Thursday, February 09, 2006

spending what it takes to win

this writer has heard any number of rationalizing arguments in this appalling offseason of repeated failures as to why or how the cubs' front office really are spending enough to win -- but, for some justification or another, are not winning. the justification varies, but the gnawing bit is the primary assumption: the cubs spend enough to win -- is that really so? rarely does the argument include a conception of what that level of fiscal outlays would be, in terms of dollars, instead relying on something of a statement of faith in the cubs as a metaphysical entity to "do what's right".

i hope you'll pardon me, dear reader, but after 24 years of futility and a fortune directed to tribune shareholders, such charity of faith in the virtuous intentions of management is difficult for me to muster.

as always, this page would endeavor instead to examine the empirical reality for signs of the truth as we may come to know it. fortunately, some work in this direction has already been done by others. take a scroll down dan agonistes' page and you'll find an analysis of both what it takes to make the playoffs and what the cubs have been up to. it turns out that 2004 is the only year in recent seasons that the cubs spent enough to actually have some reasonable expectation of removing an undersized payroll as an impediment to being a world-series-caliber team.

the detail of agonsites' study was to utilize the lahman database to calculate the payroll of every club in the majors in any given year. a normalized payroll was calculated for each team by simply by dividing total payroll by the major league average. lahman systemically underreports total payroll outlays by ignoring players who do not contribute statistically in that year; this is a relatively minor flaw, however, being distributed among all teams fairly and will be safely ignored in this analysis. agonistes further calculates an efficiency quotient, dividing winning percentage by normalized payroll.

updated for 2005, the cubs past payroll outlays over the last several years look something like this:

year - payroll - normal - eff
1998 - $50.8mm - 1.193 - .463
1999 - $62.3mm - 1.252 - .330
2000 - $60.5mm - 1.090 - .368
2001 - $64.7mm - 0.990 - .549
2002 - $64.7mm - 1.122 - .369
2003 - $79.8mm - 1.126 - .482
2004 - $90.5mm - 1.312 - .419
2005 - $87.0mm - 1.193 - .409

agonistes also studied all the teams that had made the playoffs from 1998-2004 and calculated the average normalized payroll at each level of the playoffs ultimately attained.

  • average normalized payroll of 62 postseason teams -- 1.26

  • average normalized payroll of 14 wildcard teams -- 1.17

  • average normalized payroll of 43 division winners -- 1.29

  • average normalized payroll of 12 pennant winners -- 1.42

  • average normalized payroll of 6 world series winners -- 1.31

  • this is to say that the cubs have only once in the last seven seasons allocated payroll of a sufficient magnitude to reasonably eliminate payroll as an impediment to winning the world series. never have they spent enough on player payroll to meet that of the average league winner in that span.

    moreover, studies are demonstrating something beyond the correlation between winning and payroll -- concurring with agonistes, this sabr report concluded that the correlation is growing stronger with the passage of time, being now noticably stronger in recent years than in previous periods.

    to be sure, there is no doubt that one can find individual examples of cash-strapped teams winning big. but there is little enough reason to care because they amount to rare exceptions proving the rule -- the force of numbers is that which outlines probability distributions, upon which rational people can base rational expectations instead of good-luck wishes, and these analyses at least begin to do that.

    having disposed of the basic claim, we would turn to the justifications -- the most common of which is summed by "its not how much you spend, its how you spend it". this is an argument for not absolute results but for efficiency. someone who evinces this argument isn't talking about improving by every avenue; they are arguing to improve only by utilizing existing resources more efficiently.

    i submit to you, dear reader, that this page is not so choosy -- we just want to win. and if they cubs are the least efficient winner of the world series ever, spending more per win than anyone else ever has, we would be happy with that.

    but it does bear noting that the efficiency quotient calculated above -- where .500 would indicate an average return in wins for payroll expended -- the cubs have been consistently deficient, being frequently among the least efficient spenders in baseball. this is a problem with management. it is management that is responsible for evaluating individual ability, allocating funds to procure sufficient reserves of it and constructing teams to capitalize upon it. the cubs, at least since 1998 -- long before the advent of jim hendry, but certainly also after his arrival in mid-2002 -- have been singularly and systemically dismal in attempting to do so.

    whatever the reason for this underwhelming management -- and this page has an opinion as to where responsibility lies -- what can be deduced is that the cubs, without some fundamental management change, actually should expect to have to spend above the normalized payroll target of their desired level of playoff performance in order to compensate for an efficiency in utilizing payroll that is 15% less effective than the average over the last eight seasons.

    that is to say that the cubs should expect, under current management, in order to remove payroll as an impediment in the pursuit of a national league pennant, to have to spend some 63% over the average major league payroll outlay.

    what does that mean in the context of 2006? if the average team payroll in this coming year as measured in the lahman database lands in the area of $75mm (as seems very likely), the cubs would become truly competitive in the area of $120mm -- which implies an actual payroll outlay approaching $130mm.

    clearly, this club, tinkering with cheap broken arms, is nowhere close to that with little prospect of getting any closer at this very late stage. this analysis serves only, it would seem, to reinforce the gloom that casts its dreary pall over cubdom as a critical offseason crystallizes into a catagorical disappointment.

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