Up next in the Pinch Hitters series is Eli Knoll, a 25-year-old health care executive in the Metropolitan area. He said he’s always been passionate about the intellectual side of baseball, “particularly in the juxtaposition of economics, statistics, and performance.” Eli wrote, “I particularly find the works of JC Bradbury to be fascinating in both their content and breadth.” He was at the head of the sports staff at the Brooklyn College newspaper in 2005, and although he had some interest in writing professionally about fantasy baseball, he had to pass on a job opportunity because as an Orthodox Jew, his observation of the Sabbath prevented Eli from covering Friday night and Saturday games.
For his guest post here at LoHud, Eli took a look at the notion that the Yankees buy championships by using their big-market, financial might.
A favorite debate between Yankees fans and their counterparts revolves around the payroll advantages that large-market teams like the Yankees use to sway competitive balance. Large-market teams, the other side argues, have the financial resources to support a disparately larger payroll than small-market teams and do not need to have the same fiscal prudence in assembling their roster.
Consequently, “they just buy their championships.”
With many Yankees fans clamoring for an Albert Pujols signing this offseason (as a gold-glove DH!), you can understand where that frustration comes from. However, these disproportionate budgetary concerns are not nearly the advantage they are made out to be.
GM’s of small-market teams are often lauded for “getting the most out of what they have.” In separating that axiom into two parts, we can better digest what they are striving for. By “getting the most” from their team, they are seeking to field a team that will produce the most amount of wins relative to the budget realities that embody “what they have.” To establish the objective of this statement, we need to study the relationship between what a player costs and what his production is worth.
In sabermetrics, WAR is statistic that shows how many more wins a player’s statistical output is worth in comparison to replacement level production. By cross referencing WAR to the earnings value of a win to a team, we monetize WAR and articulate the dollar value that a player’s season is worth. In economics, this output of the player is referred to as his marginal revenue product (MRP), the added dollar value that his statistical input brings to generating revenue.
For low-budget teams to be successful, they must excel in finding players whose MRP’s overachieve their salary, by navigating the nuances of MLB’s rookie scale and free agent structure. Supposedly, large-budget teams like the Yankees are not bound to these restrictive economic principles. They are stocked with players whose salaries are already in concert with their established statistical production, somewhat guaranteeing their parameters of success. This is why large-budget teams are generally competitive on a year-to-year basis. They have no need to set their success on the exponential growth and development of younger players, or on the legs of bounce-back years from market-depressed (thus cheaper) veterans. They can afford to pay for the security of established production.
Interestingly, the players with the best MRP ratio to salary tend to be younger, unestablished prospects, journeymen who unexpectedly thrive in specific and limited roles, veterans who make good on pillow contracts, and players with unexpected break out or career years. Armed with superficially low salaries, these players have a built-in cushion to out-produce their contracts. Additionally, sabermetric-minded teams will search the player pool for underpriced players, identifying specific skill sets that contribute more to wins than the market gives them credit for. This detection and exploitation of market inefficiencies is what the Moneyball philosophy is predicated on.
Upon examination, the financial freedom teams have to throw money at superstars is not necessarily the advantage it’s made to be. These elite players are worthy of large contracts because they have demonstrated a history of valuable statistical performance. Security of production is a very valuable and expensive commodity. However, the large, rabid fan bases of those big-money teams — specifically in conjunction with their multiple media outlets — would be outraged if their teams were stocked with unproven or uninspiring, lower-priced players. They want the sure thing. They want to know that their exorbitantly priced tickets are going to still be worth something in September.
While it is one thing for a team to place responsibility on a touted prospect or to use a fringy player to fill out the roster, it is another to make it the modus operandi. Fans and media would be in an uproar, sports radio lines would be overloaded, and the blogosphere backlash would deafen any real implementation of an economically-sound roster structure. Let’s remember, Tony Fernandez and Tony Womack needed to be signed because it was too scary to let rookies like Derek Jeter or Robinson Cano play roles for a team that had the financial resources to ensure better. It is the nature of the large-market that explains why Jeter and Jorge Posada received higher contracts to re-sign than they could have mustered in free agency.
Lest us forget the sheer panic when Cliff Lee refused to steady the rotation in 2011. Ivan Nova? The Padres didn’t even want him! Freddy Garcia? Is this 1998? Bartolo Colon? Really? Wait, as a mascot?
As you can see, large-market teams rarely have players in crucial roles whose production exceed their contracts, as their hands are tied to exclusively field players that have a more proven track record (and a salary commensurate with that). Thus, while their payroll ceilings are disproportionately higher than others, so too are their responsibilities to reach those ceilings. Ironically, the resources that provide for a larger payroll are exactly what limits the ability to take proper advantage of it. It reduces the opportunities for younger and cheaper players to grab prominent roles, creating a spending cycle that complicates the further integration of younger, cheaper players into the lineup.
With the new 2014 CBA luxury tax and revenue sharing regulations restricting spending to increase competition, Brian Cashman has started to prepare the Yankees for a new challenge. With spending seemingly capped, Cashman has to balance the unchanged expectations of the Yankees fan base against a new system necessitating fiscal balance. Lately, we have seen Cashman more proactive in trying to build a team with better budget balance in an effort to ensure that the team will still be able to utilize its financial advantages.
Once the CBA goes into effect, the Yankees will have found savings in their budget for the continued acquisition of superstars by having cost-controlled players performing in traditionally expensive roles. Cashman has carefully allowed players such as Brett Gardner, David Robertson and Ivan Nova — players whose production far outweighs their cap counts — carve permanent roles in the Yankees future plans. He has also left the opportunity open for Austin Romine (or personal fave JR Murphy) to grab the catching reigns in the not-so-distant future. Perhaps the five cost-controlled years of a front-line starter like Michael Pineda was the impetus to give up an immense talent like Jesus Montero.
As understanding as Yankee fans are, we still want the liberty to sign that marquee free agent that we just must have. Embracing change will ensure that our fiscal advantage will still be there.
Associated Press photo