A Good Way to Make a Living (Baseball’s 2011 Payrolls, Part 1)

(I am reporting the Red Sox payroll at roughly $168 million, instead of the roughly $162 million reported by USA Today. For reasons unexplained, USA Today chose not to include Carl Crawford’s $6 million signing bonus in the Red Sox’s payroll calculation. Given that the Red Sox have to pay this bonus to Crawford, and that Crawford’s 2011 salary is about $6 million less than his annual salary for 2012 – 2017, it’s clear to me that this $6 million represents part of the Red Sox’s 2011 payroll, regardless of the label placed on this payment by Theo Epstein and the Red Sox brain trust.)

Predictably, most analysts have focused on the fact that (surprise!) the Yankees have the biggest payroll in baseball.  The Yankees pay more than $200 million combined to the players on their 25-man roster, which they have done for 5 of the last 7 years.  No other team has ever had a payroll above $200 million, or even above $175 million.

But we’ll focus on the Yankees’ payroll in Part 2 of this series.  Here in this part, let’s focus on other matters of interest.

For example: payroll growth.  Average team payroll grew by a modest 2.74% between 2010 and 2011.  But since 2004, the average team payroll has grown by about 35%, around twice the rate of inflation.  Baseball is still a very good way to make a living (assuming of course that we’re talking about salaries in the major leagues, since minor league salaries haven’t moved substantially since the invention of movable type).

In case you were wondering, the growth in major league salaries is not purely a matter of rich teams paying gobs of money to rich players. In fact, the growth in baseball payrolls is nearly equal for rich and poor teams alike.  Since 2004, the 10 teams with the largest payrolls have seen their payrolls grow by an average of 34%.  But the 10 teams with the smallest payrolls have seen their payrolls grow by an average of 31% during this same period.  (Note: for this calculation, I’ve compared the teams at the top and bottom of the payroll list in 2004 to the teams at the top and bottom of the payroll list in 2011.  The teams on these lists in 2004 are not necessarily the same as the teams on these lists in 2011. One extreme example: the Detroit Tigers were a bottom 10 team in 2004 and are a top 10 team in 2011.)

From these figures, you might guess that individual baseball teams have experienced similar rates in payroll growth since 2004.  But you’d be wrong.

The chart above shows the percentage growth in the payrolls of each team over the last 7 years.  The second percentage column shows the percentage difference between each team’s current payroll and their payroll back in 2004.  The third column takes a slightly broader view, and compares each team’s average payroll in 2004-2006 to the average for the period 2009-2011.  But no matter which way we look, the three teams with the fastest growing payroll over the last seven years are (in order) the Milwaukee Brewers, Detroit Tigers and Minnesota Twins.

This is (I think) one of the most remarkable trends in baseball payroll growth over the last seven years: the bulk of the fastest growing payroll teams are located in the Midwest — not just the Brewers, Tigers and Twins, but also the White Sox, Reds, Cubs and (stretching our definition of “Midwest”) Rockies.  (Credit to Rob Neyer for pointing out the growth of payrolls in the Rust Belt.)  Unfortunately, central division teams like the Astros, Royals and Pirates have not shared in this growth. As a result of the uneven growth in payrolls from team to team, we see substantial gaps in the payrolls of teams in nearly every division in baseball.  I will address these gaps in part 3 of this series.

If you’re more interested in the short-term, the Texas Rangers had the biggest percentage gain in opening day payroll from 2010 to 2011: a whopping 67% increase.  Just imagine if they’d also signed Cliff Lee.  The second-biggest increase belongs to Vernon Wells the Angels of LA/Anaheim, with third place shared by the normally frugal Pittsburgh Pirates and Oakland A’s.  At the bottom of this list are the KC Royals, with a payroll nearly cut in half from 2010, and the Tampa Bay Rays (a team that may not be rebuilding but looks like they’re rebuilding from these numbers).

Ah, but you say this is a Yankees blog.  OK.  Tomorrow we’ll look at the Yankees, whose free-spending ways threaten to destroy baseball as we know it.  Or maybe not so much.

10 thoughts on “A Good Way to Make a Living (Baseball’s 2011 Payrolls, Part 1)

  1. So the Yankees aren't an evil franchise that just buys its way to success? That small market Red Sox team seems to be doing pretty well for itself too

    • If the Yankees are Dr. Evil, then the Red Sox are Mini Me. As a Red Sox fan, I have no problem saying that we (along with the Phillies) have joined the Yankees to create an axis of evil. Lol. Great piece Larry.

  2. I don't really like the USA Today numbers either. They don't take into account a team paying the salary of a member of another team because of a trade (Astros paying Oswalt, etc.) or released players (Mets paying Perez or Castillo).

    They do, like Cot's and MLB for the Competitive Balance Tax, average a bonus over the length of the contract. That's why Crawford's 2011 salary is listed as it is.

    • Makes sense. Except that the entire bonus to Crawford is being paid this year. And Crawford's 2012 salary is just about equal to his 2011 salary plus his "bonus". Give the Sox credit; they know how to play the game. But since we're trying to examine "real" payrolls here, I think Crawford's 2011 bonus should count 100% in 2011.

  3. Excellent as always. Just curious, do you know how baseball's increase in salary/payroll compares to the other major sports? People seem concerned about baseball (contraction, etc.), and while I know that's ridiculous, I wonder how baseball compares to the other sports.

    • I have no idea how it compares to football, but given the NBA's salary cap structure and financial issues, I would assume baseball salaries are growing much more steadily than basketball salaries. That's just an assumption though.

    • An interesting question. I don't have the figures at hand, and based on a quick internet search, it does not appear that anyone else has them at hand either. I may try a more thorough search later.