AL East

Some SI.com analysis of baseball teams' "output" per dollar of payroll has an interesting note on the Orioles.

"The Orioles stand as a reminder of why the worst mistake in baseball is to spend when you are not ready to win. Instead of trying to hang with the Yankees and Red Sox, Baltimore would have been better off to strip down its payroll. Payrolls are like undivided highways: the worst place to travel is the middle of the road."

(I put "output" in quotes because measuring performance of baseball teams is subjective.)

This suggests there might be a kink in the output per dollar of payroll for a team such as the Orioles. This graph attempts to give a picture. The intuition is that the Orioles' chances of increasing their output (making the playoffs and winning the WS) is only going to increase if their investment passes some threshold (dotted green line) to keep up with the Yankees and the Red Sox.

The only time in the 2000s that the AL East sent a team other than the Yankees or the Red Sox to the postseason (as division winner or as wildcard) was the D-Rays in 2008.

This brief analysis suggests that other divisions may fall into two-horse races.

For example, as of 2008, the AL Central was distributed as follows: Tigers #3, White Sox #5, and then $40 MM below, Indians #16, Twins #24, Royals #25. (Though in 2009, the Twins snuck into the playoffs when the Tigers and White Sox both slashed payrolls and then underperformed.)