Date of Award

8-2014

Document Type

Thesis

Degree Name

Master of Arts (MA)

Legacy Department

Economics

Committee Member

Curtis Simon

Committee Member

Raymond Sauer

Committee Member

Andy Hanssen

Abstract

Americans oldest past time, baseball, has turned into a multi- billion dollar industry under Major League Baseball alone. Baseball is an entertainment industry that is driven by putting a profitable, entertaining, and competitive product on the field to draw the fans to the games or televisions. However, in the late 90’s, claims of a lack of competitive balance due to large market team spending became loud and widespread. An uncompetitive and unentertaining product would clearly cut into the profits of Major League Baseball. This was a fact that Bud Selig was well aware of when he commissioned the Blue Ribbon Panel, a panel of experts, to evaluate these claims in 2000. The Blue Ribbon Panel concluded that the claims of a growing lack of competitive balance due to large market spending were correct. This conclusion lead Bud Selig to revamp the revenue sharing and luxury tax structure of the league to put a more well balanced product on the field. However, the Blue Ribbon Panel largely used wins to measure competitive play. Wins, being a binary statistic, prevented a truly precise comparison between the teams of the league to be made. This study aims to learn the story left untold by the Blue Ribbon Panel and other academic studies of the 1990’s by creating a measure of team strength based on the gambling markets perception of competitive play. After all, human perception of competitive play is what the industry should be most concerned about. Using this newly created measure of competitive play, this study observed a change in competitive balance, but could not definitively link this change in competitive play with a growth in large market team spending

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