Every year, baseball fans across the country ask themselves the same question: What will it take for their team to make it to the playoffs, maybe even win it all?
A team can spend hundreds of millions of dollars grabbing the biggest stars in an attempt to buy glory—and still fall short (sorry, New York Mets). Another team with a much smaller payroll, like the Cleveland Guardians, might try to develop the hottest prospects to top the standings.
But how much does budget influence a team’s performance?
Boston University finance expert—and baseball fan—Mark Williams wanted to look at that question the way he would look at any business problem: by comparing pay versus return.
With two graduate students, Ethan Davis and Dan Shin, and BU alum Brandon Cohen, Williams created MLB Toolbox, a new data platform that compares team payrolls with on-field performance.
As part of the project, the team analyzed years of regular-season data, ranking teams by spending efficiency, wins, and wins above replacement (WAR), a metric commonly used to estimate a player’s overall value and how many additional victories they bring to a team. (Spoiler: the Red Sox aren’t topping the standings.)
The website also lets users compare teams and players, examine contract value, and build sample rosters under payroll limits. A Questrom School of Business master lecturer of finance, Williams says the goal is to make front-office decisions more transparent to fans.
Here, Williams digs into why he brought a finance lens to baseball, what the toolbox reveals about team spending, and what professional organizations can learn from the numbers:
How did MLB Toolbox come about, and what question were you trying to answer?
The goal was to do an MLB pay-versus-performance study. In 2019, I did a study with a group of BU graduate students that focused more on activities happening on the field, behind home plate, and the lack of umpire accuracy in calling balls and strikes.
As a result of that initial research, public awareness increased, and today we have ABS [Automated Ball-Strike] challenge systems [which allow players to appeal home plate umpire calls using tracking technology]. For us, that was pretty exciting, to feel like you’re part of that and that your research could be applied, and change could happen for the better.
Our goal from the very beginning with the 2019 study, and also with this study, is to make the game better.
What made you interested in studying baseball through a finance lens?
I was very interested in evaluating, for example, executive pay versus performance in the stock market, quantifying cost and measuring outcome. I thought: Why not apply similar tools to evaluate pay versus performance of the 30 MLB teams?
What were the biggest findings from your analysis?
There were some conclusions that we were surprised about. We found that there were several teams that really punched above their weight. Just having a big salary, or having a lot of money, didn’t necessarily mean that you were going to win enough to make the playoffs or go on and play in—or win—the World Series. Small- and middle-market franchises, such as Milwaukee and Cleveland, have been very effective with small payrolls and have been able to generate a large amount of wins—and even make it to the playoffs.
There are lots of teams that have lots of money, but they just can’t put it together, while there are other teams with constrained payrolls that have been able to string the wins together in an impressive way.
What did you learn from teams like the Milwaukee Brewers?
Milwaukee’s success is fascinating. When you look at its roster value, 62% of it comes from its farm [minor league] system. It proves it’s been very successful. Roughly 28.5 [wins above replacement] came from pre-arbitration players [those with less than three years of league service] in the 2025 season—and this is the highest production in baseball.
What we also learned is that you can’t just rely solely on pre-arbitration players. To actually go deep into the playoffs—although Milwaukee had significant wins this past year—you also have to spend some money on the franchise free-agent players. Milwaukee isn’t doing enough of that.
What did your analysis show about roster construction?
What the research demonstrated is that you can’t build a successful franchise with large amounts of wins, 90 or more, just with young players. You also have to have franchise players. It’s really a combination of two things. We also see teams that aren’t that effective because they’re in what we call the mushy middle. They’re not spending enough for their top talent, and they’re relying too much on younger, pre-arbitration talent.
Does that mushy middle include our Boston Red Sox?
The Red Sox, in regard to payroll spending, landed number 12, so they were almost squarely in the middle. But it actually speaks to a franchise that is getting to the mushy middle. They’re selling off their franchise players. Mookie Betts was a great example, and Alex Bregman was another more recent example. Unlike Milwaukee, they devote a much smaller percentage of WAR to younger pre-arbitration players.
What does this say about rising salaries in baseball?
That MLB franchises with bigger payrolls have a bigger and growing advantage. In the last five years, the cost of free agents went up 170%. That’s an important aspect of all this. I think MLB should look at this in more detail and reassess where we are. This is one of the only professional sports [in the United States] that doesn’t have a salary cap, and MLB really needs to start considering it to make sure there’s a level playing field for all 30 franchises.
Imagine how boring MLB would be if we had only five large-market teams constantly dominating and winning everything. That’s not the baseball that we grew up with and loved.
Did you see any connections between how successful baseball teams are run and how businesses stay at the top?
Many of the owners of these franchises came to baseball later in their lives, after successful careers in other businesses. The commonality of successful franchises, in how the front office manages, is strong risk management. To be strong in risk management, you must identify the risks, understand the upside and downside, and make a decision of whether that risk is worth taking. When we, as fans, think of wins, losses, playoffs, and World Series, many owners think of risk management and profitability. They understand that just going to the playoffs can be good enough for franchise profitability and fans will remain loyal.
What do you hope people take away from MLB Toolbox?
We wanted the research to not be stale, but useful. That’s why we also created an app. What we hope to do is create transparency so fans can better understand front-office decisions and how they impact the performance of their individual teams. We hope it can also be a useful toolbox for MLB front offices as it is updated over time. Ideally, fan feedback will continue to improve it.
This interview was edited for length and clarity.
Source: Boston University
