The Volokh Conspiracy - Are the Red Sox Evil Empire Jr.?

Sports Illustrated columnist John Donovan claims that the Red Sox are becoming like the Yankees, trying to spend their way into championships. If Donovan attends any games at Fenway Park next season, he may want to go incognito:).

More seriously, there is a small kernel of truth to Donovan's claims. Over the last 3 years, the Red Sox have become the second-highest payroll team in baseball. However, they are still not in the same class as the Yankees when it comes to shelling out the dough. This year, the Yankees' payroll was a whopping $194 million, some 62% greater than the Red Sox no. 2 ranked payroll ($120 million). Perhaps even more telling, the $74 spending million gap between the Yankees and Red Sox was almost exactly the same as that between the Red Sox payroll and that of the perennial small market doormat Kansas City Royals ($47 million), one of the five poorest teams in major league baseball. Thus, the Yankees' payroll edge over their closest competitors is comparable to that of the Red Sox over the worst-off teams in the majors.

That is not to say that the Yankees succeed through spending alone. Obviously, they could not win without making at least somewhat reasonable decisions about how to spend their money. Still, the Yankees' having $3 to spend for every $2 available to the Red Sox is a very large advantage for the Sox and other teams to overcome. The Oakland A's moneyball methods (partly adopted the Red Sox since 2003) help, but they cannot completely eliminate the advantages the Yankees derive from their wealth, especially if the Yankees also begin to exploit the new methods. Given equal quality front office decisionmaking, the team with the most money is likely to win. That is one reason why every major league sport other than baseball enforces a salary cap.

UPDATE: Some commentesrs claim that baseball's "luxury tax" for high-spending franchises has the same effect as a salary cap; the luxury tax money is redistributed to small market teams. I don't think this is quite correct. Last year (the latest date for which we have statistics), the Yankees paid $34 million in luxury tax and the Red Sox $4 million, the only teams to do so. $38 million divided up among 8 or 10 different small market teams is not enough money to make a major difference. Moreover, the luxury tax (at its current level) seems not to have deterred the Yankees from having a payroll vastly disproportionate to even the second-highest team - to say nothing of the league average. There is also no evidence to show that the luxury tax has deterred high spending by other large market teams.

	[Ilya Somin, November 13, 2006 at 6:42pm] Trackbacks Are the Red Sox Evil Empire Jr.? Sports Illustrated columnist John Donovan claims that the Red Sox are becoming like the Yankees, trying to spend their way into championships. If Donovan attends any games at Fenway Park next season, he may want to go incognito:). More seriously, there is a small kernel of truth to Donovan's claims. Over the last 3 years, the Red Sox have become the second-highest payroll team in baseball. However, they are still not in the same class as the Yankees when it comes to shelling out the dough. This year, the Yankees' payroll was a whopping $194 million, some 62% greater than the Red Sox no. 2 ranked payroll ($120 million). Perhaps even more telling, the $74 spending million gap between the Yankees and Red Sox was almost exactly the same as that between the Red Sox payroll and that of the perennial small market doormat Kansas City Royals ($47 million), one of the five poorest teams in major league baseball. Thus, the Yankees' payroll edge over their closest competitors is comparable to that of the Red Sox over the worst-off teams in the majors. That is not to say that the Yankees succeed through spending alone. Obviously, they could not win without making at least somewhat reasonable decisions about how to spend their money. Still, the Yankees' having $3 to spend for every $2 available to the Red Sox is a very large advantage for the Sox and other teams to overcome. The Oakland A's moneyball methods (partly adopted the Red Sox since 2003) help, but they cannot completely eliminate the advantages the Yankees derive from their wealth, especially if the Yankees also begin to exploit the new methods. Given equal quality front office decisionmaking, the team with the most money is likely to win. That is one reason why every major league sport other than baseball enforces a salary cap. UPDATE: Some commentesrs claim that baseball's "luxury tax" for high-spending franchises has the same effect as a salary cap; the luxury tax money is redistributed to small market teams. I don't think this is quite correct. Last year (the latest date for which we have statistics), the Yankees paid $34 million in luxury tax and the Red Sox $4 million, the only teams to do so. $38 million divided up among 8 or 10 different small market teams is not enough money to make a major difference. Moreover, the luxury tax (at its current level) seems not to have deterred the Yankees from having a payroll vastly disproportionate to even the second-highest team - to say nothing of the league average. There is also no evidence to show that the luxury tax has deterred high spending by other large market teams.