Saturday, October 11, 2008

Inefficiency

Pete Abraham notes here (by way of this MSNBC article) that the Yankees paid 2.3 million dollars per win last year. The Rays paid only $451,000 per win.

This is actually misleading. In reality the situation is much worse. It's not possible for a baseball team to field a roster with zero payroll and it isn't likely that the worst roster a team could field (while still trying to win) would win zero games. In fact, the minimum a team could pay its players for one season is roughly 10 million dollars and the lowest win total they could possibly have is around 40 wins.

When you factor this in, what you realize is that the Yankees really paid about 199 million dollars for 49 wins, an embarassingly bad 4.1 million dollars per win. The Rays go up too; they really paid about $593,000 per win.

This distinction is actually important. For example, the Yankees are last in dollars per win, but when you adjust for the proper baselines, the Seattle Mariners are far more inefficient. Seattle paid 5.1 million dollars over the minimum payroll for each win over 40.

Inefficiency isn't just about spending tons of money. The real key to inefficiency is to pay a lot and get almost nothing for it. That's why the 40 win baseline is so important. Teams should not get credit for efficiency for winning games that they were going to win no matter how inept they were. Hell, even the 2003 Tigers managed 43 wins. They probably hold the record for inefficiency. By my back of the envelope calculations, they would have paid nearly 17 million dollars per win. If you fail to adjust for the proper baseline, they would appear to have only spent 1.4 million dollars per win.

Proper baselines: always important.

I would remiss if I didn't mention Doug Pappas in this post, since he is the man who pioneered this line of thinking, at least among those of us who follow baseball analysis on the Internet. Doug died in 2004 at the age of 41 while hiking on vacation. His presence and analysis is sorely missed. You can read his take on payroll analysis here and view his blog here. Rest in peace, Doug.

**EDIT** Fixed some egregious typos and reworded an awkward sentence.

1 comment:

rklllama said...

Yeah, good points all.