MLB Team Moneyball: Part III

This is Part III of a three-part series. This is the "Moneyball" section. We'll determine how efficient teams are at spending on their money.

In Part I of this series, we found that opening day salaries in major league baseball rose 85.6% from 2000 to 2013, a 37.2% real increase. In addition, 18 teams spent record amounts on their opening day roster in 2014.  

In Part II of this series, we found that spending and winning vary on a year to year, but over time, teams with high payrolls win more than teams with lower ones in the regular and postseason. 

Some management circles in major league baseball are concerned with winning, and others focus on efficiently winning. If only there was a way to do the latter-- win games without having to spend money. 

Oakland Athletics general manager Billy Beane made this concept “Moneyball” famous. His teams always ranked near the bottom of MLB in payroll (never higher than 16th in the 2000s), yet his teams kept making the playoffs. Beane couldn’t afford elite free agents in Oakland, so he utilized other approaches and exploited inefficiencies in the market to win. 

In Part III of this series, we’ll find out if the movie got it right. Were the A’s the real “Moneyball” champs of the 2000s?

The approach in Part III will be similar to Part II, where we looked at how teams finished with varying level of amounts spent. We determined there is some correlation over the long haul between spending and winning, but not as much on a year-to-year basis. This time, we'll compare how much teams spent if they did so efficiently.

This first graph plots teams into four quadrants based on the concept that if you spend more, you should win more, on an equivalent payroll and standing intervals. Most teams fall into two quadrants; either they are cheap spenders and finish better than expected, or they are heavy spenders and finish worse than expected. The team carrying the highest payroll should finish with the best record. 

The average payroll rank is plotted on the X-axis and the average MLB standing on the Y because we’re trying to determine which teams have outperformed expectations based upon salary. The line on the graph is not a “best-fit” line per se, it’s just the equation Y = X.

The farther away a team is from the Y = X line indicates how much difference the team has performed relative to expectations. Above the line: bad. Below: good. The vertical asymptope crosses at X = 15.5 because that’s the midway point on average payroll.

There are only five teams who were above-average spenders and finished better than expected or were below-average spenders and finished worse than expected. The Atlanta Braves and St. Louis Cardinals fall into the first category and the Baltimore Orioles, Houston Astros and Colorado Rockies are in the latter.

The Rockies' well-documented problem is pitching at Coors Field. The team has finished on average 24.64 in ERA from 2000-13 and 14th in the NL. The Orioles' issue is being trapped in a stacked division (the Yankees and Red Sox lead MLB in opening day payroll (2000-13)).

Twenty-one of 30 teams averaged 10-20 in the standings proves the point that teams aggregate toward the mean, despite what they spent. The best-fit linear line, which is not shown, is .467x + 8.26, showing that it's not a 1-to-1 ratio.  So the model would predict that the best possible payroll rank would be at 8.73 in the standings. At 5, 10.95. At 10, 12.93. 15, 15.26.

Here’s this graph shown from a table point of view, where we see that indeed the A's were the "Moneyball" kings of the 2000s. They finished 14.14 spots in the standings ahead of the theoretical expectation. Rounding out the top five are the Florida/Miami Marlins (+7.61), Tampa Bay Rays/Devil Rays (+6.72), the Minnesota Twins (+5.86), and the San Diego Padres (+5.39).

The common trend among the top-five teams is they all had basement payrolls. The A’s and Twins won despite the payroll, while the Marlins, Rays and Padres still finished below-average in the standings. Does finishing slightly below average with a bargain payroll constitute a success?

The five worst “Moneyball” teams according to this approach are the New York Mets (-10), the Chicago Cubs (-9.68), the Baltimore Orioles (-7.29), the Seattle Mariners (-6.17) and the Los Angeles Dodgers (-5.21). The Cubs and Mets both took on bad contracts in the 2000s, such as the four-year $66 million deal for Jason Bay or the eight-year $136 million deal with Alfonso Soriano. The Mariners haven't made the playoffs since 2001 when the team won the most games in MLB history.

This next scatter plot takes the hard numbers – salary and winning – and puts them on the same curve. The salaries are adjusted for inflation. On the X-axis is the inflation adjusted salary (2000-13) with a team’s winning percentage on the Y-axis, also from the same period. Based on the actual data, we’ve come up with a best-fitting line which is Win % = (.000000000872) * inflation-adjusted average salary + .4203. I’ve started this curve at $50 million, so don’t extrapolate and say that a team would win 42 percent of its games if it had $0 on its opening day payroll. That would be truly be Moneyball.

Here's how to read the graph: at $50 million average payroll (inflation-adjusted), a team would win roughly 46.4% of its games. At $75 million, that turns out to 48.6%. At $100 million, it’s 50.75%. At $125 million, 52.9%.

This approach gives us a different picture, although the A’s (+7.2%) are still the "Moneyball" kings and the Twins fourth (+2.6%). The St. Louis Cardinals (+5.2%) and Atlanta Braves (+4.4%) are the new two-three combo.

If you remember from the last chart, the Braves and Cardinals were the only two teams that finished with an above-average payroll rank and finished higher in the standings. The Rays (+0.3%) and Padres (0.3%) only had modest increases.

The new bottom five is as follows: Orioles (-5.0%), Kansas City Royals (-4.5%), Cubs (-4.0%), Mets (-3.4%) and Pittsburgh Pirates (-3.3%).

We've already touched on the Orioles, Cubs and Mets. The Royals and Pirates have made the playoffs once during this studied period.

Thanks for reading this series!