Visualizing the Recent MLB Payroll Disparity, its Reasons, and its Effects
The MLB differs from other major league professional sports such as the NFL, NBA, and NHL in one major way: there is no salary cap.
A salary cap is an agreement amongst the league that places a limit on the amount of money a team can pay their players.
Although there is a luxury tax (a fee for each dollar spent over a predetermined threshold),
teams are more than incentivized to pay their players as the revenue generated through tickets, merchandise, and ads when a team is winning warrants it.
This rule can create an extreme competitive advantage for teams located in large markets such as New York and LA.
With franchise values ranging from less than 1 to over 5 billion, and sports salaries only increasing as time goes by,
the difference in payrolls amongst MLB teams is drastic and widening.
We aim to explore teams' payrolls and geographic markets with the goal of investigating whether this competitive advantage truly translates to winning.
*Note: Salary figures from the 2020 pandemic-shortened season were prorated to 37% of their actual value, which is reflected in this data and appears as a dip in spending for all teams.
This scatterplot graphs teams' regular season winning percentages and seasonal payroll. Use the time slider below to move across the last 10 years of data. Clicking on a point will show details about the team in the side panel on the right as well as highlight its metro area on the map below. Teams can also be searched by name/city on the left.
The map below plots the Gross Domestic Product (GDP) of every metropolitan area in MLB. This statistic, along with population, are key measures of market size, which directly correlate with how much revenue a team will bring in. Hover over a city to see its GDP and population, or click to see where the team ranks in the scatterplot above and in the sidebar.
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