I had to do a persuasive speech in my public speaking class, so I argued the need for a salary cap in MLB. I spent more time on the need for it - focusing on the payroll disparity and how the salaries are continuing to rise - then realized too late that I didn't really understand all of the economics of a salary cap...

I spent a good deal of time looking at payroll v. wins to analyze the idea of whether "money = success" because one opponent to my argument had said that high-payroll teams don't always win, and low-payroll teams sometimes unexpectedly do.

If you look at the last ten years of the playoffs, you see that this has been true somewhat - lot of different teams winning recently, and I came across one article pointing out how the Rangers' ALCS victory over the Yankees was a huge disparity in payroll.

But one of my main references was the book that Don Sicilia recommended to me awhile back: "Moneyball" by Michael Lewis. One part of it discusses how the playoffs work in baseball, and refers to it as a "giant crapshoot," suffering from the "sample size problem." It says that Pete Palmer ("The Hidden Game of Baseball") found that "the average difference in baseball due to skill is about one run a game, while the average difference due to luck is about four runs a game" and that, in the long season, luck evens out, but in the relatively short postseason, "anything can happen."

Because of this, I decided to look at the regular season instead. Even though it doesn't decide the ultimate winner, I figured it would be a better gauge of "success." So I spent more time than necessary finding the average payroll and average number of wins for each team, from 1998-2009. The attached chart is what I came up with, and here are the numbers for it:


You can see how Oakland is one of the big outliers, which is what Moneyball focused on.

So anyway, I thought you all might find the numbers interesting, and wanted to get your opinion on the salary cap itself, and on this idea of the playoffs being a "crapshoot." I promise, this is not brought up as a bitter Astros fan - if we ever win, I'll be convinced it was all skill and not a bit of luck.

every yankee, red sox, and yes cub fan will argue against this...every team has a chance to win it all...that is if they don't ship out all of their talents (i.e pirates and indians)

EDIT: are you for or against this? i kind off replied back after reading the first two sentences.

In the first chart, what are the numbers on the right?

Plaw would be proud of you!

Tampa Bay should prove that it's not about payroll, but talent. And not just talent, but whether a team "clicks" or not. Even the almighty Yankees over the years have bought huge talent that didn't click and was actually detrimental to the team as a whole.

I think this is even more complicated -- there are MANY more factors involed -- but a nice analysis!

"average payroll and average number of wins"

I'll try to write less next time, but I think I said so within the first sentence.

Thanks, Geoff! I really wanted to channel Plaw (including my wordy explanation...haha), and wished I could get his thoughts on it. I'd tried to find some old posts here to see if anyone had discussed a salary cap, and that's actually how I came across the post where you April fooled him!

I agree that there are a ton of factors - so difficult to figure out everything that's at play in even a single game, and I guess that's what makes baseball fun to watch! I found Moneyball to be really interesting, in learning how Oakland took advantage of undervalued players, which allowed them to get such great talent at such bargain prices. But even beyond that, like you said, there are team dynamics you gotta consider. Maybe we're just not supposed to understand it all.

okay for some reason i thought you were against the salary cap lol. but, yea one thing you should know...in a year or so the astros will have an new owner. if he is anything like the late steinbrenner, then you have nothing to worry about...besides the cubs that is

Sorry for my lateness on this...

Fantastic work, Gina! Now a few thoughts on this:

- It's clear that there's a positive correlation between payroll and wins. Would be interested in (i) what the linear regression would say (i.e., number of wins an incremental million dollars spent would buy) and (ii) the correlation between the two statistics.

- I tend to agree with the "giant crapshoot" theory to the playoffs. As you know, for anything to be statistically significant, teams would have to play at least 30 games for a trend to prove itself out. Therefore, in a best-of-seven (or in a best-of-five), the games are too few and the volatility is too great.

- I have no strong feelings either way re: salary cap in baseball. I probably tend toward the side that calls for it. Although huge payrolls don't guarantee playoff success, they do lead to regular season success (larger sample size) and a greater opportunity in making the playoffs. I don't feel the long-term future of the game is served well when the same teams each year make the playoffs.

Thanks, CS!! If it weren't for your Moneyball recommendation, I wouldn't have had half my argument! I really wanted to just pass out the book to everyone and force them to read it, but my main job in terms of the speech was just getting people interested in the subject of baseball.

Wow, your mention of linear regression and correlation made me realize how much I've sadly forgotten since that high school class! That would definitely be interesting, though. Wasn't there something in the book about a certain "breaking point" where it wouldn't pay off to spend any more? I would imagine that'd be the case.

It would certainly be nice to have a more level playing field for opportunity's sake, but I think maybe the "crapshoot" quality of the playoffs is what gives baseball it's lovable heartache nature.

It is interesting to note that the average salary is computed from 1998 - 2009. The Phillies built a new stadium and doubled their payroll from their average and not coincidently have started to win consistently. The Pirates, with an almost identical stadium at the same time chose a different path with a small payroll and a dramatically different result.

It's hard to argue against the cap for the NFL - it allows any team to compete. It is difficult for the small market teams to compete in baseball. They can be competitive for a short time but usually can't afford to keep a good team together. A team like the Yankees can afford to keep it's good players and sign free agents. The biggest difference is that the Yankees can afford to bury an mistake and continue to make additions. A team like Kansas City could never afford to make a mistake like Pavano or Brown and for the most part doesn't even attempt a top shelf free agent signing. When they do end up with a top player they end up trading him rather than lose him to free agency, like Greinke.