Thank you, Texas Rangers.
Two years ago, I argued in my high school senior thesis: "Although Major League Baseball's financial system creates a revenue advantage for teams, lower budget organizations can still contend by employing superior management."
Exhibit A to my thesis: the New York Yankees. The year I wrote my thesis, the Yankees and their $200 million payroll missed the playoffs, feeding perfectly into my "Money Can't Buy a World Series" mantra. I contended despite their significant financial advantage, the Yankees were crippled by poor spending habits.
Then those Damn Yankees went out and won a World Series.
I conducted 120 hours of research, corresponded with MLB commissioner Bud Selig and Braves GM Frank Wren and wrote a 27-page research paper. The Yankees won their 27th World Series championship and spoiled everything.
So honestly, I felt a little vindictive pleasure when the Texas Rangers bested the Bronx Bombers in the ALCS. I enjoyed watching the Rangers, whose $55.2 million payroll is fifth lowest in baseball, beat the team with the highest budget.
The Rangers' win demonstrates that despite baseball's financial imbalance, the sport still maintains a competitive equilibrium. The team's first World Series berth continues a trend of parity in Major League Baseball.
Those 120 hours of research taught me that 23 different teams have competed in the World Series during the past 20 years. Analysts at Johns Hopkins University found that despite increasing payroll gaps, the gulf between the best and worst teams has actually decreased from 1901 to 1999. Professors at the University of Iowa concluded that there was only an 18.32 percent correlation between payroll and winning percentage. Clearly, something beyond money determines success.
One primary factor is luck. Mathematician Peter Palmer computed that "in a five-game series, the worst team in baseball will beat the best about 15 percent of the time." In the playoffs, where the teams are more equally matched, the outcome is even more random.
Bill James, senior advisor to the Red Sox, attributes the parity to the world's "negative momentum," or the tendency for psychology "to pull the winners down and push the losers up." Essentially, the top teams suffer from complacency, while the bottom teams more passionately strive to get better.
Smaller teams are able to capitalize on baseball's inevitable luck and "negative momentum" through perceptive management. Michael Lewis outlines this logic in his renowned book, Moneyball, which chronicles the success of the Oakland As despite their severely strained budget. Oakland general manager Billy Beane used sabermetrics, an objective mathematical analysis, to find and exploit market inefficiencies. With four division titles in six years, it seems Beane must have been doing something right.
Statistics are not the only way to beat the system, though. The 2008 Tampa Bay Rays made it to the World Series with the second-lowest payroll in baseball. When former Goldman Sachs partner Stuart Sternberg became the principal owner of the Rays, he brought with him an army of Wall Street gurus. The front office applied its business approach to baseball, striving to buy players low while selling high.
Each of these teams employed different strategies but they all became contenders because of their innovative management styles. Baseball is peppered with examples of low-budget, high-performance teams. The Minnesota Twins, Arizona Diamondbacks, Colorado Rockies, Milwaukee Brewers and now the Texas Rangers have all experienced recent postseason success despite a monetary disadvantage.
I have learned my lesson, though. I will never underestimate the power of money.
A financial handicap is often too overwhelming for teams to overcome. In his response to my letter, Frank Wren wrote, "I think that the current system allows most teams to compete, but makes it difficult for small market teams to compete over time. It is next to impossible for them to keep their team together long enough to develop a winning tradition."
I did not include that quote in my original thesis but I should have. Wren's point is too important to ignore. Money often breeds money, and more money often means more wins. You do not have to know baseball to know people can win because of their wallet. We all know the smallest teams can do everything right and still lose. But there are also times when they will win. My thesis does not argue the poor will succeed. It simply argues that they can.
So thank you, Texas Rangers. You reminded us that while money can sometimes buy success, it still can't guarantee it.
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