Horse First, Then Cart
I’m a bit sleep deprived after a long week in Dallas, but I wanted to make one quick point before heading to bed. I know that the Angels decision to spend big on Pujols and Wilson has caused a lot of people to turn their attention back to the size of the Mariners payroll, and calls are getting louder for the team to spend more money in order to compete in the AL West. I’m not against the team spending more money, but I do believe that we need to understand the actual causation that drives the correlation between a team’s payroll and their record.
It’s easy enough to look at a chart that includes total payroll and total wins and see that there’s a relationship. Teams that spend more generally win more – not always, but usually. It doesn’t take a rocket scientist to understand why this is.
However, that’s a correlation. That the two things are related does not mean that increasing payroll will increase your win total to the degree that the correlation would suggest – that conclusion requires causation, and you have to dig deeper to see the actual effects of increasing payroll on team wins.
In reality, there’s causation that goes both ways. Increasing your payroll does increase your expected winning percentage, but raising your expected winning percentage also raises your payroll. In order to win, you need good players, and good players demand more and more money as they get older. A team that has managed to successfully draft and develop a nice young crop of home-grown stars is going to win first, then see their payroll rise as a result of the success of those players. In that situation, the increase in team salary occurs as a result of the acquisition of talent, rather than the increase in salary causing the acquisition of talent.
This is why you have to be very careful concluding that the Mariners failures of late are because of the team’s decreasing payroll relative to the rest of the league. In reality, the poor decision making of the front office over the last decade has actually had more to do with the payroll going down than ownership getting “cheap”. Because the team drafted poorly and traded away most of the young talent they did manage to develop, the franchise simply hasn’t had many players worth locking up to long term deals that escalate the payroll organically.
Here’s the list of meaningful contract extensions handed out by the Mariners over the last 10 years:
Ichiro Suzuki – 5 years, $90 million
Felix Hernandez – 5 years, $78 million
Kenji Johjima – 3 years, $24 million
Bret Boone – 3 years, $24 million
Franklin Gutierrez – 4 years, $20 million
Mike Cameron – 3 years, $15 million
That’s it – that’s the list. In over a decade, the M’s have only given out a half dozen contract extensions to players they wanted to retain due to their quality performances. What young talent did make it to the big leagues generally failed to develop into players that the team wanted to keep around, and thus, the team has entered into very few payroll-raising contract extensions to keep talent on hand.
Put simply, the Mariners lack of talent has had a significant impact on their payroll – there simply haven’t been good enough players to pay to keep around to keep the team’s overall budget going up organically. And so, without good players to retain, the team was forced to hunt for talent in the free agent market, and we all know how well that has worked out for the organization.
Having a $150 million payroll simply shouldn’t be anyone’s goal. The goal is to accumulate so much talent that you need to raise your payroll to that kind of level in order to keep it all. Not every piece of the roster has to be homegrown, and there’s certainly a spot for acquiring veterans from other organizations through free agency or trade, but history shows that teams who increase their payrolls by trying to buy wins in those markets generally don’t succeed. The winners are the franchises who develop talent through the farm and then invest in long term contracts in order to keep those players around.
The correlation between wins and payroll is real, but don’t make the mistake of believing that the relationship between the two means that raising payroll will lead to substantially more wins. For sustained success, the winning comes first, and then the rising payroll follows.