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Mar 08

Spend a Little, Win Big

In my grad school class reading this morning I came across fun project management metrics such as cost variance and cost performance index, which are used to determine how much has been spent compared to the expected cost. Of course, as I was reading this, my mind wandered over to baseball (probably due to me watching yesterday’s Braves and Mets game on MLB Network—go Jacob deGrom and 2014 first round pick Michael Conforto!) and what teams actually spent based on what the expected cost would be. I’ll tackle that in a later post I hope, but in my subsequent research on cost per win, I came across this gem of a table from Gammons Daily that broke down what a team actually paid per win:

Rank Team Salary Wins Cost/Win
1 Marlins $41,836,900 77 $543,336
2 Astros $44,985,800 70 $642,654
3 Athletics $77,220,900 88 $877,510
4 Pirates $77,845,999 88 $884,614
5 Indians $82,500,800 85 $970,598
6 Royals $90,481,500 89 $1,016,646
7 Cubs $74,546,356 73 $1,021,183
8 Mariners $89,539,642 87 $1,029,191
9 Rays $82,035,490 77 $1,065,396
10 Mets $84,281,011 79 $1,066,848
11 Orioles $105,084,121 96 $1,094,626
12 Padres $89,881,695 77 $1,167,295
13 Cardinals $108,020,360 90 $1,200,226
14 Twins $84,912,500 70 $1,213,036
15 White Sox $89,551,982 73 $1,226,739
16 Braves $97,855,673 79 $1,238,679
17 Brewers $102,724,338 82 $1,252,736
18 Angels $128,046,500 98 $1,306,597
19 Nationals $134,366,735 96 $1,399,653
20 Reds $112,378,771 76 $1,478,668
21 Rockies $99,579,071 66 $1,508,774
22 Blue Jays $129,427,700 83 $1,559,370
23 Giants $148,239,158 88 $1,684,536
24 Diamondbacks $111,798,833 64 $1,746,857
25 Tigers $163,078,526 90 $1,811,984
26 Rangers $132,491,596 67 $1,977,487
27 Red Sox $154,380,395 71 $2,174,372
28 Phillies $179,521,056 73 $2,459,193
29 Yankees $208,830,659 84 $2,486,079
30 Dodgers $241,128,402 94 $2,565,196

2014 MLB – Cost Per Win

It’s a straightforward concept. The site took each respective team’s Opening Day payroll figure and divided it by how many wins each team had. Voila! The Dodgers spent the most per win and the Marlins, misers that they are, were building their potential 2015 sleeper team with a paltry $543,336 dollars per.

That wasn’t good enough for me, though. This sort of table while rooted entirely in reality rewarded teams for being cheap. All of the top 10 teams in terms of lowest Opening Day payroll were within the top 14 in relation to cost per win. Only the Minnesota Twins were outside the top 10 as the Kansas City Royals with the 13th lowest payroll had the sixth lowest cost per win. The flip side was also the case. The Phillies, Yankees, and Dodgers all had the top three highest payrolls and had the three highest costs per win. It makes sense. It’s simple and logical. If you spend lots of money, regardless of how many wins your team actually ends up with, the cost per win will be high.

No. I’m wondering if the figures are too low.

It’s all well and good that the Marlins started 2014 with a payroll nearing $42M and earned 77 wins. It could have been lower. The Marlins theoretically could have opened the season with an entire 25-man roster filled with minimum earners (league minimum was $500,000 in 2014) that would have cost them $12.5M. Maybe it surprises some that Jeffrey Loria didn’t do this1 but the Marlins exceeded a rock bottom roster salary by nearly $30M dollars. Spendthrifts!

Anyway, a team filled with replacement level players, the kind that would cost a team the league minimum, would eke out a 48-114 record according to Baseball-Reference, so in reality the Marlins paid an extra $30M for 29 more wins. Certainly, unless Sam Hinkie takes over a Major League team, no GM would ever completely ship off all viable talent and fill those roster spots with questionable, replacement-level talent. Forget that the Houston Astros had a payroll of $24M in 2013 and won just 51 games. Okay, so the Astros actually tried to do this very thing, but beyond their epic stink job, it’s extremely difficult to cut costs that much and not alienate an entire fan base into throwing the collective finger.

After subtracting the minimum wage team of replacement level players from the 2014 Opening Day payroll and then subtracting the minimum wins from the actual wins, I came up with a new table of costs per win.

Rank Prior Rank Team Salary Over Minimum Wins Over Replacement Cost/Win
1 1 Marlins $41,836,900 29 $1,011,617
2 2 Astros $44,985,800 22 $1,476,627
3 3 Athletics $77,220,900 40 $1,618,023
4 4 Pirates $77,845,999 40 $1,633,650
5 5 Indians $82,500,800 37 $1,891,914
6 6 Royals $90,481,500 41 $1,901,988
7 11 Orioles $105,084,121 48 $1,928,836
8 8 Mariners $89,539,642 39 $1,975,375
9 13 Cardinals $108,020,360 42 $2,274,294
10 18 Angels $128,046,500 50 $2,310,930
11 10 Mets $84,281,011 31 $2,315,516
12 9 Rays $82,035,490 29 $2,397,776
13 7 Cubs $74,546,356 25 $2,481,854
14 19 Nationals $134,366,735 48 $2,538,890
15 17 Brewers $102,724,338 34 $2,653,657
16 12 Padres $89,881,695 29 $2,668,334
17 16 Braves $97,855,673 31 $2,753,409
18 15 White Sox $89,551,982 25 $3,082,079
19 14 Twins $84,912,500 22 $3,291,477
20 22 Blue Jays $129,427,700 35 $3,340,791
21 23 Giants $148,239,158 40 $3,393,479
22 20 Reds $112,378,771 28 $3,567,099
23 25 Tigers $163,078,526 42 $3,585,203
24 21 Rockies $99,579,071 18 $4,837,726
25 30 Dodgers $241,128,402 46 $4,970,183
26 29 Yankees $208,830,659 36 $5,453,629
27 27 Red Sox $154,380,395 23 $6,168,713
28 24 Diamondbacks $111,798,833 16 $6,206,177
29 26 Rangers $132,491,596 19 $6,315,347
30 28 Phillies $179,521,056 25 $6,680,842

2014 MLB – Adjusted Cost Per Win

The top six haven’t changed any. The Marlins and Astros still spent way under what the average was. According to Gammons Daily, the average cost per win was $1,389,003 in 2014 and by the adjusted cost it was $3,224,181. It’s interesting to see that three teams with budgets north of $100M are now in the top 10 where before it took 17 teams total to find three teams with over $100M in 2014 Opening Day payrolls. Also, by the standards of the snake-bitten Texas Rangers, the Dodgers $5M per win was reasonable.2

This doesn’t actually answer things such as cost variance and cost performance index, but I found it interesting nevertheless.

Image credit: Economics book page image by Mark Wainwright.

  1. It does surprise me a little.
  2. Speaking of snake-bitten, good golly will this club catch a break? Yu Darvish possibly needing TJ surgery is like a sucker punch to everyone who loves watching baseball but especially awful considering how besieged last year’s Rangers pitching staff was with injuries. Get healthy Yu.

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