How Much is a Win Worth?

This is a very interesting question and while there is no concrete answer, I’m basically going to use a piece of analysis that I’ve seen before. I believe it was linked from baseball-reference.com but it’s been so long since I read the article that I can’t remember. I apologize for any infringement upon proprietary information as it is unintentional and I would like to make clear that I did not come up with this all by my onesies…

Anyways…

There is a wonderful metric called Wins Above Replacement (from now on, WAR) that theoretically measures how much more valuable a player is than a major league average player at his position. Please do not ask me how it is derived because I have absolutely no idea. However, considering the list of baseball analysts that routinely use WAR in their analysis, I feel comfortable making assertions based on this metric.

Essentially, the number crunching I’m about to do is very simple. If you take the number of wins a team has and divide by their payroll, you can find out how much value a win has to that franchise. Then, multiplying this number by the WAR value for a player would give you the theoretical salary that he should earn for his performance. Of course, there are some problems with this method and number one on the list is salary disparity. The New York Yankees and Boston Red Sox put a much higher value on a win than the Pittsburgh Pirates or the Kansas City Royals. This will provide for some interesting analysis further on but we’ll get to that later. The easiest way to account for these differences is instead of using individual teams, use data from all 30 teams and find the averages. So, let’s do it…

From 2000-2009, the thirty major league teams spent approximately $22.22 billion in payroll, or $74.1 million per team per year. Over that time period, teams recorded 24,286 wins, or an average of 81 per team per year. This comes out to an average expenditure of $915,248 spent per win across the majors.

If you were to combine this with the WAR metric, you can find an approximate value for how much a player’s performance was “worth” in a given year.

Let’s use the example of three time MVP Albert Pujols. In 2005, his first MVP year, his WAR was 8.2 and his salary was $11 million. According to this calculation, he was worth “only” $7.5 million that season. Similar numbers can be found for his second and third MVP seasons when he posted WAR numbers of 9.6 and 9.2 respectively. According to this analysis, his salary figures of $14.4 and $14.6 million were well above this metric’s analysis, which placed his worth at $8.8 and $8.4 million.

Obviously, there is a flaw in this system somewhere because any general manager would trip over themselves to sign an MVP candidate for $8.5 million a year and the vast majority of GM’s wouldn’t blink about signing an MVP winner for the $14-15 million price tag of Albert Pujols. So what is wrong with the method? It’s simple; wins are worth more to some teams than they are to others. In 2005, 2008, and 2009, the St. Louis Cardinals paid $921,000, $1.16 million, and $972,000 per win. However, these numbers still peg his value well below his salary.

So why is there such a big disparity? Well, as much as I hate to point fingers, you have to look at the salary disparity between established veterans and all-stars and young players that are up and coming. I’m not asking anyone reading this to feel sorry for the fact that Pujols posted a WAR of 6.9, 5.8, and 10.9 in his first three years in the majors while making only $1.7 million (vs. the estimated $21.6 million value of those wins). $1.7 million is more than the vast majority of Americans make over a three year period and that number shrinks even more when you take into account that he did it from the ages of 21-23.

All I’m saying is that in the current salary structure of baseball, young stud players are drastically underpaid and established veterans are (in some cases) drastically overpaid. The only consolation for rookies is that if they keep their production up, they’ll get that payday as well.

I’d like to shift this analysis from individual players to teams in general because I believe that the numbers match up a bit better. The first thing I did was I devised a method to compare each team’s performance as well as salary level against all the other teams in the sample. To do this, I used the highest and lowest value for both wins and $/win and placed every team on that line and assigned a value from 0-100 based on where they were.

For example, the extremes for wins were 43 (by the 2003 Tigers who went 43-119) and 116 (by the 2001 Mariners who went 116-46). The extremes for $/win were $188,096 (2006 Marlins) and $2,335,919 (2008 Yankees). In 2002, the Angels went 99-63 and spent $623,451 per win on their way to a World Series title. To find their data point, I did the following:

(99-43)/(116-43) = 0.767*100 = 76.7

Their win total in 2002 was 76.7% of the way from the lowest win total to the highest win total.

If we do the same calculation for $/win, we can find their salary data point:

(623,451-188,096)/(2,335,919-188,096) = 0.203*100 = 20.3

Finally, I subtracted the payroll number from the wins number to see how well they line up.

76.7-20.3 = 56.4

Any positive number means their team outperformed their relative expenditure for that season and a negative number means they underperformed for how much they spent on payroll. Before launching into the best and worst the last decade has seen, I want to make it clear that I understand that sometimes, things go wrong over the course of a 6-month, 162-game season and a team ends up paying $10 million to a guy who spends most of the season on the disabled list. I understand that teams (for no apparent reason) can over or underachieve for whatever reason but this analysis does show some trends that can’t be explained away as coincidence.

THE BEST
W-L, $/Win
Wins, $/Win metrics
Difference

2001 Seattle Mariners
116-46, $644,145
100.0, 21.2
78.8

2001 Oakland Athletics
102-60, $331,478
80.8, 6.7
74.1

2002 Oakland Athletics
103-59, $388,390
82.2, 9.3
72.9

2000 Chicago White Sox
95-67, $334,142
71.2, 6.8
64.4

2008 Tampa Bay Rays
97-65, $451,759
74.0, 12.3
61.7

With the exception of the Mariners, all of these teams were put together with enormous amounts of young, cheap talent that went out and performed day in and day out. If you take out the Mariners $74.7 million payroll, the highest in the group is $43.8 million by the 2008 Rays.

This doesn’t mean by any stretch off the imagination that these were the five best teams of the past ten years. I would instead say that they were the five best teams in terms of what you got per dollar spent.

Understandably, when you expand the above list and look at the top ten, only the White Sox of 2000 are considered to be playing in a large market. The others are Seattle (2001), Tampa Bay (2008), Minneapolis-St. Paul (2002), San Francisco (2000), Cleveland (2005), and the only team represented in the top ten more than once, Oakland (2000, 2001, 2002, 2003).

What this says to me is that in the early part of this decade, Billy Beane and his team were the best in the majors at putting together a winning team on a relatively tight budget. They haven’t won a World Series title since 1989 but when you consider that in the past decade, the Athletics have a win-loss record of 890-728 with an average payroll of $52.4 million per season (less than one third that of the Yankees), it speaks volumes about the men making the decisions.

THE WORST

2008 Seattle Mariners
61-101, $1,928,959
24.7, 81.1
-56.4

2009 New York Mets
70-92, $2,133,914
37.0, 90.6
-53.6

2003 Detroit Tigers
43-119, $1,143,442
0.0, 44.5
-44.5

2004 Arizona Diamondbacks
51-111, $1,368,250
11.0, 54.9
-43.9

2003 New York Mets
66-95, $1,775,400
31.5, 73.9
-42.4

Yes, I’m afraid that the Mets have to qualify as the biggest train wreck of the decade and this includes an appearance in the World Series in 2000. Their win-loss record for the decade is 815-803 and their .504 winning percentage is good enough to be 14th best in the majors over that span. However, their payroll sum of $1,091,320,006 for the decade ranks third only to the Red Sox and Yankees.

Interestingly enough, if you expand the bottom five into the bottom ten, it includes both the 2005 and 2008 versions of the New York Yankees but there is one critical difference. If you compare the other 8 teams to the two Yankees teams, you see shocking difference. The other eight teams won between 43 and 74 games with an average record of 62-100. In 2005, the Yankees spent $208.3 million, went 95-67, and won the American League East. In 2008, they went 89-73 with a payroll of $207.9 million and that year, they finished third to the Red Sox and the Rays (see “BEST” teams).

Basically what I’m trying to say is that while this analysis only scratches the surface of money management, it’s relatively easy to see who is mismanaging it. In the Yankees most cost-efficient season (2002), they still rank only 68th this decade in cost-efficiency. Something they can say that nobody else can though is that they played in the postseason 9 times, the World Series 4 times, and won the Series twice while never winning fewer than 89 games. They had a payroll that demanded winning and they won.

To sum up, I’m going to throw just a few more numbers at you and this way, you can see where the thirty teams have fallen for the decade as a whole instead of year by year:

Until next time, enjoy the baseball!!!

Rank. Team Name
W-L, Payroll (in millions)
Cost-Efficiency

1. Oakland Athletics
890-728, $523.6
62.7

2. Minnesota Twins
863-758, $504.7
53.3

3. Florida Marlins
811-807, $353.9
47.6

4. St. Louis Cardinals
913-706
$843.2
44.5

5. Los Angeles Angels of Anaheim
900-720, $882.2
35.5

6. Atlanta Braves
892-727, $929.6
28.2

7. Chicago White Sox
857-764, $774.5
26.6

8. San Francisco Giants
855-763, $790.3
24.9

9. Philadelphia Phillies
850-769, $795.2
22.1

10. Cleveland Indians
816-804, $651.9
20.9

11. Boston Red Sox
920-699, $1,167.0
20.2

12. Houston Astros
832-788, $766.9
16.9

13. Toronto Blue Jays
805-814, $678.4
14.0

14. San Diego Padres
769-852, $544.5
11.8

15. Los Angeles Dodgers
862-758, $999.8
8.7

16. Arizona Diamondbacks
805-815, $732.8
8.6

17. Seattle Mariners
837-783, $882.7
8.3

18. Colorado Rockies
769-852, $609.1
5.3

19. Milwaukee Brewers
741-879, $529.2
2.0

20. New York Yankees
965-653, $1,670.3
0.0

21. Cincinnati Reds
751-871, $586.1
-0.1

22. Tampa Bay Rays
694-923, $400.0
-2.9

23. Washington Nationals/Montreal Expos
711-908, $463.5
-3.2

24. Texas Rangers
776-844, $752.0
-5.8

25. Chicago Cubs
807-811, $905.7
-6.8

26. Pittsburgh Pirates
681-936, $439.2
-12.6

27. New York Mets
815-803, $1,091.3
-20.8

28. Kansas City Royals
672-948, $475.8
-21.0

29. Detroit Tigers
729-891, $763.4
-27.8

30. Baltimore Orioles
698-922, $720.6
-37.2