MLB: Does money buy happiness in MLB?

In no other professional sport is the difference between the have’s and the have not’s so magnified as it is in Major League Baseball.

2008-08-13

In no other professional sport is the difference between the have’s and the have not’s so magnified as it is in Major League Baseball. While revenue sharing plans have helped, in no way have they come close to evening the playing field. Still, in looking at the current standings in baseball, does it really matter? Should the bettor be concerned as to a team’s payroll? The following study reveals some interesting numbers as to how a team’s payroll relates to its success both on the field and at the betting window.

In conducting this study, I simply took a list of the current team payrolls in Major League Baseball and compared the rankings to the team won-lost marks and betting returns. To simply, I grouped the teams into three tiers, the Top 10, the Middle 10, and the Bottom 10. It should be noted that all team records are as of entering play on Tuesday.

Here’s a look at the Top 10 teams in terms of 2008 payroll.
Tier 1 Payroll Teams
Rank, Team, Payroll, W-L (%), ML Units
1. NY Yankees: $209,081,579, 63-56 (52.9%), -11.8 Units
2. Detroit: $138,685,197, 58-60 (49.2%), -12.6 Units
3. NY Mets: $138,293,378, 62-56 (52.5%), -7.7 Units
4. Boston: $133,440,037, 68-51 (57.1%), 5.6 Units
5. Chi White Sox: $121,152,667, 65-52 (55.6%), 9.6 Units
6. LA Angels: $119,216,333, 74-43 (63.2%), 23.8 Units
7. Chicago Cubs: $118,595,833, 71-47 (60.2%), 12 Units
8. LA Dodgers: $118,536,038, 59-59 (50.0%), -8.5 Units
9. Seattle: $117,993,982, 45-73 (38.1%), -29 Units
10. Atlanta: $102,424,018, 55-63 (46.6%), -16.2 Units
Total: 620-560 (52.5%), -34.8 Units

Tier 1 Team Summary: To no one’s surprise, the Yankees are far ahead of the pack in payroll at over $200M. Of course, their -11.8 units of loss for bettors this season are also 7th worst among the 30 clubs. Detroit is next highest in payroll, and 6th worst in betting return. As a whole, this collection of big market teams has combined to lose over 34 units of return for investors this season. Their 52.5% winning percentage ends up the highest of any of the three tiers, but the price tag attached certainly doesn’t justify it. Just on the surface, it seems that oddsmakers take payroll into serious consideration when building their lines. This group of clubs, other than Seattle and Atlanta, are often playing as overpriced favorites. Fading these teams consistently has produced a nice return.

Now, here are the Tier 2 teams with their respective payrolls, won-lost marks, and betting returns.

Tier 2 Payroll Teams
Rank, Team, Payroll, W-L (%), ML Units
11. St Louis: $100,624,450, 66-55 (54.5%), 12.6 Units
12. Toronto: $98,641,957, 60-59 (50.4%), -7.8 Units
13. Philadelphia: $98,269,881, 64-54 (54.2%), -2.5 Units
14. Houston: $88,930,415, 59-59 (50.0%), 6.8 Units
15. Milwaukee: $81,004,167, 68-51 (57.1%), 10.1 Units
16. Cleveland: $78,970,067, 53-64 (45.3%), -21.2 Units
17. San Francisco: $76,904,500, 50-67 (42.7%), -9.2 Units
18. Cincinnati: $74,277,695, 52-67 (43.7%), -19.7 Units
19. San Diego: $73,677,617, 46-72 (39.0%), -30 Units
20. Colorado: $68,655,500, 53-67 (44.2%), -19.8 Units
Total: 571-615 (48.1%), -80.7 Units

Tier 2 Team Summary: The Tier 2 teams are a mostly collection of the league’s most disappointing teams of 2008, Cleveland, San Diego, and Colorado most notably. Miwaukee is the biggest shining star on this list, playing 17-games over .500 with the league’s 15th biggest payroll. Overall though, this tier of teams has proven to be the most futile when it comes to producing at the betting window. Only the three teams from the N.L. Central Division, St. Louis, Houston, and Milwaukee have produced positive returns for their backers. It seems that “not going the extra mile” with these clubs’ rosters has taken its toll.

Finally, here are the Tier 3 clubs and their performance marks.

Tier 3 Payroll Teams
Rank, Team, Payroll, W-L (%), ML Units
21. Texas: $68,239,551, 61-58 (51.3%), 14.4 Units
22. Baltimore: $67,196,248, 56-61 (47.9%), 3 Units
23. Arizona: $66,202,713, 60-58 (50.8%), -9.8 Units
24. Minnesota: $62,182,767, 66-52 (55.9%), 17.8 Units
25. Kansas City: $58,245,500, 54-64 (45.8%), -0.9 Units
26. Washington: $54,961,000, 44-75 (37.0%), -18.7 Units
27. Pittsburgh: $49,365,283, 54-64 (45.8%), 1.8 Units
28. Oakland: $47,967,126, 54-63 (46.2%), -10.8 Units
29. Tampa Bay: $43,820,598, 71-46 (60.7%), 20.4 Units
30. Florida: $21,836,500, 62-57 (52.1%), 16.8 Units
Total: 582-598 (49.3%), +34 Units

Tier 3 Team Summary: With six teams producing positive returns at the betting window, and one other within -1 unit, the Tier 3 teams, or the lowest payroll group, have been the most rewarding thus far in 2008. In fact, Tampa Bay, Minnesota, Florida, and Texas rank 1st through 4th on the list of MLB teams in betting return. These are clubs whose unproven players have truly come up big in ’08, and consequently, they currently find themselves in the thick of the pennant races. Again, with this group, it seems that oddsmakers have pre-adjusted their lines this season based upon the team’s payrolls. It’s refreshing however to see that not only are these clubs producing big dollars at the betting window (+34 units of return), a few of them are also potential playoff clubs currently leading their respective divisions.

I guess to answer the title question then, it seems there is only a marginal improvement in winning percentage for a larger payroll, while the majority of strong betting return comes from spotting those live underdogs with the diminutive bankrolls.