Moneyball Existed Before Billy Beane and the Oakland A's

A previous story on Investigative Economics detailed how money didn’t appear to significantly affect the outcomes of major league baseball teams in the 2000s. Payroll spending didn’t significantly correlate with more wins.

Teams with low or middling payrolls made it far, sometimes winning the World Series, without breaking the bank.

For some teams it was a factor; others not so much. Between 2010 and 2020, Pearson correlation values between win-loss percentages and total payroll might be .315 for a season (not highly correlated) or lower.

But that analysis was reserved to the 2000s. In the late 1990s, almost the opposite was true. Between 1995-1999, payroll correlated with winning to a substantially larger degree, and the highest paying teams were regularly at the top of their leagues based on various data sources (Fueled By Sports, Baseball Reference, Steve the Ump, and Major League Baseball). Data for 2019 was not available.

In 1999, it was the top three spenders—Texas Rangers, Atlanta Braves, Cleveland Guardians/Indians—at the top of their leagues. Other big spenders weren’t far behind.

In that era, payrolls heavily correlated to win-loss ratios, with Pearson correlation values between .58-.75 every year—sometimes twice what it was ten years later.

That correlation then stopped abruptly in 1999, a few years before the 2002 season that Moneyball the book was based on.

The book details the tactics used by Billy Beane of the Oakland Athletics to leverage advanced statistics to compete despite a relatively small payroll.

Not every team that spent a lot in the late nineties did well, and vice versa, but the trend indicates that more money often led to more wins. That correlation between payroll and win-loss ratio would drop off after 1998.

Late Nineties Era in Baseball

The late nineties into the early 2000s was a tumultuous time for major league baseball as 1998 was the peak of the steroid era—when numerous high profile players were identified for use of the drug.

It was also a time of major contract negotiations, when stars like Bobby Bonilla earned large payouts despite being at the end of their career. Bonilla’s final contract signed in 2000 would earn him deferred payments of over $1 million a year between 2011 and 2035—over $24 million—despite the fact that the team only owed him $5.9 million. Bonilla last played in 2001.

The New York Mets assumed they would save money by paying out Bonilla incrementally so they could use the spare cash to invest in Bernie Madoff’s Ponzi scheme at the time.

In 2000, Alex Rodriguez would sign one of the most lucrative contracts of all time at $275 million for ten years with the Yankees. Rodriguez would eventually admit to using steroids between 2001 and 2003 while playing for the Texas Rangers before joining the Yankees in 2004.

Team Payrolls always increase each year, but beginning in the late nineties, they increased even faster. Since then, average spending by each team has tripled.