We had a couple of reasons for the previous post regarding the relationship between spending and winning across leagues. The post was intended as a discussion point for our class – “Predictive Sports Analytics”. But, the post was also background for our next series of analyses that focus on identifying the “smartest” or most efficient spenders in each of the four major professional leagues.
Today, we take a look at Major League Baseball. The analysis itself is fairly simple. We use the last 12 years of data on spending and winning to estimate a linear regression model. We also include fixed effects for each team in this equation. As a side note, an examination of residual trends might be a little better as management teams tend to change over time.
The fixed effects or team level intercepts provide an indication of whether teams over or under perform relative to what they invest. The analysis is kept simple since it is for class, but it could easily be extended to include non-linear effects, or perhaps the dependent variable could be post-season qualification models as a binary logit.
The results of our analysis are both as expected in many ways and surprising in others. At the top of the list we have the early adopter of analytics, the Oakland A’s. We will take this as evidence of the value of investing in analytical capabilities. At number two on the list we have the Atlanta Braves. In positions three through five we have the Cardinals, Yankees and Giants. The Yankees came as a bit of a surprise given their enormous payrolls.
At the bottom of the list we have Baltimore (note that this current season data is not used). To some extent, the simplicity of the model might be unfairly penalizing Baltimore. We would explain why, but this seems like a good question for class! The other notable but unsurprising member of the bottom five is the Chicago Cubs. This pains Professor Lewis too much to write about.
1 |
Oakland |
2 |
Atlanta |
3 |
St Louis |
4 |
NY Yankees |
5 |
San Francisco |
6 |
Boston |
7 |
LA Angels |
8 |
Philadelphia |
9 |
Cleveland |
10 |
Minnesota |
11 |
Chicago White Sox |
12 |
Texas |
13 |
Cincinnati |
14 |
LA Dodgers |
15 |
Toronto |
16 |
Arizona |
17 |
San Diego |
18 |
Miami |
19 |
Houston |
20 |
Tampa Bay |
21 |
Milwaukee |
22 |
Seattle |
23 |
NY Mets |
24 |
Washington |
25 |
Colorado |
26 |
Detroit |
27 |
Chicago Cubs |
28 |
Pittsburgh |
29 |
Kansas City |
30 |
Baltimore |
Mike Lewis & Manish Tripathi, Emory University, 2014.