Friday, October 03, 2008

Fall guys

October is the cruelest month, especially if you spend foolishly

Hail October, once again, and in 2008 as in 2007, the Mets' pain is MoneyLaw's gain. For the first time in 15 years, Major League Baseball will conduct a postseason blissfully devoid of New York teams. For the first time in 102 years, both Chicago teams are represented. And somewhere between those free-spending states of mind, Florida is home to the sport's most efficient teams.

In the balance of this post, I promise, there lurks a MoneyLaw payoff . . . .Long, long ago, in a post called Marginal MoneyLaw: What law schools can learn from bad baseball teams, I extolled the famed sabermetrician Doug Pappas's Marginal Payroll/Marginal Wins formula as a model for understanding shrewd and spendthrift approaches to academic spending. The extremely abbreviated version of the story is this: Armed with nothing more than each Major League team's salary, the MLB Players Association's minimum salary (currently $390,000 per year), baseball's final regular season standings, and some empirically justifiable assumptions about minimal competence in baseball, you can compute how much in marginal payroll each team paid for each marginal win over the .300 winning percentage that a team of 25 minimum-wage ballplayers (plus three comparable players on the disabled list) would have delivered.

Comparing the marginal payroll/marginal win ratio with a team's final record yields four categories:
  1. Low payroll, winning team: an efficient team that made the most of limited resources.

  2. High payroll, winning team: a wealthy team that bought its way to success.

  3. Low payroll, losing team: a team that didn't spend enough win, or otherwise failed to leverage its modest spending into competitiveness.

  4. High payroll, losing team: lousy, free-spending management. Hardcore baseball fans will enjoy this list of the most bloated and underperforming teams of the past two decades.
The analogy to academic management should be obvious.

I have uploaded a set of spreadsheets calculating marginal payroll per marginal win for all Major League Baseball teams in 2008. The following table expresses MP/MW for all teams in descending order of winning percentage:

TeamPayrollWinning %MP/MW

I've posted the complete set of tables as a Google spreadsheet, organized in the following fashion:
  1. Sorted by payroll, in descending order
  2. Sorted by winning percentage, in descending order
  3. Sorted by marginal payroll per marginal win, in descending order
  4. Sorted by marginal payroll per marginal win, in ascending order
The 2008 Seattle Mariners, rated the fourth worst combination of high salary and poor performance since 1990, deserve special mention. The woeful (61-101) Mariners' $8,634,999 in marginal payroll per marginal win falls squarely between the combined MP/MW figures for the four playoff teams in each of the two major leagues:

National League: $8,942,880
Los Angeles Dodgers$3,040,001
Chicago Cubs$2,197,355
Philadelphia Phillies$2,012,670
Milwaukee Brewers$1,692,854

American League: $8,193,128
Chicago White Sox$2,765,913
Boston Red Sox$2,640,518
Los Angeles Angels$2,106,933
Tampa Bay Rays$679,764

The Mariners' profligacy sheds light on another aspect of the 2008 baseball season. For the first time since 1993, baseball's postseason involves no teams from New York. The Yankees ($4,904,990) and Mets ($3,152,806) combined to spend $8,057,796 in marginal payroll per marginal win, nearly as much as the Mariners. The two Chicago teams were hardly paragons of efficiency, but both are still playing baseball. And Florida's two teams, the AL-leading Tampa Bay Rays ($679,764) and the Florida Marlins ($303,897, posted a combined 181-142 record while keeping their combined MP/MW figure below $1 million. The Rays kept the Yankees in third place, which in baseball terms (if not horse racing) is out of the money, while the Marlins, for the second consecutive season, eliminated the Mets at Shea Stadium on the final weekend of the regular season.

All of which goes to show that some baseball teams can spend money profligately and still stink, while others can spend frugally and still shine. Perhaps law schools should take note.


Blogger smith said...

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10/06/2008 7:22 PM  

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