Wednesday, October 03, 2007

Moneyball 2007: It's not just pay to play

I worked for many years for a small software company. During its early years, the company managed to suck $40M out of unsuspecting investors. We had great technology, we had brilliant techies, we were just ahead of the market curve, prosperity was just around the corner...Yeah, yeah, yeah.

As so often happened, the investors wised up, turned off the cash spigot, and sent in a turnaround guy. The turnaround did a couple of turns around the place and told us that, given our relative market position - and the fact that at this point all of our competitors were well financed and poised to take on the market that was at long last here - we were going to get rolled.

Oh, we managed to hang on a few years through sheer grit and determination, but we were, indeed, rolled. Our competitors had better products, better marketing, better everything. If only, we loud and longingly lamented, we had just a bit of that $40M we'd squandered over the years.

Thus, on the morning of the first Major League Playoff divisional playoff games, to take a look at how well having the big bucks to spend has translated into success in the regular season.

There are 8 teams in the playoffs. In the American League, it's the Yankees, Red Sox, Angels, and Indians. Over in the National, it's the Cubs, Phillies, Rockies, and Diamondbacks. (These teams are obviously not listed in preference order - would I put the Yankees first???? - but in payroll order.)

In terms of payroll (as of opening day), here's how the boyos of summer ranked overall:

  • Yankees - #1: $195M
  • Red Sox (gulp) - #2: $143M (gulp)
  • Angels - #5: $109M
  • Cubs - #8: $100M
  • Phillies - #14: $89M
  • Indians - #23: $62M
  • Rockies - #25: $54M
  • D-backs - #26: $52M

It looks like you pretty much have to pay to play in the American League: three of the playoff teams are among the Top Five big spenders. But then there's the lowly (based on payroll) Indians - 23 out of 30 teams in the MLB, yet there they are in the playoffs and tied with the wildly outspending Red Sox for the best record in the league. To date, it's certainly hard not to argue that the Indians are the most productive team in the AL.

In the National League, only the Cubbies cracked the Top Ten. The Phillies are narrowly in the top half, and then there are the Rockies and the D-backs, with two of the lowest payrolls in baseball.

Who did the worst relative to their spend? Hard to argue that the Mets, #3 with a spend of $118M, who squandered a 7 game lead with 17 games left and ended up out of the playoff picture entirely. Amazin'.

And the White Sox, at #4, burnt $110M and finished fourth in their division.

Of course, while baseball is certainly business, it isn't exactly business. Even the lowliest teams in baseball play .400 ball, winning 4 out of 10 games, which is unlike the lowliest software companies which definitely do not win 4 out of 10 deals against stronger competitors. And even the mightiest teams - this year the Red Sox and the Indians - win fewer than 6 out of 10 games. (Each finished at .593.) Which is what makes baseball so exciting. There are no "gimmes". When the Red Sox play Tampa Bay - the dead last team in terms of spending at $24M, and not so obviously the owners of the worst record in baseball (.407) - they're still capable of getting beaten. Which we've all seen and torn our hair out over. Let's face it, no one gets to the professional level in any sport without having a good deal of talent and determination. And in baseball, with it's llllloooonnnngggg season, things tend to even out, and the spread between the best and worst teams is just not what it is in a sport like football.

Given their spend, I can certainly see that a lot of people will be root, root, rootin' against the Yankees, Red Sox, and Cubs - and big time for the Indians, Rockies, or D-backs to take it all.

And that's just another great thing about baseball. Sure, moneyball talks, but so do grit, hustle, and luck.

I, of course, will be rooting for my personal big spenders, the Red Sox. After that, I've got to go with the Cubs as sentimental favorites. Plus I'm half-Chicago to begin with. (My mother's from there.) If the Red Sox or Cubs aren't in the finals, I'll take the Indians or the Angels. Anybody but you know who...

Source of 2007 MLB payroll info: The Sportscolumn Blog.

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