Value for money in the Major Leagues: the “Moneyball Cup”

I’ve had a lifetime love for baseball. Born a Yankees fan, I remember staying up late into the night watching the Yankees win the World Series in 1998, 1999, and 2000 (only to watch the Yankees’ heartbreaking collapse in 2001) with some of the best teams in baseball history. I loved listening to baseball games on mute, pretending to be an announcer with my younger brother (also a fanatic) who did the color commentary. We watched all the games, played backyard baseball, created countless fantasy teams and played countless video games, and we collected baseball cards–assembling a collection that would later make my brother a fortune on eBay. But baseball, like most things I was interested in when I was 10 or 11, eventually faded for nerdier pursuits.

Moneyball: The Art of Winning an Unfair Game, by Michael Lewis

It was about two years ago when I became interested in baseball again, following the league and discussing the game with my friends and family. My brother was still an expert, and I started living with Will, a formidable Boston Red Sox fan who I had to deal with on Red Sox Nation turf. Part of what drove my interest in baseball was Michael Lewis’ famous book Moneyball, an investigative journalist-style inquiry into baseball’s sabermetric revolution, its impact on the low-budget Oakland A’s, and Oakland’s eccentric General Manager Billy Beane (Brad Pitt will play Beane in a Moneyball movie in 2011).

I had already been familiar with the statistical revolution that was overtaking baseball, being a statistical nerd myself, but the book sparked my interest once again: I began spending way too much of my time on Baseball-Reference.com, FanGraphs, and various other baseball blogs.

Part of what interested me in the statistics was how it played into baseball as a business: with the explosion of statistical sports commentary on the web, teams were constantly being criticized for their front office moves. Did an aging slugger’s statistical performance merit his new contract? Using advanced statistics, the decisions of General Managers could be analyzed not just for their contribution to performance on the field but also for their cost-effectiveness. The change had an impact on me as a fan, but it had a bigger impact on front offices: though Moneyball chronicled a low-budget team trying to catch up with the big boys, even big spending teams like the Red Sox and the Yankees began using advanced statistics to find undervalued and underrated players.

Baseball-Reference.com recently added more sabermetric stats. It's a great tool for quickly looking up players, teams, records, etc.

But what teams are doing the best job at getting value for money in the Major Leagues today? One could take a look at the standings, divide each team’s salary by their number of wins, and determine which team has paid the most in order to get where they have (and which teams have spent the most per win) but a central insight of the statistical era in baseball is that many wins and losses in baseball are due to statistical noise–in other words, luck. The statistic “batting average on balls in play” (BABIP) for example, measures how many times a batter gets a hit per each time he puts the ball in play. Since BABIP tends to be uniform in the Major Leagues for all hitters season-to-season (with slight variations for players who beat out a lot of infield hits), one can use the statistic to determine whether a hitter has been lucky (missing fielders or taking advantage of bad ones) or if his batting average is a result of higher performance.

Wins Above Replacement is a great statistic to determine how much a team’s performance is a result of luck and how much a team’s performance is a result of prudent front office decisions: the statistic measures how many wins a player contributes to his team, compared to an average player the team could have picked up off the waiver wire or Triple-A (click the link above for a fuller explanation, I’ve probably oversimplified it a bit). Overall, it correlates better with winning than most other stats, and when it doesn’t, it’s likely due to luck.

So what teams get the most WAR for the money? Baseball-Reference makes that calculation easy by providing salary and WAR information for all Major League teams. According to my calculations, the team that’s spent the least money per WAR so far this season (winning what I like to call the “Moneyball Cup”) is the San Diego Padres: spending just $1.9 million per WAR. It’s not just because they’re bargain hunters, either: The Padres are currently in first place in the NL West. Here’s the rest of the top 10:

The Padres, bolstered by a few surprises and some very talented young players, are getting the most value for money this season.

1.  San Diego Padres - $1.9 million per WAR
2.  Toronto Blue Jays - $2.9 million per WAR
3.  Oakland Athletics - $3.4 million per WAR
T-4.  Texas Rangers - $3.6 million per WAR
T-4.  Cincinnati Reds - $3.6 million per WAR
6.  Tampa Bay Rays - $4.1 million per WAR
7.  Minnesota Twins - $4.2 million per WAR
8.  Kansas City Royals - $4.3 million per WAR
9.  Cleveland Indians - $4.5 million per WAR
10.  Atlanta Braves $4.6 million per WAR

Unfortunately, as a Yankees fan, I have no bragging rights in this contest (not that I expected any): While the Red Sox are around league average at $6.5 million per WAR, the Yankees pay quite a bit more: $9.1 million.

Interestingly, it’s a little tricky to determine which team is the worst. Both the Houston Astros and the Pittsburgh Pirates have compiled negative WAR this year. What does that mean (after all, you can’t lose negative games…)? By compiling -2.2 and -2.6 WAR, respectively, the players on the Astros and Pirates have done worse than what one would expect from a team assembled off the waiver wire, the Minor Leagues, and free agency. Ouch. Both teams have thus basically wasted the money they’ve spent on payroll this season, though it’s probably worse for the Astros, whose payroll is over $91 million (the Pirates’ payroll is approximately $34 million).

Here are the rest of the worst:

5.  Seattle Mariners - $15.1 million per WAR
4.  Los Angeles Angels - $18.7 million per WAR
3.  Chicago Cubs - $39.4 million per WAR
T-1.  Pittsburgh Pirates - $34.4 million for negative 2.6 WAR
T-1.  Houston Astros - $91.5 million for negative 2.2 WAR

Of course, the Major League standings don’t mimic these standings. The Yankees have the best record in baseball (though several of the best teams are contenders, like the Rays and Rangers), and plenty of other teams use big budgets to win as well. Since teams like the Sox and Yankees have more money, their use of statistical analysis has allowed them to continually assemble competitive teams. Meanwhile, teams like the A’s struggle (still under Billy Beane, they haven’t made the playoffs since 2006). Baseball, the only major professional sports league in America that does not have a salary cap, remains a game that favors big market teams and free-spending owners (heh… go Yankees!). For everyone else, though, there’s always the Moneyball Cup!

Beyond the jump, I have the full standings.

Tm WAR Salary Moneyball Cup Standings 
SDP 19.3 $37,386,500 $1,937,124.35
TOR 19.7 $59,025,600 $2,996,223.35
OAK 13.7 $46,995,000 $3,430,291.97
TEX 14.8 $54,037,414 $3,651,176.62
CIN 18.8 $68,645,542 $3,651,358.62
TBR 16.9 $69,720,771 $4,125,489.41
MIN 19.9 $84,784,166 $4,260,510.85
KCR 12.4 $53,662,000 $4,327,580.65
CLE 13.4 $59,878,966 $4,468,579.55
ATL 18.1 $84,021,166 $4,642,053.37
ARI 10.3 $52,218,166 $5,069,724.85
MIL 15.6 $80,301,778 $5,147,549.87
STL 17.3 $93,540,751 $5,406,979.83
WSN 9 $57,599,000 $6,399,888.89
COL 12.9 $83,824,000 $6,497,984.50
BOS 22.7 $148,097,333 $6,524,111.59
FLA 7.8 $55,239,500 $7,081,987.18
LAD 13.2 $94,953,516 $7,193,448.18
SFG 13 $98,186,333 $7,552,794.85
NYY 22.7 $206,333,389 $9,089,576.61
DET 12.9 $119,439,928 $9,258,909.15
CHW 11.1 $104,330,000 $9,399,099.10
PHI 14.1 $141,928,379 $10,065,842.48
NYM 11 $132,753,942 $12,068,540.18
BAL 4.9 $70,172,500 $14,320,918.37
SEA 5.5 $83,043,500 $15,098,818.18
LAA 5.2 $97,308,866 $18,713,243.46
CHC 3.7 $145,784,000 $39,401,081.08
PIT -2.6 $34,533,000 Really bad.
HOU -2.2 $91,540,000 Even worse.
MLB 375.1 $2,609,285,006 $6,956,238.35
Provided by Baseball-Reference.com: View Source Table
Generated 8/14/2010.
Advertisements

4 thoughts on “Value for money in the Major Leagues: the “Moneyball Cup”

  1. I saw this in your facebook status… As you may not know I’ve also taken up baseball statistics a lot lately. Like you, I read fangraphs daily and constantly look at stats on baseball reference.

    I have very mixed feelings towards WAR. On the one hand, it’s a great one-number measure of the value of a player, but on the other I think some people (especially on fangraphs) tend to rely on it a bit too much. The main issue I find is that, even though it’s a measure of a player’s contributions to the team not accounting for luck, the variance of its fielding component severely diminishes its predictive value. A guy’s fielding year could easily be worth +/- 2 WAR the versus his previous year, so you get guys like Ben Zobrist leading majors overall. Certainly, he was the most valuable player in baseball, but his WAR was still quite fluky due to the obscenely good fielding year he happened to have. It makes me wonder if WAR really is that much better than WPA…

    On another note, I wonder how the moneyball cup standings would look if the contributions of major league minimum players were removed. The management decisions around those guys are always strictly talent-rated (“Is he good enough to play for us?”) instead of monetary (“Is he worth the money we have to pay to tender/sign him?”).

    It’s also sometimes interesting to remember the players can make revenue contributions to teams beyond WAR. The added revenue from signing a “name veteran” instead of a younger or under-rated player probably exists to some degree. For some guys, it can be big- Hideki Matsui has a huge following in Japan and even though he wouldn’t have been worth the $7 million the Yankees would have had to pay to sign him, he’d have made up for it with the merchandise sales and TV ad revenue he’d have brought in Japan.

  2. I’m glad you found the blog, Marcus.

    I’ll agree with you that there are definitely other metrics than WAR, and that WAR is not a panacea. However, it’s pretty damn good IMHO, and for a back-of-the-envelope calculation like this it serves well. I would be interested in trying to improve the “Moneyball Cup” metric for future standings, though… maybe it’s something we could talk about 😉

    I half-agree with you on the major league minimum point. Yes, some major league minimum signings are based on talent, but that would show up in how much WAR (or some other measurement of value) they produce. Also, some players playing at the major league minimum aren’t signings, but just talented rookies or arbitration-eligible players. Their contributions are important to measure.

    You’re absolutely right about things like merchandise sales and TV ad revenue. But I think “star power” is often overrated as a revenue source in baseball. The first lesson of Sports Economics 101 is that wins = money, and when players like Matsui struggle or fail to produce, they end up being costly.

  3. Numbers like these are great for evaluating managers, especially if you are a small market team. Too bad efficiency doesn’t matter as much if you do have unlimited pockets.

    Of course, in terms of the NFL and NBA, these numbers would be a lot more useful (although a lot weirder to use, because with a cap, it’s hard to determine what is efficient aside from wins). You would have to actually determine it on a per player basis, using something like WARP (very similar to the same stat in baseball). Caps do however allow you to luck out on efficiency because there will always be players paid under real market value (ie Lebron would get paid as anyone else who gets the max, though they would probably be worth less).

    Just rambling. Bored. Good post though.

  4. I know you said the standings don’t mimic the WAR rankings exactly, but it’s actually not that far off-base. If the season ended today, the only teams that would make the playoffs without being in the Top 10 Moneyball are the Yankees and Phillies.

    1. San Diego Padres – $1.9 million per WAR (1st in NL West)
    2. Toronto Blue Jays – $2.9 million per WAR
    3. Oakland Athletics – $3.4 million per WAR
    T-4. Texas Rangers – $3.6 million per WAR (1st in AL West)
    T-4. Cincinnati Reds – $3.6 million per WAR (1st in NL Central)
    6. Tampa Bay Rays – $4.1 million per WAR (tied for 1st in AL East/AL Wild Card)
    7. Minnesota Twins – $4.2 million per WAR (1st in AL Central)
    8. Kansas City Royals – $4.3 million per WAR
    9. Cleveland Indians – $4.5 million per WAR
    10. Atlanta Braves $4.6 million per WAR (1st in NL East)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s