We can’t do the same thing the yankees do. Given the economics, we’ll lose. -Billy Beane
This is the perennial struggle of small market teams in Major League Baseball. Billy Beane, in case you are unfamiliar, was one of the first general managers in baseball to bring sabermetrics into his organization. The quote above specifically details how small market teams cannot compete economically with markets like New York. This was one of Beane’s major motivators into bringing sabermetrics to Oakland. Today, we take a look at the value of different teams in the market and how small market teams attempt to overcome their limitations.
The value of each team in Major League Baseball.
Forbes is one of the premier business publications in America and provides market research for a number of different fields. Here are Forbes’ rankings of Major League organizations based on their team value.
1. New York Yankees ($4 billion)
2. Los Angeles Dodgers ($3 billion)
3. Chicago Cubs ($2.9 billion)
4. San Francisco Giants ($2.85 billion)
5. Boston Red Sox ($2.8 billion)
6. New York Mets ($2.1 billion)
7. St. Louis Cardinals ($1.9 billion)
8. Los Angeles Angels ($1.8 billion)
9. Philadelphia Phillies ($1.7 billion)
10. Washington Nationals ($1.675 billion)
11. Houston Astros ($1.65 billion)
12. Atlanta Braves ($1.625 billion)
13. Texas Rangers($1.6 billion)
14. Chicago White Sox ($1.5 billion)
15. Seattle Mariners ($1.45 billion)
16. Toronto Blue Jays ($1.35 billion)
17. San Diego Padres ($1.27 billion)
18. Pittsburgh Pirates ($1.26 billion)
19. Detroit Tigers ($1.225 billion)
20. Arizona Diamondbacks ($1.21 billion)
21. Baltimore Orioles ($1.2 billion)
22. Minnesota Twins ($1.15 billion)
23. Colorado Rockies ($1.1 billion)
24. Cleveland Indians ($1.045 billion)
25. Milwaukee Brewers ($1.030 billion)
26. Oakland Athletics ($1.020 billion)
27. Kansas City Royals ($1.015 billion)
28. Cincinnati Reds ($1.010 billion)
29. Miami Marlins ($1 billion)
30. Tampa Bay Rays ($900 million)
World Series winners over the last ten years
Today we will primarily focus on the last ten years of baseball so as to not stray too far away from current market sizes and team values. Over the last ten years, World Series champions have included the Phillies, Yankees, Giants, Cardinals, Red Sox, Royals, Cubs and Astros. The Giants were thrice champions. Of those teams, all but the Astros and Royals are top ten in team values. Houston comes in at 11th.
By itself, it is a simple concept that big market teams are able to succeed at the highest level. Especially when there is no hard salary cap in baseball, rather a luxury tax of $197 million. However there are implications of being a small market team that go well beyond just winning the World Series.
Struggling to maintain success
The first and most recent case of struggling to maintain success would be the Kansas City Royals. When Kansas City won the World Series, they had the 7th highest payroll in baseball despite being 27th in team value. This is the common trend with small market teams. The years that these teams have success, they are able to spend like the big teams.
However, the difference is the long term maintenance. Smaller organizations like Kansas City have to build up their teams and organization for years to be able to spend like the Yankees for just one or two seasons. Whereas, the Yankees are able to spend like they do every single year.
Success at the championship series level
To continue the above point, let’s look at the championship series over the last ten years. The Dodgers have the most appearances with five. Following with four apiece are the Yankees and St. Louis. Then, Philadelphia, San Francisco, the Cubs and Detroit are each at three LCS appearances since 2008. Of all of these top teams, only Detroit is outside the top 10 in team value.
Even beyond the championship series, the same trend extends to the divisional series. Point being, success is hard to maintain for smaller market teams. While Cincinnati may go all out to spend a record amount in 2010 and win the division, what happens to the future? For the Reds, it meant a steady decline before four straight years of finding themselves in the basement of the National League Central. In contrast, take a look at St. Louis and Chicago. The down years for these two teams are rarely even last place in the division. When there is a down year, it is soon followed up by a trip to the MLB Postseason.
These larger market organizations have the ability to turn around on a dime. Smaller market teams like Cincinnati and Kansas City have to rebuild for years. If you are Cincinnati the World Series drought is going on three decades.
How to combat the disadvantages
Billy Beane was discussed at the top of this wall of text, and his front office did a rather fine job of combating the small market problem. Sabermetrics play a large part is aiding these teams in building a competing roster, however, the element of surprise is no longer there. Sabermetrics are well on their way to every front office in baseball, thus high-spending teams have begun to compound their immense budgets with statistical analysis.
One idea often floated around is to institute a hard salary cap instead of the current luxury tax. The luxury tax is a limit placed on team spending in which if a team surpasses it, they are to pay a tax. This is different from a cap in the sense that with the luxury tax, richer teams are still allowed to spend past the ceiling.
In the long run, there may never be a true solution for small market teams to compete with New York and L.A. other than moving cities. However, being aware of that issue is something for fans to be conscious of when wondering why the system is not working for their team.