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Patel – Pay to Play? An Analysis Between Team Payroll vs. Performance

 

Pay to Play? An Analysis Between Team Payroll vs. Performance (2024)

Undergraduates: Priya Patel, Jaydeep Sehra, Brandon Wanatick, Heath Althoff, Jack Oglesby


Faculty Advisor: Jonathen Jensen
Department: Exercise and Sports Science

The belief that higher spending translates to more wins in Major League Baseball (MLB) has become increasingly prevalent over the last few decades. Payroll is a key consideration for any front office when building a roster, given the lack of a salary cap in MLB. Our study aims to answer the question: How effective is the pay-to-play strategy and what factors are most indicative of higher payrolls? We analyzed various batting, pitching, and playoff statistics for all 30 MLB teams across 10 seasons (2013-2023, excluding the shortened 2020 season). Our final model revealed that older players, high home run totals, a high number of strikeouts, and fewer wild pitches are statistically significant predictors of team payroll. Using this analysis, we predicted teams’ payrolls based on these variables and split the data into teams that were underpaid and overpaid. Results indicated many of the “overpaying” teams reside in larger market cities (except for San Francisco and Houston which were “underpaying”). However, the World Series distribution (six for overpaid teams and four for underpaid) and average playoff series wins (3.6 for overpaid and 3.3 for underpaid) demonstrate that money does not always translate to success and parity in the league is still present despite a lack of a salary cap. Nonetheless, our findings warrant further analysis by MLB in order to continue to promote competitive balance and financial equity.