On Sunday, The Athletic reported Major League Baseball will form an “economic reform committee” that will tackle issues of revenue and spending disparity among the 30 teams. One of the first things the committee will learn is that the public has already done much of their work for them.
As it turns out, researchers are really interested in the correlation between an owner’s spending habits and the success of his team on the field.
One paper (“Productive Efficiency and Salary Distribution: The Case of US Major League Baseball”) examined team salary and other data from 1985 to 2000. The authors concluded that “many other determinants appear to be more important to MLB success than salary inequality.”
Among those determinants, in order of importance: pitching (lower ERA, more saves), hitting (more runs per game, higher on-base and slugging percentages ), and fielding (fewer errors per game). Who knew?
In another paper (“Player Salaries, Organizational Efficiency, and Competitiveness in Major League Baseball”) researchers looked at team-salary data from 1985 to 2002. They found about four to eight teams each year are non-competitive due to low total player salary, although low total player salary didn’t entirely account for the competitive imbalance in MLB.
Of course, neither of those reports had a more outsized effect on the game than the one Bud Selig commissioned in 1998. four years later, Selig’s “Blue Ribbon Panel” concluded that competitive balance was impaired by the structural characteristics of the league.
The revenue disparity between the richest and poorest teams, around $30 million in 1989, had grown to $163 million by 1999. In the subsequent Collective Bargaining Agreement, which took effect in 2003, players and owners agreed to reinstitute a luxury-tax system that remains in place today.
You don’t need a degree in statistics to update those previous studies with 21st-century data. Teams that spend more still usually win more. Teams that spend less usually win less. But that is more true in the regular season than the postseason, and the exceptions to the rule are too fascinating to ignore.
Here’s where the last 10 World Series champions ranked by their Opening Day payroll:
2022 Houston Astros: 11th
2021 Atlanta Braves: 13th
2020 Dodgers: 2nd
2019 Washington Nationals: 7th
2018 Boston Red Sox: 1st
2017 Astros: 18th
2016 Chicago Cubs: 14th
2015 Kansas City Royals: 16th
2014 San Francisco Giants: 7th
2013 St. Louis Cardinals: 10th
There are plenty of ways a person can spin this data, but a few big points jump out. For one, 22 consecutive years have passed without a champion in back-to-back seasons – a record. In nine seasons from 2013-21, the league produced nine different champions, which had not happened since 1979-87. It’s never been harder to buy and retain a title.
Would an owners’ conclave yield a better way to distribute revenues among the 30 teams? Maybe, but I would be suspicious of any radical proposals for change. If the goal of revenue sharing is to give different teams a chance at winning a championship, MLB is already doing something right.
We know the postseason invites a degree of luck that a 162-game regular season usually weeds out, so let’s look at the other end of the spectrum. Here’s where the worst regular-season teams ranked in terms of their Opening Day payroll:
2022 Nationals: 19th
2021 Baltimore Orioles: 29th and Arizona Diamondbacks: 19th
2020: Pittsburgh Pirates: 29th
2019 Detroit Tigers: 20th
2018 Orioles: 14th
2017 Tigers: 4th and Giants: 7th
2016 Minnesota Twins: 18th
2015 Philadelphia Phillies: 9th
2014 Diamondbacks: 11th
2013 Astros: 30th
A handful of these teams (Phillies, Giants, Tigers, Nationals) fell to the bottom of the standings after spending big to get to the top. At least two others (Twins, Diamondbacks) were hamstrung by injuries. The Astros and Orioles were clearly rebuilding; the Pirates, less clearly so. It’s hard to find a unifying through-line just by scanning this list.
Here’s one, though: If market size were the be-all, end-all factor pulling teams to the top or the bottom of the standings, we would expect to see more than two small-market teams listed among the worst teams of the last 10 years. We would expect to see more than, well, zero New York teams among the list of recent champions. Market size matters, but only to a point – in other words, just what the academics have been telling us for decades.
There are, admittedly, better ways of measuring parity. In spite of revenue sharing, for example, it’s relatively difficult for teams to move up and down in their own division standings from year to year. It’s more difficult under the current CBA for teams to use the amateur draft to tank and rebuild like the Astros, Cubs and Orioles.
With that in mind, pay attention to what the new committee decides is a problem that needs solving. MLB must re-evaluate its broadcast revenue streams in light of cable cord-cutting generally, and specifically the financial woes of Diamond Sports Group, which owns the game’s largest portfolio of regional sports networks (RSNs). How to distribute those revenues is another matter, and it would be nice to see that owners have learned something since the last economic committee convened.
In 2002, Selig’s Blue Ribbon Panel concluded that low-revenue clubs used their revenue-sharing funds to become modestly profitable rather than competitive. It recommended something akin to a “salary floor,” a minimum player payroll, to counterbalance the competitive balance taxes on teams at the top. That call went unheeded. Tanking continued.
If the new committee concludes the same problems are afoot, it’s worth asking what we’ve learned in the last 21 years.