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Money game

The 2010 World Series opened on Wednesdayin San Francisco, as the Giants faced the Texas Rangers. The Series matchup may be heartening to those who decry the astronomical salaries in Major League Baseball: the Rangers and Giants defeated two big-market teams with much higher payrolls, the New York Yankees and Philadelphia Phillies, respectively. This Q&A with Frederick Wiseman, a statistician and a professor of information, operations, and analysis in the College of Business Administration (CBA), offers perspective from his research on Major League Baseball salaries.

Why did you choose to research baseball? Does this sport have the most overpaid players?

During the last decade, there has been a substantial increase in the use of statistical analysis and modeling in sports, especially baseball. In fact, a new field, “sabremetrics” (the mathematical and statistical analysis of baseball data), has emerged as Major League Baseball teams are now frequently using advanced statistical analyses.

Given my background, interests and the wide availability of historical baseball statistical data, it was natural that my research would extend into this area. As an added benefit, there are numerous examples in which my research can be brought into the classroom to show students the usefulness of statistics in decision-making.

It is hard to say which professional athletes are the most overpaid given the different length of schedules and the requirements (both physical and mental) placed upon these athletes.

Have you done this type of research with any other sports?

Yes, due to the wide availability of historical data, CBA Professors John Friar, Mohamed Habibullah, Sangit Chatterjee and I have conducted extensive research and written a number of papers related to the performance of professional golfers and how they have improved over time. Our findings have been published in numerous academic journals and presented at conferences, including the World Scientific Congress of Golf, which was held in St. Andrews, Scotland.

Is there a correlation between payroll and postseason play?

There is a relatively weak positive correlation between a Major League Baseball team’s payroll and how well the team performs during the season. For example, in 2010, New York, Minnesota, Tampa and Texas reached the playoffs in the American League and, out of the 14 teams in the league, the four playoff teams had the first, sixth, ninth and 13th highest team salaries, respectively. In the National League, Philadelphia, San Francisco, Atlanta and Cincinnati reached the playoffs and, out of the 16 teams in the league, the four playoff teams had the second, fourth, eighth and 11th highest team salaries, respectively. Further, if you split the teams in half by the amount they paid their players, the highest paying teams won, on average, 10 more games than the lowest paying teams. This all highlights the point that there is a relationship, but not a very strong one (at least in 2010) between payroll and on-field performance.

Why do you believe that a few lower spending teams have had great talent evaluators, while a group of higher spenders have had poor talent evaluators?

There are a variety of reasons why some teams do better than others, and this includes talent evaluation. However, there clearly are other factors, such as injuries to your team and to opposing teams, travel schedule, strength of schedule, managerial ability, fan support and team chemistry, to name but a few.

In addition, our research has shown that how a team distributes its payroll among its players also impacts how well a team performs. Specifically, the more equally divided the payroll is distributed among a team’s players, the better the on-field performance of the team.

– Christina Barrows

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