THE BOOK--Playing The Percentages In Baseball

I hear this from some Red Sox fans from time to time.  My feeling is that they think their management is smarter than others and they would dominate if everyone was put on an equal footing.  The Yankees have the most money, and spend more than the Red Sox.  They probably feel that is the sole reason why the Yankees do better on the field - not because their management is the same or better than the Red Sox - but because they can and do spend more money than the Red Sox.  So their argument is—let’s put everyone on equal footing (i.e. don’t let the Yankees spend more than us) and then we will dominate because we are smarter.  Not a bad tactic to take...but I think they are overestimating themselves - afterall they do have a huge advantage over other teams due to how much more they can spend compared to say a team like the Rays.

It’s just lobbying, like anything else. The best situation for the Red Sox would be a cap/floor, where the Yankees would have to spend less and small market teams (i.e. not the Sox) would have to make up the difference. That’s why Henry has always been in favor of a cap:

http://sports.espn.go.com/mlb/spring2009/news/story?id=3916048

But given that the players would never ever allow that, this is another decent alternative, since it still creates the desired outcomes, if not quite as effectively.

When people talk about competitive balance, I never know if they are talking about the spread between the best and worst teams or the ability for teams to move up and down along the win spectrum.

It’s not very comforting as a Pirate fan (ok, bad example but stay with me) to know that the spread between the ‘09 Pirates and the ‘09 Yankees isn’t as great as the spread between the ‘39 Yankees and the 39’ Browns. Instead I’m more interested in knowing whether or not the Pirates, given good management, good luck, and time have any chance at all to win a championship. I feel like the answer to that question is increasingly ‘no’.

It would be interesting to also see the correlation between payroll and wins broken down by decade, and perhaps year by year for the current decade.  If I remember correctly, there was not a large correlation between the two empirically.  I wonder if that correlation is growing or shrinking with the advent of saber-minded front offices.
vr, Xei

I think the sport needs a certain basic level of competitive balance, sure, otherwise people will lose interest.  I also think it’s generally healthy for the sport to have teams from big cities like NY, Boston, Chicago, LA and Philly be good, often. 

The question is whether the sport is already there.  I’m a Yankees fan.  I tend to believe that things are still tipped too far in favor of the rich teams.  My preferred solutions, however, do not involve salary caps or floors.  That’s going at it from the wrong side.  You have to go after the revenue (though that has its own hazards).

Also, what is his definition of “prosper”?  Is he talking about the amount of money that MLB makes and it’s financial growth?  Sounds like he is saying that fairness implies financial growth.  With fairness defined as a much narrower difference between the highest and lowest payrolls, or the cap/floor system stated in #2. 

Is the sport of baseball better off financially when you don’t have so many of the same teams making the playoffs (NYY, BOS, LAN, LAA)?  Or it’s easier for richer teams to rebound from an off season or two?

How much does the extra payroll actually help, and what is the correlation from #4?
vr, Xei

BrianK/3, I’d disagree with that, as a Pirates fan myself. If the Rays can win 97 games and go to the WS having to play the Sox and Yankees ~40 times, there’s no reason the Pirates can’t beat the Cardinals and Cubs if managed correctly.

I think the best way around this without modifying the revenue sharing or instituting a salary cap/floor would be to realign the divisions based on a three year weighted payroll.  The AL teams with the highest payrolls would have to fight each other for one playoff birth (divisional crown).  Each year the AL and NL divisions would be shuffled, and in many cases it wouldn’t get shuffled much unless a team cut or raised payroll significantly.  And to keep a team from taking advantage of the system, any team making the playoffs would be relegated to the next division above it, switching places with the worst team from that division.

This way if the Angels and White Sox didn’t feel they could secure a division title or WC fighting against the Yankees and Red Sox, they could either wait for relegation to move them down, or cut payroll slightly.

There may be a few flaws/kinks to work out, but an interesting idea that will never happen.

vr, Xei

#7 Yes, the occasional miracle can happen, but how many years have the Rays finished higher in the standings than the Yankees and/or Red Sox?  My guess is only once.  It took having awful teams for many years for the Rays to succeed.  They hit the jackpot on many of their first round picks, as well as made some nice FA signings.  It basically took the “perfect storm” for the Rays to overtake the Yankees and Red Sox and make it to the W.S. two years ago.  So, yes it’s doable… but it’s just so darn difficult.
vr, Xei

Xei: I’ve often argued for a similar system.  My proposal would be to have the top 6 markets in the same division, and are given 3 playoff spots.  And the bottom 10 markets are given 1 playoff spot.

This ALREADY happens anyway (basically, half the playoff spots are earmarked for the top markets), and the bottom markets have a 10% chance of making the playoffs.

What this does is crystallize it as fact, and it gives a team like the Pirates, Royals, etc a more realistic chance that they think they can make the playoffs.

This idea already exists around the world.  It happened with the NHL expanded from 6 to 12 division (expansion teams went to one division).  It happens in the NCAA 64, where certain teams are given more berths.  It happens in the World Cup, where certain regions are given a certain number of teams. 

It does away with the fakeness that every team is on equal footing.

The reason the Red Sox owner would favor what Shawn Hoffman suggests in post 2 is that it would maximize Red Sox profits, not necessarily Red Sox World’s Championships.  If there were a cap and a floor then other teams would be required to spend less (New York) or more (everyone else) on salaries, which would make the Red Sox’s advantage in revenue from NESN and Fenway worth all the more. 

The payroll cap thing is just a way to keep money in the hands of the owners.  Alex Rodriguez doesn’t play better paid $36 million versus $10 million.  Neither does Carlos Silva.  If you even out salaries, what you do is allow someone to use other advantages (climate, playing conditions) without having to spend the money on salary and it stays in the hands of the owners.

@Shawn-#7:

Yes...the Rays are the great counter example. I’d give you points for the Twins too. But going forward, I think it is less likely you will see those types of stories as it appears that the large market teams are being managed better. If once every 4 or 5 years a small market team makes an appearance in the World Series, I’m not sure I call that competitive balance. I’m also not sure what can be done about or if anything should be done about it. The 70’s, 80’s and 90’s were a time of unprecedented competitive balance in baseball and people tend to think that’s the way things always were. Of course we know that’s not true. This isn’t a great argument, but to me it just FEELS like that era is coming to a close.

i think the promotion relegation system would work great with baseball in north america.  too bad (in this instance anyway) that the minor leagues are not independent and MLB acts too much like a single entity for it to come close to being a reality.

i do like the idea of allocating more or less playoff spots depending on the team but it gets tricky in where you make the cut off and deciding who competing for which slots.  but it could probably get worked out, or at least be more equitable than it is now.

Another key part of the article hasn’t been mentioned here:

“Change is needed and that is reflected by the fact that over a billion dollars have been paid to seven chronically uncompetitive teams, five of whom have had baseball’s highest operating profits,” Henry responded in an e-mail. “Who, except these teams, can think this is a good idea?”

All teams get at least $50M from centralized revenue. There is no reason for any team except Florida to have less than $50M local revenue (Florida has a deal where most of stadium profits goes to stadium owner). Add some $20M of revenue sharing, and every team should be able to support at least $70M payroll, pay for draftees, and have reasonable profit. And if they spend it wisely, it would attract more fans, and generate more revenue.
The problem is, revenue sharing is based on payroll, so teams that increase payroll spend more AND lose revenue sharing money. A few years ago someone from Minnesota explained how if they spend to increase revenue (both on payroll and on promotions), they get only around 40% of newly generated revenue, but if they decrease payroll, they keep the money and get more revenue sharing money.(Note - I read it several years ago; I might have confused the original article with some analysis of that article).
The best solution for the baseball would be to tie revenue sharing with revenue potential. Something like: calculate revenue potential of each team, based on the size and wealth of local market and basic inclination toward sports (without penalizing Yankees, Boston, Philadelphia and others for developing their markets, or awarding KC, Pittsburgh and others for neglecting theirs). Some percentage of out-of-market revenue can be added, if that area strongly leans toward one team (with care not to punish teams for developing those areas). Revenue sharing should then be based on that calculated revenue - each team gives 2/3 - 3/4 of calculated revenue into central fund, and all get equal share back. Everything they make over calculated revenue, they keep. If they make less, their problem. Of course, calculated revenue would have to be adjusted each year, because MLB revenue would rise - every team would have clear incentive to develop as much local revenue as possible. Add penalties for owners who are constantly way under calculated revenue (if team is sold, penalty is removed, but it follows owner if he buys new team) and everybody in baseball is thinking how to increase total baseball revenue.

Expansion & Realignment:

AL North: Blue Jays, Tigers, Twins, White Sox
AL East: Yankees, Red Sox, Phillies, Indians
AL South: Rays, Rangers, Royals, Orioles
AL West: Mariners, Angels, As, Expansion Team

NL North: Cubs, Cardinals, Brewers, Mets
NL East: Pirates, Nationals, Marlins, NY Expansion
NL South: Braves, Reds, Astros, Rockies
NL West: Dodgers, Giants, Padres, Diamondbacks

Not sure where expansion team #2 goes. I’ve got it on the West Coast, but you could argue for NY area for it too… if you did that, you’d have to reshuffle the divisions. 

I think this, coupled with generous revenue sharing and the Yankee (erm, luxury) tax, would work pretty well.  Whether it’s worth the effort is another matter.

Rob, I don’t know why it would “work pretty well”.  I really see nothing novel here.  So, it’s going to work pretty much because it’s going to work.

I’ve long held that using geography to put any two teams together to be less than ideal.  Not to mention it is completely without imagination.  No offense to you, but you simply perpetuate the status quo here.  Furthermore, you are keeping the NL/AL distinction, which again is more status quo, though you conscripted the Phillies to play in the AL (whereas the Brewers would have made a better historical choice).

Re-alignment based on market size, re-alignment based on semi-random order (like World Cup), re-alignment based on teams drafting other teams into their division, re-alignment based on having an odd number of divisions, re-alignment based on removing the DH distinction… these are the kinds of ideas we can discuss. 

Re-aligning based on geography is… dull.  Everyone throws teams out there, and in two days, no one will remember what anyone said.

Sorry dude.  I hope you don’t take offense, but I just wanted to make my point.

#12, I’m not saying that you’re wrong, but we’ve been hearing about how it will become increasingly more difficult for the smaller market teams to win for as long as I’ve been a fan (early 80s).  Money is no doubt a big factor in sports, but is it really any more difficult for the smaller market teams to win today than it was 10, 15, or 20 years ago?  It seems every time a team like the Rays win something that people say it will be more difficult for teams like that to do it if changes aren’t made.

It will become difficult if teams stop blowing their wad on free agents, and spend-happy teams continue to act smart.

The great equalizer for the small-market teams is that they did not waste their money on free agents, who are severely overpriced, and instead spent smart on players from age 18-28.

If Redsox continue to be smart about this, then this will erode the great equalizer.

Tango,

I think the current system works pretty well, and just needs a few tweaks and some better PR.

So yes, my plan is a mostly* status-quo solution to a problem that I think is somewhat overblown.  I was not aiming at anything revolutionary here, because I think revolution is unnecessary.  I take no offense at you pointing that out. 

I did consider disregarding geography and shooting for market size based divisions.  In the end, I tried for a mix of the two.

* - adding teams to the NY market isn’t status quo.  It’s not brilliant insight - many others have mentioned it.  It’s been true in the past.  I think it’s the best way to cut down on the Yankees financial advantage, beyond what already exists.

Rob, new team in NY can’t work because MLB would have to pay close to $1B for land and stadium. With Yankees and Mets already in town and with new stadiums, New York won’t give a single cent to get 3rd team. Team in New Jersey might be possible, but I don’t think that NJ would be interested in throwing money to MLB, and it’s questionable how much would NJ team hurt Yankees. Also, new team would have to become WS candidate very fast to hurt Yankees for more than a few percentage points of revenue. New team in NY would cost MLB too much money to risk a move which could, at best, in decade or so cut Yankees revenues for 20% - 30%.
As for division reshuffling, I think most fans would have a problem with major changes. Changing divisions during expansion is OK, but otherwise, there would be too many angry fans. And looking at AL East, Toronto and Baltimore should be able to at least come close to Boston in payroll, but they need Boston-type front office. Tampa suffered a decade of bad ownership/bad management. They should be able to sustain 85-90 win team for a few years. If they can maintain winning team, we could see real potential of that market.

I don’t believe we need to change around divisions much (but maybe schedule building), my biggest concern is removing the strong rivalries. I love Mets Braves, Mets Phillis and I know the country loves Yankees Sox. I want to avoid a Primer League where you get a big four winning each year.

Without looking at the revenue small market owners is pulling in without the luxury tax and revenue sharing, I have to assume they are making money and choosing not to re-invest a portion of it into their team. I am not looking to reward a team for that.

Off the bat I think the draft is an important aspect. I wrote about what I would do to change the draft in a realistic way (not my own personal political views) at the next collective bargaining agreement here, I wrote about draft changes here : http://www.minorleagueball.com/2009/8/18/993056/bargaining-the-draft

If MLB guarantees that each team is on the same playing field for bringing in first year players that will but the ball in the small market team’s court to spend their money wisely locking up the Ryan Brauns, Billy Butlers, Hanley Ramirezes, and Joe Mauers while the team has all the leverage.

I would also spread out the games more. 19 in division games is way to many. 12 would be better. I would slash inter-league too. There are too many boring games. Cut it down to 1 special series.

I’ve got more, but sadly I need to go. The first step to me, is fixing the draft.

There were 24 teams in 1969, when the divisional system was implemented, 28 teams in 1995 when the current playoff system started.  In the forty-one years since 1969, 16 of the 24 teams existing then won world championships.  If world championships had been distributed equally, each team would have won a couple.  In the 15 years of the current playoff system, 8 of the 28 teams existing then won world championships.

My question then is what is the problem?  There are 8 teams in the league (Nationals, Indians, Cubs, Brewers, Astros, Rangers, Padres, and Giants for the curious) that have not been able to win a World Championship in over forty years of trying.  Three of the six expansion teams coming into MLB in the past forty years have also won world championships.

If world championships were distributed exactly evenly, each team would win one exactly every 30 years!  I assume this would be pure competitive balance.  Yankees fans would certainly hate it.  But since the big expansion and change to divisional system in 1969, fans of 75% of the teams existing then have been able to celebrate at least once.

The Yankees won 7 world championships in that time, which is higher than their “quota” of about 2, but not that much higher.  What happens is that since the number of teams entering the playoffs was doubled in 1994, they keep getting into the playoffs.  But what they’ve done in the playoffs shows that this doesn’t necessarily translate into winning the whole thing.  What they’ve avoided is 15 consecutive losing series like the Pirates.  Maybe the problem is that the Pirates are not competitive, not that the MLB is not competitive.

You also see a wider distribution of teams in the championship series (or game, for the NFL) in baseball than in other sports.  Every year about half the teams will have losing seasons.  Some teams will have losing streaks.  This wil happen even if the results of all games are determined randomly.

So what is the problem?  In normal (non-sports) life, maldistribution is a huge problem.  This includes, or especially includes, maldistribution due to purely random outcomes.  People can die before their normal lifespan due to maldistributions in healthcare.  But I think we can have a wider tolerance with sports.  Its bad for Cubs fans.  But these schemes won’t help the Cubs, they are not exactly a small market team.

What does the distribution of team by team payroll look like in 10 year snapshots.  I think that would tell us about the disparity in terms of payroll between teams from different eras (as many people are using eras in their arguments).  As well as payroll spread, it would also be nice to see revenue spread.

Are the Yankees any further away from the mean in terms of payroll and revenue today than they were 10, 20, 30 and 40 years ago?

Revenue also has other advantages besides the opportunity for a higher payroll, but also helps draft players out of slot in todays draft.

vr, Xei

A couple of months ago, I showed what a team’s 10-yr or 15-yr payroll translated to win%.  Whoever finds it first, please post a link.

From what I remember, the Twins had a payroll fitting a .475 team, but they played .525, and the Orioles were the opposite of that.  Something like that.