The Toronto Blue Jays signed starting pitcher R.A. Dickey in a high-profile deal last year that saw the club’s total payroll jump considerably.ROBERT GALBRAITH/Reuters
Canadian companies usually get what they pay for in a chief executive officer, according to recent research. But does the same theory on pay and performance hold true in major league baseball?
The Bank of Montreal is blending financial analysis and the ol' ball game in a study of teams' payrolls and how much they are winning halfway through the season.
"With no salary caps or league parity, baseball is the closest thing to a free market in sports," said Jack Ablin, chief investment officer of BMO private bank, a Chicago-based division of U.S. business, BMO Harris Bank N.A. He's also the one who compiled the list.
This year, Mr. Ablin found some exceptions to the rule that more financial resources can attract better players and build better teams.
Take the Oakland Athletics, for example. The team is performing well with a payroll that amounts to a measly $60.4-million (U.S.). This is the same team that inspired the book Moneyball: The Art of Winning an Unfair Game by Michael Lewis, which shows how general manager Billy Beane analyzed player stats to rebuild the A's without much money.
And there are big differences in budgets: The New York Yankee's payroll is $228-million, which is more than 10 times the pay the Houston Astros will dole out this year. "In fact, there are currently 10 players in the league, four of whom play for the Yankees, who individually earn more than the entire Astros' payroll," Mr. Ablin points out.
So how does Canada's only major league team rank? The Toronto Blue Jays went on what Mr. Ablin calls a "spending spree" for the season, paying out $117-million. But right now the team is on track for a third-place finish in its division: "While generally, high spending teams get the best results; this year may be an exception," he said.
(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)
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