Revenues vs. Wins: Motivations of General Managers in Major League Baseball Public
Adler, David (2011)
Published
Abstract
Abstract
Revenues vs. Wins: Motivations of General Managers in Major League
Baseball
By David Adler
Using data on free agent signings in Major League Baseball, this
paper examines the value added
by free agents to their new teams and develops a new statistic
called Wins Above Current. By
converting the Wins Above Current into dollar terms and comparing
it to the difference in
salaries between the old and new players, the signings can be
classified as revenue maximizing
or win maximizing. It is shown that both teams and individual
signings are predominately
revenue maximizing, indicating that the current policy of revenue
sharing in Major League
Baseball serves to weaken the competitive balance. A McFadden's
choice regression determines
revenue maximizing teams tend to pick players with more home runs,
or players that will
continue to bring fans and excitement to even non-competitive
teams.
Table of Contents
Table of Contents
I. Introduction 1
II. Background Information 2
III. Data and Empirical Methods 4
Table 1 - Selected Summary Statistics 8
IV. Results 9
Table 2 - Free Agent Signings by Team 10
Table 3 - Types of Free Agent Signings by Team 13
Table 4 - Regression Results Using Free Agent Value as Independent
Variable 15
Table 5 - McFadden's Choice Model of Free Agent Signings by Type
18
V. Conclusions 19
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