Business, Accounting, & Economics
Candy Sikes, Ph.D
First Committee Member
Kyriacos Aristotelous, Ph.D
Second Committee Member
Meredith Frey, Ph.D
Baseball, Marginal Revenue Product, Player Valuation, Salary, MLB
Finance and Financial Management
By using data from the 2014 Major League Baseball season, this paper examines the current market of baseball. I mainly look to offer clarity to the debate questioning if players are paid their marginal revenue product. By using a two-step model, I first estimate the effect team statistics have on team winning percentage, and next how that team winning percentage affects team revenue. After obtaining results from the regressions, I use those calculations in two formulas aimed at quantifying a player’s marginal revenue product. I find that overall, players are paid close to their respective marginal revenue products. An age gap exists, however, where younger players are paid significantly less than their values, while older players are paid in excess of their contributions to the team.
Pearce, Jocelyn R., "A Financial Analysis of Professional Baseball Player Worth" (2016). Honors Thesis Projects. Paper 28.