Team Payroll Versus Performance in Professional Sports: Is Increased Spending Associated with Greater Success?

dc.contributor.advisor

Arcidiacono, Peter S

dc.contributor.advisor

Kimbrough, Kent P.

dc.contributor.author

Shorin, Grant

dc.date.accessioned

2017-05-11T20:19:49Z

dc.date.available

2017-05-11T20:19:49Z

dc.date.issued

2017-05-11

dc.department

Economics

dc.description.abstract

Professional sports are a billion-dollar industry, with player salaries accounting for the largest expenditure. Comparing results between the four major North American leagues (MLB, NBA, NHL, and NFL) and examining data from 1995 through 2015, this paper seeks to answer the following question: do teams that have higher payrolls achieve greater success, as measured by their regular season, postseason, and financial performance? Multiple data visualizations highlight unique relationships across the three dimensions and between each sport, while subsequent empirical analysis supports these findings. After standardizing payroll values and using a fixed effects model to control for team-specific factors, this paper finds that higher payroll spending is associated with an increase in regular season winning percentage in all sports (but is less meaningful in the NFL), a substantial rise in the likelihood of winning the championship in the NBA and NHL, and a lower operating income in all sports.

dc.identifier.uri

https://hdl.handle.net/10161/14332

dc.language.iso

en_US

dc.subject

Payroll

dc.subject

Professional Sports

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Competitive Balance

dc.subject

Performance

dc.title

Team Payroll Versus Performance in Professional Sports: Is Increased Spending Associated with Greater Success?

dc.type

Honors thesis

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