Moneyball

No, this is not a review of the recent movie starring Brad Pitt for my baseball movie series The Great Debate. Series is a little generous since I only did one. I know, I'm working on it. Instead, I'd like to take a few minutes of your day to talk about the lack of success on the part of teams with high payrolls this year. It seems like a growing trend, and I want to examine it to see if it's just me, or if there really is something there.

Let us look no further than the St. Louis Cardinals. They won the World Series this year with a payroll that is not meek, at roughly $109 million dollars, but which is significantly lower than the money spent by some other clubs; like the New York Yankees ($207 million), Philadelphia Phillies ($166 million), Boston Red Sox ($163 million), New York Mets ($143 million), Los Angeles Angels ($142 million), Chicago Cubs ($134 million). Other teams who spent more than the Cardinals this year include the Chicago White Sox, San Francisco Giants, Minnesota Twins, and Detroit Tigers. The other team in the World Series, the Texas Rangers, had an even lower payroll than the Cardinals, at $92 million, and many would say they were the favorites going into the matchup. What both of these teams were able to accomplish with less money is remarkable, when considering that the Angels, Cubs, Red Sox, White Sox, Twins and Mets didn't even make the playoffs, and that the Phillies and Yankees exited very early in October. But spending money doesn't guarantee a winning season. Injuries, malcontent, and a variety of other factors make teams win and falter. So we can't claim that spending lots of money on player contracts is a bad business move based on one year. Let's look at 2010 then as well.

In 2010, the highest paid team was again the Yankees ($206 million), which should comes as no surprise to anyone. Then there was the Red Sox ($163 million), Cubs ($147 million), the Phillies ($142 million), and Mets ($133 million). The team who won it all that year was the San Francisco Giants, who had a payroll of roughly $98 million, of which $32 million was taken up by Barry Zito and Aaron Rowand's contracts, two guys who contributions to that championship were minimal at best. So two years in a row, a team with a medium sized payroll has won the World Series. Ah, but Patrick, you are saying to yourself right now, aren't you forgetting that those same high spending Yankees won the World Series in 2009?!

No sports fans, I did not forget. It is true that the Yanks won the title in 2009 with a payroll of $201 million, a good $50 million above the next highest spending team, the Mets, who spent $149 million to miss the playoffs. But that is exactly where I think this new spending pattern is getting it's misinformation from. You see, the Yankees spend a lot of money every year. Obviously they can't win the championship every season, although lord knows they try their damnedest. The theory that has come out of places like New York over the past decade is that spending money doesn't matter, as long as it results in a title once in a while. The potential financial benefits from winning a championship once every few years would then outweigh the cost of funding a ridiculously expensive team every year. But that idea is flawed.

If you look at the money the Yankees spent from their last World Series in 2000, to their most recent one in 2009, they spent about $1,686,000,000 to win two championships. That is almost the same amount Forbes magazine valued the club at in March of this year. If you look at the St. Louis Cardinals as a comparison, they spent $571 million from 2006 to 2011, and also won two championships. That is even more than the $518 million the club was valued at in March, but it took the Cardinals 4 less years to reach the same amount of titles. The theory with spending lots of money on an eventual title also claims that you are building a brand with the spending, thus creating even more revenue when you do win it all. But look no further than the Yankees to see that this doesn't always work.

The Yankees have always spent money freely while the Steinbrenner family has owned them. But their greatest success and brand building under that ownership came in the 1990s, when an influx of young talent came up through the farm system, and smart free agents were brought in to bolster the roster. Since 1994, the Yankees have been outspent once, and between '94, and 2000, their payroll went up almost $66 million, well more than double the '94 payroll of $47 million. The problem with this was that the money being spent wasn't the primary reason they kept winning. They had a core of young Hall of Fame talent, the spending just made sure those guys had the surrounding staff. What this led to was higher and higher competition prices by other teams in order to keep up with a team that was hitting the jackpot with young talent. When that talent starting to show its age in the earliest parts of the 21st century, the maintenance cost of trying to keep the team competitive rose even higher, because the core young guys were getting old. Now the money was being spent trying to outspend other teams for the best possible players, which the Yankees often got. However, the end result wasn't the same.

The 2000 season was a landmark year for baseball for many reasons, but one of the most glaring facts was that it was the first time in history that a team spent over $100 million for a roster of players. That year the Yankees spent $113 million, and it was the last year of the effective dynasty the Yankees had over baseball. The very next year, three teams had payrolls of $100 million or more. In 2002, four teams. In 2011, there were 12 teams with payrolls of at least $100 million, and the Yankees in particular doubled that. See the pattern? Now there are other issues that played into this system of overspending, like inflation, and an economy that ran away with itself headlong into a brick wall in 2008. But there is a good portion of this type of overindulgence that wasn't necessary. A lot of commentators thought that the cost of player salaries would take a dive after the Great Recession, but contrary to that idea, players kept asking and owners kept paying.

Ever since Alex Rodriguez got paid $25 million a season in 2001 by the Texas Rangers, all hell broke loose. Salaries from 2001 on skyrocketed and contracts were forced to extend in length to meet the new needs of players, and to make these astronomical deals more affordable over a period of time. We are at the point now where one of the best pitchers in the game, C.C. Sabathia, actually opted out of his contract that was paying him $23 million a season, because he thought he could get more money. And he did! There was almost no other suitor that could possibly pay him what he was asking, essentially putting the Yankees in a bidding war with themselves, and they signed him the other day to an extension that gave him an extra year on his contract, and another $30 million over the course of the deal, making him now earn about $25 million until 2016. Do you see the ridiculous nature of the baseball business world right now?

This all goes back to my original point that the cost of putting together a team is actually outweighing the benefits of winning a championship. At the rate the Yankees, Red Sox, and other teams spend money now, they are forced to win a title every year, just to make ends meet. The problem is, they aren't winning. The Red Sox's last took home the Commissioner's Trophy in 2007, and since have raised their payroll by over $20 million. For their efforts, they have missed out on the playoffs for the past two years, ending this season in the greatest American League September collapse in history. The Phillies won it all in 2008, with a payroll of $98 million. Since, they have increased their payroll by $68 million dollars and have finished worse in the playoffs every year. This financial environment is forcing these smart teams to make dumb deals that sign guys to horrendous contracts that don't make any sense. Albert Pujols stands a good chance of earning $30 million a season for the rest of his career. Now, Albert might be one of the greatest hitters to ever put on a uniform, but when he is 40 years old, I can guarantee you he will not be putting up statistics worth $30 million a year. That is, unless, by that time guys are earning triple that. You see the inherent problem with this type of payroll inflation?

I know I've railed against big contracts many times before, but it's getting to the point where it is hurting the team. The Yankees were a good team this year, but they had some obvious flaws, and their top players are quickly showing signs of age. With a $200 million roster and holes to fill, the next few seasons could see this team's salary jump to $250 million and still not be much better. The Red Sox went out and spent a combined $296 million on Adrian Gonzalez and Carl Crawford last year, and missed playing in October because of it. It doesn't make sense. Now these guys are great players, but if I can get another guy who will provide 60%-70% of their production for 10-20%% of the cost, guess what I'm doing.

This issue is extremely relevant because the upcoming free-agent class has some stupendous talent. You have Albert Pujols, Prince Fielder, Jose Reyes, C.J. Wilson, Roy Oswalt, Carlos Pena, Aramis Ramirez, Carlos Beltran, Edwin Jackson, Ryan Madson, Heath Bell, Francisco Cordero, Francisco Rodriguez, Frank Francisco, San Francisco, Fransisco Goya, and anything else named Francisco you could possibly think of. Not to mention a huge list of very capable players that won't cost you an arm and a leg to sign. This off-season is going to be interesting because smart teams should start to notice that high priced talent isn't always the best bet. Moneyball has been somewhat effective for Billy Beane in Oakland, even though he's never won a championship. If teams start applying their vast dollars in the right places instead of showering big names with Benjamin Franklin, then the parity in the league may turn around very quickly. If they don't, look forward to a $300 million team in the next decade. And I'm just going to take a wild guess that the team name will start with a Y.