Updated: 8/01/96
Pay Vs. Performance in Major League Baseball
To see players, sorted by dollar value
To see players, sorted by 1995 TPR
To see players, sorted by 1995 salary
Explanation
Early this spring, I was invited to give a brief presentation at my alma mater regarding Major League
Baseball salaries and performance. Essentially, I had concocted a subjective,
but reasonably accurate, methodology for comparing player salaries to
their actual performances.
Now, the issue of evaluating player performances is a long-argued pasttime
among baseball fans. And, when salaries are taken into account,
it's essentially impossible to determine exactly what a player
contributed to the financial success of his team (note - I did
not say "contributed to his team's wins").
So, let's first cover the brief assumptions I made in order to
accomplish this task. You'll quickly realize there's a massive fudge
factor to much of this...but then you'll realize it's probably pretty
accurate!
- First, I assumed that a player's primary contribution to
his team's success is through on-field performance. Surely,
there are players who have an attraction greater than their contribution
to team wins (Andre Dawson, Cecil Fielder, Joe Carter), so their actual
value to a given team is greater than my estimate below. A study
I conducted in college, as well as other references, indicates that
winning attracts fans (i.e., money) to a team more than any other
factor.
- Second, I assumed that the value of an additional win for a major
league baseball team is approximately $1,500,000. All of the evidence I
could gather, anecdotal and factual, tells a reasonable person that the
figure is actually higher than $1.5mill, but people tend to
disbelieve the results. For a particularly good reference in this
regard, check out Billions and Baseball by Andrew Zimbalist.
Wonderfully written, full of information. Of course, not every
additional win is worth $1.5mill to every team. It's the law of
averages, folks - but you'd be surprised how inelastic the figure really
is!
- Finally, I assumed that the contribution to team wins by an
individual player is accurately measured. In this regard, I used the
"TPR" ratings calculated by my good friend, Pete Palmer, at Total Baseball. While not 100%
accurate, they are the present standard measurement for measuring true
on-field performance - and they're pretty damn good anyway. Thanks,
Pete!
Thus, by taking a player's actual performance, measured in wins added or
subtracted from the team, and multiplying it by $1.5mill, I came up with
a rough value for what that player contributed to his team's
bank account in 1995, above an average player at his position.
No, I didn't figure replacement values, or anything else that might be
more useful. When you see that Mike Piazza was worth -$5550,
what you really learn is that the difference between what he was paid
($900,000) and what he approximately earned above an average catcher
($6,450,000) is $5,500,000.
Thus, a player like Paul O'Neill, who made $2.85mill and earned
$2.85mill, has a difference of $0.
Get it?
If you have any questions about this - especially where I've been vague
about how I got my figures - please email
me!