Payroll vs. Success: How Much Does Money Matter?

Photo courtesy of Baseballbettingpro.com

by Jan Stransky | @janstransky | jstransky@fieldofignorance.com |

Every team, depending on the franchise, has a different goal in mind. There is however one goal that every team strives for: to win the World Series. It can be said that for low payroll teams a more achievable goal might be to simply reach the playoffs and build from there. Teams with the league’s highest payrolls are naturally given the expectation of winning a championship. And so the debate is spurred: to what extent does money ensure success? Are the Yankees creating an unfair advantage due to the fact that they spend more on their players than any other team?

Before I reveal the correct answer to you, let me provide you with my findings. In the last 5 years:

-        40% of the worst five teams in baseball have been within the lowest 5 in payroll

-        64% of the worst five teams in baseball have been within the lowest 10 in payroll

-        28% of the worst five teams in baseball have been within the middle 10 in payroll

-        8% of the worst five teams in baseball have been within the top 10 in payroll

In the last 16 years: World Series Finalists in terms of payroll:

-        Top 10 in payroll: 20/32 =  62.5%

-        Middle 10: 8/32 = 25%

-        Bottom 10: 4/32 = 12.5%

In the last 16 years:  World Series Winners in terms of payroll:

-        Top 10: 11/16 = 68.75%

-        Middle 10: 4/16 = 25%

-        Bottom 10: 1/16 = 6.25%

Let’s first eliminate the sentiment that the team with the highest payroll should win the World Series every year. If that statement were true, teams in at least the top 10 in terms of league payroll would win the World Series 100% of the time. However, in the past 16 years, only 2/3 of teams that have even gone to the World Series are in that upper echelon; we’re not even talking winning the whole thing yet. That means that about two teams outside of the top 10 in payroll should be in the World Series every three years.

Ok. So smaller money teams are making it to the WS about twice every three years. They must be flukes, right? Surely they aren’t lifting the Commissioner’s Trophy over their heads. However, data proves that about 31% of WS Champions in the last 16 years have come from outside the top tier of teams in terms of payroll. Let’s look at the other end of the spectrum: the five worst teams in baseball over the last 16 years have been in the lowest third in terms of payroll 64% of the time. That means that over a third of the time, teams with payrolls ranging from 1st to 19th in a league of 30 are finishing seasons in the cellar of the league.

So, just because the Yankees hold the highest payroll in baseball does not mean that they should or will win the WS every year. There is clearly another element to the game of baseball that determines a championship caliber team. Whether that comes at the hands of Major League Baseball’s short best of five Division Series (after a 162 game long season) or team chemistry is another topic entirely.  Conversely, teams with the lowest payrolls in the league should at least theoretically be the worst teams in the league. However, this too has been proven not to be true.

Concluding Points:

1.      Does money have a direct correlation to winning the World Series?

Clearly, there are teams outside of those who know how to spend that are winning it all.

2.     Does more money spent correlate to success?

Only to a certain extent. The majority of teams that enter the playoffs, play for the World Series, and win the World Series every year are in that top third of teams in payroll. However, what I believe to be the deciding factor of these findings is that that majority is not even really close to a vast majority. Technically speaking, 51% is a majority, and I would consider a vast majority to be at a minimum of 80%. Teams in the top ten in league payroll over the last 16 years have not even approached the realm of an 80% “majority” in terms of reaching and winning the WS.

It is for these reasons that I conclude: the more money a team spends, the better it’s chances of reaching and being successful in the playoffs. However, there is no definite evidence to even remotely prove that money is the deciding factor in whether a team will win the World Series. Payroll, in general, will distinguish successful teams from one another before the season has even begun. Ultimately, what money will not determine is which team will win the World Series.

2 Comments

  1. Great article Jan! Just look at the Mets, throwing money at free agents and they commonly fall in the bottom of the National League. Your article brings up an interesting question: What would happen if there was a Salary cap in baseball?

  2. I’m a life-long Yankees fan, so you don have to think too hard about the comments I get every time the Yanks make a big name, big money signing. But my response is always the same: thy have to play the game on the field…and produce. Simple.

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