MLB: What’s cash got to do with a winning record?

The correlation between an MLB team’s spending and its win total reached a quarter-century low this season

In these Covid-driven times, money doesn’t buy what it used to. Not in MLB, anyway.

The statistical relationship between what a team spent and how many games it won reached a quarter-century low in 2020. The correlation between a team’s payroll and its 2020 win total was an inconsequential 16 percent, the weakest since 1992.

Data illustrating that weakness was abundant. The Tampa Bay Rays, with the majors’ third smallest payroll, won 40 games and claimed the AL East title ahead of the New York Yankees. At a compensation tax level of $265.2 million – nearly three times Tampa Bay’s payroll – New York led 2020 spending.

Of the six division champions, three – the Rays, Oakland Athletics and Minnesota Twins – ranked among the bottom half of MLB spenders. Meanwhile, half of the majors’ 10 richest teams – the Phillies, Mets, Red Sox, Nationals and Angels – finished out of the playoffs entirely.

The 16 percent correlation represented a substantial decline from the 41 percent correlation in 2019. That’s a historically normal correlation for the past 25 seasons.

The last time money had such a meager influence on victories was in 1992, when the correlation only measured 14 percent. The smallest correlation for any season for which reliable payroll data exists was 11 percent, that occurring in 1987.

Although it’s impossible to prove why money was such a small influence in 2020, logic points to the changes imposed upon the game by the pandemic. The shortened season and limited access to opponents – games played only on a regional basis – both are obvious suspects.

Revenue issues driven by the shortened season and absence of fans also are a logical driver. In a normal season, calculation of a team’s spending would be based on its 40-man opening day payroll since that’s the figure on which the roster was constructed.

But because Covid restrictions forced a significant after-the-fact restructuring of team payrolls, it made more sense this season to make the calculations based on each team’s competitive balance tax formula rather than the percentage formula that was negotiated as part of the restart.

The essentially random nature of spending vs. victories could be easily seen. Of the 10 richest teams, only four – the Dodgers, Braves, Cubs and Yankees – ranked among the 10 winningest, the Cubs (34) and Yankees (33) standing ninth and 10th on that list. Meanwhile, three of the 10 poorest teams – the Rays, Athletics and Cleveland Indians – ranked 2nd, tied for 4th and 8th respectively in wins.

The story was the same at the other end of the spectrum. Three of the 10 losingest teams – the Nats, Angels and Red Sox – were among the 10 biggest spenders in MLB. Only four of the 10 poorest – the Kansas City Royals, Baltimore Orioles, Detroit Tigers and Pittsburgh Pirates – were in that low-end group.