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Tuesday, February 04, 2014

Berri: Why Masahiro Tanaka’s Yankees Contract Is Good for Baseball

As Professor Lavoof said: “There has to be a world off the books”.

So baseball people have thought large salaries are a threat for more than 130 years.  Despite this sentiment, Major League Baseball – unlike the NBA, NFL, and NHL – does not have a salary cap.  Consequently, baseball – relative to these other sports – has substantially more disparity in payroll.  In sum, there does appear to be a difference in baseball between the “haves” and “have-nots.”

At least, that is the payroll story.  Payroll disparity, though, isn’t really the issue from the perspective of the fans.  What really matters is disparity on the field. And on that count, baseball – relative to other sports – doesn’t really have a problem.

...In sum, losing talent to another league tends to worsen competitive balance.  And likewise, expanding your talent base makes it better.

Of course, all of this might still leave you thinking that the Yankees buying a winner is bad for baseball.  Perhaps the following might make you feel better:  Variation in payroll in baseball explains less than 20 percent of the variation in winning percentage. One reason why spending doesn’t match outcomes is that forecasting the future in baseball is difficult. We can look at the stats and know who was “good” or “bad” in the past, but the future – especially for pitchers – is hard to predict.  Consequently, it is hard for the richest teams to simply spend money and win.

So if you don’t like the Yankees (and I share this sentiment), do not despair.  The Yankees cannot simply buy a title.  But if the money in Major League Baseball can get more great players to come to the North America, then that is good for the game. At least, the game in North America.

Repoz Posted: February 04, 2014 at 08:01 PM | 9 comment(s) Login to Bookmark
  Tags: business, yankees

Reader Comments and Retorts

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   1. ptodd Posted: February 04, 2014 at 08:37 PM (#4651786)
When you consider that only 1 team in baseball over the last 19 years has won a World Series in the bottom half of the league in payroll.

In the last 18 years, the Red Sox and Yankees have had the top 2 payrolls in baseball, and won 8 World Series between them.

So its no guarantee, but the larger the payroll the larger your odds of winning a World Series are.

Sure, the bottom half in payroll can make the playoffs from time to time in a system where 1/3 of the teams make the playoffs, just from random variance. But low payroll teams being consistently good are relatively rare since once you stop getting top 10 draft picks your source of cost controlled talent dries up.
   2. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: February 04, 2014 at 08:45 PM (#4651793)
The writer probably didn't write the headline but the headline is misleading. The article is about why Tanaka coming to MLB is good for MLB. Why we need someone to illuminate this startling fact for us, I don't know.

I hate the Yankees like any warmblooded American should, but I remain skeptical as ever that having the teams with the most fans be the most frequently successful is a bad thing.
   3. madvillain Posted: February 04, 2014 at 09:22 PM (#4651811)
Variation in payroll in baseball explains less than 20 percent of the variation in winning percentage. One reason why spending doesn’t match outcomes is that forecasting the future in baseball is difficult.


Hey, somebody ran a regression. Of course, using strictly payroll of MLB players is misleading, at least prior to the rules changes. The White Sox were a "large market team" in name only, spending relative trifling amounts on latin academies and scouting and signing bonuses.
   4. snapper (history's 42nd greatest monster) Posted: February 04, 2014 at 09:36 PM (#4651814)
I hate the Yankees like any warmblooded American should, but I remain skeptical as ever that having the teams with the most fans be the most frequently successful is a bad thing.

Important point. MLB is a profit maximizing enterprise, for owners, players, execs, etc.

Any system that has KC winning as much as the Yankees is grossly inefficient. Big market teams derive more revenue from winning, therefore the whole MLB ecosystem benefits from them winning more often.
   5. Monty Posted: February 04, 2014 at 10:18 PM (#4651834)
I hate the Yankees like any warmblooded American should, but I remain skeptical as ever that having the teams with the most fans be the most frequently successful is a bad thing.


I think that might mix cause and effect. If the Mets started being as successful as the Yankees and the Yankees started being as unsuccessful as the Mets, after a few years, their fan bases would reflect that.
   6. PASTE Thinks This Trout Kid Might Be OK (Zeth) Posted: February 04, 2014 at 10:40 PM (#4651841)
Yes, but the Brewers will never have as many fans as either because of the simple reality of population distribution.
   7. Best Regards, President of Comfort, Esq. Posted: February 05, 2014 at 12:54 AM (#4651859)
I hate the Yankees like any warmblooded American should, but I remain skeptical as ever that having the teams with the most fans be the most frequently successful is a bad thing.


Yankees consistently good: good for baseball
Yankees consistently winning pennants: bad for baseball
   8. Random Transaction Generator Posted: February 05, 2014 at 08:16 AM (#4651895)
Yes, but the Brewers will never have as many fans as either because of the simple reality of population distribution.


Is that true? I know that the Green Bay Packers have a large fan base outside of Wisconsin. Couldn't a successful/entertaining team in a smaller market gain a following outside that market?

   9. McCoy Posted: February 05, 2014 at 08:26 AM (#4651901)
Ask the millions of rays and A's fans all across this country of ours

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