A week and a half ago I asked whether or not the Yankees bought their title. Given that, as of this morning, 652 people have commented on that, I feel comfortable saying that the subject struck a nerve.
Today noted sports economist Andrew Zimbalist says in the Wall Street Journal that, nope, the Yankees did not buy their title:
It’s a little surprising, but the statistical relationship between a team’s winning percentage and its payroll is not very high. When I plot payroll and win percentage on the same graph, the two variables don’t always move together. In other words, knowing a team’s payroll does not enable one to know a team’s win percentage.
More precisely, depending on the year, I find somewhere between 15% and 30% of the variance in team win percentage can be explained by the variance in team payroll. That means between 70% and 85% of a team’s on-field success is explained by factors other than payroll. Those factors can include front office smarts, good team chemistry, player health, effective drafting and player development, intelligent trades, a manager’s in-game decision-making, luck, and more.
Interesting, sure, but this should all be taken with a grain of salt. For one thing, while Zimbalist is the most famous sports economist out there, he has had his butt handed to him over what appears to be some pretty sloppy work in the past. He obviously knows more about sports business than you or I do, but whether he always uses that knowledge to reach sound conclusions, as opposed to starting with conclusions and using that knowledge in an effort to justify them, is an open question. Indeed, it’s an open question with all supposed experts.
Secondly, while the Yankees have always had money, with the opening of their new stadium, that money is reaching unprecedented levels (another sports economist, Vince Gennaro, thinks that their revenue went up by $100 million based on the stadium alone). Zimbalist talks about how the contracts they buy now may eventually become burdensome as the players age and “will weigh on the team’s ability to acquire other players,” but with the kind of cash flow the Yankees are seeing now, that conclusion is questionable. Sure, there’s some payroll number that the Yankees can’t afford, but there’s no indication that they’re anywhere close to reaching it.
Finally, while the Yankees have long been free agent players, we may very well be seeing something new in the past couple of years in terms of their ability to consistently and effectively use their money to get the right players. Ask yourself: what could have happened in the early part of this decade if the quiet Hal Steinbrenner had been in charge instead of the boisterous and emotional George? Can we say for certain that the Yankees wouldn’t have won more titles if, rather than waste their time with the Jaret Wrights and Kei Igawas of the world, they had done what they did last winter and simply decided to sign the absolute top free agents?
Maybe those are unanswerable questions, but two things are certain: (1) while the Yankees have always had a fat wallet, that wallet is now fatter than it has ever been; and (2), while the Yankees have always spent their money freely, they have only recently really started to spend their money wisely. Each of those factors may radically change Zimbalist’s dollars/wins graph going forward.