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The Financial Cost Of Losing Adam Wainwright

When news broke this morning about Adam Wainwright‘s “significant” arm injury, Cardinals fans quickly realized that their odds of winning the 2011 National League Central took a big hit. However, Wainwright’s loss will be felt beyond the standings, and if he is indeed out for the season, this injury could end up costing the Cardinals tens of millions of dollars.

Over at ESPN Insider today, Dan Szymobrski noted that losing Wainwright adjusted the Cardinals ZIPS projection down from 87 wins to 83 wins. That four win swing is enough to cut the Cardinals chances of winning their division from 35 percent down to 20 percent. When you factor in that they’ve also taken a similar hit in their chances of winning the wild card, it becomes clear that St. Louis will lose nearly half of their playoff expectation if Wainwright is indeed shelved for the season.

Beyond just being a bummer, this also has real financial ramifications for the Cardinals. In Baseball Between The Numbers, Nate Silver estimated the marginal revenue created by each additional win, and also by earning a playoff berth. While the revenue from average regular season win was estimated at about $650,000, that number is dragged down significantly by the low marginal value of wins that have little to no effect on a team’s playoff chances. Since no one makes the playoffs with fewer than 75 wins and every team that wins more than 105 games gets to play in October, the bulk of the value of a regular season win is tied up in the 75-105 range, and more precisely, the spike is really between wins 84-94.

This Cardinals team was directly in that sweetspot. The wins that the Cardinals are forfeiting by losing Wainwright are more accurately valued at about $2.5 million each. If we accept the four win drop that ZIPS projects, that would mean the Cardinals are going to lose out on approximately $10 million in revenue from regular season gate receipts, concessions, and merchandise sales. Considering that the book was published in 2006 (meaning that the analysis was probably done in 2004 or 2005), the totals are probably a bit higher now, but we’ll go with these for ease of use, and perhaps look at updating the study later this year.

It gets worse, however. Silver also estimates that, above and beyond the value of those individual wins, a playoff appearance is worth something like $25 million in revenue to a Major League team. If the Cardinals had a 50 percent chance of making the playoffs with Wainwright, they could have expected $12.5 million in potential revenue from their status as a contender. With just a 25 percent chance of making the playoffs, that expected potential revenue is now just $6.25 million.

That puts the financial loss of Wainwright’s injury at a total of $16 million in revenues that are now likely to be unrealized. For a team that is already struggling with the decision on how much they can afford to pay Albert Pujols, a $16 million drop in revenue is a really big problem.

Given the Cardinals tenuous standing in a tough division, as well as their need to find a lot of cash to pay their franchise superstar, the Cardinals could not afford this injury. The ramifications of this loss will likely be felt for years in St. Louis. It’s a huge blow to an organization that was in need of a boost, but instead, got punched in the face.