Saturday, May 26, 2007

Baseball salaries, 1990 vs 2005

Baseball has always been my favorite sport, from back when I was a wee lad. My favorite team has always been the Yankees, and in 1990, they came within a whisper and a cough of only their third 100 loss season. For me, I was just happy to watch the team. It didn't matter to me that the Mets were the good team in the city (that wouldn't last, like usual). As far as I was concerned, Mattingly-Sax-Espinoza-Velarde was the best infield in the league.

Fortunately, as I got older, the team improved. By 1994 they were in first place and would have made the playoffs if not for the strike. By 1995, they were in the postseason. By 1996, they won their first World Series title since 1978. Then came the so-called dynasty, which was then followed by a massive explosion in payroll.

Over the years, I have heard countless complaints regarding the Yankees spending. I began thinking of the financial discrepencies. The Yankees do spend a lot of money. Did it matter? How much did they spend in 1990, that terrible year? What about 2005, when they won their eighth straight division title? Last year, I took a look at the figures.

The Oakland Athletics ($21,785,040) were swept by the Cincinatti Reds ($14,870,166) in the World Series in 1990. The Cincinatti payroll was pretty much the league average. In the 2005 World Series, the Chicago White Sox ($75,178,000) beat the Houston Astros ($76,779,000). Both teams had functionally equivalent salaries, and were fairly close to the league average. I have argued in the past few years that a team could win the World Series with a salary of around $60-$65 million. I was just going by my own theory, but it seems perhaps the reason is that the average cost of a 25 man roster is around that price.

As of August 31, 2006, Detroit had the best record in baseball, with a payroll of $82,302,069, close to last year's average 25 man cost. Of the four teams within $5 million of last year's average, Texas, Minnesota, San Diego and Oakland were still in contention. Washington was not. If you stretch it to ten million dollars, two or three out of an extra five more were still in contention. Nevertheless, dollars do speak loudly - the New York Yankees had the second best record in the A.L., and the New York Mets had the best record in the N.L. The bottom five payrolls had been out of contention for a long time, while the top five remained in the playoff hunt or in the lead. Stretch it to the top ten and bottom ten, and 8/10 highest payrolls were in contention, whereas 3/10 of the lowest were still in contention.

The Yankees have always been near the top of the payroll heap, as evidenced in 1990, but they have supremely distanced themselves this decade. I estimate the Yankees could have kept all of their 2005 roster by offering the most attractive contract and still paid about $50 million less. Granted, some of the salaries, like Alex Rodriguez and Bobby Abreu's, were set by other teams (in fact, Texas pays a fair chunk of A-Rod's salary). However, even with an adjustment, that's still a comfortable margain above Boston and well beyond the rest of the next (Los Angeles Angels, Chicago White Sox, New York Mets, Los Angeles Dodgers.

In 1983, the Yankees payroll was $11.6 million (second highest in MLB). In 1993, it was $46.6 million (third highest in the league). In 2003, the Yankees payroll was $149.7 million (highest). Quite the increase. For fun, let's take a look at the good ol' days of baseball when everything was sepia toned and there were no Latinos in the game. In 1933, the Yankees payroll was $294,982 (highest). In 1943, it was $301,229 (highest). In 1953, $438,250 (second highest, behind Cleveland). Conclusion? Well, I guess the Yankees have a long history of reinvesting their earnings back into the ballclub.

Although it looks like the Yankees make a healthy profit, if you factor in that the club paid $77 million in revenue sharing in 2005, the Yanks actually lost money. You can argue that they made the money up somewhere (although television revenue and merchandising is included in total revenue), it's pretty apparent the team will enjoy its new stadium (new stadium means no revenue sharing for a few years, thanks to a special clause in the mysterious book of MLB).

On the other hand, I once read an article when George W. Bush was running for governor, and when asked how he could manage the budget of the Texas government when he couldn't do that for the Texas Rangers, he replied that there was two types of numbers, the published figures and the private ones.

In the book Moneyball, author Michael Lewis describes how Oakland is able to put together a quality baseball team with limited financial resources because their front office knows what makes good players. Interestingly enough, in 2006 Oakland's payroll was $62.3 million. You might remember last year's average cost for a 25 man team was $65.8 million. Oakland won their division, ahead of L.A./Anaheim ($103.6), Texas ($65.1), and Seattle ($87.9).

The point to be learned from all of this, to quote Michael Lewis, is that whether it be the Yankees' gross overspending or the tight pursestrings of certain teams or the success of teams within range of the average roster cost, "in professional baseball[,] it still matters less how much money you have than how well you spend it."


psychodevil said...

Who needs education when you are good at sports?

psychodevil said...

Apparently the stupid link is cut off. Well done

Link found here.

Jai said...

I would pay you $600,000 to shit in my pants. If I had that kind of money just, you know. Laying around.

ChrisV82 said...

There's a baseball player that was born the same day and year as me, and he makes $600,000 per year. If I was told I would make $600,000 this year, I would not only shit my pants but I'd fly over and shit in yours, too.

It's not inconceivable to believe this ballplayer will make $5 million dollars per season at some point.

ChrisV82 said...

Sorry Jai, you look crazy now. I had to repost my comment because I mistyped "inconceivable" as "unconceivable." Who knew you were right behind me?

Jai said...

I knew that mucking about with the space/time continuum as much as I do would fuck me over one day...