I have always contended that the baseball financial structure needs to be restructured in order to put all teams on a more level playing field. Clearly, a payroll ceiling is a step in the right direction. However, a floor is just as important as has been demonstrated with the ineffectiveness of the current luxury tax where owners receiving money can (and do) put it in their pockets and not reinvest it into their teams. Besides, it is extremely unlikely that the players union would even consider a ceiling or cap without a floor.
Money does not guarantee success or championships. A team still needs to invest its money wisely (look at the Yankees in the 80s or the Wilpon owned New York Mets). Nor does a low payroll make it impossible for a team to succeed. But those successes are the exception to the rule and ability to repeat is severely hampered.
To prove my point that money, or lack of it, can put a team at an extreme advantage or disadvantage, I did an analysis of the payrolls and results of the 30 MLB teams since the last expansion in 1998. I grouped the payrolls on an annual basis into 6 buckets of five teams (1-5, 6-10, 11-15, 16-20, 21-25 and 26-30). I then calculated the average number of regular season wins for the group and totaled up the number of Division, Wild Card, Division Series, League Championship Series and World Series winners for each group. The data is summarized in the following table.
The table clearly illustrates that although it is possible to be successful with a low payroll, not surprisingly, the lions’ share of success is rewarded to the teams with the highest payrolls. The number of regular season wins directly correlates to the size of the team’s payroll with each successive step up the 5 team payroll group adding 3-4 games to its average. More than 75% of the Division winners had payrolls in the top 50% while 60% of them had payrolls in the top 33%. 83% of the Wild Card winners had payrolls in the top 50%.
That success continued into the post-season as 85% of the Division Series winners, 88% of the League Championship Series winners and 92% of the World Series winners had payrolls in the top 50%.
So if you don’t believe that the success of the New York Yankees is not based on money (albeit, spent wisely), think again. The playing field is heavily slanted in their direction. Consider that in 2009, the Yankees payroll was 35% the next team on the list, more than double 20 of the other MLB teams, 5.5 times the Marlins payroll and more than the Nationals, Pirates, Padres and Marlins payrolls combined! Is it any wonder that they won the World Series last year?