MR. SMITH GOES TO OAKLAND
The implication: the best team didn't win; the richest one did. America's game is rigged.1
However, Moneyball-- and the movie and book both suffer this flaw-- conveniently overlook the approximately $50 million the A's collect annually from MLB's revenue sharing program which compensates them precisely for their geographic limitations. The subsidy the A's collect from Major League Baseball's revenue sharing program emanates from two separate sources: (1) a "local revenue" tax assessed on all teams' broadcast dollars and gate proceeds and then redistributed from the large media market "Haves" to the small media market "Have-Nots" and (2) a "central fund" allowance realized from national broadcast contracts, merchandise sales, the MLB cable network, and MLB Internet properties but split evenly among all 30 franchises.
So, what exactly have the A's done with the $50 million-dollar-a-year allowance Uncle Bud gives them each year to spend on players? They certainly haven't spent it on major league free agents; that's for sure. Since the A's new owners arrived, their payroll actually has fallen. It totaled $62 million on Opening Day in 2006 and $55 million on April 6, 2012. And perhaps, for this reason, Forbes' calculates that in 2011, the A's owners netted a $15 million dollar operating profit-- $5 million more than the supposedly rapacious Yankees.
Sure, the Yankees spend 3.5 times as much on their major league roster as do the A's on theirs ($197,962,289 vs. $55,372,500 in 2012.) However, the surplus expenditure does not purchase them either a proportionate advantage in roster talent or yield them an equivalent boost in on-field performance. That this benefits the Yankees, only their most dogmatic fans would dispute. Among the advantages, the Bomber's $200 million dollar payroll enables them to retain star veterans, to acquire premiere free agents, and to squander resources on boondoggles like Kei Igawa and Carl Pavano without it transfixing their roster.
However, the Yankees' extravagance avails them far less than most people assume and less still than the linear correlation implied by Moneyball's premise. According to Ranjit Dighe, an economist at Oswego University, the Yankees actually receive no marginal benefit, at all, from each dollar expended above $150 million. See also. More germane still, in the book Wages of Wins, Stanford economists, David Berri, Martin Schmidt, and Stacey Brook conclude, using a complex regression analysis, that over the eighteen Major League seasons between 1988 and 2005, payroll discrepancy accounted for only 18% of clubs' win variation. A significant correlation but hardly a determinative one. The .18 coefficient also doesn't indicate whether spending reaps wins or whether winning spurs teams to spend more or whether some third variable like, number of under-30 free agents signed, subsumes both.
Now, compare, by contrast, this to the NBA and NFL, two leagues where salary caps control salaries and impose a relative spending parity among teams. Over the last thirty (30) years, only nine (9) different franchises have claimed the NBA title, only fourteen (14) in the NFL.
The converse is true for the Yankees, the team, not coincidentally, that signed him to a $120 million dollar contract just shy of his thirty-first birthday. Between 2002 and 2007 (the next six years of Giambi's career), his average annual salary escalated nine-fold to $15.23 million dollars while his mean wOPS fell to 138.
The inefficiency is emblematic. And it likely explains why the Yankees have failed to recapture the supremacy their core of young, cheap, prolific and homegrown players conferred for a brief interval in the late 1990s (Jeter, Williams, Rivera, Pettitte, Posada). The talent available each year on the open market is too sparse, the salaries, too high, the contracts, too burdensome to enable even a team willing to spend $200 million dollars on Major League salaries to assemble a championship caliber team through free agency alone. Indeed, the Orioles' failure during this period to keep pace with the Yankees through expensive, high profile free-agent acquisitions and the decrepit, calcified roster they accumulated in the process offers both a vivid illustration and cautionary example.
THE VILLAIN AS HERO
THE DIAMOND REPUBLIC
1 Evidently, only the Red Sox win because of ingenuity. Sorkin postscript informs us as follows: "Two years later the Red Sox won their first championship since 1918 embracing the philosophy championed in Oakland," Sorkin's postscript informs us. Their $125,000 payroll that year had not the slightest influence.↩
2 Both the Red Sox and Cardinals won two titles over this period but ranked 2nd and 11th in payroll, respectively, on both occasions.