Sunday, April 22, 2007

AL/NL payroll gap now even bigger

A couple of months ago, I posted about the AL being superior to the NL. One of the factors was the salary gap – in 2006, the average American League team spent $84 million on payroll, while the National League teams spent only $72 million.

Today, in the New York Times "Keeping Score" column,
Dan Rosenheck notes that the difference in payrolls has increased. The NL moved only slightly, to $74MM, but the American League jumped substantially, to $93MM.

The gap is now almost $20 million. That's about four wins per team per season. (Or maybe it's five. But because of interleague play, let's call it four.) So a National League team that goes 83-79 is probably no better than an American League team going 79-83.

By the log5 method, AL teams should play .524 ball against NL teams this year. That should give the AL a 132-120 record.

Last year, the AL was 154-98. I still think that was just a fluke.

Hat tip:
The Griddle

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At Monday, April 23, 2007 10:47:00 AM, Blogger Tangotiger said...

The payroll to wins converter that I use is this:
So, if you have one that is P=1.25 (Payroll is 25% higher than the other), then the win% is .529 (which implies a 4-5 win gap). This implies however that the higher paying team builds his team the way it normally does: overpaying for free agents. It in effect puts a cap on how much you can win. Even paying double only gives you a win% of .600. At the .500 level, the marginal $ per win is around 4MM.

On the other hand, doing P/(P+1) means you have a .555 win % (a 9 win gap). At the .500 level, the marginal $ per win is closer to 2MM.

So, in a general sense, knowing the payroll of a league does help. But, you still need to know how it built up its payroll that way. And in a league that has the Yankees, which itself accounts for almost half of the gap between the two leagues, that makes a big difference.

At Monday, April 23, 2007 6:15:00 PM, Blogger Unknown said...

Rather than deriving the league strength difference from the payroll discrepancy, why not just use the actual estimations of league strength based on the actual quality of the players? The 30 points of OPS and 25 points of ERA advantage given by Nate Silver translates to a much larger gap in league strength of ten wins per team.

At Monday, April 23, 2007 6:54:00 PM, Blogger Phil Birnbaum said...

Hi, Dan,

The short answer is: because it's easier. I'm not sure how Nate got his numbers, but I know that both methods should give you roughly the same answer.

25 points in ERA is about 4 wins per season per team, which is exactly what the salary calculation gives ... right?

And you can't count both the ERA and OPS numbers, because they're just both sides of the same coin.

At Thursday, April 26, 2007 1:44:00 AM, Anonymous Anonymous said...

And you can't count both the ERA and OPS numbers, because they're just both sides of the same coin.


Phil, this is incorrect. Let's say that AL and NL pitchers are equivalent, but AL hitters are better. What happens when players switch leagues?

Well, hitters will do no better in the AL than in the NL (or vice-versa), because they're facing the same quality of pitching. But pitchers switching from the NL to the AL will do worse because they will face better hitters, and the opposite is of course true as well.

This is the method Nate uses (I did too in devising the THT projections), and it shows a larger advantage than the payroll gap would project. Part of that might be luck, part of it may be that AL teams also spend more money on signing and developing minor leaguers.

At Thursday, April 26, 2007 2:03:00 AM, Blogger Phil Birnbaum said...

Yup, you're right.

But does the same apply if you assume any differences between leagues are evenly split between pitching and hitting? Gotta think about this ... it's late and I'm confusing myself right now.

And I agree with you that if one league has more non-market-value players than the other, the salary calculation will not be accurate.

Perhaps my assumptions were oversimplifications.

Is there a consensus that one league has fewer free agents and more "slaves" than the other?

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