MLB Payrolls and World Series Success

Now that the White Sox and the Cubs have made hasty exits from post season play, the whole city of Chicago is now on suicide watch. The 5th and the 7th highest payrolls respectively netted exactly one playoff win and the Yankees, Tigers and Mets failed to reach the post season altogether despite having the three highest payrolls (although the Tigers were close, they only missed the playoffs by 14.5 games).

This got my friend Rudi and I thinking. What is the relationship between payroll and post season success? While our wives rolled their eyes and talked about more meaningful things (like the Hills), we punched the numbers into Excel.

As you can see in the graph, many World Series champs had payrolls that exceeded the median payroll by over 50%. Only 5 out of the last 19 champs had payrolls within 5% of the median ('89 A's, '90 Reds, '91 Twins, '02 Angels, and '03 Marlins). As for the big spenders, 9 out of 19 had a top 3 payroll and 11 out of 19 had a top 5 payroll. The highest payroll won the World Series 4 times.

With 30 teams in Major League Baseball, each team theoretically has a 3.3% chance to win the World Series. However, in the last 20 years at least, if you have the highest payroll, you win 21% of the time. Your odds are dramatically improved, but you'll still lose 79% of the time.

Of the teams that are left, the Red Sox, Angels and Dodgers have top 10 payrolls, the Phillies are near the median and the Rays are second to last. The Rays payroll is about half that of the median and a little more than a third of the White Sox. Go Rays!