Baseball's New Parity: A Myth

Despite Bud Selig's claims, the success of underdogs in this year's MLB playoff race is a fluke.

Allen Fredrickson/Reuters

Interviewed at the 2014 MLB All-Star Game, retiring commissioner Bud Selig was asked what part of his legacy he’s most proud of. Selig cited a new age of "competitive balance," commonly referred to as parity—meaning that teams who spent large portions of the previous two decades as also-rans now have a chance to not only make the postseason, but make deep runs into October.

It’s a nice thought. There are 30 MLB teams, and for the most part recently, playoff success has been limited to only a tiny subset of that 30. A break from this group of traditional elites would be refreshing. And happily, at the beginning of the final month of the regular season, there are plenty of underdogs to root for:

  • The Pittsburgh Pirates, who broke a two-decade streak of futility in 2013, are less than two games out of a playoff spot.
  • The Milwaukee Brewers, who lost star slugger Prince Fielder to free agency after the 2011 season, currently lead the race for the second National League wildcard spot.
  • The Oakland Athletics, despite having a perilously low payroll and playing in a stadium where raw sewage regularly overflows into the dugouts, hold a commanding wildcard lead.
  • The Kansas City Royals, a team that has not been to the postseason since 1985, hold a tenuous division lead over a well-heeled Detroit Tigers squad.

Couple the success of these underdogs with the futility of traditional powerhouses (the Red Sox sit in last place in their division, the Yankees are long-shot wildcard contenders, the Phillies never rebuilt after their championship season, and their past-their prime core sits firmly in last place), and Selig’s parity quote makes all the sense in the world.

It’s also wrong.

It’s a lot of fun rooting for an underdog, and the schadenfreude of the Red Sox first-to-worst 2014 probably is fun too. Yet 2014 is anomalous—baseball has not entered an age of parity, and in fact the gap between rich teams and poor teams has widened.

The MLB season is 162 games long. The playoffs, at their absolute longest, stretch 20, and no single series lasts more than seven games. As a result, while the best teams almost always end up winning over the much-longer regular season, the playoffs are much more of a crapshoot where a couple hot weeks can crown an inferior team as champion (the 83-78 2006 Cardinals say hello). It’s likely this randomness that Selig counts on as a source of parity—with the addition of a second wildcard team in 2012, one more also-ran per league has a chance to do damage in October.

Yet if that’s the evidence Selig is counting on, it’s misdirection. Any proper measurement of parity should target the much-longer regular season to ensure the metric is not skewed by the small sample size of October baseball. And by those metrics, the news is grim for any fan of a small-market team.

Let’s go back to 1990 to give ourselves a quarter century worth of data. For ease of analysis, we’ll make a couple key changes:

  • We’ll use winning percentage (wins divided by total games played) as our metric for success. This gets us around the fact that differing numbers of wins are required to qualify for the playoffs each year as well as the fact there are differing numbers of playoff spots thanks to the introduction of wildcards over this time period. Further, this allows the strike-shortened seasons of 1994 and 1995 to enter into the sample, as well as the as-yet incomplete 2014 season (data current through end of September 1 games).
  • The top 10 and bottom 10 payrolls are calculated on a by-year basis, which accounts for ownership changes within the same franchise.

Anyone interested in further analysis can click here.

This ultimately gives us this graph:

MLB Win %, 1990-2014 

… which shows that since 1990, there has not been even one season where teams in the bottom third of MLB payrolls combined to play winning baseball. At their best, they combined for a .496 winning percentage in 1990—the first year of this sample, and where the difference between rich teams and poor teams was the smallest.

Meanwhile, we also see that over the same time period, there has been only one season where the top third of MLB payrolls lost most more times than they won—again, very early in the window, well before the rich/poor gap widened. Certainly, there’s no shortage of individual team seasons in both lists where a low-payroll team overachieved or a high-payroll team underachieved, but the aggregate trend is clear: Teams with higher payrolls consistently win more than their lower-paid counterparts.

Further, the distance in salary between the top third and bottom third grows ever wider. Here’s the same timespan, only plotting team payroll rather than winning percentage:

MLB Payrolls, 1990-2014

From 1990 to 2014, the top 10 highest-paid teams increased their payroll well over 600 percent. The bottom 10 also increased, but only 399 percent. In other words, not only do higher-paid teams perform better, but the bar to become a higher-paid team has become increasingly difficult to clear.

It is true that more teams make the playoffs now than in 1990, a year where there were only four divisions and no wild card spots. Contrast that with 2014, which will field 10 playoff teams. Thus, you could argue that even if it’s more difficult to become a high-paid team, the lower barrier to playoff entry makes up for the spending difference.

Alas, that’s not the case. Since 1990, the average winning percentage of a playoff-bound team is .583. Since the first wildcard was introduced in 1995 (technically 1994, but a labor dispute ended the season prematurely), that winning percentage is also .583. Even in the two years since the introduction of the second wildcard, the average winning percentage remains a strong .578. Simply put, only good teams tend to make the playoffs, and it’s very difficult for a low-payroll team to be good. While it’s true that money doesn’t buy championship rings, money does at least get your team into the jewelry store.

Want more evidence? Since 1990, only 2 teams (the 1990 Reds and 2003 Marlins) have won a World Series while in the lower third of MLB payroll. In the same time period, 15 teams in the top third took home the trophy.

None of this means fans of the Pirates or Athletics should abandon all hope, but it does mean the success of their team is actually quite remarkable. It also means that Selig should know better when he cites parity as his legacy. There are many aspects to his legacy, but parity is not one of them.