Money Talks: How Economics Affect Sports
Open Access
- Author:
- Little, Matthew
- Area of Honors:
- Accounting
- Degree:
- Bachelor of Arts
- Document Type:
- Thesis
- Thesis Supervisors:
- Samuel Burton Bonsall, IV, Thesis Supervisor
Samuel Burton Bonsall, IV, Thesis Honors Advisor
Scott Collins, Faculty Reader - Keywords:
- Sports
Baseball
Football
Basketball
Hockey
Competitive Advantage
Success
Payroll
Winning Percentage
Championships
Penn State
The Pennsylvania State University - Abstract:
- No matter the business, the business strategy, or the business sector, every company is looking for an advantage relative to its competitors. The sports industry is no different. Over time, teams have made strategic decisions about how to run their organizations in hopes of finding an equation for consistent winning. Some have focused on outspending other teams. Others have made in-game changes in hopes of winning, such as shifting infielders, taking more three point shots, or allocating funds away from the running back position and instead drafting the position in later rounds of the draft. These decisions have been heavily scrutinized since sports became competitive, yet one remained ever-present: the more a team spends, the more success it will have. Previous studies have found that there is a positive correlation between payroll and winning. This thesis develops on prior research and evaluates the relationship by suggesting that predicting winning is perhaps multifactorial. The regression tests a variety of independent variables along with payroll, drawing statistical power away from the payroll variable in hopes of finding other variables that, too, correlate consistently to winning. Even with such hopes, payroll proved to test as the only consistent statistically significant independent variable to predict success.