The impact of payroll allocation has on winning in major league baseball

ABSTRACT

This article presents evidence that allocating additional payroll to specific positions is positively related to the overall success of a sample of Major League Baseball from 2011 through 2015. When examining the two subsamples of the group, American League versus National League, the results show that the management staff of teams from respective leagues would be well served to increase payroll to certain positions such as catching and pitching. Additionally, this article investigates the impact payroll allocation has on runs scored, runs against and attendance and finds some significant relationships.

KEYWORDS:

• MLB
• payroll
• performance

JEL CLASSIFICATION:

• C23
• J53
• L83

Disclosure statement

No potential conflict of interest was reported by the author.

Notes

¹ Using Hausman and Breusch–Pagan Lagrange multiplier (LM) test.

² See website http://www.spotrac.com/ . I confirm and supplement data via the Cot’s Contract page from Baseball Prospectus; see website https://www.baseballprospectus.com/compensation/cots/

³ See website http://www.baseballreference.com/

⁴ Please note that these figures do not add up to 100%. This is due to the fact that the overall payroll figures include teams obligations for players that have been released or traded from the organization but still are compensated by the club.