Finance Uncategorized

If history is an indicator, Royals will raise payroll

If history has any say in it, Kansas City’s management will roll out a substantially higher paid roster in 2015.

(Christopher Hanewinckel -USA Today Sports)
(Christopher Hanewinckel -USA Today Sports)

Silver has a silver lining for Royals faithful. If history has any say in it, Kansas City’s management will roll out a substantially higher paid roster in 2015. With the exception of last year’s Cardinals, all of the 25 previous World Series loser from 1988-2013* have increased payroll spending the following year. As a matter of fact, World Series losers have on average hiked their payroll spending the following year during that span significantly greater than any other group of teams based on respective season finish. Because average MLB team salaries have grown tenfold from $11 million in 1988 to $112 million in 2014, each year’s relative percent gains rather than dollars were used herein for analysis. Raw figures came from USA Today’s MLB Salaries Database.

World Series losers have upped their following year opening day salaries by an average of 21.9% of the mean MLB team opening day payroll that following year. Winners of the Fall Classic have decreased payrolls in five out of the 25 years analyzed and increased spending the following year by an average of 14.2% of the aforementioned baseline.

Certainly this disparity is partly explained by the fact that the Series winners during that period have boasted payrolls an average of 33.5% higher than the league mean. Meanwhile loser’s payrolls have averaged just 16.0% higher than the league mean, a figure overshadowed by the 18.9% mark set by teams who made the postseason but not the final stage. These latter teams, though, only increased their spending by 13.2% of each respective following year’s mean team salary.

AP Photo/David J. Phillip
AP Photo/David J. Phillip

Finally, teams that boasted winning records but did not make the playoffs during that span have averaged team salaries 5.5% above the league average and increased spending habits in following years by 11.2% of the following year’s league average. Not surprisingly, teams with even or losing records have spent 12.8% below the league average and increased spending habits in following years by only 4% of the average team salary spend. See the table below for a chart and fuller explanation of these figures.

Regular season attendance figures  over the same 1988-2013 period have shown a similar trend. For comparison, the second numbers reported span the 1993-2013 seasons to show that the variance in ticket counting between the American and National Leagues during the 1988-1992 seasons did not skew the results. 1993 was the first season that the National League also began counting tickets distributed rather than turnstile count.

Also important in considering this analysis, fuller stadium capacities would decrease augmentation opportunities. However, in terms of a percent of the league average, season attendance was very similar for World Series winners – 123.9% / 121.0% and losers – 122.0% / 123.0%. Such parity noted World Series losers again have far outpaced all other cohorts in terms of following year attendance increases.  As a percent of the following year’s league attendance average, results are as follows: World Series winners – +5.3% / +5.7%, World Series losers – +10.6% / +9.2%, playoff teams not in World Series – -0.2% / +0.4%, winning teams not in playoffs – +0.7% / +1.7%, and teams at or below .500 – +1.6% / +0.1%.

The ending to Kansas City’s first World Series (or postseason) appearance since 1985 certainly disappointed the team and its supporters. However, the narrow thin margin that impeded them may also incentivize the front office and fans to spend more in 2015 than had they achieved the pinnacle. Fortunately, history also favors them in terms of again pursuing the path to ultimate victory: World Series winners between 1988-2013 have dropped on average from a 0.588 winning percentage during the regular season of their World Series win to 0.536 the following year. World Series losers only regress to 0.565 from 0.595. And, should they follow the discussed trends in augmenting their pillars of regular season winning, attendance, and payroll spending, perhaps the Royals will look back in the near future at the bittersweet 2014 season as a silver that spawned a gold.

 

Overall Payroll Trends 1988-2013*

  WS Winners WS Losers Playoff Teams Not in WS Winning Teams Not in Playoffs Teams at or Below .500
Payroll Current1 133.5% 116.0% 118.9% 105.5% 87.2%
Payroll Next2 136.6% 128.3% 122.2% 107.7% 84.0%
% Differential3 +3.1% +12.3% +3.3% +2.2% -3.2%
Payroll Increase4 +14.2% +21.9% +13.2% +11.2% +4.2%

1   Current Year Respective Team Payroll as a percent of Current Year Average Team Payroll

2   Next Year Respective Team Payroll as a percent of Next Year Average Team Payroll

3   Payroll Current subtracted from Payroll Next – For the years analyzed, average payroll increased 23 times and only decreased twice, so a higher percent generally indicated a higher percent of a higher figure. A positive (negative) number here indicates greater (lesser) year-over-year payroll spending relative to each year’s league average payroll spending.

4   Current Year Respective Team Payroll subtracted from Next Year Respective Team Payroll and expressed as a percent of Next Year Average Team Payroll – Positive numbers here indicate an average of increased absolute payroll spending for all cohorts.

 

Overall Home Attendance Trends 1988-2013 / 1993-2013*

Overall Home Attendance Trends 1988-2013 / 1993-2013*

  WS Winners WS Losers Playoff Teams Not in WS Winning Teams Not in Playoffs Teams at or Below .500
Att. Current5 123.9% / 121.0% 122.0% / 123.0% 120.5% / 119.6% 106.1% / 105.2% 86.8% / 87.1%
Att. Next6 127.1% / 125.7% 130.4% / 130.6% 118.5% / 118.8% 105.1% / 105.8% 87.1% / 86.4%
% Differential7 +3.2% / +4.7% +8.4% / +7.6% -2.0% / -0.8% -1.0% / +0.6% +0.3% / -0.7%
Att. Increase8 +5.3% / +5.7% +10.6% / +9.2% -0.2% / +0.4% +0.7% / +1.7% +1.6% / +0.1%

5   Current Year Respective Team Home Attendance as a percent of Current Year Average Team Home Attendance

6   Next Year Respective Team Home Attendance as a percent of Current Year Average Team Home Attendance

7   Attendance Current subtracted from Attendance Next – For the years analyzed, average attendance fluctuated significantly. A positive (negative) number here indicates greater (lesser) year-over-year home attendance relative to each year’s league average home attendance.

8   Current Year Respective Team Home Attendance subtracted from Next Year Respective Team Home Attendance and expressed as a percent of Next Year Average Team Attendance – A positive (negative) number here indicates an average of increased (decreased) absolute home attendance for the specific cohort.

 

*Note: Because there was no 1994 postseason, the 1994 season was not directly analyzed for any of the figures. However, it was used to calculate Salary Next, Attendance Next, and next year winning percentage figures for the 1993 season.

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