Front-Office Efficiency (FOE): How much can $1M get you?

Being a small-market franchise, the Rays need to be especially careful with how they're spending their money.  Simply put, we cannot compete with the Yankees and Red Sox if we attempt to run our team the way they do, a concept our front office knows incredibly well; however, I feel that not all Rays' fans fully appreciate the sacrifices that come with being a small-market team.  While this blog's readership is among the enlightened few, let's take a second to look at many of these principles.  

In order to be a succesful, competitive franchise, small-market teams must be: 

1. Strategic.  Large-market teams can use their money to purchase high-end talent without having to worry about how much payroll space they have.  If small-market teams want to splurge, they need to figure out who's going to be leaving to create the necessary space.
2. Willing to assume more risk than large-market teams.  Low risk, high reward players command serious bucks, so small-market teams are forced to rely on high risk, medium-to-high reward players.  These are your Carlos Penas and Jason Isringhausens - players that may or may not pan out, but are cheap and worth the gamble.  This also includes doing things like trading veteran players for prospects.  It's an inherently risky thing to do, but one that is necessary to keep payroll low while maximing your talent on the field.
3. Ahead of the curve.  Find a market inefficiency that allows you to get a valuable player for cheap.  Discovering the value of on-base percentage before anyone else did allowed Bill Beane to keep the Oakland A's competitive from 1999 - 2006.  Well, that's simplifying matters, but you get the gist.
4. Maximizing their returns.  While large-market teams can afford to pay market value for talent, small-market teams simply can't.  For example, the Rays have currently produced 44.4 WAR of value this season.  If they were to pay market value for that talent (the going rate for one win this past off-season was around $4.6M), their payroll would need to be $204M.  The Rays need to get the most bang out of their buck possible.

I came up with the idea for FOE the other day when I was pondering about the Rays' front office (FO) and the moves they've made this year.  While we praised the Rays' FO this offseason for signing Pat Burrell and Joe Nelson, in retrospect those moves have turned out less than stellar so far.  Also this off-season, the Edwin Jackson trade was fiercely debated at the time and the Sonny vs. Edwin debate refuses to die to this day.  And with the Scott Kazmir trade most recently completed, I found myself turning a critical eye towards our FO for the first time in a while.  That's not to say that I disagreed with the trade or was unhappy with the return; simply, I wanted to critically evaluate how effective our FO has been during its tenure.  Our FO has been very active again this year, and maybe I was giving them too much credit in the past and not being thorough enough in my analysis.

So here's how FOE works.  The idea behind it is to determine how much value a franchise is getting for every dollar invested in a player, so to calculate this, I took a player's total number of Runs Above Replacement (RAR) and divided by their salary.  I then multiplied that number by $1M, so the final FOE score would equal the number of runs contributed per million dollars spent.  The break-even point is about 2 runs per million, since a win (ten runs) is worth approximately $5 million.  In other words, higher than 2 FOE and a player has been worth more than he's been paid.  To get an idea of the metric, check this out:

The 2009 Rays' roster with FOE values included.

Ben Zobrist is ridiculous, but Longoria, Garza, Upton, and Howell aren't too shabby either.  As you can see, league-minimum salaries are really helpful because even relatively modest performances can get you a high FOE rating.  Remember, FOE isn't about who helps the team the most, but it's about value.

The Rays' roster doesn't say a whole lot that we didn't already know, though.  We already knew that Zobrist and Longoria are incredible values (although I was surprised by Upton's strong showing and Crawford's middle-of-the-pack finish).  It's tough to get a hold of this metric without some broader comparisons, so let's look at how the Rays have done as a whole this year: