Money Wins: Is There Enough Parity In Baseball?

Yesterday afternoon, Jayson Stark considered the question, “Is the MLB’s competitive balance a joke?” His answer was a rather blunt no:

MLB’s competitive balance is NOT a joke.

It beats the NFL.

It beats the league formerly known as the NBA.

And … I can prove it.

Stark’s method of proving it — plucking facts from the recent playoff series and comparing them generally to the NFL and other major leagues — was less than rigorous. In general, I agreed with his assertion: Parity in the MLB exists naturally far more than any other sports league.

HOWEVER, if my foot has less gangrene than your foot, does that mean I don’t need a doctor? No. I probably still need a doctor, and I probably need to stop playing barefoot tag on Rusty Nails Pier.

Relative success does not necessitate absolute success. And frankly, I feel the “parity” in the MLB indeed has a gangrene of sorts, a disease that is causing only specific segments of the league to rot while the rest hum along uncaring.

Of course, it is one thing to suspect something and demand more research, but it is another to pull the sabermetrician stocking over your head and answer that suspicion with a Falcon Punch of data.

Let’s do just that.

Okay, first of all, we must gather together as much reliable payroll data as Internet can possibly give us. I don’t always look up payrolls, but when I do, I use Cot’s Contracts — and then I thank them profusely and publicly.

Taking Cott’s contract data from 2000 through 2011, we can then pair it with the winning percentages of the teams in that era.

Stark focused a lot on the playoff successes of small market and low budget teams like the Tampa Bay Rays and Arizona Diamondbacks, but having success in the playoffs is like having success invading France — the hardest part is getting through the Ardennes, but anyone can do it once they arrive. Teams have much more control over their success in the regular season, so that’s what we need to examine here.

But we cannot look at just raw numbers — the steadily increasing payrolls of the past decade have rendered that a useless task:

Moreover, ordinal ranking (Stark’s tool of choice) does us little good when the gap between the 1st payroll (the New York Bankees, er, Yankees) and the 2nd payroll constitues a considerable and uneven distance — a gap far greater than that of the 30th and 31st payrolls.

Instead, let’s use z-scores — standardized numbers we can adjust according to their period. So, $97M in 2000 is a z-score of 1.28 (Angels payroll), but $97M in 2008 (Blue Jays) is only 0.31 — or 0.31 standard deviations above the mean — because the league as a whole has begun to spend more.

Using this method, we can more effectively plot payrolls against wins:

The relationship, as we might expect, is loose. An uninspiring R-squared in the 0.17 range tells us payrolls have accounted for 17% of the variation in winning percentages over the last 12 seasons.

Now we reach the philosophical portion of the program, asking ourselves: How much do we really want payroll to effect winning?

The NFL has decided it wants payroll to have essentially no impact on winning, so teams basically trot out the same amount of money every Sunday and hope their money was better-spent. Is that what the MLB wants?

There is some justice to the notion of rewarding owners who spend more, though. For all his despicable wealthiness, George Steinbrenner deserves praise for willingly pouring huge palettes of cash into his team. Few make the assertion that Brian Cashman or the Yankees GMs of the past orchestrated success on their own — no, George “The Real Cash Man” Steinbrenner got and gets his due.

So, yes, the Yankees have a great business model (see: YES Network, or cash cow entry) and a franchise predisposed towards financial success, but they also have a willingness to spend their money.

But what about the Milwaukee Brewers who, as Stark notes, play in the smallest media market? Or what about basically any team in the history of ever to play in Florida, where it is somehow impossible for my home state brethren to sell out any sporting event outside of college football?

These teams will never be able to spend at the same level — on the MLB payroll or on the developmental and drafting areas — regardless of their willingness to do so. Sustaining long-term success is next to impossible for these franchises. For them, 17% is far too large.

Consider this: In the above period, teams with a payroll less than $70M (pretty much the lower quartile) had an average winning percentage of .475. Teams who broke the $100M barrier had a winning percentage of .540.

Multiplied out, that’s a 77-win team and an 87-win team.

In other words, the Rays and the Diamondbacks are still very much the exception to the Money Rules rule — and the Diamondbacks benefit from their relatively winnable division. In fact, the current outlay of divisions — sliced into the smallest pieces they have ever been in baseball’s long and racist history — allow for sometimes un-deserving teams to slip into the playoffs.

For instance, in 2009, three AL West teams were at 85 wins or better, yet only one made the playoffs. Meanwhile, the 87-win Minnesota Twins, which would have been in 3rd place in the AL or NL West, won their division. In 2008, the 84-win Los Angeles Dodgers made the playoffs even though they would have been in a whopping 5th place in the NL Central.

In other words, there is hope for the low-in-coin franchise — whether it comes in the form of saving money for several years and then going crazy for a few years, a la the Florida/Miami Marlins, or slowly and meticulously building a world-class farm system and then hoodwinking players into team-friendly contracts, a la Rays du Tampa Bay.

So, yes, the MLB’s competitive balance is indeed “second to none”; it is not like the NFL of the 70s; it does not hand trophies to the biggest spenders; it does not blindly oppress the impoverished; it is not a joke by any stretch — but that does not make it perfect.

TWO NOTES: 1) Allow me to amend the 17% number there. As Burke points out in the comments, I forgot the final step of that consideration (taking the square root of the R-squared, making it a sense-ful number again). This of course means payroll accounts for 41% of the variation in wins, not just 17% — which only further exacerbate my, and presumably your, ire. I’m not sure who to trust anymore, so I’m going to trust myself on this one. There is no first amendment.

2) No, do not fear, there are only 30 MLB teams. All this NFL talk got me thinking 32, but instead of adjusting my words above, I will defer to Steve’s observation below, that I was merely counting the Blargon Nebulons as team No. 31.