The Los Angeles Dodgers have a $390 million payroll. The New York Yankees have $350 million. Both are home watching. Milwaukee and Tampa Bay are playing in the World Series instead. The Brewers rank 19th of 30 teams in payroll. The Rays rank 27th. Some call it a TV ‘nightmare.’ Jason Gay, in Friday's Journal, calls that snobbery. He loves this matchup.
Milwaukee swept the Dodgers in the NLCS. Tampa Bay went into the Bronx and beat the Yankees, then beat Cleveland. The best team in each league made it. The timing is awkward for baseball's owners. They're heading into a winter labor fight over big-market spending and a salary cap. The players' union has long said brains win titles, not money. Gay says it takes both. Money buys a bigger margin for error, and over time, he says, money wins. But this year two thrifty, well-run teams made it anyway. Gay pictures them pulling up in a dented minivan with 230,000 miles. He doubts it makes a lockout less likely.
The castoff ace
Freddy Peralta spent eight seasons with the Brewers and became an ace. Then the Mets got him and he fell apart, with a 4.99 ERA in 22 starts. Tampa Bay traded for him at the deadline, Jared Diamond reported in Thursday's paper. The fixes were small. No full windup, only the stretch. A spot on the third-base side of the rubber. A wider stance, a quicker delivery and more changeups. In his last six regular-season outings he gave up three runs in 34 innings, a 0.79 ERA. On Monday, Oct. 19, he was named ALCS MVP after a 7-3 win over Cleveland. He's 30. “For some reason I got here,” he said, “and I felt like myself again.” Now he faces the team that raised him.
Basketball shows the flip side. The Knicks won their first title in 53 years this summer. Now Karl-Anthony Towns and Josh Hart are eligible for extensions worth a combined $408 million. Both are in contract disputes, Robert O'Connell reported in Wednesday's paper. The team has frozen talks until the season ends. The reason is the NBA's ‘second apron,’ a spending line past which the tax rate tops 500% and some trades are banned. The Knicks lost their opener to the 76ers, 106-100.
Our read
This is a Behavioral story, with an Investments/Risk · IN04 side. The Dodgers spent $390 million and lost to a team that played better in October. A bigger budget buys a bigger margin for error. It doesn't buy the result. Peralta is the other half. The Mets paid for an ace and got a 4.99 ERA. The Rays, with one of the smallest payrolls, traded for him at his low point and fixed his mechanics. Value investing looks a lot like that. And the Knicks show what happens after you win. The bill for keeping the team comes due, and the tax for crossing the line is brutal.
Here's the connection to your own plan. Your portfolio has a payroll too. It's the fee line. This week, open your 401(k) app and find the expense ratio, the yearly fee as a share of your balance, on your biggest fund. If a cheaper fund in the same lineup holds much the same things, ask what the extra fee buys. Most of the time, the lean fund run with discipline is the one still standing in October. You check the umbrella before the clouds roll in, and your fee line before the next statement. We'll run that comparison with you at any review.