An Efficient Market?

By cgilroy

My uncle is a communist.  He is also a Yankees fan.  I guess we are all full of contradictions, but this is one I don’t think I’ll ever be able to square away.  How can a man whose guiding principles in life center on the overthrow of the bourgeoisie, capitalism and all its associated strictures be such an ardent supporter of Steinbrenner’s ruthless crew of financiers?  How can he stand behind the main cause of salary inequality in baseball—the team that makes competition between New York and Tampa Bay as impossible as a game of nuclear war between the U.S. and Iceland?
 

Even their GM is named Cashman for goodness sake.
 

All these questions came to mind this week after reading through Maury Brown’s insightful piece on the 2007 year-end payroll numbers from MLB.  In comforting analytical tones Brown sets out to determine which teams spent efficiently (and inefficiently) this past year as measured by wins.  Unsurprisingly those free-spending Yanks came in last in efficiency, spending roughly seven times more per marginal win than their division-mates in Tampa-St. Pete.

Congratulations goes to the Rockies and Indians who each performed best in their respective leagues in cost per marginal win while still making the playoffs.  They also give me hope that profligacy is not the only way to get business done on the diamond.
 

But there’s still nothing sexy about smart moves made with marginal players and young talent.  It’s much more fun for the fans when you land famous free-agents with their attendant hefty contracts.  This is a habit of sad desperation. Once a team is saddled with the flashiest player on the market, the situation, in the words of Norman Mailer assessing Tom Wolfe’s novel A Man in Full:
 

“resemble[s] the act of making love to a three-hundred-pound woman. Once she gets on top, it’s over. Fall in love, or be asphyxiated.”

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