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November 19, 2004

Marginal Dollars per Marginal Win

The 2004 Efficiency Report

by Ben Murphy

As part of our continuing effort to honor Doug Pappas' work, I am pleased to present the summary of marginal dollars per marginal win in 2004.

A year ago, Doug presented 2003 data, then presented historical information in both Baseball Prospectus 2004 and in a series on this site. The formulas for marginal wins and marginal payroll, first presented in The Numbers, Part Four, are as follows:


Marginal wins = ((winning percentage - .300) x 162)

Marginal payroll = (Opening Day payroll - (28 x $300,000))
In past years, the average marginal dollars per marginal win has reached approximately two million dollars. This year is no exception, as the average was about $1,855,682.

Following the rules of the East Coast Media Bias, we'll start with the AL East:


              Marginal  Opening Day   Marginal      Marginal $/
Team   Win%   Wins      Payroll       Payroll       Marginal Win

NYY    .623   52.4      $182,835,513  $174,435,513  $3,328,922
BOS    .605   49.4      $125,208,542  $116,808,542  $2,364,545
BAL    .481   29.4      $ 51,212,653  $ 42,812,653  $1,456,213
TB     .435   21.8      $ 29,506,667  $ 21,106,667  $  966,653
TOR    .416   18.8      $ 50,017,000  $ 41,617,000  $2,211,770

Average                                             $2,308,864
One of the important aspects of any discussion about baseball and money is the state of the New York Yankees' payroll. A few significant things happened this year, with respect to the Yankees, to make their marginal payroll higher than any other team's total payroll and their marginal dollars per marginal win the highest of any playoff team (third in the AL, and highest in the AL East). The Orioles usually throw their money around more than the Yankees do, but after a few World Series losses, perhaps George Steinbrenner and Brian Cashman--which is, by the way, a great name for someone who works with George to have--made too many signings, or should have allocated funds more efficiently. This leaves fans and analysts, including many of us here at Baseball Prospectus, wondering what lays ahead for the Bronx Bombers this off-season.

Other notable stories in the AL East include the Devil Rays staying below the million-dollar mark (remember that lower numbers are more efficient). They were one of just four teams in the majors to do so. The Orioles managed to lower their marginal dollars per win as well, dropping below the two-million mark. Most of this seems to be due to halving their marginal payroll from $88 million in 2003 to $42 million this year, although they did improve their marginal win total. The Blue Jays suffered several injuries, most notably to Carlos Delgado and Roy Halladay, that sent their figure to over two million dollars per marginal win. Finally, the Red Sox moved up over the two-million mark, but there haven't been any complaints coming out of Boston yet.


              Marginal  Opening Day   Marginal      Marginal $/
Team   Win%   Wins      Payroll       Payroll       Marginal Win

MIN    .568   43.4      $ 53,858,000  $ 45,185,000  $1,041,129
CWS    .512   34.4      $ 65,212,500  $ 56,812,500  $1,651,526
CLE    .494   31.4      $ 34,569,300  $ 26,169,300  $  833,417
DET    .444   23.4      $ 46,353,554  $ 37,953,554  $1,621,947
KC     .358    9.4      $ 47,609,000  $ 39,209,000  $4,171,170

Average                                             $1,445,981
The first thing you should notice is that this is the most homogenous of the divisions, with the lowest variance among Opening Day payrolls. This makes it a relatively good example for comparative purposes. The Indians got the most bang for their buck, but not quite enough bang overall, as they still fell short of the playoffs. The Twins are still one of the more efficient teams, spending around a million dollars per marginal win and making the playoffs for the third year in a row. On the flip side of this are the Royals, who paid more than four million dollars per marginal win, second highest in the American League, and finished with the worst record in the circuit.

              Marginal  Opening Day   Marginal      Marginal $/
Team   Win%   Wins      Payroll       Payroll       Marginal Win
ANA    .568   43.4      $101,084,667  $ 92,684,667  $2,135,591
OAK    .562   42.4      $ 59,825,167  $ 51,425,167  $1,212,858
TEX    .549   40.4      $ 54,825,973  $ 46,425,973  $1,149,158
SEA    .389   14.4      $ 81,543,833  $ 73,143,833  $5,079,433

Average                                             $1,875,389
My heart goes out to my fellow Mariners fans, as nobody in the AL spent more money for each marginal win than they did. Only the Diamondbacks spent more in all of MLB, and then only because the D'backs have just 1.7 marginal wins. With Bret Boone, John Olerud, Jamie Moyer, Freddy Garcia and Ichiro Suzuki all making more than $5 million this year, and ten other players raking in between two and five million per season, the Mariners had just eight players making a million or less. That's fewer bargains than the Yankees with nine, or the Red Sox with 11, despite an overall payroll $100 million less than that of the Yankees and $45 million less than that of the Red Sox.

Nine months after the fact, there's no shortage of opinions about the trade of Alex Rodriguez, but one thing is certain: it helped lower the Rangers' payroll, contributing to a total savings of about $50 million as compared to last year. The Rangers allocated their remaining payroll relatively well, staying near the one million mark, all the while weighed down by the contracts of Chan Ho Park and Rusty Greer. The A's continued to spend wisely as well, just above the one-million mark. This spending, however, continued a trend in the Oakland data, which has shown an increase in the dollars per marginal win every year since 2001. Finally, the Angels managed to allocate their $100 million payroll relatively well, getting a win for every two million dollars spent. After off-season signings that included paying Bartolo Colon and Vladimir Guerrero $11 million each this year, one might expect this number to be even higher.


              Marginal  Opening Day   Marginal      Marginal $/
Team   Win%   Wins      Payroll       Payroll       Marginal Win
ATL    .593   47.4      $ 88,507,788  $ 80,107,788  $ 1,690,038
PHI    .531   37.4      $ 93,219,167  $ 84,819,167  $ 2,267,892
FLA    .512   34.4      $ 42,118,042  $ 33,718,042  $   980,176
NYM    .438   22.4      $100,629,303  $ 92,229,303  $ 4,117,380
MON    .414   18.4      $ 43,197,500  $ 34,797,500  $ 1,891,168

Average                                             $ 2,035,449
The Mets are getting a little bit more efficient, after having the second-highest opening payroll and fourth-worst record last year. They still top this division and are second in the NL to the Diamondbacks. Without Mo Vaughn on their payroll, making almost $18 million, the Mets would have had marginal dollars per win around $3.35 million.

The Braves continue their well-chronicled run, throughout which they've been efficient spenders, staying under one million dollars per marginal win until 1999, then hovering around or below league average every year since. The Marlins also continue to do well on a tight budget, paying about one million dollars for marginal win every year since 1998, when they paid more five million dollars per marginal win in their fire-sale season.

The Phillies and Expos both stayed around the two-million mark, with the Phillies spending more overall and in the marginal sense, for relatively obvious reasons. Comparing the Expos to the Marlins, whose payroll is quite similar, we can see that the Marlins spent less and got twice as much bang for their buck. Expos management was lauded for making the best of a horrible situation, even as investing six million in Orlando Cabrera's first negative VORP season, a performance below his 25th percentile PECOTA projection, didn't help things much.


              Marginal  Opening Day   Marginal      Marginal $/
Team   Win%   Wins      Payroll       Payroll       Marginal Win
STL    .648   56.4      $ 75,633,517  $ 67,233,517  $ 1,192,084
HOU    .568   43.4      $ 74,666,303  $ 66,266,303  $ 1,526,873
CHC    .549   40.4      $ 91,101,667  $ 82,701,667  $ 2,047,071
CIN    .469   27.4      $ 43,067,858  $ 34,667,858  $ 1,265,250
PIT    .447   23.8      $ 32,227,929  $ 23,827,929  $   999,192
MIL    .416   18.8      $ 27,518,500  $ 19,118,500  $ 1,016,069

Average                                             $ 1,397,370
The big story this year was the St. Louis Cardinals. With a payroll on par with the major-league average (about $70 million this year), they won nearly 65% of their games. They got plenty of mileage out of their money, with just over one million dollars per marginal win. The most interesting thing about this division is that, save for the placing of the Cubs--which probably should have been higher--the division standings are sorted descending by payroll.

The Cubs had all the pieces, including several pitchers with solid performances, and enough hitters to fill a lineup. Perhaps their failure to meet up with their projections, either PECOTA or otherwise is a good place to start a managerial study. After all, there's no candidate like Dusty Baker for the start of a groundbreaking study, right?

Additionally, there are two well-defined types of teams in the NL Central. The three teams with higher payrolls all have similar payroll distribution, paying a few superstars in the mid- or low teens, having a few more players making $3 million to $9 million, and then having a large group of players under $1 million. The three teams with low payrolls have all their salaries under $10 million for this year, with a small group of players making a million or more, and then a large group of players being paid less than one million for this year.


              Marginal  Opening Day   Marginal      Marginal $/
Team   Win%   Wins      Payroll       Payroll       Marginal Win
LA     .574   44.4      $ 89,694,342  $ 81,294,342  $ 1,830,954
SF     .562   42.4      $ 82,019,167  $ 73,619,167  $ 1,736,301
SD     .537   38.4      $ 54,639,503  $ 46,239,503  $ 1,204,154
COL    .420   19.4      $ 64,590,403  $ 56,190,403  $ 2,896,413
ARI    .315    2.4      $ 70,204,984  $ 61,804,984  $25,752,077

Average                                             $ 2,171,078
Average (without ARI)                               $ 1,766,263
Last year, the Detroit Tigers had an infinite number of marginal dollars per marginal win because the denominator was actually negative--they lost more games than Doug's theoretical replacement level team. This year, the Diamondbacks won enough to have a positive number of marginal wins, but it is so low--less than two marginal wins--that the quotient ends up being astronomical. Why is it so large? Their payroll is on par with the rest of the division, right around league average, but they lost a whopping 111 games. They got good return out of their big ticket item, Randy Johnson, but their next highest paid guys, Richie Sexson and Luis Gonzalez, missed sizeable chunks of time due to injury. They also paid about $20 million to Matt Mantei, Danny Bautista, Elmer Dessens, Greg Colbrunn, Carlos Baerga and Shane Reynolds so that they could collectively cost the team 6.7 runs of VORP.

The rest of the division is relatively homogenous. There is some variance in the payrolls, and as a whole the division provides a good example of correlation between marginal dollars per marginal win and success in the standings. The three teams near the top were all relatively efficient, paying less than two million dollars per marginal win. The Rockies still haven't found a way to win consistently, and spending almost three million dollars per marginal win isn't a good place to start. The Padres are an interesting example of a team with a lower payroll managing to make the most of their money. They spent money wisely, paying just over one million dollars per marginal win, and managed to keep pace with the Dodgers and Giants as a result.

Related Content:  Payroll,  Doug Million,  Year Of The Injury

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