,598 $ 36,723,598 $1,539,954 SLN 97 65 .599 48.4 $ 74,098,267 $ 68,498,267 $1,415,253 ARI 98 64 .605 49.4 $102,820,000 $ 97,220,000 $1,968,016 COL 73 89 .451 24.4 $ 56,851,043 $ 51,251,043 $2,100,453 LAN 92 70 .568 43.4 $ 94,850,952 $ 89,250,952 $2,056,474 SDN 66 96 .407 17.4 $ 41,425,000 $ 35,825,000 $2,058,908 SFN 95 66 .590 47.0 $ 78,299,835 $ 72,699,835 $1,547,132
In 2002, the Athletics and Twins continued to lead the majors in efficient spending. Not coincidentally, both clubs were built around a nucleus of young, low-salaried players produced by their own farm systems, with free agents and expensive veterans brought in only to fill specific needs. At the other end of the spectrum, the mismanaged Tigers and Brewers competed to see who could do less with more. The Tigers “won” this competition by spending an incredible $7.3 million per marginal win. Detroit finished 39 games behind Minnesota in the AL Central despite outspending the Twins by almost $15 million, while for the second year in a row the Yankees were the most efficient spenders in the AL East. The Mets and Rangers proved that money couldn’t buy victories.
1999-2002 COMBINED
Opening Day Marginal $/
Team W L Pct MWs Payroll Marginal $ Marginal Win
BAL 282 365 .436 88.0 $293,269,532 $270,869,532 $3,076,809
BOS 354 293 .547 160.1 $355,418,801 $333,018,801 $2,079,455
NYA 383 261 .595 191.0 $413,293,428 $390,893,428 $2,046,789
TBA 255 391 .395 61.4 $186,049,231 $163,649,231 $2,665,754
TOR 325 323 .502 130.6 $243,410,499 $221,010,499 $1,692,270
CHA 334 313 .516 140.1 $175,109,333 $152,709,333 $1,089,876
CLE 352 296 .543 157.6 $314,827,025 $292,427,025 $1,855,501
DET 269 377 .416 75.4 $197,249,000 $174,849,000 $2,317,943
KCA 268 379 .414 74.0 $130,039,000 $107,639,000 $1,454,302
MIN 311 334 .482 118.0 $100,337,000 $ 77,937,000 $ 660,223
ANA 326 352 .481 117.2 $211,584,180 $189,184,180 $1,614,541
OAK 383 264 .592 189.2 $128,696,162 $106,296,162 $ 561,843
SEA 379 269 .585 184.6 $264,813,671 $242,413,671 $1,313,183
TEX 311 337 .480 116.6 $339,437,397 $317,037,397 $2,719,017
ATL 387 259 .599 193.8 $343,444,790 $321,044,790 $1,656,594
FLO 298 349 .461 104.1 $116,432,084 $ 94,032,084 $ 903,628
MON 286 362 .441 91.6 $124,427,833 $102,027,833 $1,113,841
NYN 348 300 .537 153.6 $329,768,224 $307,368,224 $2,001,095
PHI 308 339 .476 130.6 $177,224,667 $154,824,667 $1,185,487
CHN 287 361 .443 92.6 $260,437,499 $238,037,499 $2,570,599
CIN 325 324 .501 130.1 $170,308,233 $147,908,233 $1,136,888
HOU 346 302 .534 151.6 $226,749,195 $204,349,195 $1,347,950
MIL 271 376 .419 77.0 $171,277,761 $148,877,761 $1,933,004
PIT 281 365 .435 87.5 $146,147,930 $123,747,930 $1,414,748
SLN 360 287 .556 130.6 $258,521,318 $236,121,318 $1,807,973
ARI 375 273 .579 180.6 $331,132,845 $308,732,845 $1,709,484
COL 300 348 .463 105.6 $244,895,070 $222,495,070 $2,106,961
LAN 341 307 .526 146.6 $371,222,143 $348,822,143 $2,379,414
SDN 295 353 .455 100.6 $182,407,463 $160,007,463 $1,590,531
SFN 368 279 .569 130.6 $240,313,885 $217,913,885 $1,668,560
No surprise: Over the past four years, the combination of the third-highest winning percentage and fourth-lowest payroll has made the Oakland Athletics MLB’s most efficient club, posting 189 marginal wins at a cost of just $562,000 per win. Put another way, Oakland won as many games as the New York Yankees, with a marginal payroll 27% of the Yankees’. The Minnesota Twins, the only club to approach Oakland in efficiency, did so by slashing payroll to the bone and fielding dismal teams during owner Carl Pohlad’s “Contract Me!” phase.
Even at their worst, though, Pohlad’s Twins were no worse than other clubs which spent far more to achieve just as little. Marginal dollar per marginal win analysis distinguishes between inexpensive bad teams–the only ones which could properly support a claim that some teams “can’t afford to compete”–and those whose on-field failures are attributable to poor management. The Baltimore Orioles could be called the anti-Oakland: Over the four years of this study, they spent 2 1/2 times as much to win 101 fewer games, at a cost of more than $3 million per marginal win.
Runners-up in this category include the Texas Rangers, who outspent the Mets and Diamondbacks; the Chicago Cubs, who outspent the Cardinals and Giants; and even the hapless Devil Rays, who won less than 40% of their games despite outspending the over-.500 Reds and White Sox. The Tigers and Brewers, who squandered the revenue from their new parks, aren’t far behind. Only Kansas City, Florida and Montreal have been consistently bad and consistently cheap, and all three have serious stadium and/or ownership issues. But even fans of these clubs can look to the Twins for hope. When the promise of a good young team–and of the attendance boost such a team can provide–can induce Carl Pohlad to brush the cobwebs off his wallet to re-sign the nucleus of the Twins, no one can truly lose all “hope and faith.”
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