The Epidemic Plaguing Baseball’s ‘Best’ Teams

Many of baseball’s most financially efficient teams are faced with an injury epidemic that’s only getting worse.

May 21, 2014 at 1:56PM

There are many ways to judge a baseball team, but one method often flies under the radar. By measuring the total cost of a win in terms of payroll dollars, it's possible to determine which MLB clubs are the most – and least – financially efficient. The Motley Fool's Baseball Efficiency Standings, or "B.E.S.T." for short, do just that.

After the first three weeks of May, the Miami Marlins, Houston Astros, and Oakland Athletics are the only teams to have a cost per win below $1 million. The A's, in particular, are on pace to win more than 100 games with the third best payroll efficiency in the MLB.

Baseball Efficiency Standings | Create Infographics

Oakland's success, along with the Milwaukee Brewers and Colorado Rockies, proves that, at least in 2014, it's possible to be fiscally responsible and dominant on the baseball diamond.

The epidemic that's plaguing baseball's 'best'
Still, for some teams atop the Baseball Efficiency Standings, it's not all sunshine and rainbows. A rash of Tommy John surgeries – called an "epidemic" by famed surgeon James Andrews – has swept through the sport.

First completed in the 1970s on then-Major League pitcher Tommy John, the purpose of the operation is to reconstruct the elbow's ulnar collateral ligament. Since then, the number of surgeries performed on active MLB players has risen dramatically. Bill Petti reports there were 19 Tommy John operations between the 1974 and 1994 seasons. Over the past two decades, there have been more than 600, with an all-time high of 69 in 2012. If this year's pace holds, the 2014 season will mark a new record, likely over the triple-digit mark.

Interestingly, some of baseball's most efficient teams have been disproportionately affected. According to Petti's research, the Padres, Braves, and A's have each watched six of their players undergo Tommy John surgery over the last two seasons.

While Oakland has been stellar this season with a cost per win of about $809,000 and a 162-game pace of 103-59, the team has lost two of its most cost-effective starting pitchers to the operation – A.J. Griffin and Jarrod Parker. Both finished in the American League's top 25 in earned run average last season, and each are on the books for a mere $500,000 or so in salary this year.

The Braves are in a nearly identical spot after losing rotation mates Brandon Beachy and Kris Medlen in March. Beachy has a career ERA of 3.23 in a little over three seasons of Major League action, while Medlen was a top 40 starting pitcher by WAR (a popular sabermetric) in 2012 and 2013.

Why Miami may have it the worst
The Marlins are baseball's most efficient team, and are on pace to flirt with a playoff berth after finishing a National League-worst 62-100 in 2013. This year, the team is paying less than $600,000 per win. That's just 20% of what the L.A. Dodgers, who sport an identical winning percentage, are paying.

Marlins

Image via Steve (MrLaugh), Flickr.

When it comes to the most visible Tommy John surgery of 2014, though, that undesirable honor goes to none other than Miami, and its ace, Jose Fernandez.

After winning the 2013 NL Rookie of the Year, Fernandez was one of the MLB's best pitchers through April. He finished the month tied for the league lead in strikeouts, tied for fourth in ERA, and fifth in WHIP. According to Sports Illustrated, Fernandez was among the top three candidates for the NL Cy Young.

This momentum came crashing to a halt, though, when Fernandez faced velocity issues during a May 9 start against the Padres. He was soon after diagnosed with a UCL tear, and had Tommy John surgery last week. Fernandez isn't expected to return until the summer of 2015 at the earliest, and without him, the Marlins lose one of the most cost-effective players in baseball. The 21-year old is set to make just $635,000 this year, lowest among the MLB's top-tier starters outside of St. Louis' Michael Wacha.

What about the players themselves?
For teams like the Marlins, Braves, and A's, it's obvious why losing cheap, effective pitching hurts. By getting elite production from pitchers like Fernandez and Medlen, it's possible to keep pace with the Dodgers and Yankees of the world, while maintaining a payroll that's significantly lower. But what about the players themselves? Does Tommy John surgery alter their earnings potential after the operation?

Wendy Thurm at FanGraphs recently discussed this issue:

"For these pitchers, the surgery and rehabilitation will consume critical service time in their careers when they would otherwise be building up value for their arbitration-eligible seasons or free agency.... While teams have every incentive to provide the best medical care and rehab...[they] will use the TJ procedure — and the missed innings — as a reason to hold down future salaries."

As Thurm points out, Fernandez will be eligible for salary arbitration in 2016. The process, which is used a handful of times each year, allows teams and players to settle salary disputes with panels appointed by the MLB and the MLBPA. In almost all cases, final arbitration salaries are based on performance and longevity. A long-term injury, such as one that requires Tommy John surgery, can negatively affect final salary awards.

In Fernandez's case, he'll have less than a full season to prove he's back to his pre-injury skill level. Players who have less time before arbitration, like the A's Jarrod Parker, are more "at risk" of lower earnings in the future, Thurm says.

The bottom line
Injuries are a part of baseball, sure. But, arguably, it hurts the most when a cheap and effective arm goes down. There's no way to know just how the MLB can solve the Tommy John epidemic – limits on pitch velocity, lowering the mound, and better innings caps have all been suggested – but one thing is clear: it's an absolute killer for financial efficiency. Whether it's the Marlins this year, or a low-payroll team that relies on young pitching in the future, baseball's "B.E.S.T." will need to find a fix sooner rather than later.

Will this stock be your next multi-bagger?
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks 1 stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303% over the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of fool.com.

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to www.fool.com/beginners, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at www.fool.com/podcasts.

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.


Compare Brokers