Indians, Rockies got most out of what they paid for in 2007 – and the free-spending Yankees didn’t even come close.
When a baseball player changes teams to earn a higher salary, then says, “It’s not about the money,” everyone knows he’s lying. In baseball, it’s always about the money. There is no salary cap in Major League Baseball. Teams may pay players as much as they wish. The only restraint is that team’s budget, based on its revenues. That leads to a system in which the New York Yankees paid $218 million to their 40 players in 2007 while the Tampa Bay Rays, which play in the same division, paid less than $32 million to its 40 players. The Cleveland Indians at the end of the 2007 season had a total 40-man payroll of just less than $72 million -- that ranked 22nd of 30 teams. Yet Cleveland was one victory away from playing in the World Series. According to one statistical formula, only the Colorado Rockies got more bang for its buck in 2007 than the Indians. Because baseball is all about the money, those conclusions make a significant statement about the status of the franchises. “We have built a championship-caliber team in a culture where we have quality people working for us and players who play the game the way,” Indians president Paul Dolan said. “That’s what makes me proud. The fact we have done it in a fiscally sane way without bankrupting the franchise is a good thing as well.” Marginal Payroll/Marginal Wins The Business of Sports Network presented an analysis of baseball payrolls on its Web site that employed a formula called Marginal Payroll/Marginal Wins. The concept, developed by Doug Pappas of Baseball Prospectus, compares payroll and performance with what could be expected from a roster of replacement-level players earning the major-league minimum salary. According to the MP/MW formula, the Rockies paid $1.242 million per marginal win in 2007. The Indians paid $1.290 million. The Yankees paid $4.578 million for each of their marginal wins. But at least the Yankees made the playoffs. Baltimore was the worst-run team in baseball in 2007. The Orioles paid $4.149 million per marginal wins, yet still finished 69-93. Arizona ($1.445 million) was third behind Colorado and Cleveland. Interestingly enough, all three general managers – Colorado’s Dan O’Dowd, Cleveland’s Mark Shapiro and Arizona’s Josh Byrnes -- learned their trade while working for the Indians as young men. “Neal Huntington was just hired as GM in Pittsburgh, (assistant GM) Chris Antonetti is the most desired GM candidate out there and teams still ask me whether Mark might be available,” Dolan said. Risk Assessment Perhaps the biggest difference between how payroll affects large-market and small-market teams in terms of player acquisition is in the degree of risk those teams are willing to take on. If Boston, for example, signs a pitcher to a long-term contract and that pitcher is injured, the Red Sox simply take their lumps and sign or trade for another proven veteran pitcher. If a small-market team signs a pitcher to a long-term contract and that pitcher is injured, the overall quality of the team must suffer until that contract is finally off the books. “A lot of our job is assessing risk,” the Indians’ Shapiro said. “We have to recognize the market we’re operating in, be very aware of risk, and be very careful.” The risk of being saddled with a bad contract has become even more significant in recent years due to changes in the insurance industry. The few companies that will even write a policy for a pitcher will do so for only three years of the contract. A team paying a pitcher $15 million a year can expect to pay an additional $1 million a year or more in insurance premiums. “And the coverage is even less -- not even close to 100 percent,” Dolan said. An Imperfect World Small-market teams must weigh risks and operate within a budget in an environment in which their competitors can, on occasion, operate as if they have totally lost their marbles. They also must take the heat when a good player passes them by because Team B was willing to pay an incredible amount of money over a very risky number of years. “There is always the understanding of what can happen with our competitors in other markets,” Shapiro said. “We don’t operate letting those things determine how we conduct our business.” Contact Andy Call at (330) 580-8346 or firstname.lastname@example.org.