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I don’t care how many times you’ve heard it, but money matters in sports. Somewhere along the line, maybe starting with a book by some guy named Lewis about the A’s, someone confused “money doesn’t win championships” for somehow meaning that money doesn’t matter if you want to be competitive. That’s never been true.

We can haggle over this a bit. There’s empirical evidence—a good bit of which comes from this current season—that a team can get into the playoffs without having a massive player payroll. After all, there was “Moneyball” then, and someone will say we saw a new form of “Moneyball” in Oakland this season. But as Nate Silver and Dayn Perry said so eloquently in Baseball Between the Numbers, Billy Beane’s shit hasn’t worked in the postseason. In truth, having money helps if you wish to go deep into the playoffs.

The past few seasons, this has been less evident. The LCS last year was comprised of the Brewers (ranked 17th in payroll with $85,497,333), Rangers (ranked 13th with $92,299,264), Cardinals (11th with $105,433,572), and Tigers (10th with $105,700,231), leaving the 11th and 13th ranked teams by player payroll in the World Series. In 2010, the LCS featured the Rangers (27th with $55,250,544), Giants (ninth with $98,641,333), Yankees (first with $206,333,389), and Phillies (fourth with $141,928,379). With a Giants/Rangers World Series, that meant no team competing in the championship series had a player payroll over $100 million.

This year, however, this is not the case. With the exception of Oakland, nine of the ten teams that made the postseason had player payroll in the top 20, and all of the LCS teams were in the top eight, not one of which came in under $110 million. The 2012 World Series features the Tigers, with the fifth-ranked Opening Day player payroll of $132,994,000, and the Giants, with the sixth-ranked payroll of $131,980,298. If there is a “glass half full” feeling for the league, it’s that along with the A’s, there were four playoff teams (Nationals, Braves, Reds, and Orioles) that were within the middle third of the league by player payroll:

Commissioner Selig and others (this author included) have said that the league is experiencing incredible parity in the number of teams that make the postseason. That’s true. After that point, however, it shifts. When you think about it, this is a nice side-effect for the league. Selig can rightly say that every team has a shot to make the postseason, while FOX and TBS have been able to ensure good national television ratings as large-market teams and storied franchises make deep runs into the playoff. In that, it’s been a win-win.

Money matters. It always has. There hasn’t been a GM that sat back and said, “You know what Mr. Owner, I don’t need the extra resources that you’re offering.” The point is money never hurts. And while there are GMs and execs that will always say they've spent wisely, they sometimes don't. What money gives you is a buffer. Or, rather, what sustained revenues give you is margin. You can take more risks and you can more easily blunt the blow if some of the decisions you make don’t turn out as planned. Conversely, the club that has limited resources is always at greater risk if it makes mistakes. To quote the poet laureate Brian Johnson of AC/DC, money talks.

What money really gives you is flexibility. It allows you a greater chance of being competitive now and sustaining that competitiveness in subsequent years.

The problem has always been the ability of each of the 30 clubs to have a steady flow of revenues to work from. Yes, everyone is pulling in record revenues, but not all at the same rate. The key is "cost certainty." Clubs that have generational fan bases—Yankees, Red Sox, Phillies, Cubs, etc.—will, for the most part, generate a fairly steady flow of ticket revenues. When you throw in media rights (see recent television deals for the Rangers, Angels, and soon the Dodgers), it becomes a formidable force that the likes of Tampa Bay, Pittsburgh, and Kansas City can’t compete with. Those teams have to rely on the draft process, and certainly the Rays have shown that you can actually be competitive for more than a season or two under these constraints, but it isn’t easy and it’s not something to expect from every club. A club has to be smart. A club has to be positioned to spend when it can spend. And for heaven's sake, a club can’t be in a lengthy rebuilding process to do it. In other words, if a club is in the cycle, it can’t make too many mistakes that inhibit its ability to spend what little it may have available in the free agency space when the opportunity presents itself.

So, while it’s just one year, how does player payroll equate to winning when it comes to the postseason? I hesitated (greatly) with this considering how tight the LCS series were; a play here or there could have easily changed the outcomes. Still, it’s an interesting look. I had assumed that there would be more variance before plugging in the numbers, but with one glaring exception, the team with the higher player payroll (which, theoretically could equal a more talented roster ) won each series. Here’s a look.

The wild card play-in didn’t really follow our pattern, but it’s just one game in which a team’s rotation isn’t even really tested. This has been a common argument by some in regard to the new Wild Card format; at the very least, perhaps a three game series should be employed. It would have been interesting to see how each of these teams would have fared in that format and how the Rangers might have performed.

After that, each series went to the club that had the higher player payroll with, yes, that glaring exception. The Yankees, who had the worst team batting average (.188) in a seven-game series since the playoff format was introduced, were swept by the Tigers. Despite letting outfielder Magglio Ordóñez, infielder Carlos Guillén, and starting pitcher Brad Penny leave via free agency and releasing Brandon Inge, the club increased payroll nearly 25 percent this season (good for fifth in the league) thanks to Prince Fielder’s nine-year, $214 million deal. Still, the difference in player payroll between the two clubs was staggering—$76,568,900 less than the Yankees.

What will be interesting is seeing how this plays out in the World Series. The Tigers and Giants (fifth and sixth by total player payroll) show a difference of just $1,013,702, leaning to the Tigers. The question will be how those dollars are invested.

The Tigers are an interesting study in distribution. The team’s three biggest contributions all make up a relatively equal portion of their payroll pie: Fielder ($23 million) takes 17.29 percent, Miguel Cabrera ($21 million) takes 15.79 percent, and Justin Verlander $20.1 million) consumes 15.11 percent.

For the Giants, the distribution is spread wider and leans more toward pitching than position players. The top three by pay on the roster for 2012 are starters. Barry Zito, who shined in Game Five, is still the club’s highest-paid player ($19 million, or 14.4 percent), followed by Tim Lincecum ($18.25 million, or 13.83 percent), and Matt Cain ($15,833,333, or 12 percent), who shut down the Cardinals in Game Seven. From there, Aubrey Huff ($10 million) is at 7.58 percent while Brian Wilson ($8.5 million), who has been on the DL, makes up 6.44 percent.

The most important thing isn’t the ‘how much’; it’s the output each player provides compared to his salary that counts.

As total player payroll goes, a team’s chances of winning go up the more they dole out. It is not an absolute truth, but what is inarguable is that high player payroll affords a team a better chance of being competitive. Money doesn’t win championships, but it does give a team a better chance at winning than if it didn’t have as much to toy with. We’ll see if money talks in the World Series or not, but as the 2012 postseason has shown, it really already has.

Thank you for reading

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An interesting hypothesis. Of course one year of data really only provides anecdotal support. Makes me really curious how a more detailed an analysis would look though. Perhaps you could do a similar analysis to the one BP did with high Guillen ratio teams. I.e. ask the question, "does the post-season reduce the winning percentage of high payroll teams less than it reduces the winning percentage of low payroll teams?" Sample size would be a bit of a problem because there are so few playoff games, even if you go back as far as the modern era of free agency, say post-collusion in the early 90's. You get even less data if you try to capture the period of time that Selig's talking about, which would not include the late nineties and early 2000's when the Yankees had their most dominant modern run. I wouldn't be surprised to find that our impression that big market teams do better can't be supported at a high level of statistical significance. Thanks for the food for thought.
Planned on this for the comments... I'll likely post the payroll and ranking of WS teams for at least the last decade. Something anadotal to chew on... Look at where the Blue Jays and Royals ranked when they last won the World Series.
In case you didn't know... the Giants and Tigers have played each other in interleague six times in the last five years. They have never faced each other in a World Series
Very interesting starting point, though I think it's not enough to draw any conclusions. Just from the info in the article, in 2011 one LCS was won by the team with the lower payroll, and in 2010 both were. It would be interesting to see results for all series in the Wild Card era.

Also, just a minor clarification: what the payroll figures you have reflect? I gather they're from Cot's, but those/these don't quite align with Opening Day payrolls ( Is this actual money paid in 2012? Not that it changes your results, I'm just curious.

Cot's. I always try to keep it here in the family.
It stands to reason that marginal payroll should be correlated with playoff success. What marginal payroll specifically gets you (if done correctly) is a top-heavy roster that should fare better in a short series.

I wonder if the "secret sauce" for playoff success that no one can figure out is some kind of weighted payroll. In other words, some of the extra 75mil the Yankees have over the Tigers doesn't come into play when they're not using their 5th starter, their bench, the end of their bullpen, etc.

(Note, I don't think the Tigers/Yankees series is a particularly good example of this, because A-Rod, but the Yankees probably still spend a lot more on players 19-25 than most teams)
Big spending has never bought championships. What it is supposed to buy is the ability to contend, which does happen for the most part.

Rather than quoting the guy from AC/DC, I'll steal the line that I must have heard 14 zillion times:
Money talks, Nobody walks
(Denizens, the men's clothier...Route 17 Union New Jersey who sponsored the overnight on WABC in my formative years)

Awesome. For those that don't know, I have more than a passing fancy for AC/DC.
Good article, Mr. Brown. One modification that I would make would be to say that money wisely spent matters. The sucessful teams, especially deep into the playoffs are the ones who were not afraid to spend in order to fill gaps, or otherwise strengthen themselves with acquisitons.
This was a great read.

I am way out of my league in statistical design and analysis, but humor me, please:

Since expansion (or the '94 strike, or some other payroll-significant point in time), there have been several dozen paired-matchups of teams in both 5-game and 7-game postseason series. Would it be possible to run matched-pair analysis of these matchups, with the percent-difference in payroll as the independent variable and number of games to win as the dependent?

It should be relatively straightforward to plot the results and also determine statistical significance.

Although it would be substantially more work, I'd also love to see this analysis re-run using only the active playoff-payroll, to eliminate the effect of money lost due to injuries.

I'd suspect that the number of matchups should be enough to reveal whether the payroll difference is significant.

Was the Pirates payroll zero for the year? That Nutting, he can really run a business :)

As a Bucs fan, I'm more interested in the relationship between payroll and making the playoffs, which probably is statistically significant.

Because of the short nature of a 7 game series, I will guess that the payroll-WS champ relationship will probably not be significant (too much variation can occur in 4-7 games).
When you consider the Giants' top earners it's pretty astounding they're near the pinnacle. Zito's been a bust, Lincecum evaporated this year, Huff rides the pine and Wilson spent the season on the DL. Only Cain has earned his coin. Other than him, they've spent $55 mil for negative WARP.