No, the Dodgers Haven’t Broken Baseball’s Competitive Balance
Payroll and winning aren’t as closely linked as many believe—someone should tell the teams and their fans
The Los Angeles Dodgers rocked the sports world during the 2024 offseason, spending a historic amount of money to acquire some of baseball’s biggest stars. The most high-profile move involved superstar Shohei Ohtani, whose 10-year, $700 million deal broke records and reshaped the landscape of contracts across the sport—an agreement that will likely have ripple effects for years to come. The team also signed Japanese ace Yoshinobu Yamamoto to a 12-year, $325 million contract and entered the third year of future Hall of Famer Freddie Freeman’s 6-year, $162 million deal. These blockbuster moves dwarfed additional 2024 signings of all-stars Teoscar Hernández and Tyler Glasnow.
Many feared that this “buying up of talent” by the Dodgers—who paid a record-breaking $103 million luxury tax in 2024—would upend competitive balance in Major League Baseball. The 2024 Dodgers proceeded to win the World Series, seemingly validating the concerns of critics who questioned the front office’s aggressive moves, particularly their heavy use of deferred payments, and how it might effect the structure of the league.
The Dodgers didn’t bask in their championship for long. Prior to the 2025 season, L.A. added two-time Cy Young Award winner Blake Snell on a 5-year, $182 million deal, signed top Japanese prospect Roki Sasaki, and acquired a handful of other above-replacement-level players.1
The Dodgers lead baseball in 2025 with an estimated $338 million cash payroll.2 While this doesn’t top the all-time charts relative to 2025 dollars, their ~$138 million luxury tax bill—due to both repeat offender status and extensive use of deferred payments—pushes their estimated total spending to around $525 million, making them the first team in MLB history to surpass the $500 million mark.
This sparked much conversation and controversy in the baseball world. Many feared it would erode the parity that has long defined Major League Baseball and usher in a new era of “haves” vs. “have-nots,” with the Dodgers the first major domino.
I wrote a few weeks ago about baseball’s recent apparent lack of parity, but ironically, the Dodgers are not at the forefront of this. As of Thursday June 12th, L.A. holds a good but not astounding record of 41-28—fifth best in baseball and four games back of the MLB-leading Tigers. The 2025 Dodgers are shaping up to be the latest example that, while money can buy talent, it still doesn’t guarantee wins.
The Relationship Between Payroll and Winning
Despite all the concerns about big-market franchises spending big-bucks to “buy” wins and championships, there is a surprisingly low correlation between the two. The correlation between winning percentage and payroll in the MLB dating back to 1995 is merely 0.38—translating to payroll alone accounting for just around 14% of the variation in winning percentage. It is a similar story when it comes to championships. Just four times since 1995 has the top-spending club won the Fall Classic. Only one time has the top-spender made the World Series but lost. Ironically, the top-spender has missed the playoffs entirely just as frequently as it has made the World Series—five times. I thought using 1995 as a starting point made since, as it immediately followed the labor strike of 1994, which prevented a salary cap and persevered salary arbitration.
The median winning percentage ranking of the top-spending franchise since 1995 is 3rd, which is surely respectable, however when it comes to the winning the World Series, the median team has a payroll ranking of 6.5. In other words, half of World Series winning teams had a payroll which ranked outside the top six in the MLB. Big spending usually produces one of the top teams in the league, but it rarely leads to a championship.
Nonetheless, Teams Continue to Pay
These results haven’t seemed to crack the skulls of the deep-pocketed owners, who continue to pay more and more for wins. Even when controlling for inflation, the cost of a win in Major League Baseball has skyrocketed over the years. The chart below tracks how many wins $100,000 in payroll has, on average, translated to dating back to 1995.
Some Have Spent More Wisely Than Others
The overall dollar amount may mean less than how, exactly, it is spent. Some teams have been more effective and efficient than others in their spending. Using a simple linear regression model to predict wins based on payroll, I was able to calculate each team’s expected wins each season based on how much they spent. The chart below plots each franchise’s average annual wins (per 162 games) against what would be expected based on the linear regression.
The Atlanta Braves emerge as the smartest spenders, on average out-winning their payroll by nearly 9 games. On the flip-side, the Colorado Rockies have failed to win up to their payroll expectations to the greatest extent, winning 6.5 fewer games than their payroll would suggest. The biggest spenders since 1995—unsurprisingly the New York Yankees—have lived up to payroll expectations, winning 4.3 more games than predicted.
In Conclusion
While handing out big contracts to top-tier stars certainly contributes to a team’s success, it’s far from a guarantee—and definitely not the be-all, end-all. Much more goes into building a winning ballclub than just acquiring expensive talent, especially in baseball, where individual players—particularly non-pitchers—have less direct influence on game outcomes compared to other sports. In football or basketball, one elite player can completely transform a team into a title contender. Baseball doesn’t work that way. Teams need chemistry. They need the right roster construction, playing the right style of game. And they need to avoid the injury bug—something the Dodgers are learning the hard way right now.3
To be clear, I’m not calling for teams to follow the lead of the Pirates or Marlins, who seem almost allergic to spending. Rather, I’m pushing back on the hand-wringing and complaining that the Dodgers are destroying Baseball’s competitive balance. If simply spending money were the key to winning, someone would’ve cracked that code a by now.
Pitchers Tanner Scott, Kirby Yeats and Blake Treinen, outfielder Michael Conforto, and infielder Hyeseong Kim. Along with re-signings of to-be HOF’er Clayton Kershaw and veteran Kike Hernandez.
Per Baseball Reference’s estimates.
Well done Sean and you didn't even mention Steve Cohen and the New York Mets!