Honors Projects

Abstract

The vast disparity in Major League Baseball team payrolls over the last decade has become a prominent issue of concern for fans, owners, and league management. The belief is that the teams that invest exorbitant amounts of money into their players are paying to win. Teams, such as the Oakland Athletics, have popularized the method of “Moneyball” to find and exploit undervalued players in order to compete with large market teams. This research study aims to uncover whether this claim is based in fact or is unsubstantiated. Using statistical prediction methods like linear regression, logistic regression, and k nearest neighbor analysis, payroll was compared with the amount of wins each team has accumulated each year, along with their postseason performance. Overall, the models showed that payroll does have a positive linear relationship with wins and playoff results; however, this only accounts for a small proportion of the variability in the success of the team. There are many other variables that are not accounted for in this purely financial model, such as injuries, weather, or the types of players you build your team around. If you spend a large amount of money on your payroll, you cannot guarantee your team will have the most wins or make the playoffs, but if you do not spend money and refuse to invest in your team, it is significantly more likely that you will lose more games and not be a successful team.

Department

Honors Program

Major

Business Analytics and Intelligence

Second Major

Economics

First Advisor

Chris Rump

First Advisor Department

Applied Statistics and Operations Research

Second Advisor

Michael Slates

Second Advisor Department

Finance

Publication Date

Spring 5-7-2026

Download

Share

COinS