Sunday, May 06, 2007

Team payrolls, last year's results and who is gonna win the pennant this year

We had discussion at work about baseball payrolls. I wondered just how high the Yankees payroll is and who the next place team was. A plot of the 2006 payrolls and the 2007 payrolls vs their rank shows that the Yankee salary is certainly disproportionate vs. the other teams, but they are not twice the next team anymore. The Florida Marlins and Tampa Bay Devil Rays hold the last two spots.

A high salary does not necessarily get you a good winning percentage. There is little correlation between salary and winning. Take that Yankees. Here is an example from 2006, both with and without the Yankees who skew the chart.

They say that past performance does not guarantee future results. That is also true for at least the last three seasons of baseball. I plotted the year's winning percentage vs. the year before and get an even worse correlation than for salaries.

Perhaps it is the quality of players that determines how many baseball games you will win. Team payroll or past performance doesn't seem to correlate.


Anonymous said...

With a positive slope to the graph you say there is no correlation. Every team that spent less than $60M won less than 50% of their games. Every team that spent more than $100M won more than 50% of their games. While money isn't everything and a team can still do quite well with only a $60-80M payroll even a quick glance at your graph would seem to disprove your assertion that payroll has no effect on performance. An even better graph would be season salary rank as compared to season W-L ratio over the course of many years.

Anonymous said...

The fact that there is a positive slope may indicate 'some' correlation; but, perhaps, not enough to justify joining the salary arms race. I think with any regression analysis, you almost have to throw out both the Yanks and the Sox.