The fall of the Mets, Yankees, and Padres, the three highest payrolls in MLB this year, should tell us something about the future of the sport. Good development and analytics have caught up too and lapped around big money.
Why MLB Spending Isn’t Everything Anymore
For most of MLB history, it has been known as the sport with somewhat of a big market advantage. Teams such as the Yankees, Red Sox, and Dodgers have dominated with their money, history, and star power. With no salary cap, all teams had to do to retain their talent was bring them up and pay them, and thus after free agency began it was easy to keep players in big markets.
For a long time, if you were the Royals or Pirates, it was just hard to compete. Unlike the NBA or NFL, it’s how most people believed the sport was.
Changes in 2023
In 2023, the teams with the highest payroll to start the season were the Mets, Yankees and Padres. These teams made splashy signings such as Justin Verlander, Carlos Rodon, and Xander Bogaerts, and extended players such as Aaron Judge and Manny Machado. All 3 were expected to compete to win their divisions and then eventually, a World Series.
However, as we are almost through August, all three of these teams currently sit under .500. The Mets traded aces Max Scherzer and Verlander at the deadline, the Yankees are calling up young prospects to prepare for next year, and the Padres sit in 4th place and 17.5 GB of their division.
Meanwhile, the notoriously cheap Tampa Bay Rays sit at 76-51 despite injuries. The Dodgers, after letting several key free agents walk in the interest of possibly signing Shohei Ohtani, are dominating their division again. The Baltimore Orioles spent almost no big money and are first in the AL.
Things look almost upside down from a payroll standpoint, and it may be confusing to think about why this is. You may ask, what is the key factor driving these teams? It is development.
Development is Everything
The key force between teams like the Orioles, Rays, and Dodgers, who have succeeded without spending huge money, has been their farm systems. Their farm systems have consistently ranked in the top five over the last five years, and they continue to have players come up and excel in their systems.
The Dodgers are a big market team and spend a lot, but it is their development that gives them the prospects to trade for guys like Mookie Betts and Trea Turner, and allows them to let key pieces walk when the number gets too big. The thing about spending big is that baseball contracts are designed to give elite players a few extra years past their prime, and that can hurt you when you just sign anyone.
A player like Giancarlo Stanton of the Yankees regressing forces you to give a subpar player at bats and big money for a lot longer than you would want.
That is why the key is to make sure you continuously have good players coming into your farm system. Signing aging stars can help you a little bit, but they are not guaranteed to return that value and even if they do, you will pay the price for it. The Yankees have had several prospect failures over the last five years that have cost them and forced them to re-sign aging players.
The Padres did develop Fernando Tatis, but have otherwise relied on trading their young talent to acquire big name stars that sometimes overperform. The Mets pitching staff has been almost entirely signed through free agency. The key to winning in this league is young, affordable cores supplemented with a few high quality veterans. Spending 300 million will not outdo that anymore.