Yes, this is about the “King”…but, no mention of “Return on Investment”? Really…..?
Via Andrew Zimbalist in the WSJ –
Judging from the media coverage, it seems that the only thing the Yankees didn’t do on their way to buying the 2009 World Series is ask the federal government for a bailout. But is it true that the Yankees bought their trophy? Are the championship rings the players will take home simply a byproduct of the largest payroll in Major League Baseball? And if so, how come the Yankees haven’t won the fall classic since 2000, even though the franchise led the way in payroll each year and actually spent more last year (when it missed the playoffs) than it did this year?
It’s a little surprising, but the statistical relationship between a team’s winning percentage and its payroll is not very high. When I plot payroll and win percentage on the same graph, the two variables don’t always move together. In other words, knowing a team’s payroll does not enable one to know a team’s win percentage.
More precisely, depending on the year, I find somewhere between 15% and 30% of the variance in team win percentage can be explained by the variance in team payroll. That means between 70% and 85% of a team’s on-field success is explained by factors other than payroll. Those factors can include front office smarts, good team chemistry, player health, effective drafting and player development, intelligent trades, a manager’s in-game decision-making, luck, and more.
Wealthy teams do have an advantage, but it is not true that they can buy championships. Further, although the cries for parity among teams are loud, MLB has a good deal of competitive balance. Since 2004, 20 of baseball’s 30 teams have made the playoffs.