Yankee Liberation Day

Posted on October 10, 2007 by


Monday was Yankee Liberation Day.  With the Cleveland Indians elimination of the New York Yankees, the media’s coverage of the Major League Baseball playoffs can now focus on the other teams still playing baseball.  In case you hadn’t heard, the Arizona Diamondbacks, Colorado Rockies, Cleveland Indians, and Boston Red Sox still have a chance to win the World Series. 

So as we get ready to watch the league championship series, I thought I would offer a few observations about baseball. These include an examination of payroll and wins, competitive balance, Bill James, and why playoff teams almost always make you sad.

1.  Money can’t buy happiness in baseball.

This is a story we told in The Wages of Wins, and one we have repeated in this forum a few times.  Let’s update this story with the following two observations:

– The combined payroll of the Rockies, Diamondbacks, and Indians was $168,164,183 in 2007.  The Yankees, who as I mentioned aren’t playing anymore, spent $189,639.045. 

– In 2007, relative payroll (team payroll divided by the average payroll in Major League Baseball) explained 25% of the variation in winning percentage.  Or, payroll didn’t explain 75% of winning percentage.  Yes, money is statistically significant. But it doesn’t explain much. 

By the way, from 1988 to 2007, relative payroll explain 18% of the variation in winning percentage.  From 2000 to 2007, the explanatory power is 19%.  These results are quite similar to what we report in the hardcover and paperback edition of the book.

2. Competitive balance has improved

The Noll-Scully measure of competitive balance, which is the ratio of the actual standard deviation of winning percentage to the idealized standard deviation (the ideal is what would exist if all teams were equal in playing strength) was 1.694 in the American League and 1.326 in the National League in 2007. 

Okay, what does that mean? For the NL, this is the third consecutive season where the ratio was below 1.4.  That has never happened before in the entire history of the NL. And in the AL, the level of balance we observe in 2007 is the best (where best is a lower Noll-Scully) since 2000.  From this we can conclude, competitive balance in baseball appears to be improved.

3. The Yankees are still spending

Okay, assuming appearances are as I describe, why has balance improved?  There are many stories one can tell, but I think one story doesn’t seem to work.  And that’s the story I think Bud Selig would like to tell.  Selig might be inclined to tell us that the 2002 labor agreement – which he said addressed the competitive balance issue – should be credited for baseball’s improving balance.  The data, though, says something else.

The 2002 labor agreement instituted a luxury tax.  This tax was designed to reduce the level of payroll disparity in baseball.  Specifically, it was designed to stop the Yankees from spending so much money.

Since the agreement has been enacted the Yankees have spent at least twice as much as the league average every single season.  Prior to the agreement this had never happened.  In sum, the Yankees are spending like no team has ever spent in the history of Major League Baseball.  And all this spending is not producing titles. 

It isn’t even producing teams that are the best in the regular season.  If we look at expected winning percentage (which ESPN notes is derived from Bill James’ Pythagorean theorem of baseball) we see that the Yankees have not led baseball in expected wins any season its payroll more than doubled the league average.  In terms of actual wins, the Yankees have only managed to tie for the lead in Major League Baseball twice.   So the Yankees are spending more and more but not winning more and more.

4. The Best Baseball Stat is RBI

Okay, enough on the Yankees.  Here is something else I wanted to comment upon.

In the October 1 issue of Sports Illustrated was an interesting poll.  SI asked 257 non-pitchers: Which individual hitting stat is the most meaningful? 

The choices were : Runs Batted In, On-base percentage, Batting average, OPS, and Runs. 

Here are the results:


On-base percentage…19%

Batting average …13%

OPS… 11%


Now this is not a poll of 257 guys in a bar.  This is a poll of people who actually play, and supposedly know, the game of baseball.  But this group claims RBI is the most important stat.  And more players picked batting average over OPS.

Ferdinand Lane, the biologist profiled by Alan Schwarz in The Numbers Game, must be rolling in his grave.  It was Lane who developed an earlier version of linear weights in the first years of the 20th century.  And it was Lane who described batting average as “worse than worthless.”  Who would think that nearly 100 years later, 13% of baseball players would still consider batting average as the most meaningful statistic? 

Speaking of RBIs, Lee Panas – who has the Tiger Tales blog – examined top RBI men in baseball history who were not actually adept at creating runs.  According to Panas, of baseball players who posted 100 RBIs in a season, Vinnie Castilla in 1999 was actually the least productive (creating 34 runs below average).  I think the work of Panas (and of course many, many others) indicates that RBI is not the most meaningful stat.  But it’s odd that many baseball players disagree. 

5.  More on Bill James

More jumping around…

Yesterday I posted a lengthy comment on the column Bill James wrote this past weekend.  

In addition to commenting at The Wages of Wins Journal, I also asked my fellow sports economists to offer some thoughts.  Stefan Szymanski – who has written an immense amount on competitive balance (perhaps even more than Marty or me) – offered this thought via e-mail (which he said I could quote):

“What you should say is that far from the “perfect balance point” being an under-researched area, it has in fact been the most researched issue among academics (several articles now review all the contributions on the issue). Of course, the real point is probably that no one cares what the academics think about this.”

Skip Sauer of The Sports Economist (where I occasionally write), offered two posts on Bill James yesterday.  First he offered a lenghthy comment on the column, which included the following statement:

One tentative conclusion from people who have been thinking about this issue for some time (i.e. most of us), is that while competitive balance is clearly essential in some degree, the payoff function around the optimum may be really flat. The two most successful leagues in the world, the NFL and EPL, have vastly different degrees of balance, suggesting other factors are likely much more important in generating fan interest.

And then later Skip offered a shorter post which noted:

Many in the media, and Bud Selig, but not Hal Bodley, are singing the praises of “parity,” as if the shrinking gap between the best and worst clubs this year is responsible for MLB’s record attendance. I’m on the record (podcast, at 2:00 mark) as being skeptical of this claim. As I state, I’ve “looked at the data” but that is no substitute for a careful, sustained research effort on the question. The consequences of tinkering with the rules of the game and the rules on the business side are potentially serious. James is right that the question of parity in baseball should be, will be given close attention in the coming years by baseball researchers, and even baseball professors, as Bloomberg Radio host Tom Keene described me last week, twice!

In addition to agreeing with Skip, I want to call attention to how he made his argument.  Not once did Skip say anything like (and I have seen language like this in the comments posted in this forum) “we have proven the following” or “the work in sports economics completely destroys the argument of Bill James.” 

No, Skip spoke like the brilliant scholar that he is.  In the first quote he notes a “tentative conclusion” that “most of us” have been “thinking about.”  In his second post he notes that he is “skeptical of the claim.” 

Skip also noted yesterday that there is much about competitive balance we don’t know.  And of course that’s true of sports economics (and while were at it, economics in general).  

Still we keep writing and searching for additional “tentative” conclusions.  And as we find something, we pass it along for your enjoyment (or some such sentiment).

6.  Fans of playoffs teams should be prepared to be disappointed.

Okay, one last thought and I will close this rather lengthy post. Major League Baseball expanded its playoffs in 1995.  Since then, eight teams have played post-season baseball each year.  And surprisingly, 87.5% of all playoff teams since then have finished their year with a loss.   Yes, nearly 90% of playoff teams (and their fans who are living their lives through their baseball team) enter the off-season as losers. 

Of course there is a simple explanation behind this stat.  Only one team gets to be the champion.  So seven of the eight team (or 87.5%) have to lose. 

I bring this up to make this point: Unlike fans of the Yankees, most baseball fans do not get to see their teams in the playoffs each season.  I have only seen the Tigers play post-season baseball three times in my life (1984, 1987, 2006). Although most fans of the teams left in the playoffs are likely to be sad in the end, enjoy seeing your team play in October.  It may not happen again soon.

– DJ

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