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When a Low Payroll Wins a Championship

Posted On
9/3/2016
By
SurePayroll

The free-market nature of professional sports dictates that usually the best players make the most money. It logically follows that the best teams have the best players; therefore, the best teams spend the most money on their players. In most cases, it’s true. But over the years, a few anomalies have developed, resulting in situations where underdog, often “small market” teams, overachieve and win a championship or multiple championships.

Among the big four major sports leagues (NFL, NBA, MLB, NHL), three of them have implemented comprehensive salary caps, revenue-sharing and luxury taxes in hopes to minimize the gap between wealthy owners in huge media markets (i.e. all of the New York teams) and smaller-market owners in locales such as Cincinnati, St. Louis and Tampa Bay. Major League Baseball, however, has resisted many of these measures, making it particularly tough for thrifty teams to compete. Though there is a revenue-sharing pool in MLB, there's no salary cap to speak of — and luxury taxes are minimal by comparison. It's for that reason that there is a tremendous disparity between the big-market teams and small-market teams.

According to CBSSports.com, the New York Yankees lead the league in payroll in 2010, shelling out a whopping $206.3 million for on-field talent, while the Pittsburgh Pirates are the most frugal team in the league, spending only $34 million. Coincidentally, the Yankees won the World Series in 2009, and the Pirates are one of baseball's worst teams and haven't had a winning season since 1992.

In 2003, however, the Florida Marlins defied the odds. They won a World Series with a modest $63 million payroll, which ranked 20th in the league and was far less than the Yankees, who spent more than $180 million that year. And  "The Fish" spent substantially less than the median: $78.7 million. They defeated the Yankees in six games in the World Series behind dominant pitching and clutch-hitting from a legion of young, low-paid players, notably Dontrelle Willis, Josh Beckett, A.J. Burnett and Miguel Cabrera. In the years since the Marlins' win, the World Series title has gone to big-market teams with high payrolls (with the possible exception of the St. Louis Cardinals in 2006, who overcame their small market size but still paid their players better than the median salary that year). Many analysts have reflected on the Marlins' title by saying they "caught lightning in a bottle" by putting together a young team where everything came together at once. No doubt, it's a rare achievement.

Another efficient and championship-winning organization in recent years is the San Antonio Spurs of the NBA. The Spurs collected NBA titles in 1999, 2003, 2005 and 2007, earning them a de facto dynasty designation. From a fiscal standpoint, the Spurs have generally managed to stay around or under the salary cap, avoid the NBA's punitive luxury taxes, and stay no higher than the middle of the pack in team payroll. In 2003, Spurs players earned $52.8 million, less than the $53.5 million median, according to USAToday.com. Their feat in 2005 was even more impressive, winning a title with the 20th highest payroll in the league — $47 million — versus the league median of $54 million. They have maintained continuity by hanging on to players such as Tim Duncan, Manu Ginobli and Tony Parker, as well as head coach Gregg Popovich. Even though their A-team players have aged in the past few years, they are Western Conference staples in the playoffs.

So large payrolls don't always mean guaranteed winners—sunny locations help, too.