Major League Baseball can be said to be many things. First and foremost, however, it is a sport entertainment corporation. The brand and its member franchises are in the business of selling baseball games to consumers in the interest of turning a profit.
Like any business, it’s important for the league and its member franchises to keep operating costs as low as possible in order to maximize profit. A big part of the opening expenses for each team is the cost of the salaries of the players on the 25-man roster. A big part of becoming and remaining profitable is being successful in winning games and reaching the postseason tournament.
With those things taken into account, an easy and important analysis as to the financial efficiency of a particular franchise is comparing the payroll of its 25-man roster to the amount of victories those players have produced. That could simply be called a cost per win ratio.
Using the 2015 Opening Day payrolls of each team and the win totals as of Saturday, Sept. 5, we are able to come up with an average cost per win for each franchise to this point in the 2015 season and determine which MLB teams have been the most financially efficient this season.
The most financially efficient team thus far in 2015 has been the Houston Astros. Their cost per win average is under $1 million, the only team in all of MLB able to make that claim. With 74 wins and an Opening Day payroll under $72.5 million, the Astros’ season through 136 games has been quite a bargain.
The lowest cost per win average in the National League so far resides in Pittsburgh, where the Pirates’ 80 wins have a cost of $1,125,662.50 per win through 134 games.
At the opposite end of the spectrum for all of MLB is the Los Angeles Dodgers. Despite their 77 wins through 135 games, their MLB-leading $271.6 million Opening Day payroll has made their cost per win average an enormous $3.53 million.
The least financially efficient team in the American League so far this season has been the Boston Red Sox. With 63 wins through 135 games and an Opening Day payroll of $184.35 million, the cost per win ratio is $2.93 million.
What’s interesting is looking at the cost per win ranking among all the league’s teams for the teams currently in position to reach the postseason. Through Saturday, Sept. 5, the 10 teams in playoff position fall all over this statistical analysis.
In the AL, we have already talked about how Houston has been financially efficient in building its lead in the West division. The Central-leading Kansas City Royals are the eighth-most financially efficient team in MLB in terms of cost per win average, but fall in third among AL-teams only. Toronto falls at 13th overall and fifth among AL teams. The top wild card team, the New York Yankees, come in at 28th overall and 14th among AL teams. The Texas Rangers, currently in line to be the AL’s second wild card, are 21st overall and 11th in the AL.
The NL playoff teams fall as follows; The New York Mets are fifth overall and third among NL teams. At ninth overall and fifth among NL teams are the St. Louis Cardinals. We have already discussed how the Dodgers are at the bottom of the rankings and how the Pirates lead the NL. The current second wild card team in the NL, the Chicago Cubs, are 12th overall and sixth among NL teams.
Half of the 10 teams currently in playoff position are in the top 10 of this statistical analysis, but that would stand to reason considering the factor which helps lower the average and put a team in playoff position are the same thing: winning games. There is a strong negative correlation between simply having a low payroll and being in playoff, as only Houston and Pittsburgh are in the bottom 10 of payrolls and currently in playoff position. The other eight teams in that group are not currently in playoff position.
There’s no magic formula for buying wins in baseball, but we can use the benefit of hindsight to analyze which teams have been most efficient with the money that they have spent and turning that money into actual wins on the field. If these franchises can perpetuate these results, they stand a good chance to be financially healthy for years to come.