MLB Payroll

The data above (not all that well labeled) shows total MLB payroll (blue bars) vs. the correlation of each team's payroll to a calculated estimate of the DMA value for each franchise.

Being a Padres fan, I care a lot about the discrepancies in spending power across the MLB franchises. I wanted to post some work I did playing around with team payrolls.

Summary of data and methods:
Took team payroll data from the USA Today database: (http://content.usatoday.com/sports/baseball/totalpayroll.aspx?year=2009)
I organized them by year, and did some basic clean up (like creating an index: team salary / MLB average x 100).

I also had pulled down DMA information from the census. I basically took population numbers by DMA and HH income by DMA, creating a "pool of money" or DMA value (Income per HH x Population = value of DMA; yes I should have income person, but since I am being consistent across DMA's and just using it for relative value of DMA's, not absolute, I think it is OK).

So I trended the salaries, but also ran the correlations between the DMA value index (value of the DMA / average DMA value; this does not change) vs. the payroll index (listed above). I trended the correlation.

My findings were pretty striking. Starting around the mid-90s, payrolls really began to increase. What is interesting, is that the correlation between the DMA value and the franchise payroll strongly increased to almost .90. I interpret that with the steroids era, money really began to flow into MLB and suddenly the stakes got higher for winning, so the teams that could spend more started to do so, getting to the point where it is .90 correlation. I am sure there are others, but the relationship is very interesting.

Method stuff: For the teams that share a DMA (NYC, Chicago, LA, etc), I split the value of the DMA 50/50. I am guessing fine tuning that will not change the results very much.