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Baseball Economics 101

Class is in session.  Join Professor Wig as he presents his Baseball Economics 101 Report Card.  Ever wonder which MLB franchises were turning payroll into on-field production.  You can find out right here.  And take good notes...there will be an exam…

 

We hope you will contact The Powdered Wig and let him know what you think about the economics of baseball at powderedwig@thehighcourtofsports.com.

Baseball Economics 101

October 7, 2005

 

Baseball executives are often heard saying that baseball is a performance-driven industry.  But how does one measure performance.  For some owners, the most importance results are the ones on the field (wins and losses).  Other owners will secretly measure performance by the number of tickets sold and the amount of revenue created after expenses have been paid.  So you can see that not everyone can agree on where the bottom line is actually drawn. 

 

Here at the High Court of Sports, we think fans have the right to expect baseball executives to spend their money wisely and therefore seek to balance fiscal responsibility with on-field performance.  Overspending on teams that under-perform doesn’t impress us, nor are we sympathetic towards the front offices that refuse to spend enough to field a strong competitor.  

 

Take a look now at our 1st annual Baseball Economics 101 Report Card.  Teams were ranked according to total 2005 season wins (most wins ranking 1st, etc.), 2005 overall payroll (lowest payroll ranking 1st, etc.), and dollars spent per win (fewest dollars per win ranking 1st and so on).  Each team’s rankings were added and averaged to provide an overall grade called Wins/Payroll Rating (WPR).  The lower the WPR, the better job a team did in turning their payroll into wins in 2005.

 

*Payroll figures are courtesy www.usatoday.com

2005 Playoff teams in Green

 

 TOP 10

Team

$ Per Win (rank)

Wins (rank)

Payroll (rank)

WPR

(Wins/Payroll Rating)

1) Indians

$446,000 (2)

93 (6)

41.5 M (5)

4.3 

2) Brewers

$492,000 (3)

81 (15.5)

39.9 M (4)

7.5 

3) Athletics

$629,000 (7)

88 (9.5)

55.4 M (9)

8.5 

4) Blue Jays

$571,000 (5)

80 (17)

45.7 M (6)

9.3 

5) Nationals

$599,000 (6)

81 (15.5)

48.6 M (8)

9.8 

6) Devil Rays

$442,000 (1)

67 (28)

29.7 M (1)

10.0 

7) Twins

$676,000 (9)

83 (12)

56.2 M (11)

10.7 

8) White Sox

$759,000 (13)

99 (2)

75.2 M (18)

11.0 

9) Pirates

$569,000 (4)

67 (28)

38.1 M (3)

11.7 

10) Marlins

$727,000 (12)

83 (12)

60.4 M (12)

12.0 

 

Note:  The Top 10 organizations likely got more on-field production than they could have expected from their payroll (or in the case of the Devil Rays and Pirates, they spent so little they couldn’t help but get a decent return on their investments). 

 

MIDDLE 10

Team

$ Per Win (rank)

Wins (rank)

Payroll (rank)

WPR

(Wins/Payroll Rating)

11) Rangers

$706,000 (10)

79 (18.5)

55.8 M (10)

12.8 

12) Royals

$658,000 (8)

56 (30)

36.9 M (2)

13.3 

13) Padres

$771,000 (14)

82 (14)

63.3 M (15)

14.3 

14) Cardinals

$921,000 (18)

100 (1)

92.1 M (25)

14.7 

14) Astros

$862,000 (17)

89 (8)

76.8 M (19)

14.7 

16) Rockies

$718,000 (11)

67 (28)

48.2 M (7)

15.3 

17) Braves

$960,000 (19)

90 (7)

86.5 M (21)

15.7 

18) D-Backs

$809,000 (15)

77 (20)

62.3 M (14)

16.3 

19) Reds

$847,000 (16)

73 (23)

61.9 M (13)

17.3 

20) Angels

$1,028,000 (22)

95 (4)

97.7 M (27)

17.7 

 

Note:  These 10 organizations got approximately what they paid for.  That is, their payrolls and win totals were almost totally in agreement when compared to the other 29 teams.  Some of these teams spent a lot and got a lot; others spent little and got little.

 

BOTTOM 10

Team

$ Per Win (rank)

Wins (rank)

Payroll (rank)

WPR

(Wins/Payroll Rating)

21) Phillies

$1,085,000 (23)

88 (9.5)

95.5 M (26)

19.5 

22) Orioles

$998,000 (21)

74 (22)

73.9 M (17)

20.0

23) Tigers

$973,000 (20)

71 (24.5)

69.1 M (16)

20.2

24) Red Sox

$1,300,000 (29)

95 (4)

123.5 M (29)

20.7 

25) Yankees

$2,192,000 (30)

95 (4)

208.3 M (30)

21.3 

26) Cubs

$1,101,000 (24)

79 (18.5)

87.0 M (22)

21.5

27) Mets

$1,220,000 (27)

83 (12)

101.3 M (28)

22.3 

28) Dodgers

$1,169,000 (25)

71 (24.5)

83.0 M (20)

22.5

29) Giants

$1,202,000 (26)

75 (21)

90.2 M (24)

23.6

30) Mariners

$1,271,000 (28)

69 (26)

87.8 M (23)

25.7 

 

Note:  The Bottom 10 clubs were all guilty of overspending for the on-field results they received.  Blame the owners, the general managers, the field managers or the players.  It makes no difference.  This list produced only 2 playoff teams despite having 7 of the top 10 payrolls in baseball.  These teams failed baseball economics.  And that is the bottom line.