The Washington Nationals have been one of the best teams in the MLB for the past several years and them spending big on players has contributed to it. Since 1998, when data on payrolls was available, the Nationals’ payroll has continued to increase, but with this increase they have won more games. Looking at the data below, which was put into excel for easier visibility, in 1998 the Nationals were one of the worst teams in baseball finishing in the bottom five teams in wins, while having the lowest payroll out of any team. However, in the 2016 season they were top three in wins, while having one of the highest payrolls in the MLB.
To further analyze this relationship for the Nationals, I used SAS to perform an Ordinary Least Squares Analysis on my data. The payroll of the Nationals, in millions of dollars, was used, as the independent variable and wins was the dependent variable. The results are shown below.
To begin, the independent variable payroll has a coefficient of 0.17454, meaning for every million-dollar increase in payroll; the model expects wins to go up by 0.17454. This may seem like a steep price for the Nationals to increase their wins, but for a team that has millions of dollars at its disposal, it is not as extreme. The payroll variable had a standard error of 0.0496 and a t-value of 3.52, leading it to be statistical significant at the 1% level, but not at the 0.1% level. However, the R^2 was only 0.4214, meaning the model explains a somewhat small portion of variance from the dependent mean.
There are plenty of other reasons for why the Nationals’ seasons have ended up the way they have, such as when then Washington Nationals, moved from Montreal in 2004. It takes time for a team to settle in a new area, as can be evident when they won 83 games in 2003, while still in Montreal, but then only 67 in 2004 in their first year in D.C., but then bouncing back with 81 wins in their second year in D.C. They had similar payrolls in all three years and could help explain why the model may not explain much of the deviation. Also, with moving to D.C. it gave the team the ability to persuade better players to join their team, as players found it a better fit for them. Also when the team moved, they got a fresh start with new fans, which could have contributed to the Nationals winning games. Another contribution to wins, could be the hiring of Dusty Baker as manager in 2016, when they won 12 more games as the year before, but had almost 30 million dollars less in payroll. Lastly, another possible explanation of the success of the Nationals could be related to the introduction of key young stars, such as Bryce Harper and Stephen Strasburg, that have both already been multiple all stars nominees, but are still on beginning contracts.
Every team’s payroll has increased since 1998 and this could be due to a few reasons. First, with the improvement of technology, games have been able to expand into further areas like social media, television, and others. These areas have greatly increased the revenue teams bring in, allowing them to pay their players more. For example in 1998 the average salary per player was $1,441,406, while in 2016 the average salary was around $4,380,000. This increase in salary could also be contributed to baseball becoming more popular, with more fans going to games or buying merchandise. Also as can be seen below, the average ticket price has increased around $9 from 2006 to 2016, while keeping attendance relatively the same. Teams may have been able to charge more for prices, because the economy has continued to fight out of the Great Recession that hit in 2006 and a big jump in ticket price can be seen from 2007 to 2008.
My study could have possible been improved by running regressions on all teams seeing how their payroll has affected wins. Especially when considering most teams generally stay in the same percentile of payroll and have not grown their payroll as much as the Nationals have.
Overall the increase in the Washington Nationals payroll has helped them win more games, as it is statistically significant at the 1% level, because it allows them to bring in better players. Such as Max Scherzer before the 2016 season, who ended up being the 2016 National Cy Young Winner. However, the change in payroll does not explain as much of the Nationals’ wins as I expected and there could be many other explanations as to why the Nationals have improved since the late 1990’s. So yes, the Nationals have bought some of their wins, but other factors have contributed to their continued success. I expect the Nationals’ payroll to continue to increase and for the Nationals to be a powerhouse for years to come.