Tag Archives: baseball salary cap

Baseball Economics

image from miller-mccune.com

image from miller-mccune.com

I thought that I should get a quick post in here during the All Star break, with all the extra time and all. With the Buccos going through their yearly meltdown, I don’t see a better time topic than the problems with the economics of baseball. If we can’t change why the Pirates will never have sustained success in this system, the least we can do is understand it, right? Now, when the idea of a salary cap comes up, there are always some people who argue against it, and I just don’t understand their thinking. Being from a small market in Pittsburgh where you can’t buy a jersey with a name on it (because as soon as someone is successful enough to merit a jersey, they’re out the door before the investment is worthwhile), maybe I understand the problem a little bit more than most. The people against the salary cap love to (mis)quote statistics about how small market teams can succeed. I’m going to present some statistics of my own to show just how silly that argument is.

Proponents of free market baseball love to say that “24 of 30 teams have made the playoffs in the past 10 years”, and “we have 8 different world series champs since 2000”. Both are true statements and seem to present indisputable evidence that small market teams get their moment in the sun. Which is true. But that stat is made true by one policy: the slary structure for new players. Because players have low fixed salaries for their first 3 (possibly 4 with arbitration) years in the majors, teams can horde prospects in the minors and bring them up together in a wave that will help them compete…for a year or two. To build a continual stream of top of the line prospects that can compete their first 3 years in the majors and make a continually competitive team is next to impossible. Just ask Oakland. They held the fort for a while, outsmarting the other 29 teams, but it didn’t last. To see what I mean, just look at this. It’s a table with the average salary team from 1999-2008, the number of times they made the playoffs, and the number of titles they had in that span:

Team

Avg. Salary

Playoffs

Titles

New York (AL)

$155,791,897.70

9

2

Boston

$111,823,842.40

6

2

New York (NL)

$100,865,243.00

3

0

Los Angeles (NL)

$ 97,257,251.30

3

0

Atlanta

$ 90,590,089.40

7

0

Chicago (NL)

$ 82,760,642.90

3

0

Seattle

$ 82,690,632.10

2

0

Los Angeles (AL)

$ 81,984,799.00

5

1

St. Louis

$ 80,025,990.10

6

1

Texas

$ 76,509,696.70

1

0

San Francisco

$ 75,312,136.70

3

0

Arizona

$ 72,839,073.00

4

1

Houston

$ 72,366,366.80

4

0

Baltimore

$ 72,148,439.00

0

0

Philadelphia

$ 71,257,559.20

2

1

Chicago (AL)

$ 70,240,283.20

3

1

Detroit

$ 68,167,443.10

1

0

Toronto

$ 64,694,619.70

0

0

Cleveland

$ 64,301,721.30

3

0

Colorado

$ 58,919,140.50

1

0

Cincinnati

$ 55,199,034.50

0

0

San Diego

$ 54,678,100.20

2

0

Milwaukee

$ 49,168,005.90

1

0

Oakland

$ 48,477,649.10

5

0

Minnesota

$ 45,340,877.20

4

0

Washington

$ 42,058,966.60

0

0

Kansas City

$ 42,000,300.00

0

0

Pittsburgh

$ 40,998,248.90

0

0

Tampa Bay

$ 37,580,820.80

1

0

Florida

$ 33,118,129.30

1

1

That looks a whole lot more realistic, eh? Now, the playoff category follows generally right along with the salary numbers (save a few outliers like Oakland and Minnesota who outsmarted the system for a while). There is a definite correlation that more expensive teams are generally more successful over the long run (as they should be). The titles category, however, is more homogeneous. Boston and the Yankees both have 2 and are at the top, but the other 8 are pretty much spread over the salary spectrum. What does that tell us? Well, it tells us that the playoffs are a crap shoot.

Take a look at this. Since ’99, the teams that make the playoffs have always spent significantly more than the teams who don’t. The smallest gap was last year (mainly because of Tampa Bay). Playoff teams had an average salary of about $102.9 million. Everyone else had an average salary of about $82.4 million. That’s a difference of over $18 million in the best year. In the playoffs, however, it’s a different story. The winning team has spent above the average salary of all playoff teams in 6 of the past 10 years. 4 times they spent below. So it seems to be that the higher payroll teams rise to the top to make the playoffs (along with maybe 1 or 2 surprise teams), and from there its anyone’s game. That makes sense. Baseball is a game where anyone can beat anyone on any given day. There’s a lot of luck involved. A few seeing eye singes, a few balls go just foul, and you’ve got yourself an upset. Over the course of a long season, the cream generally rises. But the playoffs are a very small sample size, and its basically a crap shoot.

So, in essence, the playoffs is like the lotto. Getting a ticket is hard to do, but once you’re there it’s mostly whether or not the breaks go your way. The big spending teams can buy their ticket year in and year out (see the Yankees and their 9 of 10 playoff appearances), but it doesn’t guarantee a championship (see their 2 titles out of those 9 appearances). So the notion that because the championships in baseball are generally spread around doesn’t mean that there’s parity. It just means that the playoff structure is flawed as well. There’s definitely still the haves and have-nots. We’re unfortunately a have-not. So I guess we’ll just have to wait for our once in a blue moon streak like the A’s, Twins, and Rays. I hope it comes soon, because the stadium is starting to get really empty.

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