• The 15 Percent Rule

    Posted by on September 26th, 2007 · Comments (10)

    From the Cleveland Plain Dealer, back in 2003:

    This information, plus another computer analysis that showed no one player’s salary had exceeded 15 percent of a team’s payroll on any World Series champion club since 1985, overrode the Tribe’s emotional instinct to pay Thome the guaranteed salary he wanted for six years to allow him to finish his career in Cleveland.

    From the New York Times, back in 2004:

    ”If you get one player making much over 10 percent of your payroll, you’re asking for trouble,” said a general manager who has made a study of the effect of unusually large salaries on club payrolls. ”When payrolls get high, 90 or 100 million dollars, it compounds that. A guy making 20 or 30 percent of it makes it worse.”

    From the Chicago Tribune, last month:

    Assuming that the prospective ownership groups were briefed on the Zambrano signing, it would seem to indicate that they foresee future payroll of $120 million or more. His deal to believed to average a little over $18 million a year (the level that Alfonso Soriano’s contract escalates to in 2010 and beyond). That would represent 15 percent of a $120 million payroll, and history has proven it’s almost impossible to get to the World Series when one player is taking up such a large percentage.

    This is probably why Brian Cashman is willing to let A-Rod walk away after this season…if New York cannot use that money from Texas to drive down what percentage Alex’s salary would be…compared to the whole team.

    Comments on The 15 Percent Rule

    1. RICH
      September 26th, 2007 | 1:13 pm

      Your logic would be correct if salaries were limited by a hard cap.

      Since baseball isn’t limited in that way why does it matter what percentage of total salaries an individual makes up for the Yankees? If the Yankees enter a season of a budgeted payroll of $250 what’s to stop them from increasing it to $500 other than any additional taxes?

      The Marlins need to pay close attention to the 15% rule while the Yanks don’t. Their greatest strength is the combination of available funds and the willingness to spend it.

      On Arod getting $30 per year, it seems to be an “echo effect” that Boras is trying to get out there – say it enough times and everyone will believe it’s true. Countries have gone to war on less*.

      Sure, another team might pay it (Boras already got Texas to break the barrier once) but would it surprise you if after going through back channels before negotiating with the Yanks that no team is willing to meet the $27 Arod is due to get for the next 3 years? I can see him staying. I think he might have another opt-out available in 2009, maybe the money available with the new Baseball Network will make $30 chump change.

      I’d like to see Arod stay but I’ll leave it to the Yanks to determine how much revenue he is worth to them.

      *I apologize if that statement offends anyone as inappropriate for this forum, feel free to delete the message.

    2. christopher
      September 26th, 2007 | 1:30 pm

      ~~history has proven it’s almost impossible to get to the World Series when one player is taking up such a large percentage.~~

      What data supports that claim? Magglio Ordonez was paid more than 15% last year and the Tigers got to the World Series. Clemens and Bagwell both made more than 15% with the Astros in 2005 and they made the World Series. Manny and Pedro both broke the 15% barrier in 2004 and the Sox won the World Series. The Giants had over 15% tied up in Bonds in 2002 and made it to the World Series.

      It seems like the original claim made in 2003 by the Cleveland Plain Dealer is true, but that theory has been broken several times since then. There used to be a theory that you couldn’t win with a 35+ HR hitter and that was true from 1986-2000, but you don’t hear people saying that today. Happenstancial trends and statisical evidence are two different things.

      Regardless of the 15% theory, if the Yanks think A-Rod can bring in $30 mil in revenue, then they’ll pay him close to $30 mil. Any good GM will sign players based on ROI – not based on lazy reporting from the Chicago Tribune.

    3. mehmattski
      September 26th, 2007 | 1:32 pm

      “That would represent 15 percent of a $120 million payroll, and history has proven it’s almost impossible to get to the World Series when one player is taking up such a large percentage.”
      ——————–

      2002 Giants Payroll: $78.3M
      Barry Bonds: $15M (19.2%)

      2002 Angels Payroll: $61.7M
      Darrin Erstad: $6.25M (10.1%)
      Aaron Sele: $7.1M (11.5%)
      Kevin Appier: $9.5M (15.3%)

      2003 Florida Marlins Payroll: $40M
      Ivan Rodriguez: $9.3M (23.2%)
      Luis Castillo: $4.85M (12.1%)

      2003 New York Yankees Payroll: $152M
      Derek Jeter: $15.6M (10.2%)

      2004 Boston Red Sox Payroll: $127M
      Pedro Martinez: $17.5M (13.7%)
      Manny Ramirez: $22.5M (17.7%)

      2004 St. Louis Cardinals Payroll: $83.2M
      Jim Edmonds: $9.2M (11.0%)
      Matt Morris: $12.5M (15.4%)
      Larry Walker: $12.6M (15.6%)

      2005 Chicago White Sox Payroll: $75.5M
      Jose Contreras: $8.5M (11.2%)
      Frank Thomas: $8.0M (10.5%)

      2005 Houston Astros Payroll: $76.7M
      Jeff Bagwell: $18M (23.4%)
      Lance Berkman: $10.5M (13.7%)
      Roger Clemens: $18M (23.4%)

      False.

    4. September 26th, 2007 | 1:58 pm

      Sans Manny and Pudge, the over 15% rule does seem to apply, still, to WS winners, FWIW, no?

    5. Sky
      September 26th, 2007 | 2:05 pm

      I’d like to see a study that isn’t so black and white. Come up with a way to quantify a team’s “big horse rating”, something like how much more the top player earns compared to the next three highest players or something. Then look for a correlation between that and winning percentage. 15% is such a hard cut-off and there really haven’t been that many World Series played to make anything significant.

      ****

      Is there a reason WHY teams with one player earning a significant chunk of payroll would be less successful? Might it be a sign of overpaying? Might it be a sign of a tendency to pay for lots of free agents, who are overpaid relative to young players? Or maybe it’s a sign that you just haven’t supported your best player with anybody else. $10 million out of a $50 million payroll is worse than $10 million out of a $100 million payroll, but not because of the $10 million guy — he’s got no teammates.

    6. mehmattski
      September 26th, 2007 | 2:14 pm

      Sans Manny and Pudge, the over 15% rule does seem to apply, still, to WS winners, FWIW, no?
      ———-
      2001: Randy Johnson ($13.3M of $85.2M)
      2002: Appier
      2003: Pudge
      2004: Manny
      2005: none
      2006: Pujols ($14M of $88.8M, Eckstein (12.3M) and Rolen ($12.8M) also high salary)

    7. September 26th, 2007 | 3:00 pm

      OK, maybe it’s time to make the rule “over 16%”? {wink}

    8. mehmattski
      September 26th, 2007 | 3:05 pm

      Heh, but then it would be fine to sign A-Rod! ($200M * 0.15 = $30M)

    9. September 26th, 2007 | 3:57 pm

      That assumes the total is $200 million. {wink}

    10. SteveB
      September 27th, 2007 | 1:52 pm

      That is nonsense. The poster who made the point about the lack of a hard cap invalidating this argument is 100% right.

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