IDEAS home Printed from https://ideas.repec.org/a/ebl/ecbull/eb-04l80001.html
   My bibliography  Save this article

The relationship between payroll and performance disparity in major league baseball: an alternative measure

Author

Listed:
  • Daniel Mizak

    (Frostburg State University)

  • Anthony Stair

    (Frostburg State University)

Abstract

This paper introduces an alternative method of measuring competitive balance in major league baseball and employs it to assess both payroll (talent) disparity and performance (wins) disparity for 30 selected years between 1929 and 2002. Attention is devoted to the impact of two critical events in the evolution of the game: the influx of non-white players and the advent of free agency. The joint effect of these events was to increase payroll disparity while simultaneously reducing performance disparity. A single equation regression model found the effect of payroll disparity on wins disparity in the post free agency period to be positive and significant. The increasing disparity in payrolls since the mid 1990s, particularly in the American League, suggests that the luxury tax has been ineffectual and that greater performance disparity can be expected in the near future.

Suggested Citation

  • Daniel Mizak & Anthony Stair, 2004. "The relationship between payroll and performance disparity in major league baseball: an alternative measure," Economics Bulletin, AccessEcon, vol. 12(9), pages 1-14.
    • Handle: RePEc:ebl:ecbull:eb-04l80001
    as

    Download full text from publisher

    File URL: http://www.accessecon.com/pubs/EB/2004/Volume12/EB-04L80001A.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Simon Rottenberg, 1956. "The Baseball Players' Labor Market," Journal of Political Economy, University of Chicago Press, vol. 64(3), pages 242-242.
    2. Martin B. Schmidt & David J. Berri, 2003. "On the Evolution of Competitive Balance: The Impact of an Increasing Global Search," Economic Inquiry, Western Economic Association International, vol. 41(4), pages 692-704, October.
    3. Rodney Fort & James Quirk, 1995. "Cross-subsidization, Incentives, and Outcomes in Professional Team Sports Leagues," Journal of Economic Literature, American Economic Association, vol. 33(3), pages 1265-1299, September.
    4. El-Hodiri, Mohamed & Quirk, James, 1971. "An Economic Model of a Professional Sports League," Journal of Political Economy, University of Chicago Press, vol. 79(6), pages 1302-1319, Nov.-Dec..
    5. Joshua Utt & Rodney Fort, 2002. "Pitfalls to Measuring Competitive Balance With Gini Coefficients," Journal of Sports Economics, , vol. 3(4), pages 367-373, November.
    6. Rodney Fort, 2003. "Thinking (Some more) about Competitive Balance," Journal of Sports Economics, , vol. 4(4), pages 280-283, November.
    7. Martin Schmidt & David Berri, 2002. "Competitive Balance and Market Size in Major League Baseball: A Response to Baseball's Blue Ribbon Panel," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 21(1), pages 41-54, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Daniel Mizak & Anthony Stair & John Neral, 2007. "The adjusted churn: an index of competitive balance for sports leagues based on changes in team standings over time," Economics Bulletin, AccessEcon, vol. 26(3), pages 1-7.
    2. Richard Evans, 2014. "A review of measures of competitive balance in the ‘analysis of competitive balance’ literature," Birkbeck Sports Business Centre Working Papers 9, Birkbeck College, Department of Management.
    3. repec:ebl:ecbull:v:26:y:2007:i:3:p:1-7 is not listed on IDEAS
    4. Kim, Seungmo & Andrew, Damon P.S., 2013. "Organizational justice in intercollegiate athletics: Perceptions of coaches," Sport Management Review, Elsevier, vol. 16(2), pages 200-210.
    5. yamamura, eiji, 2006. "Team Payroll, Competitive Balance, and Team Performance in the Japan Professional Baseball League: A Study using 1993-2004 Panel Data," MPRA Paper 10836, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Allen R. Sanderson & John J. Siegfried, 2003. "Thinking about Competitive Balance," Journal of Sports Economics, , vol. 4(4), pages 255-279, November.
    2. Geoffrey N Tuck & Athol R Whitten, 2013. "Lead Us Not into Tanktation: A Simulation Modelling Approach to Gain Insights into Incentives for Sporting Teams to Tank," PLOS ONE, Public Library of Science, vol. 8(11), pages 1-10, November.
    3. Andrew Larsen & Aju J. Fenn & Erin Leanne Spenner, 2006. "The Impact of Free Agency and the Salary Cap on Competitive Balance in the National Football League," Journal of Sports Economics, , vol. 7(4), pages 374-390, November.
    4. Kelly Goossens, 2006. "Competitive balance in european football: comparison by adapting measures: national measure of seasonal imbalance and Top 3," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 2(2), pages 77-122, Dicembre.
    5. Robert J. Lemke & Matthew Leonard & Kelebogile Tlhokwane, 2010. "Estimating Attendance at Major League Baseball Games for the 2007 Season," Journal of Sports Economics, , vol. 11(3), pages 316-348, June.
    6. repec:ebl:ecbull:v:12:y:2004:i:9:p:1-14 is not listed on IDEAS
    7. Meletakos, Panagiotis & Chatzicharistos, Dimitrios & Apostolidis, Nikolaos & Manasis, Vasilios & Bayios, Ioannis, 2016. "Foreign players and competitive balance in Greek basketball and handball championships," Sport Management Review, Elsevier, vol. 19(4), pages 391-401.
    8. Dubois, Marc, 2022. "Dominance criteria on grids for measuring competitive balance in sports leagues," Mathematical Social Sciences, Elsevier, vol. 115(C), pages 1-10.
    9. Daniel R. Marburger, 2002. "Property Rights and Unilateral Player Transfers in a Multiconference Sports League," Journal of Sports Economics, , vol. 3(2), pages 122-132, May.
    10. Rodney Fort & Young Hoon Lee, 2007. "Structural Change, Competitive Balance, And The Rest Of The Major Leagues," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 519-532, July.
    11. Fort, Rodney & Maxcy, Joel & Diehl, Mark, 2016. "Uncertainty by regulation: Rottenberg׳s invariance principle," Research in Economics, Elsevier, vol. 70(3), pages 454-467.
    12. Dorian Owen, 2014. "Measurement of competitive balance and uncertainty of outcome," Chapters, in: John Goddard & Peter Sloane (ed.), Handbook on the Economics of Professional Football, chapter 3, pages 41-59, Edward Elgar Publishing.
    13. Di Domizio Marco, 2008. "Win the best, win the largest or win the richest. Some empirical evidence from Italian championships," wp.comunite 0047, Department of Communication, University of Teramo.
    14. Markus LANG & Alexander RATHKE & Marco RUNKEL, 2010. "The Economic Consequences Of Foreigner Rules In National Sports Leagues," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 31, pages 47-64.
    15. Carlo Bellavite Pellegrini & Raul Caruso & Marco Di Domizio, 2021. "Relative wages, payroll structure and performance in soccer. Evidence from Italian Serie A (2007-2019)," DISCE - Quaderni del Dipartimento di Politica Economica dipe0015, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    16. Brad R. Humphreys & Joshua C. Hall & Hyunwoong Pyun, 2015. "An Inventory of Sports Economics Courses in the US," Working Papers 15-49, Department of Economics, West Virginia University.
    17. Jean‐Pascal Gayant & Nicolas Le Pape, 2017. "Increasing Downside or Outer Risk? The Challenge of Measuring Competitive Imbalance in Closed and Open Leagues," Southern Economic Journal, John Wiley & Sons, vol. 83(3), pages 774-795, January.
    18. Raul Caruso & Francesco Addesa & Marco Di Domizio, 2019. "The Determinants of the TV Demand for Soccer: Empirical Evidence on Italian Serie A for the Period 2008-2015," Journal of Sports Economics, , vol. 20(1), pages 25-49, January.
    19. Helmut Dietl & Egon Franck & Markus Lang & Alexander Rathke, 2010. "Organizational Differences between U.S. Major Leagues and European Leagues: Implications for Salary Caps," Working Papers 0035, University of Zurich, Center for Research in Sports Administration (CRSA).
    20. Helmut M. Dietl & Martin Grossmann & Markus Lang, 2011. "Competitive Balance and Revenue Sharing in Sports Leagues With Utility-Maximizing Teams," Journal of Sports Economics, , vol. 12(3), pages 284-308, June.
    21. Yang-Ming Chang & Shane Sanders, 2009. "Pool Revenue Sharing, Team Investments, and Competitive Balance in Professional Sports A Theoretical Analysis," Journal of Sports Economics, , vol. 10(4), pages 409-428, August.

    More about this item

    JEL classification:

    • L8 - Industrial Organization - - Industry Studies: Services
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ebl:ecbull:eb-04l80001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: John P. Conley (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.