Date of Award

5-2015

Document Type

Thesis

Degree Name

Master of Arts (MA)

Legacy Department

Economics

Advisor

Dr. F. Andrew Hanssen

Committee Member

Dr. Raymond D. Sauer

Committee Member

Dr. Scott L. Baier

Abstract

Every June, the 30 clubs of Major League Baseball gather on a conference call to select amateur players from high school and college into their organization. These players may be position players or pitchers, and when selected, the players are awarded a signing bonus to entice them to join the organization. Using regression techniques and statistical tests, position players will be compared to pitchers as well as high school players to college players in terms of return on investment. First multiple regression techniques are used to develop a model to determine what a player's value is to his team based off of his marginal revenue product (MRP). This value is then compared to yearly compensation including initial signing bonus for the player's pre-arbitration seasons. The difference in total MRP and total compensation formulate a return on investment. These distributions of returns on investment are compared by group using a Kolmogorov-Smirnov procedure. When performed, it is found that there is no statistical difference in return by position outside of a rare exception in 2005 where position players significantly outperformed pitchers in the first round. There is statistical evidence suggesting college players return higher returns on investment on average than high school players in all rounds, but when broken down by position, the significance only holds for infielders and outfielders.

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