Money Well Spent?

With the trading deadline approaching, we will frequently be hearing about the value (or cost) of acquiring a given player. This got me thinking about which teams receive the best value for their buck.

As fans, we have an assumption that higher payroll equals more success. Obviously, this is the goal of spending more money, but it’s not always that simple. Baseball is a game where 20 hits over the course of 500 ABs can earn a player millions of additional dollars. A good year can sky rocket a players’ value well beyond what he is actually worth. There are also contracts like AROD’s $252 million that skew these types of numbers greatly.

This is where the scouting and GM offices enter the fray. These are the departments that typically earn the label of "quality organization." The ability to find talent no one else saw, or preparing young talent to compete at the major league level can set an organization apart from the others.

It is with these thoughts that I under took this exercise. My goal was to determine which organizations have gotten the best bang for their buck in the regular season over the past 5 years. I know the ultimate goal is to win championships, but I haven’t quite sorted out how I want to handle that yet.

Methodology:
I compiled the salaries and winning percentages for each team from 2007-2011. I decided to conduct a rank analysis, so I ranked highest salaries/winning percentages as 1 and lowest as 30 accounting for ties along the way for each year. Then the winning percentage rank was subtracted from the salary rank resulting in positive numbers for teams that performed well, and negative for those who over spent. I averaged the 5 years for each team as well as computing divisional values. On to the results!

First, here are the teams that have the highest salary or winning ranks over the past 5 years.

These tables show that spending lots of money can lead to sustained regular season success. While the Yankees spend a lot of money, they generally field one of the best teams in baseball. Also with them always spending the most money, the are unable to out perform their rank. The Phillies and Rays have had a 5 year run which has exceeded their salaries.

Next, let's look at the individual team 5 year rankings. I have all 30 teams, but only the top and bottom 5 will be shown here.

It's interesting to see that a team doesn't have to be a high roller to seriously under perform. Houston and Baltimore have taken average salaries and produced below average teams. On the other hand, a few teams have been able to compete above their salary levels. It appears however, that being able sustain success for 5 years with these lower salaries is very difficult. This is likely due to losing young talent to the FA market.

The divisional results showed that the AL Central (-2.12) consistently under performs while the NL West over achieves as a whole. The NL west benefits from the entire division be middle of the road record wise without any real big spenders. The AL Central on the other hand, has s couple of teams who spend like high rollers (DET and CWS), but have not produced on the field.

All considered, it appears "big market" teams have not produced as would be expected based on salaries over the past 5 years. It seems to me that there are more young stars now than there were a decade ago and that tends to favor lower salary ball clubs. This benefit my only be temporary though, as the players head off to free agency.

I plan on doing more with this data, and I realize know there is some benefit to using the actual values spent, but I felt this was a good first run and that feedback from you fine folks could steer future analysis. If anyone has any specific interests, let me know in the comments and I will do my best to figure it out.