Hitting the Moneyball Into the Luxury Box

Open Access
Author:
Loggia, Christopher Angelo
Area of Honors:
Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Robert Alexander Novack, Thesis Supervisor
  • Brian Spangler Davis, Honors Advisor
  • Brian Spangler Davis, Faculty Reader
Keywords:
  • Finance
  • Baseball
  • Moneyball
  • Player Valuation
  • Z-Score
  • Sports
  • Statistics
  • Revenue
  • Attendance
  • Winning Percentage
Abstract:
This paper aims to determine if utilizing Moneyball roster management tactics improves the revenue generation and profitability of a franchise from a franchise owner’s perspective. Ultimately, if a baseball team makes a specific effort to utilize Moneyball tactics, would the overall value of the franchise improve. All data is sourced from historical Major League Baseball statistics over eighteen seasons from 1997 to 2014. The analysis includes the creation of a new player valuation model by analyzing the career average Z-score to salary efficiency ratio. The analysis will test the relationship between a number of variables, but largely between the Z-score to salary ratio and total annual fan attendance and the Z-score to salary ratio and total annual revenue. The study found that by using a standard linear regression, there is a positive relationship between the Z-score to salary efficiency ratio with each of annual attendance and annual revenue. However, there is no relationship between the Z-score to salary ratio and winning percentage. Additionally, by using a forced constant regression, there are no positive relationships between the Z-score to salary ratio to any of annual attendance, revenue or winning percentage.