7.11.2023 Major League Baseball’s (MLB) All-Star break is here again. It’s the time of year time when investors trade their quote screens for sunscreen, stash their calculators and grab their Kindles, and leave their mobile phones charging on their bedside tables. The All-Star break is also a time when we at Cresset ask the continual question: Can money buy a winning ballclub? Without salary caps and league parity, MLB is the closest professional sport to a free market; in theory, you get what you pay for. In reality, that’s rarely the case – and that’s why we like writing about it.
This season MLB made monumental moves to make the game more interesting, and faster. The biggest change was instituting the pitch timer. No longer will pitchers take their time kicking dirt and tossing the rosin bag between pitches, nor will batters incessantly leave the batters’ box, adjust themselves and take dozens of practice swings. The moves have worked: the average baseball game this year is down to two hours and 38 minutes, about 25 minutes shorter than last year. MLB has introduced bigger bases and has restricted defensive shifts to avoid a home-run derby in which teams score most of their runs with homers, not hits. In the first week of this season, there were 124 stolen bases on 154 attempts (80.5% success rate) compared to 61 stolen bases on 89 attempts (68.5% success rate) last year.
Our regression model for the American League is upwardly sloping, suggesting that winning percentage and payrolls are positively linked, with the big-spending New York Yankees defining the line. Because the curve is relatively flat, we estimate that each incremental win costs teams about $13 million. Meanwhile, the intercept suggests a .425 winning percentage if you spent nothing, although Oakland, Kansas City and the White Sox wish they had that many wins this year.
Tampa Bay Rays
The Rays have been one of the best teams in baseball over the past five seasons. Stuck in one of the most competitive divisions, they are on pace to win well over 100 games this year. They have delivered with elite pitching and an electric offense. The Rays have the second-best team ERA in the AL and have scored a league-high 133 runs through 19 games. At .323, first baseman Yandy Diaz’s batting average is among the top in the league at the All-star break. Wander Franco, their 22-year-old shortstop, leads AL position players with a 4.2 WAR (wins above replacement) rating.
The O’s have been surprisingly successful this season, jumping into contention for a wild-card spot. They have the division’s best record over the last three months, trailing only the Houston Astros in the American League during that time. The Oriole’s GM Mike Elias, who was formerly the Astros’ scouting director and later assistant general manager during their tanking years, has brought some Astros personnel with him, most notably AGM and analytics guru Sig Mejdal. Perhaps it’s not surprising that the O’s are punching above their weight this year.
The Rangers are delivering Champagne results on a beer budget. One of the reasons is their success with runners in scoring position. The Rangers currently have the second-best performance with runners in scoring position in the history of baseball. They have improved their roster by acquiring better hitters through scouting, trading and free agency aggressiveness. They also kept the right hitters, like Jonah Heim, Nathaniel Lowe, Leody Taveras and Adolis García have all improved significantly from 2021 to 2023.
Kansas City Royals
The Royals are on track for their worst season ever, due in no small part to their troubled pitching staff. They are on pace for 118 losses, which would blow away their previous high of 106 in 2005. The Royals’ slow decline from their 2015 World Series championship is an abject failure of player development. Five years after the Royals were lauded for snagging four college pitchers among the first 40 picks in the 2018 draft, Kansas City is on track to joining the 1962 Mets with the worst rotations in history. Expect Kansas City to be dumping staff going into the trade deadline.
Chicago White Sox
The White Sox have had a tough season. They have the third-worst record and fourth-worst run differential in baseball. They have some injuries, namely Tim Anderson (knee) and Yoan Moncada (back), and of course lockdown closer Liam Hendriks has been away from the team while receiving treatment for non-Hodgkin’s lymphoma. Injuries alone aren’t enough to explain their poor start, though. Jiménez and Robert aren’t hitting, which is a big reason for their struggles. Good thing the hot dogs at Comiskey are good, because nothing else is these days.
The Tigers are struggling. They lost starting pitcher, Matthew Boyd, to Tommy John surgery, ending his season. The Tigers are far from contending and are at the point in their rebuild where they need to completely blow up their roster and bolster their farm system. They only have two top-100 prospects, Jace Jung and Colt Keith. The Boyd injury just makes a bad season worse for the Tigers’ fans, front office, and even their players. Detroit will be undoubtedly dealing into the trade deadline.
Never in our experience with the Moneyball Report have we seen winning percentage virtually decoupled from payroll. But the National League’s regression line is horizontal this year, leaving us to abandon our regression prediction algorithm for determining winners and losers, and adopting a simple cost-per-win ranking for separating this year’s achievers from bums.
With a skinny $83 million payroll, the Reds have been a pleasant surprise this season. They are currently first in the NL Central with a record of 50-41. One reason for their success could be the performance of their rookie players, like Elly De La Cruz and Matt McLain, who have both had breakout seasons. Another factor could be their pitching, with rookie Andrew Abbott performing well enough that his workload may become an issue as the stakes get higher. Overall, the Reds have shown resilience and determination, fighting until the end even in crucial series.
The Marlins have had a strong season so far, reaching the All-Star break with their best record in franchise history at 53-39. One reason for their success could be the performance of their players, such as Bryan De La Cruz, who homered among his four hits in a recent game against the Philadelphia Phillies. Other players such as Jesús Sánchez and rookie Dane Myers have also contributed to the team’s success by hitting home runs. The team’s pitching has also been strong, with starter Jesús Luzardo striking out nine and allowing four hits over 6 1/3 innings in a recent game. Overall, the Marlins have shown resilience and determination, with first-year manager Skip Schumaker stating “there is a lot of belief in that clubhouse that we’re ready to win, and they’ve proved it”. All that with a $91 million payroll.
The Diamondbacks have been performing well this season and are currently tied for first place in the NL West. One reason for their success could be the performance of players like Corbin Carroll, who’s been having a breakout season, and Zac Gallen, who was chosen to start for the National League in the MLB All-Star Game. The Diamondbacks have continued to make position players a priority in the 2023 MLB draft. Expect this team to rally well into the postseason.
New York Mets
For a large-market, high-payroll team, the Mets are a big disappointment this year. At $261 million, the lackluster Mets sport one of the highest payroll tabs in the MLB. The problem: the Mets are already the oldest team in baseball, and most of that age is slated to return even older next season, according to The Athletic. They are paying players 32 years of age and above roughly $186 million this season (not counting salaries for Robinson Canó and James McCann). They’re already scheduled to pay such players $153 million next year. “If it turns out we don’t improve, and we’re looking at ’24, let’s say we’re with a similar team and one year older, for a veteran team, that’s probably not a great place to be,” owner Steve Cohen said recently. Cut bait, Stevie.
San Diego Padres
The Padres have had a difficult season, with a high number of injuries among other challenges. For example, starting pitcher Yu Darvish was out for a start in June due to an illness. Additionally, the team has had some issues with offense, with several key players struggling at the plate. However, the team has shown some signs of improvement recently. Fans can only hope those trends continue.
The Rockies have had a rough start to the 2023 season. They were ranked 22nd in the league for total home runs, despite playing 81 games in the hitter-friendly confines of Coors Field. They were also searching for their first series win after five tries already. According to their statistics, the Rockies are in second-to-last place in on base percentage (OBP), barely ahead of the Milwaukee Brewers.