Does spending more money = more wins?
May, 2, 2012
By Jordan Brenner | ESPN.com
John Russell/NHLI/Getty ImagesIn cap-bound hockey, spending on players such as Ryan Suter and Shea Weber really matters.This is the first of a three-part series from ESPN the Magazine's "Pay Dirt." The full feature is available in the current issue of The Mag's Money Issue.
It’s tough to follow the money in sports, so The Mag commissioned the Wharton School at the University of Pennsylvania to discover the relationship between spending and winning in the NFL, NBA, MLB, NHL and English Premier League. Six Wharton students and two professors spent 250 hours studying exactly how money is used to gain an edge in sports. They used a technique called regression analysis to estimate how changes in spending at certain on-field positions would positively or negatively impact how much a team won. The research probed how reallocating player salaries impact performance, whether that relationship changes from sport to sport and how teams can spend smarter than their competition. Armed with Wharton’s data, we learned nine important lessons.
Lesson one: Moneyball still works
Perhaps Wharton’s most surprising finding was that there was a smaller correlation between spending and winning in deep-pocketed baseball than in cap-bound hockey. While many teams have co-opted A’s GM Billy Beane’s Moneyball strategy, other market inefficiencies linger, like player development and pre-arbitration deal-making. “The Rays are a great model,” says one GM about the low-budget team that has averaged 92 wins the past four seasons. “It’s much more difficult to sustain success with a smaller payroll, but if you put the right parts together, you can have a three- to-five-year run.”
Lesson two: EPL rewards spenders
Nothing stood out to the Wharton professors like this English Premier League truism: “If you can’t pay, you can’t compete.”
The coveted top four spots in the Premier League standings belonged to the top spenders in six of the 10 years studied. With no cap on players or teams, the war chests of Arsenal, Chelsea, Liverpool, Manchester City and Manchester United create a vast disparity between themselves and the other 15 clubs.
This strong correlation between salary and success (and a long season that mitigates the randomness seen in low-scoring tourney upsets) also led the researchers to conclude that team performance is actually easier to project in soccer than in the other sports.
Lesson three: A lot of spending goes a little way in the NFL
Unlike world football, the NFL shows an extremely weak correlation between spending and winning: There’s no formula, and the best talent has been hard to pay for. Increasing team payroll by 10 percent yields just a quarter of a win. Spending it on offense nets only 7.9 extra points per season; on defense, it nets 2.2 fewer points allowed.
Throw your money at quarterbacks or cornerbacks, linebackers or left tackles. It doesn’t much matter. Wharton found that dedicating more payroll at any one position proved statistically insignificant to winning. And salary isn’t indicative of performance. Rams QB Sam Bradford made $26.8 million last season, including bonuses; Giants QB Eli Manning made $9 million. Manning and his team were just slightly better.
Vikings GM Rick Spielman says he isn’t shocked by those results. In the other sports, especially baseball, star pitchers or power hitters can dominate individual matchups. Football relies more on coordinating the efforts of everyone on the field. “All 11 guys have to work together as one on every snap,” Spielman says.
Plus, more than in any other sport, the frequency and randomness of injuries can destroy even the best-built teams and throw off any slight relationship between salary and success. Put another way, when you’re down to your backup QB, that’s a problem no amount of money can solve.