Because baseball is, after all, a business

A series of recent baseball articles from Forbes:

From the last story:

The average payroll cost per win for MLB teams in 2010 was $1.1 million, and the median was $1.06 million;

– The San Diego Padres had the lowest payroll cost per win at $419,656 while the New York Yankees had the highest payroll cost per win at $2.17 million.

To gauge efficiency, I combine these cost figures with a practical albeit arbitrary win total to assess which clubs had the best and worst seasons from the practical standpoint of not only getting their money’s worth from player performance but also focusing on win totals.

The criteria for the ‘most efficient’ teams is combining low ‘cost per win’ with at least 87 wins (5 games above .500). Hence, the 5 most efficient teams from the 2010 MLB season are:

1) San Diego Padres (90 wins…$419,656 per win)

2) Texas Rangers      (90 wins…$612,404 per win)

3) Tampa Bay Rays  (96 wins…$748,688 per win)

4) Cincinnati Reds   (91 wins…$795,072 per win)

5) Atlanta Braves     (91 wins…$927,284 per win).

The criteria for the ‘least efficient’ teams is combining high ‘costs per win’ with a non-winning season (i.e. 81 or fewer wins). By this criteria, the 5 least efficient teams from the 2010 MLB season are:

1) Chicago Cubs         (75 wins…$1.96 million per win)

2) New York Mets     (79 wins…$1.68 million per win)

3) Seattle Mariners   (61 wins…$1.61 million per win)

4) Detroit Tigers        (81 wins…$1.52 million per win)

5) Los Angeles Angels (80 wins…$1.31 million per win).

And

…the correlation between payroll and success from the 2010 MLB regular season. Specifically, the correlation between winning and payroll was relatively weak in 2010.

For most major league seasons when running a statistical technique called simple linear regression, the number of wins is statistically correlated with team payroll. And though one can’t deny that the fates of teams like the Yankees and the Pittsburgh Pirates is in part driven by payroll disparities which stem from revenue disparities, the fact of the matter is that the statistical correlation between wins and payroll league-wide based on regression results proves to be extremely weak. This may be a function of greater revenue sharing in baseball, or it could be that small-market clubs are simply out-thinking, out-scouting, and out-coaching their large market competitors…at least in 2010.

The weakness in correlation between payroll and wins in 2010 is driven by the fact that certain high spending teams (Cubs, Mets, Tigers, Angels) underperformed relative to their payroll while 5 of this year’s 8 postseason competitors in 2010 (Padres, Rangers, Rays, Reds, Braves) had payrolls at or below the league median payroll of $84.3 million. This would have been unconscionable prior to the revised MLB Collective Bargaining Agreement nearly 10 years ago.