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February 8, 2012 at 12:02 PM

Study shows link between payroll and wins not as big as before, but teams like Mariners still face bigger obstacles than others

Read an interesting study by Dave Studeman over at The Hardball Times that shows the correlation between team payroll and wins has dwindled to the lowest it’s been historically for quite some time in baseball.
Now, before any of you go planning World Series parades, it’s important to take the study in its proper context and not read stuff into it that wasn’t stated.
The study looked at regular season wins for all teams and the payrolls they carry and compared it to previous points in the game’s history. The study concludes that the correlation between wins and payroll is indeed relatively smaller and attributes it to some degree of random luck, but more importantly, ventures that some of it might be because of enhanced revenue sharing under the collective bargaining agreement reached in late 2002. My first reaction to it was that this should make it easier for teams to compete for a playoff spot if their payrolls are relatively close to others vying for those exact same spots.
In other words, what the Milwaukee Brewers did doesn’t matter as much to the Mariners as what the Angels and Rangers might do because Seattle can’t make the playoffs if those two teams finish ahead of them. And what Studeman’s study appears to show is that, if the Mariners can maintain a payroll that’s at least somewhat in the ballpark of what their direct rivals spend, they have a better chance now of making the playoffs than they did in other eras as long as they don’t throw bucks out the window too often.
Studeman himself mentions very high up in the study that the so-called “Alpha Teams” outspending rivals by huge margins (i.e. Yankees, Red Sox, Phillies) are still going to thrive and make the post-season consistently as they have in the past. “I’m not out to debunk the Alpha Team theory, far from it,” he writes.
But what Studeman’s study does do, at least from my reading of it, is provide hope that teams with general managers who spend their money wisely will be able to better compete as long as their ownership provides an adequate level of payroll to do that competing with.
In other words, give a GM a $60 million payroll and it’s unreasonable to expect him to have any sustained success fighting for playoff spots against direct rivals with $100 million plus to work with. Yeah, the Rays have had recent success, but it’s just not a realistic model to base comparisons off of since Tampa Bay built a young foundation off a decade of miserable baseball and resulting high-end draft picks. We’ve yet to see whether that can be sustained long term without a serious payroll hike.
Remember, for every Rays team, there are the Royals, Pirates, A’s and Indians.
So, yes, we do get exceptions to every rule. Life is never black and white. But we want to look at realistic chances for teams. And what Studeman appears to be saying is that, given a relatively close amount of payroll that does not allow for a runaway Alpha Team situation, the odds have never been better from an historical perspective for a GM to succeed as long as his ownership gives him the chance.
Just to be certain that I was getting things right from my take, I emailed Studeman with a bunch of questions. I wanted to make sure that I wasn’t putting too much of my own spin into interpreting his study and that I captured the essence of it in its proper context.
“Bottom line, competitive balance is good in MLB these days compared to its history,” he told me via email. “But there is still a persistent correlation between wins and payroll that’s not going to go away. I wouldn’t use the phrase ‘parity’ to describe the current situation.”
Which he doesn’t do. Because you don’t need a study to click on to Baseball Reference and see that the Yankees and Red Sox between them have captured 14 of the 18 playoff spots available to American League East teams (division titles and wild card opportunities over nine seasons) since baseball’s revenue-sharing system began in 2003. Both teams have big money and spend it relatively well, unlike, say, Peter Angelos and his free-spending Orioles squads from last decade. To suggest that payroll wasn’t behind that sustained level of success for New York and Boston would be downright ignorant. And again, this study never does that.
But by that same token, you also don’t need an in-depth analysis of baseball to see that the St. Louis Cardinals won a World Series last year with the game’s 11th highest payroll, defeating the Rangers with their 13th highest payroll. Clearly, you don’t need to outspend every team in the game to win a title. But you do need to overcome your closest division and league rivals to make the playoffs first, which the Cards did on the final day of the regular season.
And yes, we are measuring long-term success by whether or not teams make the playoffs. You can’t play in a best-of-seven World Series where anything can happen if you don’t perform consistently well during the 162-game regular season.
And what Studeman is saying is that we could see more of these types of Cardinals playoff teams: the ones where ownership pays enough to get their team to that minimal, base-line level of payroll competitiveness with their closest foes as opposed to simply paying to keep the squad breathing.
Maybe it’s a $100-million minimum payroll. Maybe the magic number is less and actually more of a percentage of what your direct rivals spend. Truth is, there is no hard and fast number because larger payrolls often are not reflective of a team’s real talent, given the mistakes that get made when spending big. But precise or not, there is a threshold beyond which you cannot allow the true payroll gap to grow with your rivals unless you want to consistently lose out to them as most AL East teams have to New York and Boston.
Nobody has identified the exact formula yet and it’s probable they never will. But it still exists, clearly, as the Alpha Teams have demonstrated ample times over the years.
This is a huge distinction to make. Especially when it comes to the Mariners and their chances as we move forward.
Photo Credit: AP

What fans of the Mariners do not want to see are two Alpha Teams in the AL West doing what the Yankees and Red Sox have for the past decade-plus. If that happens, all of the potential good from the trend of not having to rely as much on payroll for your team’s wins goes out the window.
And the one thing Studeman’s study doesn’t do is examine the correlation between payroll and making the playoffs.
“There’s no doubt that playing in a division with other high spenders makes it more difficult for your team to make the playoffs,” he wrote via email.
And that’s really just common sense.
Because making the playoffs requires more than merely adding wins to your team’s total. It requires getting up into that 90-to-100-win range, which is tough to do if you’re getting jackhammered 38 times per season by two bigger spending divisional foes.
So, merely being able to win more games overall — which is really what this study looked at — won’t be able to tell you whether your team can reach that elite plateau. And again, common sense tells you that a team outspending yours by a significant margin is going to be able to correct the flawed roster building and mistake free agent signings that your team cannot.
And this is truly important to understanding how payroll impacts baseball.
Fact is, we don’t know exactly how close you have to stay to your closest rivals in order to have a real shot. As I said, there is no magic number, only educated guesswork.
We saw the Angels spend about $141 million last year and stay close in the wild card race, but they had $27 million of that going to a non-performer in Vernon Wells. So, realistically, they were more like a $115 million team that was beaten out in the division by a Rangers squad with a less mistake-laden end-of-season payroll of $104 million.
Those two payrolls are pretty darned close if you’re going to look at them realistically. And they fall in line exactly with what Studeman’s study implies. You don’t have to outspend everybody, just keep things in the same ballpark.
I know it sounds like cherry-picking, but it isn’t. You have to look at a payroll from a realistic perspective if you want to make comparisons that mean anything. The Yankees might not be a true $200 million team. But even if you admit they have $50 million worth of deadwood on the squad, that’s still a $150 million true talent squad that should be able to beat out most comers.
And they have, going on two decades now.
So, what about the Mariners? Well, the first thing we have to look at is whether their payroll is truly a reflection of their team.
And I just don’t see how anybody can objectively make that argument.
You can look at it in a vacuum and say “Hey, they put a $94 million team on the field the last two years! That’s more than enough.”
Only it clearly wasn’t. As the 101 losses in 2010 and 95 losses in 2011 showed us. You really don’t need any more proof than that.
We wrote about this very issue in August 2010. That as long as the Mariners saw such a large chunk of their payroll tied up in two singles-hitting leadoff types in Ichiro and Chone Figgins, it was going to be very tough for them to compete. And that’s back when Ichiro was still putting up good numbers. But it didn’t matter. There’s a reason no other team in baseball has devoted such a massive chunk of payroll to those types of players. For the Mariners to correct some of the flaws in their roster and in how their payroll was distributed, they were going to have to take payroll much higher in order to buy enough quality players to build around Ichiro.
They started to do that in 2008 with a $118 million payroll, but spent too much of that added money on the wrong types of players hitting the downsides of their careers. Had they spent the added money on the right types of more productive players, they may have had a chance. Since then, the team has gone in the opposite direction money-wise overall, which means even a Hall of Fame season by Ichiro won’t be enough to overcome Seattle’s other shortcomings.
Heading into 2012, you’ve effectively got the Mariners putting out an $82 million team with $27 million of that going to Ichiro and Figgins with their numbers in decline. And so, if the team is closer to a $60 million true talent squad, we know it’s going to be very difficult to overcome two division opponents spending twice that amount.
Not impossible. Just highly improbable.
We don’t deal in absolutes here. But we do try to be realistic.
Spending $100 million on payroll doesn’t guarantee the post-season. But not spending it while your rivals are doing so will make it that much tougher to have a chance.
And Studeman’s study doesn’t change that one bit. In fact, it makes the reality all that harder to swallow. Because his study appears to show that teams have a better chance of overcoming playoff rivals if they can keep the money relatively close and spend it wisely.
So, at some point, rebuilding plan or not, the Mariners will have to see their ownership step up and help GM Jack Zduriencik by paying the price of admission to truly compete in the AL West. To do that, Zduriencik will have to be given a better margin for error, allowing him to spend past any free agent mistakes without having to wait for the “bad” contracts to expire as Seattle is now doing.
That’s what the Angels have done — spent past their mistakes. It’s what the Rangers are in a position to do, since they’ve got a darned good team even if Yu Darvish doesn’t pan out.
And those two teams, right now, are standing between Seattle and the playoffs.
Of course, it is possible to see payroll work the opposite way. That means, a team with a $60 million payroll might play like a $100 million team for a short time if all of its cost-controlled young talent starts maxing out on production at the same time.
We saw it with the Rangers two years ago, with the Diamondbacks last season and the Twins prior to that. But sustaining that long-term is extremely difficult given the realities of free agency and the cost of locking up young players — which is why the Rangers and Twins have now shot over $100 million to a more realistic reflection of the overall cost of putting teams like those on the field.
So, while the Studeman study is potentially good news for the Mariners, any real impact likely won’t be felt until ownership steps up and decides to fund a more competitive payroll. How much money that will take will depend on what Seattle’s closest playoff competitors are spending and how few mistakes Zduriencik can make in utlilizing the funds sent his way.
Want to increase Zduriencik’s margin for error? Up his payroll. It’s that simple.
The Mariners might decide to do this down the road. We don’t know. All we know is, based off the results, they haven’t done enough in recent years to overcome their competitors for two available playoff spots.
And that’s the danger of reading too much into this, or any study about the money that goes into baseball. As Studeman himself says, there is still a persistent correlation between payroll and winning in a sport that refuses to put a hard salary cap on teams. And trying to argue the opposite merely gives teams an excuse not to spend the money they are capable of when it comes to putting a winning team on the field.
The last thing Mariners ownership needs is for fans to make excuses for them not to step up to the plate. It’s going to take more than a young, talented core to get this team to the post-season. Ownership will at some point need to be as committed as the players, coaches and front office for this team to beat out the squads ahead of them. Throwing a payroll number out there and proclaiming it good enough compared to other teams means nothing if a huge chunk of the money has been wasted.
Ownership has to be smart enough to recognize this and take steps to overcome the flaws by spending more if it plans on making the playoffs against squads with bigger payrolls.
Because the law of the jungle still applies in most cases: a good big man beats a good little man just about every time. And right now, as good a little man as the M’s hope to become, they’ve got two good big men standing in their way.

Comments | Topics: Chone Figgins


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