Submission Date

5-4-2026

Document Type

Paper

Department

Business & Economics

Adviser

Elisheva Stern

Committee Member

Scott King

Committee Member

Hugo Montesinos-Yufa

Department Chair

Jennifer VanGilder

Project Description

This study examines how Major League Baseball teams can build their rosters to spend their payroll more efficiently. Using a manually constructed dataset, consisting of thirty teams over the past five years, this paper studies different payroll allocation strategies, such as the percentage of a team’s payroll to homegrown players or free agents, to improve the efficiency of how an MLB club is spending. Through running regression models, results have shown there is a statistically significant positive relationship between how efficient MLB teams spend their payrolls to the percentage of a team’s payroll designated to homegrown players. Additionally, there is a statistically significant negative relationship between a team’s market size, represented by television homes in the team’s city, and how efficiently MLB teams spend their payrolls. These findings suggest a wide financial gap between small and large-market teams, explaining their different approaches to constructing rosters.

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