• Vive Le Roi! B4 Le Roi Est Mort!

    Posted by on November 16th, 2009 · Comments (18)

    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.

    Comments on Vive Le Roi! B4 Le Roi Est Mort!

    1. MJ
      November 17th, 2009 | 11:16 am

      The ROI prism is far too narrow and black-and-white a view to take. Yes, of course you want to see return on investment but the pure ROI view is the same as the idiotic Steinbrenner Doctrine. I’d argue that the eight-year interlude between championships — 7 playoff appearances, 6 division titles, 2 pennants — was a return unmatched by all but one team in that same time period and thus provided a good return on investment.

      Don’t confuse “efficiency” with “ROI” because they are not the same thing.

    2. November 17th, 2009 | 12:13 pm

      MJ wrote:

      Don’t confuse “efficiency” with “ROI” because they are not the same thing.

      How are they different?

    3. MJ
      November 17th, 2009 | 12:55 pm

      @ Steve Lombardi:
      It depends on what you are seeking to define “return” as. I won’t speak for you but I have assumed that you subscribe to the Steinbrenner Doctrine and, as such, you view “return” as a World Series championship.

      I think the Steinbrenner Doctrine was an idiotic proclamation that was unrealistic from the beginning. It minimized the difficulty and challenges undertaken by the team in winning 4 titles in 5 seasons and 6 pennants in 8 seasons.

      If you view the World Series as the only suitable return, then sure, the Yanks ROI isn’t what you’d hope it would be given the investment. But if you understand that payroll doesn’t guarantee success and that there is a degree of randomness to the playoffs then I just don’t see how one can be disappointed with the returns of making the playoffs 7 times, winning 6 divisions and 2 pennants, especially when the only other comparable level of success from 2001-2008 came in the form of 6 playoff appearances, 1 division title and 2 World Series titles for the Red Sox.

      Therefore, in my definition, “returns” equals playoff appearances and “efficiency” would be more along the lines of wins per dollar spent. In that latter defintion, the Yanks are clearly the least efficient team in baseball. Ideally, they’d find a way to increase efficiency but it’s ultimately irrelevant since the returns have been so positive.

    4. MJ
      November 17th, 2009 | 12:58 pm

      Correction: Boston’s record in that time period included 5 playoff apperances, not the 6 mentioned above.

    5. November 17th, 2009 | 1:18 pm

      @ MJ:But, in your mindset, where ROI = playoff appearances and “efficiency” = wins per dollar spent, are you accounting for the fact that “efficiency” is connected, in a sense, to ROI?

      Think of it this way: Without wins, you’re not making the playoffs. Basically, these days, you need around 95 wins (maybe a little more?) most times to make the post-season. So, if you do a shitty job at “efficiency” (meaning $/win) then you’re doing a shitty job at ROI in a sense as well, no?

      Sure, you might meet the goal of making the post-season, but, because you did it in a manner that was not “efficient,” your ROI was really not as good as it could have been had you met the same ROI in a more “efficient” manner.

    6. MJ
      November 17th, 2009 | 1:51 pm

      Steve Lombardi wrote:

      Think of it this way: Without wins, you’re not making the playoffs. Basically, these days, you need around 95 wins (maybe a little more?) most times to make the post-season. So, if you do a shitty job at “efficiency” (meaning $/win) then you’re doing a shitty job at ROI in a sense as well, no?
      Sure, you might meet the goal of making the post-season, but, because you did it in a manner that was not “efficient,” your ROI was really not as good as it could have been had you met the same ROI in a more “efficient” manner.

      All the more reason why in baseball I see returns and efficiency as separate discussions.

      Why would efficiency matter if you are getting your returns? The Yanks have shown that they can be the most inefficient team in baseball and still get their returns so there doesn’t seem to be a correlation given the current economic realities of the game. In the here and now, the Yanks don’t have to worry as much about efficiency as long as the returns are there. And, as long as the 2011 labor negotiations don’t change the current spending landscape, it’s not something the Yanks truly ever have to worry about fixing.

      Yes, ideally, the Yanks would strive to be more efficient. And I think one could argue that Hughes, Chamberlain, Kennedy, etc. represent a move towards greater efficiency. But, ultimately, who cares?

      What are we really talking about, Steve? If we’re talking revenue and gross income, no, the Yankee inefficiency isn’t a good thing. But as long as the Steinbrenners are content to spend whatever it takes to put a great product out on the field, the efficiency/ROI relationship doesn’t work in the way you’re describing.

    7. November 17th, 2009 | 2:40 pm

      Well, without question, I would rather see the Yankees spend their money towards improving their team, park, system, etc., than stick the money in their pockets. And, I’m thrilled, as a Yankees fan, that this is their M.O.

      But, that said, I would take more pride in their “ROI” meaning playoff appearances (and ring this year) if they could do it in a manner where they didn’t have to outspend everyone else by a zillion dollars.

      And, the fact that other teams make the post-season often, and have won some rings (see the Bosox and Phillies of recent years) without having to spend nearly as much as the Yankees, tells me that the Yankees are working costly and not working smart.

      Think of it this way: Who would you rather align yourself with – a company who gets the job done where they have to work 120 hours a week or a company who gets the same job done working 35 hours a week? The latter, at least to me, appears to be more of a winning/smart organization. And, in theory, they should be able to use those hours saved to address some other need, etc.

      So, if the Yankees could do what they do now, but, with a payroll closer to $150 million, I would consider that a better ROI/whatever than what we see now…

      Maybe to you/others, that does matter? It’s not your money, etc.,…

      But, to me, again, in terms of being a flag holder (and the like), I would take greater pride (as a fan) if they didn’t have to spend $200 million a year (at the big league level alone) to get a job done that others have proven can be done at 50-75% of that cost.

    8. MJ
      November 17th, 2009 | 3:01 pm

      Steve Lombardi wrote:

      Think of it this way: Who would you rather align yourself with – a company who gets the job done where they have to work 120 hours a week or a company who gets the same job done working 35 hours a week? The latter, at least to me, appears to be more of a winning/smart organization. And, in theory, they should be able to use those hours saved to address some other need, etc.

      Actually, your analogy is backwards. The Yanks’ inefficiency means that they can absorb more mistakes and afford to take bigger risks. As such, they work less “hard” than their opponents because they have greater margin for error. That’s a bit of an oversimplification but it should get you off the idea that the Yanks have to work “harder” (120 hours). I get what you’re saying but your analogy doesn’t really work.

      But, as YankCrank has said many times before: if you don’t like the fact that the team you root for can spend a lot of money ($200M payroll) and sign the best players (CC Sabathia, Mark Teixeira, A-Rod) and keep its stars (“Core Four”) then you should really root for the Twins or Royals. It makes no sense to be a fan of the Yanks if you’re so embarrased by their wealth and their ability to use their money to their advantage.

      It’s kind of disingenuous to be ashamed at a $200M payroll but say that Boston and others doing it for $150M are so much more noble. If you want noble intentions, root for the Marlins. For $30M, they managed to finish in 3rd place the past two seasons. Then again, for that same $30M, no fan wants to attend their games or buy a jersey with Hanley’s name on the back of it because he’ll be someplace else by early 2011 anyway.

      You’re a very curious fan in that you truly don’t seem happy when the Yanks win. There’s always something not quite good enough about the state of things for you.

    9. November 17th, 2009 | 4:31 pm

      MJ wrote:

      You’re a very curious fan in that you truly don’t seem happy when the Yanks win. There’s always something not quite good enough about the state of things for you.

      Ever hear the line about the difference between Yankees fans and Mets fans?

      The Yankees can win 100 games and lose 62 – and the Yankees fan wants to know what went wrong in those 62 losses.

      The Mets can win 62 games and lose 100 games – and the Mets fan is happy to pound his chest over those 62 wins.

      I’m an old-school Yankees fan – even when they “do well” by conventional standards, I want to see them do it better.

      Really, I think you’re more like me than you may confess…

      Q: If the Yankees are in first place, on July 3rd, by 20 games, and they’re on pace for a 102-win season, and they lose a game to the Red Sox, 1-0, that night, on a passed ball in the bottom of the 9th, are you going to bed that night pissed off, etc.?

      I’m thinking you are…if I know you at all. And, then, you’re no different than me – since you’re not happy at that moment even ‘tho the team is going great, etc.

    10. MJ
      November 17th, 2009 | 5:00 pm

      @ Steve Lombardi:
      Big difference between losing a game to the hated BoSox because Posada the space cadet let one go through the five-hole in the midst of an otherwise awesome 103 win season and feeling some sort of shame that I root for a $200M monster that can win because it has the financial flexibility to do so.

      I’m a Yanks fan and that means people already hate me for the fact that I’m so-called arrogant just because I happen to root for the team with more success in US team sports history. If people are going to hate me on the basis of which baseball team I root for, then I may as well embrace all the things that people hate about the Yankees. I would never want to be a Royals or Twins fan (misery guaranteed almost every year), nor would I want to be a Red Sox fan (there is no greater nobility in *only* spending $150M for your second-place team).

      Steve, losing hurts and I take it personally. I avoid TV, newspapers and the blog when things are going wrong. In that way, we are 100% alike. But where we differ is in the concept of ROI. I want to win titles but I know it’s not possible every year — not anymore, not with multi-tiered playoffs and revenue sharing. I am happy that my ballcub has won more games in this decade than any other. We book-ended the “aughts” with titles. What more can I ask for?

    11. November 17th, 2009 | 5:07 pm

      Think of it this way – you can win on the battle field because you bought more tanks than anyone else, or, you can win on the battle field because you out-smarted or out-fought your opponent. Both are wins, yes. But, one is sweeter.

      I want the sweet win.

      Don’t get me wrong, if the “bought” win is the second option, I’ll take that over the loss – every time. But, it’s just not as enjoyable as the sweet win, IMHO.

      There’s just something to be said about winning on the battle field with honor as opposed to buying the win…

    12. Evan3457
      November 17th, 2009 | 7:43 pm

      Steve Lombardi wrote:

      Think of it this way – you can win on the battle field because you bought more tanks than anyone else, or, you can win on the battle field because you out-smarted or out-fought your opponent. Both are wins, yes. But, one is sweeter.

      There’s just something to be said about winning on the battle field with honor as opposed to buying the win…

      Boy, I’m sure glad is was FDR and George Marshall involved in doing the logistics for World War II and not you.

      I’m sure glad the Abrams’ tank was the best, most expensive tank in the world in the Gulf War and the War in Iraq.

      “Winning with honor” has little to do with how much you spend to win; in fact, in modern American military combat, the U.S. has always preferred to spend $$$ rather than men. It is only the other way around when someone screws up, which has unfortunately happened as well. On those rare occasions the strength and honor of the fighting forces of the U.S. has come through most of the time.

      But that’s not the way we prefer to fight wars.
      ===========================
      But that’s really a poor analogy.

      Let me back off this and try it another way…

      Do you like the fact that Jorge, Mo, Jeter and Andy were together on this team?
      Cha-Ching!! $60 million, please.

      Was it good or bad that they traded Soriano for A-Rod?
      Cha-Ching!! $30 million, please.

      Everyone thinks Damon and Matsui did a fine job while there were here, right?
      Cha-Ching!! $26 million, please.

      Did the Dynasty Yankees win 4 titles with young, cheap pitchers up from their farm system? Uh, that would be no; Clemens was a (VERY high) salary dump from Toronto. Ditto for Cone. David Wells was a fairly hefty free agent signing for the time, about $4 million a year. Ditto for Key. El Duque was an international free agent; the Yankees outbid everyone for him, and his performance was so great that if another El Duque came up now, you couldn’t get him for $10 million over 5 years; in fact, Contreras proved it by costing $32 million for 4 years to sign.

      But the Yanks won this year with two expensive starters, in addition to Pettitte and two slots in the rotation for little more than league minimum.
      Cha-Ching!! $30 million, please. (CC was $14 for 2009; his $23 mil a year kicks in next year)

      Giambi’s $22 milion out; Tex’s $20 million in.
      Cha-Ching!! $20 million, please.

      So now, you’re at $166 millon. This is where other teams stop paying. Where’s the other $35 million? Cano, Swisher, Molina, Marte, Wang, a host of league minimum guys, some minor league guys, and a couple of bench guys and bullpen guys.

      So, who, exactly, gets voted off the island? The guys you think you want to get rid of are the cheaper contracts; amazingly enough, unlike most years, everyone making the big bucks pretty much earned them this year.
      ==========================================
      I’m really sick and tired being told I should wear sackcloth and a signboard that say “Repent! The End is Near!!” for being a Yankees fan. I’m not embarrassed about it; not anymore; not at all.

      Let’s take LA. Are the people in LA embarrassed that USC “outrecruits” (Hahahahaha) everybody for top football talent. And those poor people in Florida that root for the Marlins and Rays; I don’t see them embarrassed by all those Miami U. and Florida U. titles, and all those 1st-rate Florida St. teams.

      Those sad mid-west folk don’t seem too ashamed of Notre Dame (well, maybe recently, since the Irish decided to play “with honor” by superior rules) or Michigan or Michigan State, or Ohio State.

      And I’m sure the downtrodden folk in Pittsburgh are certain that neither Pittsburgh nor Penn State ever fractured a rule or two in their recruiting. Oh, no, good ol’ Joe Pa wouldn’t stand for it.

      And Arizona was well-known for being a basketball hotbed before Lute Olson showed up from Iowa. And UNLV and Tarkainian. And Calhoun and Connecticut, “outrecruiting” St. John’s and all.

      And don’t get me started about them Longhorns and Sooners and Cornhuskers, or them Tigers of LSU or Crimson Tide.

      No, no one ever questions the legitimacy of any of those college championships unless one of these programs is dumb enough so that even the NCAA investigators can catch them.

      You know why? Because, unlike baseball, the real payroll isn’t known, that’s why.

      But everyone watches those bowl games, and everyone fills out their brackets during March. And no one says anybody bought a title, ever.

      And it’s a complete load.

    13. Evan3457
      November 17th, 2009 | 7:46 pm

      Ooooh…forgot about Rick Pitino’s travelling road show and patent medicine shop, and John Callipari’s Flying Circus.

    14. Raf
      November 18th, 2009 | 6:32 am

      Steve Lombardi wrote:

      But, that said, I would take more pride in their “ROI” meaning playoff appearances (and ring this year) if they could do it in a manner where they didn’t have to outspend everyone else by a zillion dollars.

      The problem with that is retaining players cost. Other teams, Jeter, Posada & Rivera would’ve walked a long time ago

      And, the fact that other teams make the post-season often, and have won some rings (see the Bosox and Phillies of recent years) without having to spend nearly as much as the Yankees, tells me that the Yankees are working costly and not working smart.

      Not quite;
      Playoff apperances since 1995:
      NYY: 15 (5 rings)
      BOS: 9 (2)
      PHI: 3 (1)

    15. November 18th, 2009 | 9:50 am

      @ Raf:
      “recent years” = since 2004.

    16. MJ
      November 18th, 2009 | 10:40 am

      Steve Lombardi wrote:

      “recent years” = since 2004.

      Playoff apperances since 2004:
      NYY: 5 (1)
      BOS: 5 (2)
      PHI: 3 (1)

      Philly still seems like a distant third in your comparison.

    17. Raf
      November 18th, 2009 | 5:50 pm

      @ Steve Lombardi:
      Why since 2004? Why not look at the bigger picture? Especially since salaries didn’s start to get out of whack until around 2000?

    18. November 22nd, 2009 | 1:11 pm

      More on this:

      http://www.dailyfinance.com/2009/11/16/actually-yes-the-yankees-certainly-did-buy-the-world-series/

      I grew up in Milwaukee, the smallest city with its own Major League Baseball team. During my summer vacations from high school and college, I worked as a vendor at Milwaukee County Stadium, where the Brewers played before it was torn down and replaced by Miller Park. Not once during that time did the Brewers make the playoffs. In fact, starting in 1982, they went 26 years without a post-season appearance.

      Finally, last year, the Brewers sneaked in as a wildcard team, largely on the strength of C.C. Sabathia’s superhuman pitching. Then the season ended, Sabathia (pictured) signed with the Yankees, and the Brewers, who couldn’t come close to matching the Yankees’ seven-year, $160 million offer, resumed playing their usual sub-.500 ball.

      So you can imagine how it offended me, as a Milwaukeean and a Brewers fan — nay, as a human being, dammit — to read “The Yankees Didn’t Buy the World Series,” Andrew Zimbalist’s editorial in News Corp’s (NWS) The Wall Street Journal on Monday. A pre-eminent sports economist, Zimbalist examines whether “the Yankees bought their trophy,” and concludes that they didn’t.

      This much Zimbalist is able to prove, to his own satisfaction, with a simple thought experiment: “[H]ow 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?”

      You may have heard this line of reasoning before from, say, a smoker who defends his habit by telling you about his grandfather who totally smoked a pack a day for his whole life and lived to be 92. It’s pure humbug, of course. The Yankees endured a shocking, tragic eight-year championship drought because baseball is not algebra: Chance plays a role, just as genetics plays a part in determining who ends up developing lung cancer.

      Zimbalist can’t very well pretend he doesn’t know this, so he seeks to minimize it. Having done the math, he asserts that “somewhere between 15% and 30% of the variance in team win percentage can be explained by the variance in team payroll.” He states this as though 15% to 30% is not very much. Is it? Consider this: The difference between the Yankees’ league-leading 2009 record (103-59) and the Brewers’ not-quite-memorable one (80-82) was 23 games: 14.2% of a 162-game season.

      Zimbalist concludes, “Wealthy teams do have an advantage, but it is not true that they can buy championships.”

      Wrong: It is absolutely true that they can buy championships. What they can’t buy is any one specific championship, simply because money has no bearing on player health, team cohesiveness, strength of competition, or various other factors. All the stars still have to align. But a sufficiently large payroll can boost a team’s chances to the point where it can win championships, say, a quarter of the time — which is exactly what the Yankees have managed to do, absurdly, over the past 105 years.

      I can’t blame Yankees fans for not wanting to alter this state of affairs. Well, actually, that’s not true. Of course I blame them. Their willingness to benefit from a rigged system is killing baseball as America’s pastime by suffocating enthusiasm for it in all the places that aren’t New York.

      But if they’re not going to agitate for change, the least they could do is acknowledge the shameful truth: Money buys titles.

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