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Something for Everybody: MLB’s Mechanism Design

2010 January 28
by Brian Goff

Continuing my recent Yankees theme … in a curiously long post on his blog, SI writer Joe Posnanski considers the effect of MLB’s playoff structure on the Yankees’ performance :

And in that way the expanded playoffs have been genius for baseball — not only because they are milking television for every dime but because the short series have been baseball’s one Yankee-proofing defense against the ludicrous unfairness of the New York Yankees. Hey, if the game is rigged, rig the game. The Yankees spend a lot more money than any other team. As a direct result, they had the best record in the American League in 2002, 2003, 2004, 2006 and 2009. They made the playoffs every single year but one this decade (and going back to 1995). They are the best team with the best players every year — that sort of big money virtually guarantees it.

Stefan Szymanksi made similar observations in his 2007 TSE post, A Measure of Success and Dave Berri in 2006 with Is Revenue Sharing Working? However, Posnanski isn’t exactly mollified by the relatively small number of World Series titles. In fact, he sees that as part of the plot:

So, you create a system where the best team doesn’t always win. In fact, you create a system where the best team often doesn’t win. For years the Yankees didn’t win. They lost to Florida. They lost Anaheim. They blew a 3-0 series lead against Boston. They lost to Anaheim again and Detroit and Cleveland — and how could you say that baseball is unfair? Look, the Yankees can’t win the World Series! See? Sure they spend $50 million more than any other team and $100 million more than most. But they haven’t won the World Series! Doesn’t that make you feel better?

And this has been the Wizard of Oz slight of hand game that Baseball has been playing for a long time … ignore the man behind the curtain who makes more money off of baseball than anyone else and can buy just about any player he wants. Ignore the absurdity of it all. Just remember: The Yankees haven’t won in a while! Just remember: Anything is possible.

Posnanski’s on the mark about the system’s effects, but I would turn his sarcastic rant about it on its head. Yes, MLB is having it’s cake and eating it too, but rather than nefarious “slight of hand” or “absurdity,” it’s “surdity”. As he later observes, the Yankees dwarf the rest of MLB by their payroll, but this is because they dwarf the rest of MLB in their fan base. If I’m running MLB, do I really want the Yankees (as much as I dislike them) at the same performance level as Kansas City and Pittsburgh over a decade?

The playoff structure isn’t outside the system, tricking everyone as Posnanski seems to imply. It’s an integral part of he system. If the Yankees lose in the playoffs, I enjoy that maybe as much or more than them losing in the regular season. Whether by design or serendipity, the expanded playoff format reduces their chances of winning it all while not taking them “out of the hunt” more frequently as a more constraining revenue-sharing system would. The large Yankee fan base gets something while non-Yankee fan bases get to see some team take them down with a degree of regularity. To use prevailing econ jargon, it’s a very useful design mechanism.

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