Last year I wrote a post about the relationship between team payrolls and wins in 2015. In some cases the highest spending teams were rewarded with more wins than average, but not always. Updating this now for 2016, there is a huge difference in payrolls, from just under $50,000,000 to over $200,000,000. Note payroll info is from www.baseball-reference.com.
Two of the three AL division winners (the Boston Red Sox and Texas Rangers), had combined payrolls at the high end of all teams in the league. The Red Sox spent $218,682,750 on payrolls in 2016, while the Texas Rangers spent $212,117,760, the second most in the league. This compares to two teams who finished last in their divisions, and who spent less than $60,000,000 on their payrolls: Oakland Athletics ($54,969,067) and Tampa Bay Rays ($48,223,791). So what about Cleveland? They spent less than half on their payroll compared to their other two AL division winners and were able to win their division.
If you look at the graph below, it is broken into four quarters. The horizontal axis plots total wins for each time, and the vertical axis plots total payroll. There is a horizontal line cutting across the average payroll of all teams ($137M), and a vertical line cutting across the average number of wins for each team (82).
The top right part of the chart shows teams with above average payrolls, and above average wins (Bosox, Rangers, Jays for example) and the bottom right teams with below average payrolls and above average wins (the Astros and Indians). Lastly the bottom left part of the chart shows teams with below average payrolls and a below average number of wins (Chicago White Sox and Tampa Bay Rays for example).
Another interesting way to look at this data is if you look at the amount of money on payroll that each of these teams spent per win in 2016. At the high end there are five teams who spent over $2,000,000 on payroll per win last season. On the other end of the spectrum were the two teams that were most efficient in obtaining wins, spending less than $1,000,000 on payroll per win: Oakland Athletics ($796,653) and Tampa Bay Rays ($709,173).