Payroll efficiency: What baseball teams do the most with the least?

By: Patrick W. Zimmerman

Apparently the Oakland A’s just are that efficient.  They are not just the team most closely associated with spotting market inefficiencies (thanks, Michael Lewis and Brad Pitt!), but they also seem to actually do best when they spend frugally.

We thought we’d dig into baseball’s conveniently vast (and free) reams of data to look at which teams offer the most bang (measured in run differential in a given season) for buck (the percentile of each team’s payroll in a given year).  We’ll go as far back as reasonable payroll data exists, which means 1988, the end of baseball’s (first?) collusion and the re-opening of modern free agency.

The question

Is spending money to construct a baseball roster a skill, or do teams just luck into good buys (or terrible ones)?

The short-short version

Yes, there is.  The A’s lead the pack at efficiently generating good teams, and the Blue Jays and Mets suck at it.

Why aren’t the Yankees and Red Sox at the bottom? Well, because they spend like crazy but also generally have good teams as a result.

Also, apparently the Atlanta Braves are the one franchise whose payroll is most closely linked with their success.  When they spend, they win; when they don’t, they stink.  No one else is even close to their 0.74 correlation between payroll percentile and run differential (next is Washington/Montréal with a correlation of 0.48 and then a bunch of teams in the mid-0.40s).  We have no idea what that means, and suspect it might just be the baseball gods trolling us through randomness.  Or that Atlanta had one amazing generation of players that was well paid, and also had plenty of completely lost seasons.

The results

¿Quién es más listo?

Oaktown.  Next question.

Mouseover for details.

Ok, fine, we’ll elaborate.  We looked at a team’s typical season over the last 30 years (1988-2018), in terms of how much they spent relative to the league and how well they did.

This seems about right.  At the level of franchise history (or, skill of front office), there’s a decent correlation between money and happiness (r2=0.40), but some teams are also clearly better at it (and some worse).  There are good teams who spend a ton (Evil Empire, Evil Empire’s whiny little brother), and there are teams that spend a lot with mixed results (LOL Mets and Angels).  There are also a few cheap, decent teams (Oakland, Cleveland).

And then there are the Pirates, who turned 100-loss seasons into an art form for 20 years.

Team Median yearly payroll %ile Median run diff. Correl. payroll:RD Average Efficiency Best season Worst season
Oakland 17th +39 -0.02 40.82 2001, 3rd %ile, +239 1991, 100th %ile, -16
Washington / Montréal 24th -5 0.48 38.43 1996, 0th %ile, +73 2008, 14th %ile, -184
Tampa Bay 3rd -41 -0.03 23.25 2008, 3rd %ile, +103 2001, 38th %ile, -215
Chicago White Sox 52nd +3 0.19 14.67 1990, 0th %ile, +49 2007, 86th %ile, -146
Cleveland 31st +44 0.43 11.73 2005, 14th %ile, +148 2012, 31st %ile, -178
Houston 52nd +16 0.37 10.65 2015, 3rd %ile, +111 2009, 76th %ile, -127
Milwaukee 28th -33 0.39 10.08 2017, 0th %ile, +35 2002, 31st %ile, -194
Atlanta 66th +95 0.74 9.39 1991, 24th %ile, +105 1988, 32nd %ile, -186
Arizona 34th +7 0.22 6.00 2017, 14th %ile, +153 2004, 59th %ile, -284
St. Louis 66th +53 0.25 5.27 2013, 66th %ile, +187 1990, 72nd %ile, -99
San Diego 31st -42 0.30 2.01 2010, 3rd %ile, +84 2015, 69th %ile, -81
Minnesota 31st -7 0.14 1.97 2001, 0th %ile, +1 2011, 72nd %ile, -185
Boston 90th +93 0.28 1.67 1995, 33rd %ile, +93 2012, 93rd %ile, -72
LAA/Anaheim/California 79th +4 0.44 0.85 2002, 52nd %ile, +207 1992, 68th %ile, -92
Pittsburgh 10th -63 0.45 0.07 2015, 17th %ile, +101 2001, 41st %ile, -201
LA Dodgers 83rd +51 0.30 -0.13 2009, 72nd %ile, +169 1992, 96th %ile, -88
San Francisco 69th +41 -0.22 -3.07 2000, 41st %ile, +178 2018 (thru 7/29), 97th %ile, -31
Miami / Florida 14th -36.5 0.08 -3.15 2009, 0th %ile, +6 2012, 79th %ile, -115
Colorado 45th -34 0.34 -3.16 2007, 17th %ile, +102 1999, 62nd %ile, -122
Seattle 62nd -32 0.21 -3.78 2001, 66th %ile, +300 2010, 72nd %ile, -185
Texas 59th -16 0.02 -4.53 2010, 10th %ile, +100 2003, 86th %ile, -143
Cincinnati 38th -50 0.25 -4.58 1999, 34th %ile, +154 1993, 96th %ile, -63
Chicago Cubs 66th -11 0.24 -8.17 1989, 24th %ile, +79 2010, 93rd %ile, -82
Kansas City 28th -62 0.44 -9.67 2015, 45th %ile, +83 2018 (thru 7/29), 38th %ile, -196
NY Yankees 100th +01 0.47 -10.20 1998, 97th %ile, +309 2013, 100th %ile, -21
Baltimore 52nd -29 0.26 -10.39 1989, 4th %ile, +22 2000, 93rd %ile, -119
Philadelphia 44th -14 0.29 -11.02 1993, 30th %ile, +137 2013, 93rd %ile, -139
Detroit 64th -6 0.46 -19.01 2006, 55th %ile, +147 2017, 93rd %ile, -159
NY Mets 83rd +4 0.08 -33.87 1995, 15th %ile, +39 1992, 100th %ile, -54
Toronto 59th +27 -0.03 -40.32 2015, 48th %ile, +221 1995, 100th %ile, -135

Looking at the numbers, the A’s top the chart, followed by Washington/Montréal, Tampa, and the White Sox.  We calculated efficiency by taking a team’s run differential for a given season, and dividing it by their payroll percentile (if a positive run differential) or by that percentile subtracted from 1 (if negative, to account for the sign change – we didn’t want to reward a team for spending a lot on a negative run differential). 

Basically efficiency = how many more runs did a team score than its opponents, corrected for how much it spent.  Bang / bucks.

Fun nuggets:

  • Franchise with the least-bad worst season (in terms of efficiency): The 2008 Washington Nationals, with a -21.1 efficiency score (compare that to the disaster that was the 1995 Blue Jays).
  • Franchise with the least-good best season: The 2015 Kansas City Royals. Sure, they won the World Series, but they only managed a 18.1 efficiency score. Nothing remotely like the 1996 Expos and their 730 mark.

Want to see each team’s history?  Ok, glad you asked!

Mouseover for details.

What’s next?

It’s time to start breaking teams down into components. 

A question we’ve been tossing around is: where should a team allocate its payroll?   Starting pitchers?  Hitters?  Relievers?  Grit? (Haha. No.)

A positional breakdown might be interesting.

About The Author

Architeuthis Rex, a man of (little) wealth and (questionable) taste. Historian and anthropologist interested in identity, regionalism / nationalism, mass culture, and the social and political contexts in which they exist. Earned Ph.D. in social and cultural History with a concentration in anthropology from Carnegie Mellon University and then (mostly) fled academia to write things that more than 10 other people will actually read. Driven to pursue a doctorate to try and answer the question, "Why do they all hate each other?" — still working on it. Plays beer-league hockey, softball, and soccer. Professional toddler wrangler. Likes dogs, good booze, food, and horribly awesome kung-fu movies.

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