FiT Publishing

This paper seeks to determine the financial costs of recent injuries and market expectations of players’ future attrition rates by investigating the impacts on free agent contract designs, as represented by the yearly salary and contract length. The empirical findings, derived from data about 698 free agent contracts in Major League Baseball between 2011 and 2018, indicate that injuries exert different impacts on salaries versus contract lengths. For example, free agents who recently injured an elbow or shoulder receive shorter contracts than those not injured in the previous season, but...Read more

Scholarship has established that characteristics of a firm’s upper echelon affect firm-level outcomes in a range of industries. In professional sport, firms depend on live game attendance and, increasingly, the consumption of online content to generate local revenue. The ability to drive these two revenue streams depends on a franchise’s competencies in marketing, relationship management, and brand building. In this research, we speculate those competencies start at the top, i.e., with ownership. Using upper echelons theory (UET), we hypothesize that franchises with owners who have...Read more

Michael Lewis’s best-selling book, Moneyball, demonstrated the efforts of Oakland A’s General Manager, Billy Beane, to create a successful baseball team in spite of its location in a small market. Previous studies have argued that the salary returns to the neglected skill of on base percentage (OBP) should rise once the Oakland A’s hitters demonstrated proficiency with this skill. Our key result is that after Moneyball was published in 2003, hitter salaries for free agents signing new contracts were not more closely related to OBP. Consistent with efficiency, we find no long-term...Read more

The present paper examines aggregate player movement in Major League Baseball over the majority of the 20th century. Major League Baseball has been subject to numerous exogenous shocks across the period. For example, it has been subject to competition during the mid-1910s with the introduction of the Federal League. It has also changed its own rules such as racial integration, free agency, and revenue sharing. In order to examine the impact that these shocks have on player movement we examine movement over three dimensions: total players, total at-bats, and total innings. In the end we...Read more

In late 2011, at a time when other leagues such as the National Football League and the National Basketball Association had engaged in work stoppages, Major League Baseball owners and the MLB Players Association harmoniously agreed on a new five-year collective bargaining agreement. This article focuses on the reasons why MLB as an industry has maintained labor peace after decades of work stoppages. The primary aspects of the new MLB CBA, such as changes to the revenue sharing system, competitive balance tax, salary arbitration, and the amateur draft are addressed. The manner in which...Read more

We examine the need for and the presence of competitive balance in professional sports leagues. We argue that competitive balance helps to further fan welfare and we propose a new measure of competitive balance that hopefully better reflects the needs of fans—that is, compared with measures used both currently and in the past. More specifically, we model the hope of postseason play in a new way as a proxy for competitive balance, and, using a database from Major League Baseball, we provide descriptive statistics for our measure alongside a number of other measures currently extant in the...Read more

This study estimates Major League Baseball (MLB) player salaries for three distinct periods of time. The data from the first time period, 1961 through 1973, were collected in 1974, but analysis of that set has never been published. During that period the reserve clause was fully in effect. The second period, 1974 through 1983, captures the early years of arbitration and free agency. The third period, 1999 through 2005, represents the modern era. The estimates specify that the salary productivity elasticities have increased over time for slugging average, player durability, and player...Read more

Competitive balance research partitions into two areas: analyzing sports policy and its effect on competitive balance and the uncertainty of outcome hypothesis. This paper examines the latter section. No formal analysis of the relationship between competitive balance and regular season average attendance in Major League Baseball (MLB) using the actual to idealized standard deviation ratio exits. This paper examines the effect that competitive balance has on MLB attendance between the seasons 1920 and 2006. Additionally, this paper incorporates a games-behind variable to examine if fans are...Read more

Competitive balance is highly desired in professional sports leagues, yet measurement of the concept is not well established. The definition of firm/team goals in a professional sports league and its connection with competitive balance has typically been assumed rather than studied. Using fan welfare as the goal of the firm, the current research attempts to link competitive balance with fan welfare through the use of what is termed the ¡°hope¡± construct. A market survey of 367 individuals in a Major League Baseball market empirically supports the use of the hope construct in competitive...Read more

Static microeconomic theory predicts that monopolists set prices in the elastic range of the demand curves for their products. However, for nearly thirty years, most of the empirical studies of sports-game attendance demand have failed to support this prediction. This paper shows that in a multiple time-period model, professional team owners are likely to set ticket prices at which attendance demand is price-inelastic if the intertemporal elasticity of substitution for games is small and/or if attending games is habit-forming. Our empirical study shows that these two conditions hold for...Read more