Motivation and Background Major League Baseball is unique among professional sports in that until 2003 it had no salary cap This leads to debate as to whether every team has the same fair odds of ID: 703859
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Slide1
Payroll and Success in
Major League BaseballSlide2
Motivation and BackgroundMajor League Baseball is unique among professional sports in that, until
2003, it
had no
‘salary cap.’
This leads
to debate as to whether every team has the same fair odds of
winning.
In 2003
, a luxury tax, or a ‘competitive balance tax’, was levied on the league.
Baseball
is the only national professional sport where the competing teams have such discrepancies in their comparative
payrolls across the league. Slide3
Research QuestionsIs money a deciding factor in a baseball team’s
success?
By analyzing the ratio of number of wins of a baseball team and the money spent by that team, we found a medium-strong
correlation.
How has the implementation of a ‘luxury tax’ affected this relationship?
We
found that the
luxury
tax actually
increased the correlation,
but decreased the effectiveness of
a payroll’s influence. Slide4Slide5