How Much Do Major League Baseball Salaries Matter?

PORTLAND, Ore. ( TheStreet) -- Major League Baseball's playoffs aren't just a few extra home games for playoff teams and a few more millions for those teams' coffers. They're a return on a sizable investment.

Going into the 2013 season, 14 of the league's 30 teams spent $100 million or more on payroll. Just five made it past Game 162 and one, the Texas Rangers, did so by playing an extra game to determine the American League's Wild Card spot.

The team it faced in that playoff -- the Tampa Bay Rays -- came into the season with a $57.9 million payroll that was third-lowest in the league. By comparison, the New York Yankees had Major League Baseball's top payroll on opening day at $228.8 million, just missing the playoffs for the second time since 1995. In doing so, they spent more on three players -- Mark Teixeira ($23 million), C.C. Sabathia ($23 million) and Alex Rodriguez ($28 million) -- than the Rays did on their entire team.

That's not shabby for a team with a payroll ranked 28th in the league, but the Oakland A's and their general manager Billy Beane won the American League west on just $60.7 million. That payout ranks 27th in the league and still less than the combined $74 million earned by the Yankees named above.

Does that necessarily mean Beane's frugal, stat-based "Moneyball" strategy has won out? Not necessarily. With $90 million being the line that separates the 15 biggest spenders in the top half of the league from the relative misers at the bottom, six of the teams that made it to at least a playoff had payrolls of $100 million or more. Of the teams that avoided wild-card playoff games by winning their divisions outright, four out of six spent nine figures or more to do so.

It only helped that the big spenders just kept laying out cash as the season progressed. As statistician Phil Roth pointed out by delving through contract data, transactions made during the season bumped the Dodgers' payroll from $216.6 million on opening day to closer to $225 million. It's just some couch change for the Dodgers, who are getting a cool $6 billion of the $8 billion television deal the team struck with Time Warner Cable ( TWC) before the season, but that would be a 14% payroll increase for the A's.

It's a similar situation for the Boston Red Sox, who began the year with a $150.6 million payroll but jumped above $160 million after adding pitcher Jake Peavy and others to help clinch the American League East. That boost is roughly 17% of division rival Tampa Bay's overall salary pool.

While the Pittsburgh Pirates ended a streak of losing seasons and playoff absence dating back to 1992 by spending a relatively scant $79.5 million, they did so in an NL Central in which three teams spent $100 million or so going into this season ($115.2 million for the St. Louis Cardinals, $107.5 million for the Cincinnati Reds and $104.3 million for the Chicago Cubs) and the fourth, the Milwaukee Brewers, still outspent them by more than $3 million. The $77.8 million Cleveland Indians, meanwhile, earned a wild-card spot in a division where the champion Detroit Tigers nearly doubled their payroll at $148.4 million.

If nothing else, it makes the tightwads far more cost-effective than their big-spending brethren. As Forbes pointed out at midseason, the aforementioned teams in Pittsburgh, Tampa, Oakland, Atlanta and Cleveland were spending less than $1 million per win, with Oakland and Tampa each hovering around $630,000. Compare that with the Dodgers, who were easily the league's least cost-effective playoff team at $1.7 million to $2.1 million per win.

It should be noted, however, that World Series wins are seldom cost-effective. As Kevin Wells at The Washington Times noted earlier this year, teams among the Top 5 payrolls in the league have won eight of the past 18 World Series. The only team to win one without shelling out salaries in the league's Top 15 was the Florida Marlins back in 1997, when their payroll ranked 25th out of 28 teams.

It's not that other thrifty teams haven't made it to baseball's biggest stage. It's just that they don't tend to fare well while they're on it. The 2010 Texas Rangers were ranked 27th when they lost to the 10th-ranked San Francisco Giants. In 2008, the Tampa Bay Rays had the second-lowest payroll in the league, but lost to the 12th-highest Philadelphia Phillies. The Colorado Rockies made the World Series with the league's sixth-lowest payroll in 2007, only to be swept by the team with the second-highest: The Boston Red Sox.

As a business plan, keeping the payroll down has its benefits. The Houston Astros, for example eked out 50 wins this year and finished their first season in the American League by losing their last 15 games. By doing so, Forbes says they'll make a profit of roughly $99 million in 2013. That would make this year's Astros the most profitable team in league history and more profitable than the past six World Series champions combined.

It's also a great way of angering the fan base, poisoning the clubhouse and removing any hope of a playoff berth by midsummer. While small-budget teams have made big noise this season, the path to a championship is still lined with money. In the past 18 years, teams with payrolls ranked either first or second in the league have won the World Series seven times: The Yankees in 1996, 1998, 1999, 2000 and 2009 and the Red Sox in 2004 and 2007. Even if you don't win, outspending everyone else still provides teams the best shot at late-October baseball. Though the Yankees didn't win it all in 2001 or 2003, their highest-in-the-league spending got them to the big show.

As well as drafting, researching and scrimping have worked out in Oakland, Tampa, Cleveland and Pittsburgh, major-market spending in Los Angeles, Boston, St. Louis and Detroit is maintaining baseball's expensive status quo.

-- Written by Jason Notte in Portland, Ore.

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Jason Notte is a reporter for TheStreet. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, the Boston Phoenix, the Metro newspaper and the Colorado Springs Independent. He previously served as the political and global affairs editor for Metro U.S., layout editor for Boston Now, assistant news editor for the Herald News of West Paterson, N.J., editor of Go Out! Magazine in Hoboken, N.J., and copy editor and lifestyle editor at the Jersey Journal in Jersey City, N.J.

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