Wednesday, June 24, 2009

Team Salaries

Finally taking a look at current team salary estimates.

First, here's a graph of the projected team salaries.

There are some surprises here (to me at least). Everyone knows that the Yankees are the highest in salaries, but I was surprised to find the Red Sox a lowly 4th. I suspected the Mets were up there, but didn't realize how high the Cubs payroll had gotten.

On the low end, I am amazed by how extremely low the Marlins total remains. 8 of the players on their 25 man roster are making the league minimum ($400,00) and another 7 are making less than $1 million.

Beyond that, The Padres remain quite low as well, especially considering Jake Peavey makes $11 mill and Brian Giles makes $9 mill. Add in Chris Young at over $4 and you have half the payroll in 3 players.

For a point of reference, the Yankees paid about $34 million in luxury tax in 2005, or just $3 million less than the Marlins actual payroll this year. This year, the Yankees are likely to be the only team over the "luxury" cap of $162 million. As the evil empire has broken the cap more than 3 years, they get charged the max rate of 40%. I believe that is on just the portion over the cap. If so, the Yankers can expect to pay another $16 million this year.

I digress, since I mean this as a scathing indictment on the Marlins, not the Yankees (who I will talk about later). MLB has a revenue sharing system of some sort, but they haven't released numbers on how much is shared and where it comes from or where it goes since 2006 (2007 numbers were partially leaked, but not readily available).

At that point in time, the lowest teams (Marlins and Rays w/Devil) were receiving over $30 million. Assuming that number has gone up or at least stayed the same, than the highest paying teams are paying no less than 80% of the Marlins payroll. Why doesn't this franchise work? I know they've won two world series, but they have no fan base, which is that much worse considering they have won two world series in a little over the past decade.


Since I have been obsessed with normalizing things lately, I converted the salaries to z-scores and made a graph to see if the salary structure resembles a normal or bell curve.

Overall, there is a somewhat normal shape to the payroll distribution with a few expections near the very top and mid to bottom. The Yankees are an extreme upward outlier, which is no surprise. Their z-score is 3.4, nearly double the next team's score (Mets at 1.77). In the current situation, the Yankees are the only technical outlier, but there seems to be a bigger issue. While the Yankees stick way the hell out there, it is not easy to notice the other teams creeping up. I figured the crazy high outlier was pulling the entire curve to the right, but it turns out that the Yankees are not the only actor here.

The Mets and Cubs are not outliers when the Yankees are in the calculation. If you either take the Yankees out of the equation completely, or give them a average payroll around $80 million, then the Mets (extremely) and Cubs (barely) become the outliers.

There are no negative outliers in either case, but I believe this is because there are a 3 teams (Pirates, Padres and Marlins) under the $50 million mark that are grouped within $12 million of each other though they remain at least $12 million under the next tier.

Looking back at the top, the differences between the almost top tier (Tigers are #5 overall at $115) and the next teams are much higher yet no where near each other. The Red Sox at #4 are $16 higher, the Cubs are at #13 higher than the Sox, the Mets are another $13 above the Cubbies and again, the Yankees are an astounding (to beat a dead something) $54 million higher than the Mets.

The difference from 1-5 is over $85 million, which is the larger than the difference from 5-30. Ignore the Yanks for a moment and look at the difference between 2-5 ($32). Take the same difference below 5 and you end up at 14 . Take $32 off again and you go from 14 all the way to 27.

I do not mean to say who is right and who is wrong (yet, that will be another post). But the differences here are almost unfathomable.

Especially given that when I regressed payroll versus number of wins, it only explained about 10% of the difference between winning and losing, with no real clear cut correlation between money and wins.

1 comment:

rissykay99 said...

I thought the Luxury Tax was something they made up for Monopoly.

Shows how much I know.