A Shift in Parity:

The History of Competitive Balance in Major League Baseball

Thomas Korolyshun
AM 502: The History, Literature, Film, and Science of Baseball
April 30, 2015

At the 2014 Major League Baseball All Star Game, now retired MLB commissioner Bud
Selig was asked of which part of his legacy he is most proud. His response: the new age of

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competitive balance. Competitive balance, or parity, is perhaps the most widely debated topic
surrounding modern professional sports. This discussion has been seen throughout the game of
baseball for the past half century. Many baseball writers and analysts have written extensively on
this topic, prolonging the debate.
Recently, in an article in The Atlantic, Adam Felder argues that this alleged newfound
parity is a myth. Felder states that while it is nice to think baseball has grown to generate equal
opportunity for all teams, this just is not the case. He says, There are 30 MLB teams, and for the
most part recently, playoff success has been limited to only a tiny subset of that 30.1 Felder
points to the recent success of a hand full of underdogs and the futility of some traditional
powerhouse teams as the reason this myth gained traction. He argues that simply because
baseballs postseason is a crapshoot it does not give merit to league wide parity, saying that the
randomness of the maximum 20 game postseason should not be the determining factor of parity.
According to Felder that factor should be the 162-game regular season. He says, Yet if thats the
evidence Selig is counting on, its misdirection. Any proper measurement of parity should target
the much-longer regular season to ensure the metric is not skewed by the small sample size of
October baseball. And by those metrics, the news is grim for any fan of a small-market team.2
Felder continues by providing statistical information to justify his claims, stating that in the past
twenty-five years there has not be a single season where teams in the bottom third of payroll
have combined to break a .500 winning percentage. He says, At their best, they combined for a .
496 winning percentage in 1990the first year of this sample, and where the difference between
rich teams and poor teams was the smallest.3 Felder goes on to show that the gap between the
1 Adam Felder, Baseballs New Parity: A Myth, The Atlantic, September 5, 2014, accessed April 5, 2015,
http://www.theatlantic.com/entertainment/archive/2014/09/bud-seligs-legacy-its-not-parity/379648/.
2 Ibid
3 Ibid
1

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top third teams and bottom third teams in terms of payroll has grown dramatically over this same
time period. He states, From 1990 to 2014, the top 10 highest-paid teams increased their payroll
well over 600 percent. The bottom 10 also increased, but only 399 percent.4 Felder sums up his
argument by stating that even with the creation of two wild card teams, the average winning
percentage of playoff teams has only dropped from .583 to .578, making it still very difficult for
low-payroll teams to succeed.
On the other side of the argument, senior baseball writer for ESPN.com Jayson Stark
argues that the the same team wins every year jab held against baseball is false, stating that
while baseball can do more to increase equal opportunity it still has come a great distance. Stark
argues that only one dynasty has existed in modern baseball: the Yankees who reached six of
eight World Series from 1996 to 2003 winning four of those. Stark continues by justifying the
Yankees dynasty, stating, Now I'm not going to pretend that the Yankees' dominance thing never
happened. But (A) I need to remind you the Yankees' run also inspired an influx of more
significant revenue sharing, which has changed the sport and B) even that streak was an
aberration.5 According to Stark, it is illogical to say that the same baseball team wins every year.
He says, All but six baseball teams have played in at least one of the past 30 World Series, and
17 teams have won one. No matter how you do the math, at least 12 teams have divvied up the
champagne in 24 of the past 30 World Series6 While admitting that the Giants, who have won
three of the past five World Series titles, the Cardinals, and the Phillies have represented the

4 Ibid
5 Jayson Stark, Think the NFL has Greater Parity Than MLB? Well, Think Again, ESPN, January 30, 2015,
Accessed April 5, 2015, http://espn.go.com/blog/jayson-stark/post/_/id/1075/think-nfl-has-greater-parity-than-mlbwell-think-again
6 Ibid

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National League in nine of the past eleven World Series, Stark backs up his argument with
statistics showing that since 2009 at least fifty percent of playoff teams missed the playoffs the
previous year. He continues by saying, And you'd have to go all the way back to 2005 to find a
season in which more than half of the baseball playoff field was comprised of teams that had
been there the previous year. Stark contests the playoff parity versus regular season parity
argument as well, saying, Over the past 10 seasons, 90 percent of the franchises in baseball have
made the postseason. That's 27 of 30 (everyone but the Marlins, Blue Jays, and Marines).7 Stark
finishes by contesting the myth that only teams with money can win in baseball. He refutes
this by saying, five of the nine teams with the highest Opening Day payrolls missed the playoffs
in 2014. Three of them finished last (Red Sox, Rangers, and Phillies.) And of the teams with the
12 highest Opening Day payrolls, exactly one of them (the Giants) won a series in October. Just
two (Giants and Nationals) won a postseason game.8
While both analyses are factual, they show the inherent flaw in the debate. It is not about
whether definite parity exists in Major League Baseball. True parity will never exist. The nature
of having big and small market teams and variations in talent levels create an inequality that can
never be taken out of the game. It will always be easier to win with a high payroll than it is to
win with a low payroll and certain teams will always have more talent than others. The debate
should rather be about how far baseball has come to limit dynasties and develop an increased
level of competitive balance through the years. Using the definition for competitive balance
given by the Blue Ribbon Panel commissioned by Bud Selig in 2000, which defined competitive
balance as, when there are no clubs chronically weak because of MLBs structural features

7 Ibid
8 Ibid
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[and] every well-run club has a regularly recurring reasonable hope of reaching the postseason,9
I contest that over the last half-century baseball has taken tremendous strides in creating a game
in which teams today are given a chance to succeed regardless of their financial, historical, and
geographical situations.
In the mid 1900s baseball fit the baseball expression, the same team wins every year.
From 1949 to 1963, the New York Yankees, New York/San Francisco Giants, and the
Brooklyn/Los Angeles Dodgers accounted for twenty-three of the thirty pennant winners. In that
fifteen-year span the Yankees won the American League pennant thirteen times. The only other
American League teams to win the pennant during that period were the 1954 Cleveland Indians
and the 1959 White Sox. These numbers were not outliers in early 20th century baseball;
dynasties dominated this era. Teams, including the previously mentioned Dodgers, Yankees, and
Giants, as well as another Yankees team that won seven American League pennants from 19361943 and the St. Louis Cardinals teams that won four National League pennants from 19421946, regularly repeated as league champions. In the mid 1970s Major League Baseball began
enacting policy to grow the competitive balance in the league. Throughout the 1980s the effects
were widely apparent. In that decade, fourteen different teams made an appearance in the World
Series, with teams such as the Royals, Twins, and Mets all winning their first Championship.
According to Baseball References summary of the decade, it was a time of parity, as almost
every team was competitive at some point in the decade.10 After baseball arguably experienced a
slight dip in parity during the 1990s, league-wide equality rose again in the 2000s. In the first
decade of the 21st century, twenty-three of the thirty teams reached the postseason and fourteen
9 Richard C. Levin et al., The Report of the Independent Members of the Commissioners Blue Ribbon Panel on
Baseball Economics, Mount St. Marys University, July 2000, 5, http://faculty.msmary.edu/einolf/Sports/Blue.pdf.

10 1980s, Baseball Reference, l December 17, 2013, http://www.baseball-reference.com/bullpen/1980s.

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different teams appeared in the World Series. The decade also experienced eight different World
Series Champions. In the eighteen years since the last league expansion took place, nineteen of
the thirty Major League Baseball teams have won a pennant. In this timeframe, every team
except the Blue Jays has made a postseason appearance, and the Blue Jays can be credited with
not only multiple postseason berths in the early 90s, but also two World Series Titles. This
growth in parity can also be seen in the dispersion of team winning percentage between 1900 and
2009. David Roher of the Harvard Sports Analysis Collective, graphed the standard deviation of
winning percentages of Major League Baseball teams during this period and determined, There
is a clear upward trend in parity (downward trend in SD) over the course of MLB history. It was
lowest in the earliest parts of the dead ball era, but increased throughout the dead ball era and
into the first part of the 1920s. After a level period of about 20 years, there was a steep upward
parity trend until the 1980s. From that point on, parity decreased until the turn of the 21st
century. We currently appear to be on another parity increase swing11
To what can this growing trend of competitive balance be credited? Over the years many
theories have been tested, but I contest that the three most influential factors on the increase in
parity throughout Major League Baseball are the rules developed by MLB executives to
compensate teams in low-revenue markets, the overall compression of baseball talent, and the
growing intelligence of team executives.
Since the mid 1960s, Major League Baseball has implemented numerous rule changes in
attempt to increase parity in the league. The first of these rule changes occurred in 1965 with the
introduction of the reverse-order amateur player draft. Prior to the draft, amateur players were
free to sign with whichever team they chose. This allowed big-market teams to dominate the
11 David Roher, A History of MLB Parity, Harvard Sports Analysis Collective, (blog), November 4, 2009,
Accessed April 7, 2015, http://harvardsportsanalysis.org/2009/11/a-history-of-mlb-parity/.

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amateur player pool, leaving smaller-market teams with less quality prospects. The draft, which
still exists today, limits the ability for large-market teams to control the amateur player market by
dispersing top prospect across all teams. The drafting order is determined based on the previous
standings, with team possessing the worst record receiving the first pick. This allows weaker
teams to obtain the rights to the best prospects, attempting to level the playing field.
Dr. Jess C. Dixon, an associate professor at the University of Windsor, argues, In
practice, however, the reverse-order entry draft has had a minimal impact on competitive
balance.12 He continues his argument by pointing out that the difference between drafting teams
is at most one player per year, and that one player in baseball cannot usually make a significant
impact. Dixon contests that the first round is the only round where the difference between the
first pick is significantly greater than the last pick. While this argument is valid, it neglects two
key components of the draft. First, it does not just provide one team with one player; it prevents
one or two teams from stockpiling all of the top talent. By giving each team the rights to a top
prospect, the draft not only gives good players to bad teams, but it prevents good teams from
buying all of the top new talent. Secondly, the drafts affect on competitive balance significantly
increases when a team has a high pick in consecutive years. Take for example two modern
examples of the draft providing teams with competitive balance.
First the Tampa Bay Rays. As an expansion team that entered the league in 1998, the
Rays struggled for much of the 2000s and consistently were awarded high draft picks. In the
2006 draft, the Rays selected Evan Longoria third overall, and in 2007 they selected David Price
with the first pick. While other factors did contribute to the Rays turnaround, the year after they
selected David Price the Rays not only made the first postseason in franchise history, but also
12 Jess C. Dixon, Exploring The Impact of Top Management Team Composition on Player Selection in Major
League Baseball, 12, ProQuest, Order No. 3289219 University of Massachusetts Amherst, 2007, Ann Arbor:
ProQuest, Accessed April 15, 2015

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won their first pennant. In their peak seasons, Longoria and Price produced WARs of 8.1 and 6.9
respectively.13 WAR is a stat created by baseball reference to determine a players value in wins
per year above the average league replacement player. At their combined peak, Longoria and
Price were responsible for providing the Rays with fifteen wins more than a replacement player.
Fifteen wins from two players is season changing and over five years, that performance can be
franchise changing.
Another example of the draft providing teams with a chance to become more competitive
occurred recently with the Washington Nationals. After moving to Washington from Montreal,
the Nationals experienced several down seasons, which provided numerous high first round draft
picks. In 2009, the Nationals selected Stephen Strasburg first overall, in 2010, they selected
Bryce Harper first, and in 2011, Anthony Rendon was taken sixth. Strasburg, Harper, and
Rendon produced peak season WARs of 3.5, 5.1, and 6.5 respectively. Combining each players
best season the three are worth a total of 15.1 wins above three replacement level players. Once
again these players, obtained through consecutive drafts, have altered a franchise for the years to
come.
If used correctly the entry draft contributes to league-wide parity. In an article titled,
Competitive Balance in Major League Baseball, published in The American Economist,
Michael R. Butler tests the main theories as to why parity has grown in Major League Baseball.
According to Butler, The coefficients on AMDRAFT are negative and significant in both
estimated equations, indicating that the introduction of the reverse-order amateur draft in 1965
served to promote competitive balance in both the American and National Leagues.14 Butlers
13 All WAR stats are compiled from Baseball Reference
14 Michael R. Butler, Competitive Balance in Major League Baseball, The American Economist, 39, no. 2 (Fall,
1995): 48, Accessed April 15, 2015, http://www.jstor.org/stable/25604039.

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analysis shows that while many factors, one of which being the entry draft, have contributed to a
rise in competitive balance across multiple seasons, the only statistically significant factor in the
growth of competitive balance within seasons is the introduction of the reverse-order draft.15 This
shows the significance the draft has had on league-wide parity.
Another example of a rule change by Major League Baseball that has had a positive
effect on generating league-wide equality is the introduction of the luxury tax. In the 2002
collective bargaining agreement, the modern luxury tax, or the competitive balance tax was
established. The tax was developed to punish teams for excessive spending and curb the growing
gap between the payrolls of big-market and small-market teams. The tax sets a hard cap on
yearly team payrolls and applies a progressive tax to repeat offenders. For example, in 2012 and
2013 the luxury tax was $178 million. Any team exceeding that team salary would be charged a
17.5% tax, with the tax rate increasing each consecutive year.
Over the last ten years there has been a significant trend of baseball teams trying to limit
their payroll spending. Every year, at the onset of free agency, much of the discussions with
baseball executives, especially among those from big-market teams, focuses on staying under the
luxury tax. Joel Sherman, in an article written in 2013 in the New York Post, shows the focus bigmarket teams have put on getting below the luxury tax, stating, Steinbrenner indicated the
Yankees intend to stay under the $189 million luxury-tax threshold, but there is money to spend
now and the Yankees as always plan to be aggressive in pursuing the best players.16
Sherman is referring to Hal Steinbrenner, the managing partner and co-chairman of the Yankees,

15 Ibid, 48-50.
16 Joel Sherman, Hal Taking a More Active Role in Yanks Daily Business, New York Post, November 13,
2013, Accessed April 15, 2015, http://nypost.com/2013/11/13/hal-taking-a-more-active-role-in-yanks-dailybusiness/.

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and while the Yankees did blow past the luxury tax salary limit, it is significant to notice the
stress executives are placing on getting below the threshold.
Statistical models prove that while results are still small, there is indication that the luxury tax is
producing its intended impact on the league. A statistical analysis done by economists Olugbenga
Ajilore and Joshua Hendrickson supports this claim. In their analysis, Ajilore and Hendrickson
analyze the impact the luxury tax has on team competitiveness, factoring in both how talented a
team is and how well that team is run. After analyzing the data they concluded, the luxury tax
dummy is significant only for the competitive teams. Thus after the implementation of the luxury
tax, there is less inequality. This is an important result because it shows that the luxury tax is
having the intended impact.17 While teams have still exceeded the luxury tax, it is important to
note that it is having its intended impact and is increasing league parity.
Perhaps the most notable factor causing the leveling of competition in Major League
Baseball is the compression of talent seen over the years. As baseball becomes exposed to more
people and more people begin to play the game, an influx of talent will be produced. The more
talent that is produced, the smaller the talent gap between the best player and an average player
becomes. Essentially, the more people that play baseball, the more great players become
available. And allowing more teams access to great players creates better competition. The
biggest factors in the compression of talent in Major League Baseball are the expansion of the
player pool and the increasing preparedness of athletes. The expansion of the player pool was
produced from the population growth in America, the integration of the game, and the expansion

17 Olugbenga Ajilore and Joshua Hendrickson, The Impact of the Luxury Tax on Competitive Balance in Major
League Baseball, North American Association of Sports Economists, Working Paper Series, no. 07-27, (May,
2005), Accessed April 15, 2015, HolyCross.edu
http://college.holycross.edu/RePEc/spe/AjiloreHendrickson_LuxuryTax.pdf.

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into international markets, while the increase in preparedness is derived from the growing
number of camps and leagues available to youths.
The first factor in the compressing of talent in Major League Baseball is the population
growth in the U.S. over the last half century. According to baseball economist Andrew Zimbalist,
If the population grows and the number of baseball teams does not, then the proportion of the
population playing falls and the distribution of talent becomes more compressed. This is what
happened in MLB between 1903 and 1960, with the population growing from 80 million to 181
million and the number of teams remaining constant at 16.18 This growth in population and
Major League Baseball lack of procedures to counteract the growing player pool led to an
increase in the balance of competition throughout the league. The total population in the U.S.
grew again by almost 70 million from 1960 to 2000.19 In this time period, baseball reacted by
adding an additional fourteen teams to the league to offset the growing player pool. While some
argue that expansion has diluted the player pool, expansion only accounted for the growth in
U.S. population. The two other factors contributing to the expansion of the player pool went
unchecked, causing a spike in the compression of baseball talent.
Prior to 1947, Major League Baseball consisted only of white men, limiting the player
pool and the talent available. By limiting the amount of talent available, Major League Baseball
created a league based in talent inequality. When Jackie Robinson broke the color barrier in
1947, he expanded the player pool by 10%, thus narrowing the gap in the talent of players.20 The
18 Andrew Zimbalist, Thinly Spread Talent Creates Challenge to Records but also to Baseball, Sports Business
Daily Global Journal, August 9, 1999, Accessed April 16, 2015,
http://m.sportsbusinessdaily.com/Journal/Issues/1999/08/19990809/No-Topic-Name/Thinly-Spread-Talent-CreatesChallenge-To-Records-But-Also-To-Baseball.aspx.

19 U.S. Census Bureau, Demographic Trends in the 20th Century, by Frank Hobbs and Nicole Stoops, CENSR-4,
(Washington D.C., November 2002), 11, https://www.census.gov/prod/2002pubs/censr-4.pdf.
20 Ibid, 75

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growth of the game to add African American players had a major impact on the growth of the
game domestically.
Lastly, in the 1950s, baseball once again began to expand its player pool by beginning to
expand abroad. In 1955, Roberto Clemente became the first Hispanic baseball player, leading to
a heavy influx of Latin American players involvement in the game. In addition to its expansion
to Latin America, Major League Baseball spent the second half of the twentieth century
expanding all over the globe. According to economists Martin B. Schmidt and David J. Berri:
Globalization of baseball is now evident on the playing fields in the United States.
Players still hail from the traditional areas of recruitment, such as the United States,
Dominican Republic, Puerto Rico, Venezuela, and Cuba, but many players from Mexico,
Australia, Japan, and Korea also play in the Major Leagues. Even such countries as
Spain, Belgium, the Philippines, Singapore, Vietnam, the United Kingdom, Brazil,
Nicaragua, and the Virgin Islands have produced professional baseball players. In 2000,
the number of foreign-born players on Major League Baseball rosters was 312,
constituting 26% of all players.21
By expanding to encompass markets abroad, Major League Baseball has expanded its talent
pools exponentially, leading to an influx of talent, thereby compressing the talent in the league.
In order to determine whether the underlying population dictated competitive balance, Schmidt
and Berri analyzed different sporting leagues. Schmidt and Berri used the hypothesis that similar
levels of competitive balance should be seen within different leagues of the same sport, while
different sports produce various levels of competitive balance. The data supported the
hypothesis, showing, The dispersion of wins within leagues in baseball, basketball, football, and
soccer are statistically similar The level of competitive balance, in contrast, achieved by each
sport is quite different. The most competitive is soccer, the sport with the largest underlying
population of athletes. The least competitive sport is professional basketball, which draws its

21 Martin B. Schmidt and David J. Berri, On the Evolution of Competitive Balance: The Impact of an Increasing
Global Search, College of William and Mary, Accessed April 16, 2015: 696,
http://mbschm.people.wm.edu/Balance-economic-inquiry.pdf

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talent from the small pool of tall athletes.22 This analysis shows the affect a large player pool
has on the competitive balance of a league.
The second factor in the compression of talent in Major League Baseball stems from the
greater training undertaken by todays athletes. Zimbalist argues, At the same time, the
population is increasingly fit athletically and the availability of baseball programs for training
youth is far more extensive today. Todays major league ballplayers, then, are a smaller fraction
of an increasingly prepared population.23 Today, athletes are bigger, stronger, faster, and more
developed by the time they make it to Major League Baseball.
Athletes today have far greater resources at theyre disposal. The scientific and
technological advancements today far surpass that of which athletes twenty to thirty years ago
experienced. Modern athletes often spend as much time inside analyzing game film as they do
practicing on the field. Whether pitchers and catchers are studying batter tendencies or hitters are
studying pitcher tendencies, players today rely much more on off-field work.
Advancements in biomechanics and physics have also led baseball to become a much
more scientific game. In an interview with WBRC, Birmingham, Alabamas fox news affiliate,
Dr. Glenn Fleisig of the American Sports Medicine Institute explains the use of biomechanics in
baseball, stating, It's using the laws of physics to see what the best way is for a person to move.
If we can make someone's mechanics as good as possible then they will minimize the chances of
getting hurt and also maximize their performance.24 The article continues by explaining the

22 Ibid, 697-698
23 Andrew Zimbalist, Baseball and Billions: A probing Look Inside the Big Business of Our National Past
Time, (New York City: Basic Books, 1992), 97.
24 Britton Lynn, Technology Advances Baseball, MyfoxAL.com, May 6, 2013, Accessed April 20, 2015,
http://www.myfoxal.com/story/22170945/technology-advances-baseball

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advanced technological process undertaken during their tests. For the biomechanical evaluation,
38 reflective markers are placed on each athlete then the 8 infrared cameras around the
laboratory are each used to capture those reflective markers at 450 pictures-a-second which the
computer then uses to create the data.25 This shows how far technology and science have come
and their effect on the talent level in baseball.
Young athletes are also afforded more opportunities to play in structured and organized
baseball leagues. With the introduction of Little League, Babe Ruth League, American Legion,
and other similar leagues, young athletes today are given many opportunities to learn the game in
a structured and competitive environment. And with the introduction of Minor League Baseball
and the expansion of the Amateur Athletic Union (AAU), players today are developed for the
purpose of pursuing baseball at the highest level. Combined, the advancements in athletic
science, technology, and development programs have led to an increase of talent in the player
pool of Major League Baseball.
Major League Baseball over the last thirty years has experienced a growing disparity in
team salaries. In 2012, the teams with the five largest salaries averaged a payroll of $136.3
million, while the five smallest teams had an average payroll of $74.2 million. These figures
produce an 83.7 percent difference in average salary between the bottom five and top five
payrolls. This number has grown from a 17.8 percent difference in 1992.26 If the payroll gap has
recently grown exponentially, how has league-wide equality also grown? Zimbalist believes,

25 Ibid
26 Michael Sanserino, Moneyball: Baseball has had some Success in Restoring Competitive Balance,
McClatchy Tribune Business News, December 3, 2012, ProQuest, Accessed April 17, 2015,
http://search.proquest.com.ezproxy.bu.edu/docview/1221150829?accountid=9676.

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[The growing payroll gap] can be overcome by a savvy front office or an enhanced
integration of Sabermetrics.27
This leads to the third factor creating the upward trend in parity; teams with fewer
resources have become smarter. This can be seen in the development of advanced sabermetrics in
scouting. Sabermetrics is the mathematical, statistical, and empirical analysis of baseball.
Researchers use this statistical analysis to measure a players value in attempt to objectively
determine the best fit for a given need or situation. Statistician and founder of the blog
FiveThirtyEight, Nate Silver, argues, having a core competency for statistical analysis
provides another dimension along which a team can compete. Since statistical analysis is
relatively cheap to execute, this has tended to lessen the intrinsic advantage of large-market
clubs, which in turn provides "hope and faith" to a larger number of fans.28 By providing a
relatively inexpensive tactic for competing, the sabermetric revolution has allowed small-market
teams an effective way to compete with the previously dominant large-market teams.
The book Moneyball: The Art of Winning an Unfair Game has provided a case study into
this topic by examining the Oakland Athletics and their revolutionary general manager, Billy
Beane. Beane is credited as one of the first baseball executives to implement an advanced
sabermetric style approach to decision making. In 2012, the Athletics finished the year with a tie
for the fourth best record in baseball, while beginning the year with the second lowest opening
day payroll.29 2012 was not an anomaly for the Athletics. Under Beane, Oakland has been able to
sign and develop young talent who are deemed as undervalued by the sabermetric community for

27 Ibid
28 Nate Silver, How Sabermetrics Helps Build a Better Game, Baseball Analysts, May 10, 2007, Accessed April
17, 2015, http://baseballanalysts.com/archives/2007/05/how_sabermetric_1.php.

29 Steve Orinick, MLB Team Payrolls, Stevetheump.com, Accessed April 16, 2015,
http://www.stevetheump.com/Payrolls.htm.

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relatively lost costs. This has led Oakland to regularly overachieve in terms of wins in relation to
payroll. An analysis done by Benjamin Morris, a blogger for the statistics based FiveThirtyEight,
shows that the Athletics have garnered 180.2 wins above expectation from 2000-2014, providing
an average of 12 wins above expectation per season.30 Morris describes wins above expectation
as similar to WAR, which would establish Beane as being worth 12 more wins per season than a
replacement level GM. Morris asserts that after assembling the fifteen greatest positional player
seasons by WAR, they trail Beanes 180.2 WAE, accruing a combined 180.1 WAR. While some
may discredit this as luck, Morris claims that the odds of this being luck are one in 13 trillion.
Since Beanes success, a growing trend has developed in the using of sabermetrics to find
previously undervalued players for relatively inexpensive costs. ESPN recently released its great
analytics rankings, where it ranked franchises in order of how much they have embraced the use
of analytics. Among the top franchises were the Red Sox, Indians, As, Pirates, Cardinals, and
Rays, who have all been perennial playoff contenders for the past ten years, while the two teams
at the bottom, the Phillies and Marlins, have both finished toward the bottom of the standings in
the past few years.31 While embracing analytics cannot guarantee success it has proven to be a
great equalizer between big-market and small-market teams.
To study the growing payroll gap further we examine a statistical analysis done by Dave
Studeman of The Hardball Times in 2012. Studeman observed the relationship between wins and
a teams salary from the beginning of the free agency era (1976) through 2011. He concludes that
while there is still a relationship between wins and salaries, its settled into a pattern that is more

30 Benjamin Morris, Billion-Dollar Billy Beane, FiveThirtyEight, July 24, 2014 (7:27 a.m.), Accessed April 17,
2015, http://fivethirtyeight.com/features/billion-dollar-billy-beane/.

31 The Great Analytics Rankings, espn.com, Accessed April 18, 2015,

http://espn.go.com/espn/feature/story/_/id/12331388/the-great-analytics-rankings.

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competitive than any previous time period, other than the years of collusion.32 The years of
collusion refers to 1985 through 1987. In these years, owners colluded to under value the free
agency market. While the ability to spend money still provides an advantage to teams, that
advantage is slowly shrinking. Much of this shrinkage in the relationship between salaries and
wins can be attributed to the growing savvy of baseball executives employed by small-market
teams. The main way money has helped teams recently is in the ability of large-market teams to
dole out bad contracts and maintain the ability to compete. One bad contract can cripple a smallmarket team, while a big-market team can hold multiple bad contracts and still be successful.
This has only increased the necessity for small-market teams to become smarter to better avoid
this problem.
It is clear that Major League Baseball has grown in terms of league-wide parity over the
last half century and league executives have shown a clear intention to continue this trend in the
future. However, is league-wide parity best for the game? While competitiveness does create a
more thrilling experience and environment for fans, many consider excessive parity to be
detrimental to the quality of the game. California Institute of Technology economics professors
James P. Quirk and Rodney D. Fort argue that fans are attracted to a league that favors dynasties
as opposed to equal opportunity because they appreciate the game being played at its highest
level.33 The two factors making parity detrimental to Major League Baseball are that it breeds
league-wide mediocrity and that it transfers money from the players to the owners.
The growing parity in baseball is turning a league that once produced great teams and
players into a league designed on balance and normalcy. In baseball today, it pays to be slightly
32 Dave Studeman, Money and Wins, Hardball Times, February 7, 2012, Accessed April 19, 2015,
http://www.hardballtimes.com/money-and-wins/.
33 Rodney D. Fort and James P. Quirk, Pay Dirt: The Business of Professional Team Sports, (Princeton, New
Jersey: Princeton University Press, 1992).

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above average. In an article last year for Sports Illustrated, baseball analyst Tom Verducci argued
this point, saying, Playing .500 baseball is no longer an insult. Baseball in 2014 is about
hanging around .500, treading water while waiting out injuries, and waiting for a three- or
four-week stretch of playing good baseball. 34 He continues by arguing that this can
create two possible outcomes: a thrilling, competitive, and deep playoff push or a weak,
slow, sputtering of teams trying to hang around long enough to back door their way into
the playoffs. Today, great accomplishments are rarely reached because of the need to
maintain league competitiveness. Seasons with .400 batting averages, 60 home runs, and
sub 1.00 ERAs may be lost in this growing need for parity.
The other argument against parity is derived from it being the tool by which owners have
transferred money from the players to their own pockets over the years. Whether this is an
intrinsic feature of parity is up for debate; however, the owners have exploited the way Major
League Baseball has attained its growing parity. Until the 1970s, owners maintained ownership
of their players even after a players contract expired. During this time, owners justified the so
called reserve clause by arguing that it limited big-money teams from having the ability to buy
all of the best players, thus allowing the owners to significantly underpay their players. Judges
backed up this claim by ruling for the reserve clause on multiple occasions. Today owners are
still attempting to transfer money from the players to themselves by claiming competitive
balance. As research, such as the statistical analysis done by William Ryan Colby, proves,
revenue sharing has actually had a negative impact on competitive balance in baseball.35 All

34 Tom Verducci, Mediocre League Baseball: Extreme Parity a Result of Bud Seligs Plan, SI.com, June 17,
2014, Accessed April 21, 2015, http://www.si.com/mlb/2014/06/17/mediocre-teams
35 William Ryan Colby, Revenue Sharing, Competitive Balance, and Incentives in Major League Baseball,
(Senior Thesis, Amherst College, 2011) https://www.amherst.edu/media/view/329624/original/ColbyRevenueSharing,CompetitiveBalance.pdf.

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outcomes produced by revenue sharing are negative. It limits players salaries and actually makes
the league less competitive. This limit on salaries affects the game negatively by limiting the
player pool. If salaries in other sports outgrow baseball, it will create a less desirable career path.
While the debate over whether or not parity exists in Major League Baseball will
continue for years to come, it is clear that over the last half century league-wide equality has
grown by great lengths. Baseball has advanced from a time when it was ruled by dynasties to a
modern league where a majority of the teams can be considered contenders every season. The
causes of this uptick in parity can be attributed to the rules put in place by league executives
(specifically the reverse-order amateur player draft and the luxury tax), the compression of talent
in the MLB caused by the expanding of the player pool and the better development of modern
athletes, and the growing intelligence of baseball executives and sabermetrics. This clear upward
trend in parity, although seen as a good thing by many, may in fact be detrimental to the game. It
both inhibits greatness and helps to make the owners richer, while keeping salaries down. If
Major League Baseball hopes to continue this upward trend, they will have to continue to
implement new policy. Big-market teams are constantly attempting to find loopholes around
these policies and their efforts are currently taking effect. High-revenue teams such as the
Dodgers and Cubs are hiring these young, sabermetrically inclined executives who have been
successful away from their small-market competitors. Big-market teams will always be searching
for ways to exploit the growing revenue gap.

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