So it's official: the two teams that qualified for this year's League Championship Series with the lowest payrolls are in the World Series.
Houston ($76,779,000), which ranked 12th in team payrolls at the start of the 2005 season, beat the Braves ($86,457,302) and the Cardinals ($92,106,833), who had advanced to the NLCS by beating the Padres ($63,290,833), the team that made the playoffs with the smallest payroll.
Meanwhile, the White Sox, which ranked 13th in MLB in payroll ($75,178,000), won the AL pennant in which they were badly outspent by the other three clubs: the L.A. Angels of suburbia ($97,725,322), the Boston Red Sox ($123,505,125) and of course, the free-spending Yankees ($208,306,817).
And yet, despite their relative parsimony, Houston and Chicago are actually proof that income disparity cannot be overcome with just a farm system and pluck. They prove, in fact, that you can't have much hope of winning the World Series unless you spend a lot of money. Here's a paper suggesting that every 1% of payroll disparity translates to 0.8% higher wins in the AL and 0.7% in the NL.
The White Sox are a great example of this. Here's a prescient article written in 2003 by Jim Laffer -- son of the famous supply-side economist -- which argues that the White Sox were underperforming because they weren't spending enough on payroll. (Check out the complicated table accompanying the piece. Jim's old man couldn't be prouder if he'd written it on a paper napkin.) Sure enough, owner Jerry Reinsdorf went out, got free agents like A.J. Pierzynski, brought the payroll up to a competitive level, and now he's got a winner.
If you measure a team's success by how close it came to the World Series, most teams in the top half of MLB payrolls had better seasons than those in the bottom half. Oh sure, the Indians, Nationals, Brewers, Marlins, and A's contended well into September with puny payrolls. But they were the exceptions -- and they all sat home for the playoffs. Overachievers like the Twins and A's have rarely made it past the first round in recent years, and the below-average-payroll Padres, who were swiftly dispatched in the playoffs, would've been sitting home except that they played in an awful division this season.
Obviously, then, MLB's half-hearted attempt at income redistribution -- taxing the Yankees and Red Sox and giving the money away to the other teams -- isn't working. The sport needs an all-for-one, one-for-all mentality with much broader revenue sharing, like every other sports league. Everyone knows it, and yet year after year we get suckered in by these East Coast commentators who pat the Twins and Indians and A's on the head and say, "See? These teams are competitive even with small payrolls."
Forget "competitive." I want what the White Sox got. But as long as they are spending twice as much on payroll as the Royals, I might as well dream of buying an MLB franchise with my Powerball winnings.
