The calculation is to take each team's payroll and subtract $12 million, which is essentially the least you can spend on a major league team's payroll. Then, take their wins, and subtract 48, which is about the number of wins a team made up of entirely replacement-level players would win. I didn't check his math on that part, but it sounds about right to me.
Sky then also penalized each NL team 2 wins and added 2 wins to each AL team to account for the overall superiority of the junior circuit.
The result is that the Nationals, even at a $54 million opening day payroll, are the third least efficient spending team in the league, with each marginal win over replacement costing a hair over $4.9 million. Only the Mariners and Padres spent worse. If you reject the AL/NL win adjustment (which I don't totally buy), the Nationals rise all the way to fifth least efficient spending team, ahead of the Mariners, Tigers, Padres, and Yankees.
And since it's generally easier to spend your first $10 million effectively than your last $10 million, it's quite something to spend so little money so inefficiently.
There's always been a camp of people out there who want to give Jim the benefit of the doubt because he's supposedly always been hamstrung by tiny payrolls. There are three reasons why I find this uncompelling. First, he did actually have top 5-type payrolls for his first few years in Cincinnati, and he still only made the playoffs once. Second, he's never once that I've found lost a good young player to free agency. It's not like he's Billy Beane or Terry Ryan developing really good players all the time and losing them to free agency. To the extent he's been held back on payroll, it's just that he's never been able to plunder the small-market teams. And since when is it unreasonable to expect a GM to develop some of his own talent?
But this is the most important point--what money Jim has had to spend, he's wasted. Dmitri Young instead of Milton Bradley. Paul Lo Duca instead of Kyle Lohse. These are the bad spending decisions that not only squandered money but put crappy teams on the field. These tables show the facts: just spending more money isn't going to turn the Nationals around. We need someone at the top who's going to spend well. It's about talent evaluation, not just writing big checks.
- BTW I know we're all supposed to be talking about Teixeira and nothing else, but, sorry, I'm bored of that story. I'll comment again when there's actually something to talk about.
- Commenter Cpt. Murdoch points out that based on this same methodology for calculating marginal cost per win, the Nationals were 5th most efficient in baseball in 2007. Consider it acknowledged. Of course, it's a lot easier to rank high on this metric as a small budget team, and it takes a special level of failure to ever get so close to the bottom of the list with a payroll the size of the 2008 Nationals. So I still think that the weight of the '08 data point is greater than that of the '07 result. But he's right it's worth recognizing for the sake of context and fairness (geez the fairness police are out in force this morning... must be a wave of goodwill for the holidays or maybe the Tex offer or maybe just people feeling the hope with Obama comin' to town...).