MLB

This year’s American League Wildcard game between the Oakland A’s and the Kansas City Royals is just the latest example in the popular argument against Oakland GM Billy Beane’s famous “Moneyball” strategy- it doesn’t work in the postseason. To be fair, the Athletics lost to another team in the bottom half of MLB payrolls, but it does remind fans that postseason success does not occur often for small-market teams. Recent success stories such as Pittsurgh, Oakland, and Kansas City have given supporters of the current MLB revenue sharing system ammunition, yet a simple look at the winners of the World Series since 2000 shows that while money may not win championships, a team can’t win without it. From 2001 until today, no team from bottom third of the MLB payroll has won the World Series, and those in the top third have won 71.4% (10 of 14) of the time.

Last year’s World Series Champions, the Boston Red Sox had a payroll of $158 million, the fourth most of any team.

Oakland and Kansas City have shown us that it’s possible to compete with smaller payrolls, but deeper coffers has a bigger advantage than  simply attracting big name players- these teams can afford to take risks. Like a large firm outspending smaller companies on research and development, a wealthy MLB team can afford to make investments and deals that do not pay off in the long run. Certainly they try to avoid them, but they can afford to take risks that Kansas City and Oakland cannot. LA Dodgers outfielders Matt Kemp and Andre Ethier are not playing nearly as well as two players with $21.5 million and $10.5 million salaries (respectively) should be, but the Dodgers are still in the playoffs and had one of the best regular seasons of any team. These contracts would be crippling for years for smaller market teams, but they account for little of the Dodgers’ $240 million payroll. The consequences of a bad deal has made those at the bottom of the payroll list more risk averse, and if recent playoff history is any indication of the future, the advantages of the large market teams will continue to lead to more postseason success.

One thought on “MLB

  1. So deep pockets let you by better athletes. No, it’s not a sure thing. But if playing in a large league is beneficial (it MLB just had a few teams viewership and add revenues would fall), then how do you encourage entry in smaller markets?

    Note that what we want to know is not how often lower-tier teams win. Rather we want to know how often they’re profitable.

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