Organizational Efficientcy - Part 2

To win games a team has to field a team of good players.  How does a team get good players?  By either buying them or developing them. 

Over the last five years, the Yankees have spent almost a billion dollars on payroll.  Yeah, that's a "b" as in BILLION.  Six times the amount their inter-division rival Tampa Bay Rays have spent.  Or almost as much as the 5 lower payroll teams combined.  As seen below, the Yankees spent over $2 million dollars for each of their wins.

Bang for the buck, or how much each win costs a team.  Here's a better article on payroll efficiency at the bizofbaseball that does a better job of explaining how well a team has done with the amount of money spent on payroll.  One of the facts that I've left out of my numbers is the assumption that a team will win at least a certain number of games even when fielding a triple-A team at the major league level.  My numbers just reflect the money spent divided by wins and doesn't factor in the level of talent that money was spent on.

Draft efficiency is the percentage of players drafted who make it to the major leagues.  I think the interesting question to ask here is; do teams with less money to spend on payroll promote player from the minors more quickly?  And of those players promoted, would they have been in the majors on a team with a higher payroll?  What I mean is, Oakland has the highest number of their draft picks reach the major leagues.  Does that mean they draft the best players, or are minor leaguers promoted due to the need to have inexpensive talent to fill their major league roster?

When a team is successful in the draft, it allows them more flexibility in roster composition.  If they have the ability to have a higher payroll, major league ready players can be used in trades to acquire higher cost, and possibly better talent at the major league level.  Or if the are a lower payroll level team, the inexpensive players allow a team to field a competitive, or somewhat competitive team inexpensively.  I think one of the reasons for Boston's recent success is their ability to draft good players while having one of the highest payrolls in baseball.  The use of their top prospects in the majors such as Jacoby Ellsbury, Kevin Youkilis, Dustin Pedroia, Jon Lester, and Jonathan Papelbon, while trading prospects like Hanley Ramirez for Josh Beckett and Mike Lowell allows them to get them most from their payroll investment.

So, which team is the most efficient?  The formula I used to determine the numbers below is ranking each team in the following categories: draft efficiency, payroll efficiency, wins, and attendance.  According to my assumptions and low-level mathematical calculations, I think the St. Louis Cardinals do the best job at running their team and the Seattle Mariners do the worst.  And that sounds about right.  St. Louis has fielded a competitive team over the last 5 years (3rd most wins) while spending slightly above average on payroll, they ranked 3rd over the same period of time in total attendance, and ranked 2nd in the percentage of players drafted who make it to the major leagues.  The Mariners on the other hand were in the top 10 in money spent on payroll while finishing in the bottom 5 in wins.  2008 wasn't a good year for Seattle fans, as the Mariners spent over $100 million to lose 101 games.  Minnesota finished second in the rankings based on their ability to produce wins on a limited payroll, and Oakland was able to tie Boston for third although they are completely different types of organizations in regards to payroll and attendance. 

I don't know if these numbers prove anything or if there's any relevance between drafting and payroll efficiency, and how they impact revenue.  I did think the numbers I found were interesting and worth sharing.