Baseball Pay and Performance
By:
Mikhail Averbukh
Scott Brown
Brian Chase
Outline
Introduction
 Research Objective
 Roles
 Existing Research
 Data Source and Collection methods
 Selection Criteria
 Findings
 Conclusion
 References

Intro to Baseball
Baseball is a
legal monopoly
No salary cap
Play 162 games
a year
The minimum
salary for the
2008 season is
$390,000
Currently 30
teams
Objectives
What is the
best indicator
of pay?
How do teams
spend their
money?
What factors
are used to
determine the
“best”
players?
How can team
and players
predict salary
offers based
on a player’s
performance?
Roles
Mikhail
Averbukh
• SQL queries, Java scripts, Salary
vs. OBP, and Budget vs. Pay
analysis
Scott
Brown
• Team vs. Player Performance
statistics, experience attributes vs.
pay
Brian
Chase
• Excel Sheet and Minitabs,
performance vs. pay analsysis
Research





Pay, Productivity and Aging in Major League Baseball,
2007, Turner, Chad and Hakes, Jahn.
Average Salary and Contract Length in Major League
Baseball. Meltzer, Josh.
Free Agency and Contract Options: How Major League
Baseball Team Value Players. Dinerstein, Michael.
Are baseball players paid too much? Moorehand,
Timothy.
Desperate GM can cripple a franchise. Law, Keith.
2007.
Data source and Collection
Lahman database from baseball1.com
 Used Java and SQL queries
 Access Database to store data
 Data from 2000-2007 for salary and
player statistics
 Inflation in baseball salaries
 Median salary goes up 100k/year
 Data put into Excel
 Analyzed with Excel and Minitabs

Attributes – Pitchers
Pitching
Wins
Losses
Strike Outs
Earned Run
Average (ERA)
Attributes – Batters
Batting
Home Runs
Runs Batted
In (RBIs)
Hits
At Bats
Batting
Average
On Base %
(OBP)
Experience
How long they’ve played for
Personal History
Teams they have played for in
the past
Playing Time
How many At Bats or how
often the player gets to bat
Starter, Utility Player,
Substitute
Results - Pitchers
Correlation:
0.670
R-Squared:
0.436
Results - Pitchers
Correlation:
0.657
R-squared:
0.420
Results - Batters
Correlation:
0.737
R-Squared:
0.544
Results - Batters
Correlation:
0.722
R-Squared:
0.521
Results – Batters top 10%
R-Squared:
0.243
Results – Batters bottom 90%
R-Squared:
0.221
Results – Players with equal
performance
Overpaid
Underpaid
Players
Players
Jason Giambi
$23.428M
Sammy Sosa
$500K
• Highest Paid Player
• Played for 12 years
• Did not play in ’06
• Played for 18 years
Derek Jeter
$21.6M
Ryan Howard
$900K
• Played for 12 years
• Captain of Yankees
• Played for 3 years
• Earning $10M in ‘08
Results: Salary vs On Base
Percentage
Salary = ln(OBP/0.3196) * 108
The formula is 90% accurate for 17 % of players,
80% accurate for 28 % of players,
not applicable for 30% of players(OBP < 0.3196)
Results: Team budget vs pay

Teams with higher budgets are able to
attract better players
How Teams choose and pay
their players

Tampa Bay Devil Rays

Smaller budget so they look for player’s with less
experience, but higher statistics where the player
will be satisfied with their salary.


Carl Crawford 2002-2006 makes $4.125M
New York Yankees

High budget so more players will have a lot of
experience playing with good teams, higher
statistics, and be more recognized

Derek Jeter 1995-2006 makes $21.6M
Experience to Salary Correlation
based on Team Budget
Tampa Bay
Devil Rays
Total Games
Played by
Players: 4,724
Total Combined
Years of
Experience: 79
New York
Yankees
Total Games
Played By
Players: 16,181
Total Combined
Years of
Experience: 181
High Market Teams
Harder to play for
because of combined
experience, higher
statistical requirements,
and popularity.
Players tend to stay
with the team longer
because of success rate
Lower Market Teams
Easier to play for
because of lower
statistical
requirements and
bad reputation
Higher turnover rates
and layoffs due to
lower statistics and
player experience
Player’s feel that
other players have
insufficient
experience and
therefore quit
Conclusion
Pay in baseball only remotely relates to
player’s performance
Other factors, such as teams willingness to
pay higher amounts, popularity of a team
and a player are important
Different teams use different strategies for
pay
Conclusions
Competition between teams for top players drive up
salaries
Very low pay for inexperienced players and very high
pay for top players makes it hard to apply one size
fits all approach in determining players’ salaries.
Team owners should look out for wasteful spending
and should monitor general manager decision
References







Pay, Productivity and Aging in Major League Baseball, 2007, Turner, Chad and
Hakes, Jahn.
http://mpra.ub.uni-muenchen.de/4326/
Average Salary and Contract Length in Major League Baseball. Meltzer, Josh.
www.econ.stanford.edu/academics/Honors_Theses/Theses_2005/Meltzer.pdf
Pay for Play: Are Baseball Salaries Based on Performance? Watnik, Mitchel.
Journal of Statistics Education v.6, n.2 (1998)
Free Agency And Contract Options:How Major League Baseball Teams Value
Players. Dinerstein, Michael. http://wwwecon.stanford.edu/academics/Honors_Theses/Theses_2007/Dinerstein2007.pdf
Are baseball players paid too much? Moorehand, Timothy.
http://www.helium.com/items/154172-imagine-which-employees-could
Desperate GM can cripple a franchise. Law, Keith.
http://insider.espn.go.com/mlb/hotstove06/insider/columns/story?columnist=la
w_keith&id=2728948&univLogin02=stateChanged