Which MLB, NBA, NFL Teams Are the Most Cost-Efficient With Payrolls?

Studies
Which MLB, NBA, NFL Teams are the Most Cost Efficient With Payrolls?

It’s no secret that professional sports teams spend staggering amounts of money on their players. When added all together, the roster payrolls for franchises in the NFL, NBA and MLB total almost $113 billion since 2000.

But not all franchises use their money in the most cost-efficient way. The best teams in sports over the past decade and a half, such as the Patriots and Spurs, have been known to get the most bang for their buck.

NerdWallet analyzed win-loss records and payroll data since 2000 to figure out which teams in Major League Baseball, the National Basketball Association and the National Football League have been the smartest spenders.

Our rankings of all 92 baseball, basketball and football franchises are based on financial efficiency — roster spending vs. team performance.

In our analysis, we counted regular season victories over the past 15 years and factored in whether the team had won any championships to create an “adjusted wins” total for each franchise.

We then divided each team’s share of the league’s total adjusted wins since 2000 by the team’s share of the league’s total payroll over that same time. This gave us a payroll efficiency index with an average score of 1. The more financially efficient a team is, the higher the index number.

Highlights

Top 3. The New England Patriots, San Antonio Spurs and Miami Marlins are the most financially efficient teams in their leagues.

Big Apple’s big payrolls. The Knicks and Yankees are two of the most financially inefficient teams in sports, thanks to spending that far exceeds their peers. The Mets are also in the bottom 10 of all the teams we analyzed.

Pittsburgh’s got two. Pittsburgh is the only city with more than one team among the top 10. The Steelers and Pirates have gotten more bang for their buck than most of their peers.

League numbers. The average price of a MLB win is $1,016,674, compared with $1,572,768 in the NBA and $11,878,369 in the NFL.

Payroll efficiency rankings
for MLB, NBA, NFL

 

MLB payroll efficiency rankings

Although Major League Baseball has a luxury tax designed to discourage excessive spending on payrolls, it’s the only sport among these three that doesn’t enforce a salary cap on its teams. This means there’s a much greater variance in the payrolls of MLB teams than in other leagues. For example, since 2000, there’s a 273% gap between the Pittsburgh Pirates’ average annual payroll of about $48 million compared with almost $179 million annually for the Yankees, the biggest spenders in baseball.

That prolific spending is what pushed the Yankees to the bottom in payroll efficiency among MLB teams, despite having the third-highest adjusted win total in the 21st century.

Meanwhile, the Miami Marlins, who won the World Series in 2003, are the most financially efficient baseball team in our study. The team’s payroll efficiency index of 1.69 reflects their perennial ranking among the league’s lowest payrolls.

Since 2000, MLB teams have spent more than $37 billion on payrolls.

 

NBA payroll efficiency rankings

The San Antonio Spurs have been one of the most successful sports franchises of the 21st century, winning four championships (not including a win in 1999) and over 70% of their games. Over these 15 years, the team’s annual payroll has ranked in the middle of the pack, meaning they’ve enjoyed strong on-court returns on their investments.

With a payroll efficiency index of 1.86, the Spurs have been nearly twice as efficient with their dollars as the average team, resulting in their status as the most financially efficient team in basketball.

At the bottom of the list: the New York Knicks. Despite spending more money in the past 15 years than any other team in the league, the Knicks have suffered the fifth-lowest rate of success, resulting in a payroll efficiency index of 0.56, the lowest of any team in the NBA, MLB or NFL.

NBA teams have spent over $28 billion on their rosters since 2000.

 

NFL payroll efficiency rankings

As good as the Spurs are, the title of most financially efficient sports franchise of the 21st century goes to the New England Patriots — the reigning champs and winners of three other Super Bowls in the past 15 years. The Patriots have also won over 70% of their games since 2000.

What puts them at the top of this list is how relatively little they’ve had to pay for their tremendous success: New England’s average payroll has been among the five lowest in the NFL. With an index score of 2.06 (yes, they’ve been more than twice as efficient as the average team), the Patriots are the most financially efficient team among the three largest U.S. professional sports leagues.

At the other end of the spectrum are the Detroit Lions, whose middle-of-the-pack payroll and league-lowest winning percentage earned them a payroll efficiency index of 0.60.

The NFL is America’s most popular sports league and the money reflects that. Since 2000, NFL teams’ roster payrolls have totaled over $47 billion — 67% more than the NBA’s and 28% higher than MLB’s, despite baseball’s lack of a salary cap.

 

Methodology

Since a championship is any team’s ultimate goal, we factored achievement into our calculation of the most financially efficient teams. If a team won a title, we added a full season’s worth of wins to the franchise’s number of regular season wins since 2000 to come up with an adjusted total of victories. A championship is equivalent to 162 extra wins in the MLB, 82 in the NBA and 16 in the NFL.

The payroll efficiency index was derived using the following formula:

(Team’s adjusted wins/league’s total adjusted wins)/(team’s payroll/league’s total payroll)

Adjusted wins = number of regular season wins + (number of championships * number of games in a season)

We examined data for the 15 most recent seasons in each league. This analysis doesn’t include the current 2015 MLB season, nor does it include any luxury tax payments incurred by the teams.

Data sources: USA Today, Spotrac.com, Baseball-Reference.com, Basketball-Reference.Com, Pro-Football-Reference.com.


Football strategy image via iStock.