This year’s World Series will be the second in a row in which neither the New York Yankees, Boston Red Sox nor Philadelphia Phillies will be playing. The 2011 payroll for each of these teams was over $160 million; and in the case of the Yankees, well in excess of that number. No other team spent even $140 million on payroll in 2011. The Texas Rangers and St. Louis Cardinals had the 11th and 13th highest payroll, with each spending between $90-$110 million assembling their pennant winning teams.

The Phillies and Yankees got eliminated in the first round of the playoffs while the Red Sox missed a playoff spot due to a September collapse of historic proportions. All of this can be attributed, to some extent to luck. One or two big hits in game five of the LCS by the Yankees and the Phillies could have meant that we would be on the eve of another Yankee-Phillie World Series. The Red Sox came within a few runs of slipping into the post- season where they could have gotten hot and made it to the World Series.

Luck, however, cannot fully explain why none of these teams made it past the first round of the playoffs. In addition to a few bad breaks, all three teams suffered from making the particular kinds of mistakes to which big market teams are uniquely prone. Big market teams, in this context, refers not just to teams that play in big markets, but to teams that spend money accordingly and, most significantly, seek to win the World Series every year. It is this goal of trying to win every year which raises problems for teams and contributed to the failure of the Phillies, Yankees and Red Sox to meet that goal this year.

The three major, and related, management mistakes to which teams like the Yankees, Phillies and Red Sox are particularly vulnerable are overrating their own players, getting saddled with players with declining skills who have big and unmovable contracts, and feeling compelled to sign free agents every year even when they are not quite what the team needs. Each of these teams does not make each of these mistakes, but they all make these mistakes from time to time. Moreover, smaller market teams, particularly well run ones, rarely make these mistakes.

The Phillies had an extraordinary year, winning 102 games, led by a fantastic pitching rotation. Their offense, however, was not as strong. The Phillies were seventh in the league in offense. Although they were wise enough to add Hunter Pence at the trading deadline, their lineup was still filled with players like Jimmy Rollins and Ryan Howard who are no longer premier offensive contributors. Teams with leadoff hitters with OBPs of less than .340, and cleanup hitters with OPS+ of less than 125 are rarely elite offensive teams, unless they hit from top to bottom. The Phillies, however, had weak offensive contributors in the outfield, first base and, when Chase Utley was hurt, at second as well.

The Yankees, unlike the Phillies, had a very strong offense, scoring the second most runs in the league. However, their offense was led not by the highest paid middle of the order hitters, but by Robinson Cano and Curtis Granderson. The middle of the Yankee order was disappointing with Mark Teixeira slumping to .248/.341/.494 while Alex Rodriguez a good, but not great, .276/.362/.461 in only 99 games. In the playoffs, the inability of the Yankees to recognize that these two players were no longer elite sluggers capable of striking fear in the other team precluded them from dropping either of these slumping and, in Rodriguez’s case, still slightly injured, hitters in the order. The point here is not that Rollins, Howard, Teixiera and Rodriguez are not still good hitters. To a large degree they are, but their roles, history and salaries makes it tough for their teams to evaluate them more clearly and use them accordingly.

Last year, for example, there were 14 players who played 125 or more games at first base in the big leagues. Among those fourteen players, Howard and Teixeira ranked 7th and 11th in OPS+. Howard and Teixeira are both 31 and unlikely to climb in those ranking over the next several years. Teixeira is owed $112.5 million over the next five years while Howard is owed $115 million over that period. The Phillies and the Yankees will be paying well above market value for two first baseman who are moving quickly towards becoming no more than ordinary run producers for their positions.

The Red Sox might be the best run of these three teams, but their recent signings of John Lackey and Carl Crawford seem more like the actions made by a team trying to show that they are trying to win than thoughtful and calculated decisions. At the time the Red Sox signed Lackey to a five-year deal for around $90 million, he was a 30-year-old pitcher who was coming off of two straight decline years. This is not exactly the formula for a successful free agent signing, but it was a move the Red Sox may have felt they had to make after failing to make it back to the World Series in 2008 or 2009. The Carl Crawford signing made more sense, although it looks bad given the difficult-to-foresee poor season Crawford just completed. Nonetheless, while Crawford may have been one of the top free agents available, his signing did not exactly address the needs the Red Sox faced at catcher, shortstop and other positions where age is beginning to become a factor.

No team in baseball is stuck with more big contracts or declining stars that the Yankees. They will be paying three players — Rodriguez, Teixeira and Derek Jeter — more than $65 million next year. None of these players are among the top five in baseball at their positions and could easily drop much further than that next year, but the Yankees have little option but to keep playing them.

Interestingly, these teams will all face the possibility of making similar mistakes this coming off-season. The Red Sox will have to determine whether they want to sign David Ortiz, who is getting older and can only DH, but who can still hit for now, to a long-term contract. The Phillies must avoid committing to Jimmy Rollins who is a useful player, but no longer a viable leadoff hitter or impact hitter. The Yankees will have to avoid the temptation to overpay for CJ Wilson and avoid giving CC Sabathia a Rodriguez-like contract should he opt out of his current one.

All three of these teams are stuck in a cycle of overpaying to keep stars, needing to sign big free agents to signal their focus on winning the World Series and then being left with overpaid and frequently not sufficiently productive players. These problems should not be overstated. Having a lot of money is still a great advantage for teams like the Yankees, Red Sox or Phillies, but it increasingly means a unique set of pitfalls and problems. The big market team that can figure out how to skirt these problems, as the Red Sox did in the 2003-8 or so period, will have an even greater advantage.

Lincoln Mitchell