Big Money Buys You What in Baseball?

[JCA-CrystalCity]

From today's Alex Speier "108 Stitches" Bosotn.com email blast:

While unprecedented sums of money are flowing through the game, the value of it to baseball teams – at least to their ultimate success or failure – appears to be less significant than ever.

The 2015 Dodgers became the first team to spend more than $300 million on player salaries. Yet that incredible mountain of cash – more than $100 million more than any team except the Yankees has ever spent on payroll – ultimately netted little but disappointment for a team that fell on Thursday in the decisive Game 5 of the National League Division Series to the Mets. Bill Plaschke of the L.A. Times writes that a $300 million payroll wasn’t enough to buy success for the Dodgers.

Yet the Dodgers are far from isolated in seeing huge commitments that netted unimpressive returns. According to this USA Today list of salary commitments (which doesn’t include elements such as the tens of millions of dollars spent by the Dodgers to subsidize players whom they traded elsewhere or certain elements of luxury tax payroll calculations), the Yankees and Dodgers were the only two of the top seven payrolls that reached the postseason at all; among the top 11 payrolls, just three teams (Yankees, Dodgers, Rangers) made the postseason.

The Dodgers and Yankees didn’t spend those sorts of sums with the thought that a first-round exit from the postseason represented a fulfilling outcome. That said, given the history of teams with immense payrolls, a first-round exit shouldn’t come as a shock for a team with a fat wallet.

In baseball history, there have been 14 teams that had payrolls of $200 million or more – with the Yankees (11 straight years) and Dodgers (3 straight years) comprising all of them. Of those, just one – the 2009 Yankees – has won the World Series. The number of titles produced by $200 million teams, then, falls short of the number of teams to hit such payroll heights while missing the playoffs altogether (3: The 2008, 2013, and 2014 Yankees).

Diminishing returns
How teams with payrolls of $200 million or more (as calculated for luxury tax purposes).
Year    Team    Payroll    Playoffs
2015    Dodgers    TBD    NLDS
2015    Yankees    TBD    ALDS
2014    Dodgers    277.7    NLDS
2014    Yankees    225.6    Missed
2013    Yankees    237    Missed
2013    Dodgers    243.2    NLCS
2012    Yankees    222.5    ALCS
2011    Yankees    212.7    ALDS
2010    Yankees    215.1    ALCS
2009    Yankees    226.2    Won WS
2008    Yankees    222.2    Missed
2007    Yankees    207.7    ALDS
2006    Yankees    201.5    ALDS
2005    Yankees    213.1    ALDS
         
Total teams          14
Made playoffs          11
Missed playoffs          3
World Series won          1
Playoffs series won          6
Playoffs series record          6-10
SOURCE: Associated Press

Of course, the Red Sox easily could have produced a fifth team to miss the postseason with a $200 million payroll, but their struggles permitted them to retreat from that anticipated plateau with salary dumps of players such as Mike Napoli and Shane Victorino and the removal from the 40-man roster of Justin Masterson and Allen Craig.

The question, of course, is why. The best answer may be supplied by that 2009 Yankees team that won the World Series.

Why do teams get into a place where their payrolls are so high? Because they’re typically paying players who have put in several years of big league service time to arrive at a point where they’d be free agent eligible – a time when they’ll be paid more than at any other point in their careers based on their past performances despite the likelihood of diminishing future returns. An enormous payroll, then, is often an indicator of a team loaded with players who either have begun or are close to beginning their declines.

That 2009 Yankees team won because it complemented a group of high-priced veterans – Alex Rodriguez, Derek Jeter, Jorge Posada, and Andy Pettitte among them – with an ensemble of incredibly expensive free agents (CC Sabathia, Mark Teixeira, A.J. Burnett). That group coalesced in impressive fashion for a year, but the subsequent years witnessed a steady decline of once-elite players whose contracts soon became iceberg-sized obstacles.

Increasingly, the value of money in baseball is that it permits teams to retain top homegrown talents through their prime years (while buying out the early years of free agency) or signing elite amateur talent well before their primes (hence the Sox’ $31.5 million in Yoan Moncada). While huge operating revenues such as those experienced by the Dodgers and Yankees and Red Sox permit teams to play in the free agent market, the benefits of the long-term payoff of that freedom haven’t been apparent for teams that forged megapayrolls.

Remarkable how little the NYY have gotten out of their $200MM payrolls, and they have gotten more than the Dodgers and the would-be-over-$200MM-but-for-in-season-fire-sale Red Sox teams of 2015 and possibly 2012 and 2014.  Also makes you wonder about the Nats use of resources.  Werth and Scherzer represent Yankee-type signings, while FotF represents perhaps the spend on in-house signing. 

[tomterp]

This kind of stuff is really going to piss off the LAC crowd.

[Slateman]

Regular season wins

[JCA-CrystalCity]

Regular season wins

but only 3 out the top 11 teams in salary even made the playoffs this year.  That's even worse than the 1 out of 3 shot all teams had.  That's just this year, and I think other years had better showings for bigger budgets, but it would be interesting to look at whether bigger budgets under the current CBA have given a decisive advantage.

[Slateman]

but only 3 out the top 11 teams in salary even made the playoffs this year.  That's even worse than the 1 out of 3 shot all teams had.  That's just this year, and I think other years had better showings for bigger budgets, but it would be interesting to look at whether bigger budgets under the current CBA have given a decisive advantage.

SSS. Expand it over the last ten years.

You spend money, you get regular season wins.

[tomterp]

but only 3 out the top 11 teams in salary even made the playoffs this year.  That's even worse than the 1 out of 3 shot all teams had.  That's just this year, and I think other years had better showings for bigger budgets, but it would be interesting to look at whether bigger budgets under the current CBA have given a decisive advantage.

I can't help thinking that the demise of PED's has something to do with this.  Players' careers are shorter and their productivity declines are earlier in the absence of PED's which gives competitive advantage to younger players who haven't yet reached free agency. 

Go young. 

[JCA-CrystalCity]

SSS. Expand it over the last ten years.

acknowledged.  You want to do the work?  I'd be curious about the results.  Also, Tom's point may be valid.  The common big money FA tends to be a guy who is near or above 30.  If you lose the outyears of performance, then you get a bunch of Werths and Zimmermans.

[varoadking]

If you lose the outyears of performance, then you get a bunch of Werths and Zimmermans.

[GburgNatsFan]

Except pitchers. They seem to be able to last. At least if they haven't had TJ surgery.

I can't help thinking that the demise of PED's has something to do with this.  Players' careers are shorter and their productivity declines are earlier in the absence of PED's which gives competitive advantage to younger players who haven't yet reached free agency. 

Go young.

[welch]

Except pitchers. They seem to be able to last. At least if they haven't had TJ surgery.

Another exception: a phenom outfielder who makes it big at 19 and is MVP at 22. That player will likely hit free agency well before 30.

The Yankees, though, are an odd story. Built a great team in the mi-90s, won championships, signed some players to long-term contracts, and competed year after year. Nearly drove the Mets to AAA status. Yankees will need to spend heavily to recover...they never take time to rebuild.

[JCA-CrystalCity]

Except pitchers. They seem to be able to last. At least if they haven't had TJ surgery.

pitchers are more prone to break downs than hitters as a group.  Injuries (not just TJ), loss of velocity are pretty common.  I'm sure Tom or Blue, if he still exists, could pull articles on this.

[welch]

pitchers are more prone to break downs than hitters as a group.  Injuries (not just TJ), loss of velocity are pretty common.  I'm sure Tom or Blue, if he still exists, could pull articles on this.

It used to be classic wisdom: pitchers lose velocity at 30, have to pitch smarter (except for Walter Johnson, Bob Feller, and one or two others).

[whytev]

acknowledged.  You want to do the work?  I'd be curious about the results.  Also, Tom's point may be valid.  The common big money FA tends to be a guy who is near or above 30.  If you lose the outyears of performance, then you get a bunch of Werths and Zimmermans.

It's becoming clear you only wanna sign guys at 30 if you are ready now. You do what Chicago did with Lester and see it's time, then pull the trigger. The Scherzer deal was the same thing. You don't sign a guy at 30 two years before you are contending because you might not synch his best years up with your young stars.

[MarquisDeSade]

Just wait until the MASN teevee money starts flowing.

[MorseTheHorse]

A lot of this has to do w/ how underpaid players are to their value early on in their careers.  Ian Desmond is hitting free agency with a career earnings of only 23M, and almost half of that (11M) for this past season.  Danny Espinosa has made less than 4M in his 5 year career.   

Does anyone else think 6 years of team control is too much?  Or at least arbitration should kick in a higher and earlier.   

[Kevrock]

Just wait until the MASN teevee money starts flowing.

Gchat me

[MarquisDeSade]

Does anyone else think 6 years of team control is too much?  Or at least arbitration should kick in a higher and earlier.

It should be more. Under my thumb.

[BeltwayBaseball]

I think the problem lies in who they payed, not just the money they payed. Heyward will probably be worth most of the money he gets, because of his age (unless somebody overpays for his defense, which will slide, and his offense has never been that great). Bryce Harper will almost certainly be worth what he gets payed, because of his age (unless, of course, he gets hurt). The same to Giancarlo Stanton.

Giving ten years to A-Rod at 32? Ten to Cano at age 30? Bad idea.

As for diminishing returns, well, Los Angeles ate a lot of money in trades for role players, and a lot on gambles, see Morse and Latos. They just don't care, money means nothing to them so they will just throw it at anybody. Their main problem is in who they evaluated, if they have infinite money why don't they just give money to Cincinnati for Chapman and Cueto? Why try to be clever with Alex Wood and Luis Avilan?

But of course, the playoffs are a crapshoot. Greinke and Kershaw were undoubtedly two of the three best pitchers this year. If you're a man of science, you pick them every time you're in a playoff. Neither of them were excellent this postseason; they were quality, they kept you in the game, but that's a whole lot less than what they did for almost every start of theirs in the regular season. And the other pitcher? He just got shelled by the Mets, after getting shelled by the Cardinals, after pitching a CGSO against the Pirates.

So the better question is, why overpay for an "ace" to lead you in the postseason when that's so unpredictable? Just put together a team that's solid in the postseason, players who can "get it done," and hope your players execute, whatever that means. But is that team good enough to get you through the grind of 162 games?

So then, the real reason you pay those players, is just to get you there, which, as the story shows, has happened the vast majority of the time. Only three times out of fourteen did they miss. Why are guys who are good enough to get you through 162 falter when it comes down to eleven? What's the correlation, how do you find balance? I don't know, ask San Francisco, I've done enough thinking for one post.

[HalfSmokes]

the ironic thing is that Harper will probably get a deal that makes 10 to Cano at age 30 look reasonable. When the best players in the game hit free agency looking to make as much as possible, the winner's curse almost certainly follows. Locking players up early enough that you only have to buy out a few years of free agency makes sense, signing those same guys as free agents, not so much. 

[BeltwayBaseball]

the ironic thing is that Harper will probably get a deal that makes 10 to Cano at age 30 look reasonable. When the best players in the game hit free agency looking to make as much as possible, the winner's curse almost certainly follows. Locking players up early enough that you only have to buy out a few years of free agency makes sense, signing those same guys as free agents, not so much.

I could see Harper getting a 15-year deal, or a 10-year deal with an opt out after five or six. That's what A-Rod got, and that's who Harper is, a guy who is on the fast track to the Hall of Fame and can be a franchise player...if, of course, he's still on this trajectory in three years when he's FA. If he gets injured again for two out of three of those years, I think that could really hurt his market.

[HalfSmokes]

I could see Harper getting a 15-year deal, or a 10-year deal with an opt out after five or six. That's what A-Rod got, and that's who Harper is, a guy who is on the fast track to the Hall of Fame and can be a franchise player...if, of course, he's still on this trajectory in three years when he's FA. If he gets injured again for two out of three of those years, I think that could really hurt his market.

Harper is in a position more similar to ARod in 2001- back then he got a contract that leaped over other contracts to an extent that shocked baseball- I think that's what harper will be looking and I don't really want the nats to be the team that wins his services

[BeltwayBaseball]

Harper is in a position more similar to ARod in 2001- back then he got a contract that leaped over other contracts to an extent that shocked baseball- I think that's what harper will be looking and I don't really want the nats to be the team that wins his services

I agree, that's the 10-year deal with the opt-out. Signed at age 25 or 26 in 2001, similar to Harper being FA at 26 in 2018. I don't think A-Rod's second contract had an opt-out.

I wouldn't mind if the Nats are the ones to pony up. This team and this city just need some history (modern history, that is), they need something to define them. If Harper does stay healthy, you want the first thing you think of when you hear "Nats Baseball" to be Hall of Famer and Washington lifer Bryce Harper. Otherwise, you could be that team that let go of Barry Bonds and is still looking for a championship to this day.

[HalfSmokes]

I look at what happens when a team with a budget signs a guy like that- it basically crippled the Rangers, the Mariners have Cano eating 1/5 of a 76 win team's payroll, even a hometown guy like Mauer never really won anything after getting paid. Teams like the Angels, Yankees, Red Sox... can absorb those huge salaries and build teams around those guys, I just question whether or not harper earning $35 million per would leave the nats room to build a roster.   

[mitlen]

I agree, that's the 10-year deal with the opt-out. Signed at age 25 or 26 in 2001, similar to Harper being FA at 26 in 2018. I don't think A-Rod's second contract had an opt-out.

I wouldn't mind if the Nats are the ones to pony up. This team and this city just need some history (modern history, that is), they need something to define them. If Harper does stay healthy, you want the first thing you think of when you hear "Nats Baseball" to be Hall of Famer and Washington lifer Bryce Harper. Otherwise, you could be that team that let go of Barry Bonds and is still looking for a championship to this day.

It wasn't just Barry Bonds.   That franchise was systemically f*ed up after 1992.    The structure of the Nationals' organization with this ownership group could withstand Harper leaving better than Pittsburgh's organization with McClatchy (among others) did after Bonds, Bonilla and a bevy of others left town.

[Ali the Baseball Cat]

There couldn't have been much purchasing power left in the STH base by '92.  Other than Carnegie Mellon, was anyone still in business in Pittsburgh in those days?  The 80s were quite unkind to that part of the universe as I recall.