Payroll vs. wins for basketball, football
On the "Wages of Wins" blog, David Berri now posts the results of a salary vs. performance regression in basketball, and another in football. For basketball, they find 15% of wins "explained" by salary, and only 5% in the NFL. I assume this means r-squared; the r's would be .39 and .22 respectively. (For baseball, they had previously found r-squared of 18%, or r of 43%.)
For basketball, Berri takes the analysis a step further, and show the average record for each of the five NBA salary quintiles:
Highest salary ....... $78MM .... 37.8 wins
Quartile 2 ........... $61MM .... 42.5 wins
Quartile 3 ........... $54MM .... 39.7 wins
Quartile 4 ........... $47MM .... 47.7 wins
Lowest payroll ....... $38MM .... 39.5 wins
One surprising thing about this breakdown is that if you do a regression on just the quintiles, you get a negative correlation between salary and wins – and it's minus 39%, exactly equal in magnitude to the positive correlation Berri got for the regression on the full league! I don't think that really means anything important, although it's an interesting coincidence that it worked out that way. And it does mean that the relationship between salary and wins within each quintile must be exceptionally high, in order to cancel out the negative relationship between quintiles.
By the way, commenter Guy presents similar data for MLB playoff appearances (2004-2006) here:
6 highest payrolls ....... 11 appearances .... 1.8 per team
13 middle payrolls ....... 12 appearances .... 0.9 per team
Next 5 lowest payrolls .... 1 appearance ..... 0.2 per team
6 lowest payrolls ......... 0 appearances .... 0.0 per team
This does show a strong relationship between payroll and success. Which means that when Berri says he "really, really believe[s] that money cannot buy love in baseball," he presumably is arguing that for money to buy success, a strong relationship in a chart like the above is necessary but not sufficient.