On Payroll, Winning, and the Pohlads

11/13/2024 08:00 AM

Advice for the Twins' next owners: spending doesn't guarantee success, but championship teams almost always spend.

Much of the discourse surrounding the Twins for the past year has been centered on the payroll. While the Minnesota franchise has never been described as a big spender, ownership's decision to reduce payroll last offseason — despite an energizing playoff appearance fueled by a strong roster filled with promising young players — painfully struck a nerve with the fan base. Frustration grew and the criticism became more biting as a short-handed roster collapsed down the stretch.

The dialogue on the topic of team spending was hardly limited to Twins Territory. If you stayed plugged into baseball after the Twins' season ended, you surely picked up on the payroll discourse surrounding the World Series. The Yankees and Dodgers' payrolls in 2024 totaled about $550M together, the largest combined total for World Series participants in MLB history, and only about $42M less than the combined payrolls of the entire American League Central division.

The Yankees ranked second in MLB in payroll last season with $309M, and the Dodgers ranked fifth with $241M, per Spotrac. (The Dodgers' number is somewhat depressed thanks to the deferred payment structures of some of their player contracts, such as that for Shohei Ohtani.)

The average MLB team payroll last season was about $167M, and your Minnesota Twins spent just shy of $131M, which ranked 19th.

Needless to say, this matchup brought renewed attention to the financial disparity that exists among MLB clubs. For some, the fact that these two financial juggernauts were meeting in the World Series showed that baseball's economic model and lack of a salary cap blatantly favor large-market, deep-pocketed franchises. For others, this is a logical outcome you get when owners prioritize winning and financially invest in their rosters instead of padding their bottom lines, and that's a choice available to all 30 franchises and their owners.

Those arguments don't necessarily have to be juxtaposed against one another; there are kernels of truth in both. With that in mind, let's dig into team payroll and its relationship with winning and competing for the World Series. In light of that, take a look back on the Pohlad family's annual investments in the Twins roster.

Does More Money Equal More Wins?

Despite the occasional cries that {insert big market team} "bought" a championship or frequent laments about smaller market clubs' structural disadvantages, rarely is something that straightforward in baseball.

Before he went to work for the MLB Players' Association, Craig Edwards annually analyzed the relationship between team payroll and wins for FanGraphs. In most years the correlation between the two hovered just below r = 0.40, as you can see in this plot I lifted from his 2020 article on the topic:

I completed the same analysis for the recent seasons not included on the chart above and got results generally in line with the previous years:

There is a clear positive relationship — higher payrolls correlate with more wins — but it's hard to argue that it's very strong. This data suggests only about 14 percent of the variance in team wins in a season can be explained by team payroll:

This makes sense. We can all probably think of expensive teams that didn't have good seasons. In 2023 alone, we saw the Mets and their league-leading $343M payroll win 75 games, and the Yankees ($278M) and Padres ($256M) each win 82 games. All three clubs missed the playoffs. Meanwhile, the Orioles spent $71M to win 101 games and the Rays spent $79M to win 99.

That season was particularly extreme in this regard but those examples are not anomalies.

Money isn't close to everything and it guarantees nothing. But it tends to help. Especially if the goal is winning championships, not just regular season games.

Team Payroll and the World Series

Going back to 1984, when Carl Pohlad bought the Minnesota Twins, twenty-four different MLB franchises have won the World Series. Each of the 30 franchises has qualified for the playoffs at least once in the past decade. Those numbers suggest MLB has a good amount of competitive parity.

However, those facts shouldn't be taken to mean that MLB has a level playing field. Across the last forty seasons in which MLB has crowned a champion (the World Series was canceled due to a labor stoppage in 1994), only four teams have won the title with a below-average team payroll, as you can see here:

Those teams were the Diamondbacks in 2002, the Marlins in 2003, the Royals in 2015, and the Astros in 2017.

Importantly, 28 of the last 40 champions ranked in the top ten in team payroll. The Marlins (ranked 25th in 2003) are the only team to win the championship with a bottom-ten payroll.

The upshot? Spending doesn't guarantee success, but championship teams almost always spend — at least to league-average levels, and typically well above that benchmark.

That's held for more than four decades, even while MLB has expanded the number of playoff participants multiple times, adding even more randomness to an already inherently random format.

That increased opportunity for unexpected outcomes should, in theory, make it more possible for low-payroll teams to make serious championship runs, but the Oaklands, Tampa Bays, Clevelands, and Milwaukees of the world (i.e., clubs that routinely run bottom ten payrolls) have repeatedly fallen short in the tournament when they qualify.

You might be wondering, what about Kansas City in 2015 or even the Twins in 1987 and 1991? Each of those teams pushed their payrolls up near or just above the league average in those winning campaigns.

The Pohlad Era

That brings us back to the Twins and the payroll investment the Pohlad family, who have announced their intent to sell the franchise, has made over the years. Here's the same plot, but with the Twins' annual payrolls plotted with the seasonal league average:

Unsurprisingly, given the widely proclaimed "Cheap Pohlads!" perception about the Twins' spending, the club has routinely spent at below-average levels, especially since the mid-1990s. This data indicates Minnesota has had an above-average payroll just six times under the Pohlad's control, and four of those were within $1M of the league average. The two exceptions were 2010 and 2011, the first two seasons after Target Field opened.

Twenty of the seasons represented in the chart ranked 20th or lower in MLB. Cumulatively, the Twins have spent almost $540M less on payroll than the average team since 1984.

There are reasonable arguments that the Twins teams of the late 1990s and mid-2010s weren't competitive enough to merit additional spending. Fair enough.

The counterpoint I'd make is that the payrolls of the 2000s being below average, despite the club having a contending-quality roster, is a particularly egregious bit of cheapskate management that belies any stated intentions trying to win. That's to say nothing of the similar situation last season.

Of course, none of this means a bottom-ten payroll team can't or won't win it all again. It will almost assuredly happen again when someone squeezes the requisite additional pulp out of every dollar. It may even be the Twins. Who knows?

But routinely running a low payroll is attempting an entirely different level of difficulty than most teams face. Unfortunately, it's also often a path that is self-selected. It makes plain that the franchise isn't serious about winning, despite what its leaders may say in public.

Actions speak louder than words, after all.

So that — besting the league average — should be the minimum bar for the next Twins owners to clear, if and when a franchise sale comes to fruition. They'll surely come in saying all the right things about how excited they are to field a consistent winner. We'll find out if they mean it when we see how they spend.

Following the announcement that the team is for sale, I've seen a sentiment from a segment of Twins fans filled with a healthy dose of Midwestern "be careful what you wish for." I acknowledge there's no promise the next owners will be much better. These things are uncertain and it could turn out poorly.

But, I've only focused on payroll spending. I didn't even mention that time they tried to sell the team to an owner who wanted to relocate the club to North Carolina or that time they volunteered to let MLB contract the franchise.

You can count me as ready to roll the dice on something different. Forty-plus years of this experience (and the data) suggests there isn't very much room for the next owners to be worse.

John writes for Twinkie Town, Twins Daily, and Pitcher List with an emphasis on analysis. He is a lifelong Twins fan and former college pitcher. Follow him on Twitter @JohnFoley_21.