Do Consistent Payroll Increases Actually Lead to Success on the Field in MLB?

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Do Consistent Payroll Increases Actually Lead to Success on the Field in MLB?

Major League Baseball has lasted this long without a salary cap, and I wouldn't count on the league implementing one anytime soon. There's a lot of money being pumped into baseball thanks to both national and local television deals, and this money will allow all teams to spend like never before.

But should they? Do ever-increasing payrolls actually make a difference, or does it all end up being wasted money?

Maury Brown of BizofBaseball.com has released a chart that helps shine light on the matter. He compiled the final (meaning end-of-year) payrolls for all 30 teams dating back all the way to 1999, and you'd be surprised how many teams went on sustained spending binges.

What we're going to do here is take a look at some notable spending binges and see how they worked out. The only ground rules for this little experiment (with one exception) are a minimum of five straight years of climbing payroll and an average annual increase in the neighborhood of $10 million.

Let's take a look.

 

Anaheim Angels Between 2001 and 2004

The Increase: $49,452,387 to $115,608,112

Average Increase Per Year: $16,538,931

Here's our one exception, as we're only talking about a four-year window. I bring it up simply because it was a pretty good four-year window, and because the average annual increase was huge.

Al Bello/Getty Images
Before there was Trout, there was Salmon.

In 2001, the four most expensive players on the Angels were all former draft picks: Tim Salmon, Garret Anderson, Darin Erstad and Troy Percival. Salmon led the way with a salary of $6.5 million.

Nothing really changed when the Angels won the World Series in 2002. Salmon was still the most expensive player on the team, and a good chunk of the team's money was being spent on former draft picks. They didn't win it all with a team of hired guns.

They went down that road after 2002, though. By 2004, the two most expensive players on the Angels were Vladimir Guerrero and Bartolo Colon, who both arrived in Anaheim via free agency. They established success with their own players, and then they brought in hired guns to sustain it. Such things have been known to happen.

 

Detroit Tigers Between 2001 and 2009

The Increase: $51,101,480 to $139,429,408

Average Increase Per Year: $9,814,214

The most expensive player on the 2001 Detroit Tigers was free-agent signee Dean Palmer, who had a salary of $7.5 million. After him, the most expensive free agent on the club was making less than $1 million. Most of Detroit's funds were being committed to trade acquisitions and former prospects.

The year the Tigers went to the World Series in 2006, their three most expensive players were Magglio Ordonez, Ivan Rodriguez and Kenny Rogers, who were all signed as free agents.

By the time the 2009 season rolled around, Ordonez was still the most expensive player on the team. The most expensive former prospect was Brandon Inge, who was making a third of Ordonez's salary.

The Tigers shed payroll in 2010 and 2011, but they've gone back to their old habits the last two offseasons. Their 2013 payroll could end up topping $150 million for the first time in club history.

A lot of money has been spent in Detroit over the last decade, but it has yet to buy a World Series championship. It has, however, bought two trips to the World Series and two AL Central titles. Mike Ilitch's millions have not been wasted.

 

Chicago Cubs Between 2005 and 2010

The Increase: $76,598,500 to $142,410,031

Average Increase Per Year: $10,968,588

When the Chicago Cubs missed out on the World Series in 2003, only three of their nine highest-paid players were acquired via free agency. Their most expensive players were mainly trade acquisitions, with one former draft pick (Kerry Wood) mixed in.

Wood was the highest-paid player on the Cubs by 2005 with a salary of $9.5 million. After him, five of the team's next seven-highest paid players were free-agent signees. By the time the Cubs maxed out their payroll at over $140 million in 2010, they had five free-agent signees making over $10 million.

Jonathan Daniel/Getty Images
Exactly, Mr. Hendry. Exactly.

For all this money, the Cubs won two NL Central titles in 2007 and 2008 and have crashed and burned in the years since. General manager Jim Hendry was fired in 2011, and the Cubs are now trying to take the long, hard way back to contention under Theo Epstein and Jed Hoyer.

The hope is that they won't make the same mistakes Hendry made, but this winter has seen them hand out a Hendry-esque $52 million contract to Edwin Jackson.

 

Chicago White Sox Between 2004 and 2008

The Increase: $64,615,141 to $113,641,026

Average Increase Per Year: $9,805,177

The most expensive free-agent signing the Chicago White Sox had on their roster in 2004 was Frank Thomas, a former draft pick of theirs. Most of their money in 2004 was being committed to Magglio Ordonez, Carlos Lee and Paul Konerko, two former amateur free-agent signees and a former trade acquisition.

When the White Sox won the World Series in 2005, Ordonez and Lee were gone, and the most expensive true free-agent signee on the roster was Jermaine Dye. He was only making $4 million.

Chicago's roster was still largely devoid of expensive free-agent signees in 2008, as the two most expensive former free-agent signees on the club that year were both making under $10 million apiece. 

This speaks to Kenny Williams' willingness to embrace turnover. In addition to the world title in 2005, the White Sox have generally had an easy time staying relevant in the AL Central under his watch. They've finished lower than third only once since 2000.

 

Colorado Rockies Between 2005 and 2011

The Increase: $32,504,000 to $96,145,529

Average Increase Per Year: $9,091,647

The 2005 Colorado Rockies were a last-place team with very few notable free agents. In fact, the two most expensive free agents on the team were only sucking up $950,000 apiece.

Jed Jacobsohn/Getty Images
Not a bad duo, these two.

Things were largely the same when the Rockies went to the World Series in 2007. Their most expensive free-agent signee was making less than $4 million, and their two most expensive players (Todd Helton and Matt Holliday) were former draft picks.

There still weren't many expensive free agents on Colorado's roster in 2011. Most of the club's money was still going toward Helton, with former draft picks Aaron Cook and Troy Tulowitzki and trade acquisition Huston Street also ranking among the club's highest-paid players.

So though the Rockies became a drastically more expensive team between 2005 and 2011, they didn't do it by handing out absurd free-agent contracts. Clearly, they learned their lesson from the Mike Hampton debacle.

 

Florida/Miami Marlins Between 1999 and 2003, and Between 2008 and 2012

The Increase (1999-2003): $14,650,000 to $63,281,152

Average Increase Per Year: $9,726,230

When the Marlins finished in last place in the NL East in 1999, they had exactly one player making over $2.5 million.

In 2003, they had six players making $2.5 million or more. The bulk of that was going to Ivan Rodriguez, who was signed as a free agent, and Luis Castillo, originally signed as an amateur free agent. The next six highest-paid players on the team were all acquired via trade.

After winning the World Series in 2003, the Marlins did what they do best and went into fire-sale mode. They cut their payroll by a little more than 20 percent, and the highest-paid player on the team was making less than $7 million.

 

The Increase (2008-2012): $27,003,450 to $89,875,132

Average Increase Per Year: $12,574,336

In 2008, the Marlins didn't have a single player making more than $2.5 million, and their roster was littered with dirt-cheap free agents.

Two years later in 2010, they had seven players making over $2.5 million, but only one was a free-agent signee. The players making the big bucks—Hanley Ramirez, Dan Uggla, Josh Johnson—had come up through their system.

Mike Ehrmann/Getty Images
FAIL.

Obviously, much changed in 2012. The Marlins deviated from their normal habits and committed a couple hundred million dollars to Jose Reyes, Heath Bell and Mark Buehrle.

Things didn't work out so well. Ramirez was gone by the trade deadline, the Marlins finished in last place and they proceeded to gut their payroll with their salary-dump trade with the Toronto Blue Jays earlier this offseason.

For all the money they spent between 2008 and 2012, they finished higher than third exactly once. But knowing them, they'll be back in the World Series in no time now that their payroll is super-low and their roster is devoid of talent again. They're in their element.

 

Milwaukee Brewers Between 2004 and 2008

The Increase: $29,599,934 to $90,324,347

Average Increase Per Year: $12,145,082

The 2004 Milwaukee Brewers had one player, former draft pick Geoff Jenkins, making about $9 million. Nobody else was making over $4 million, and the most expensive free agent they had was earning a mere $1.5 million salary.

Things were a little different by the time the 2008 season came. Former draft pick Ben Sheets was making more money than anyone else, but the three most expensive players on the team after him were all signed as free agents. 

It all resulted in a payroll unlike any ever seen before in Milwaukee, but another result was the team's first playoff appearance since 1982. Their payroll was even higher when they went back to the playoffs in 2011, but a good chunk of the money was being spent on developed players rather than free agents.

 

Minnesota Twins Between 1999 and 2003

The Increase: $15,845,000 to $65,318,977

Average Increase Per Year: $9,894,795

When the Minnesota Twins finished in last place in the AL Central in 1999, free-agent signee Rick Aguilera had the highest salary on the team. However, he was gone early in the season when he was traded to the Cubs.

When the Twins won the first of three straight division titles in 2002, their most expensive free-agent signee was only making $1.7 million. Most of Minnesota's money was going to former draft picks and trade acquisitions.

It was more of the same for the Twins when their payroll climbed over $65 million in 2003. Six of their nine highest-paid players were former draft picks, with the other three being trade acquisitions. The only notable free agent on their roster was Kenny Rogers, and he made only $2 million.

So, like the Brewers, the Twins didn't escalate their payroll because they went wild in free agency, but because several of their formerly cheap players had played their way to higher salaries.

 

New York Yankees Between 1999 and 2008

The Increase: $91,990,955 to $222,519,480

Average Increase Per Year: $13,052,852

The 1999 Yankees looked like a decidedly normal team at the time, as not a single player on their roster made more than $10 million, and the most expensive players on their roster were a mix of former draft picks, trade acquisitions and free agents.

Jarrett Baker/Getty Images
Remember when Carl Pavano was a Yankee? Probably not, huh?

By the time 2008 rolled around, the Yankees had 11 guys making over $10 million, and many of them were free-agent signees. Among them were Carl Pavano, Mike Mussina, Hideki Matsui, Johnny Damon and Jason Giambi.

The Yankees did win two World Series in 1999 and 2000, but their success on the field didn't increase along with their payroll following their loss to the Arizona Diamondbacks in the 2001 World Series. They won five straight AL East titles between 2002 and 2006 but were a third-place team by 2008.

Their huge offseason spending spree in the 2008-2009 winter changed that and got the Yankees back to the World Series, but what's odd is that their total payroll actually dropped between 2008 and 2009.

Only the Yankees could go cheap, still be super-expensive and then win the World Series.

 

Philadelphia Phillies Between 1999 and 2004, and Between 2006 and 2012

The Increase (1999-2004): $30,441,500 to $97,380,476

Average Increase Per Year: $11,156,496

The most expensive player the Phillies had on their roster in 1999 was Ron Gant, who came over in a trade from the St. Louis Cardinals in the winter of 1998. The most expensive player after him was Curt Schilling, who first joined the team in 1992.

The Phillies looked drastically different by 2004. Jim Thome and Kevin Millwood, two free-agent signees, were making more money than anyone else, and the Phillies were also paying good money to former trade acquisitions Bobby Abreu, Eric Milton and Billy Wagner.

These Phillies finished in second place in 2004, and the club went on to finish in second in 2005 and 2006 as well. But by then, the Phillies were slightly cheaper, and most of the money was being distributed to a completely different group of players.

As for that group...

 

The Increase (2006-2012): $93,329,232 to $169,728,180

Average Increase Per Year: $10,914,135

By 2006, four of Philly's six most expensive players were former draft picks. When they snapped their long playoff drought in 2007, two of their three most expensive players were former draft picks.

When the Phillies won it all in 2008, their four most expensive players were former draft picks, and one of them wasn't even the team's best player (Chase Utley). They did have some free agents making good money, but the most expensive of the bunch (Adam Eaton) wasn't even making $8 million.

The most expensive player on the Phillies in 2012 was Cliff Lee, who signed as a free agent before the 2011 season. He's one of three Phillies players who made over $20 million in 2012, and several more were on the books for over $10 million.

All of this payroll resulted in a third-place finish and the first postseason-less season for the team in five years. The dollars were there, but some of the players making the big bucks failed to pull their weight.

 

San Francisco Giants Between 2008 and 2012

The Increase: $82,074,873 to $138,149,994

Average Increase Per Year: $11,215,024

The 2008 San Francisco Giants were a team littered with free agents. Barry Zito and Aaron Rowand made more money than anybody on the team, and the only non-free agent among the club's eight most expensive players was Randy Winn, who was acquired in a trade.

Justin Sullivan/Getty Images
Pictured: One guy who is good and two guys who used to be really good.

By 2010, things were different. Three free agents were making more money than everyone else, but three former draft picks ranked among the team's eight highest-paid players. 

These three players—Tim Lincecum, Matt Cain and Brian Wilson—were among the Giants' five highest-paid players this past season, which saw them win their second World Series in three years.

In all, their eight most expensive players this past season consisted of four free agents, three draft picks and one trade acquisition. Not a bad balance.

 

Final Thoughts

In a nutshell, the lesson learned here is that spending money is by no means the evil thing it's sometimes made out to be.

Several of the teams discussed above—the 2002 Angels, 2003 Marlins, 2005 White Sox, 2008 Phillies and both the 2010 and 2012 Giants—won the World Series during their spending sprees. A few others—the 2003 Yankees, 2006 Tigers, 2007 Rockies and 2009 Phillies—went to the World Series.

Fans tend to associate big baseball contracts with free agents. But in many of the cases discussed above, the players earning the most money were either traded for or developed. Some of the teams discussed above got expensive largely because once-cheap players started getting good and started earning the kind of money that's reserved for good players.

This is what all teams should hope for. Free agents are paid a lot of money in one fell swoop. Trade acquisitions and prospects become expensive more gradually. And if they do get expensive, that means a team had the right idea in targeting them in the first place.

In the past, not every team had the financial capacity to stick with players as they started getting more and more expensive. Take a close look at Brown's spreadsheet, and you'll see plenty of clubs that only let the payrolls rise for a couple years before they had to lower their spending again.

This may be less frequent in the near-to-distant future, as television money will allow teams that generally couldn't sustain high payrolls in the past to spend more money on homegrown players and trade acquisitions and to be more active in free agency.

It goes without saying that the new spenders on the block need to be careful, but they shouldn't be frightened of having an ever-increasing payroll. As long as it's kept in check, good things can happen.

 

Note: Salaries and payroll figures courtesy of Baseball-Reference.com.


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