The not-so-free agent: Non-performance factors that contribute to free agent compensation premiums

Terry, Ryan; McGee, Jeffrey E.; Kass, Malcolm J.

doi:10.1016/j.smr.2017.06.006

Cited by 7 publications

(5 citation statements)

References 42 publications

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“…For example, Eric Hosmer signed a free agent contract in 2018 (year t), but his WAR values were taken from 2017 (year tÀ1). This contract year methodology follows an important study by Terry et al (2018). For salary, we specify a player's average annual salary (average annual contract value or AAV) for contract signed in year t. For Hosmer's eight years, $144m contract, (AAV) salary is $18m.…”

Section: Methodsmentioning

confidence: 99%

Does a salary premium exist for offensive output in Major League Baseball?

Ehrlich¹,

Perline

Potter

et al. 2020

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PurposeIn baseball, a run scored on offense carries the same on-field (win) value as does a run prevented on defense. Both outcomes bear the same score margin implication. This presumption of unit equality is implicit in the Wins Above Replacement (WAR) measure, which treats units of offensive WAR (oWAR) and units of defensive WAR (dWAR) as perfectly substitutable toward win production. The purpose of this paper is to ask whether the salaries of Major League Baseball (MLB) players reveal such an equal valuation among MLB teams.Design/methodology/approachThe authors examine the relationship between offensive output, defensive output and subsequent salary from free agency in MLB using a set of log-linear OLS, fixed effects regression specifications.FindingsIn general, estimated annual salary from free agency increases significantly and substantially with unit increases in a player's (prior season) wins above replacement WAR. Across specifications, the authors estimate a 42.5–43.4% increase in salary for year t for each additional unit of WAR in year t−1. The authors disaggregate WAR into offensive and defensive components (oWAR and dWAR) and estimate a 52.4–53.3 (4.8–7.2)% increase in salary for each additional unit of oWAR (dWAR).Originality/valueThe efficiency of the baseball labor market has been studied previously with mixed results. The novelty of the present study is its treatment of inputs not as positions or individual players but as the underlying offensive and defensive win production of players. The authors estimate free agency salary returns to (contract season) oWAR and dWAR in MLB to establish whether (to what extent) a salary premium for offensive output exists within MLB.

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Section: Methodsmentioning

confidence: 99%

Does a salary premium exist for offensive output in Major League Baseball?

Ehrlich¹,

Perline

Potter

et al. 2020

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“…Data used in the study of human capital developmental programs and financial performance (Bendickson & Chandler, 2019) were collected from Baseball Almanac, Forbes, and USA Today. ESPN.com publicity offers the data of free agents’ movement and player transaction information, which have been used in the study of free agent behavior (Garcia et al, 2020; Terry et al, 2018). The team payroll information can be retrieved from StevetheUmp.Com (Garcia et al, 2020), and ballparks’ websites also provide supplemental history data of MLB teams.…”

Section: Resultsmentioning

confidence: 99%

A Multidisciplinary Perspective on Publicly Available Sports Data in the Era of Big Data: A Scoping Review of the Literature on Major League Baseball

Huang

Hsu

2021

Sage Open

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Sports big data has been an emerging research area in recent years. The purpose of this study was to ascertain the most frequent research topics, application areas, data sources, and data usage characteristics in the existing literature, in order to understand the development of data-driven baseball research and the multidisciplinary participation in the big data era. A scoping review was conducted, focusing on the diversity of using publicly available major league baseball data. Next, the co-occurrence analysis in bibliometrics was used to present a knowledge map of the reviewed literature. Finally, we propose a comprehensive baseball data research domain framework to visualize the ecosystem of publicly available sports data applications mapped to the four application domains in the big data maturity model. After searching and screening process from the Web of Science, Science Direct, and SPORTDiscus database, 48 relevant papers with clearly indicated data sources and data fields used were finally selected and full reviewed for advanced analysis. The most relevant research hotspots for sports data are sequentially economics and finance, sports injury, and sports performance evaluation. Subjects studied ranged from pitchers, position players, catchers, umpires, batters, free agents, and attendees. The most popular data sources are PITCHf/x, the Lahman Baseball Database, and baseball-reference.com. This review can serve as a valuable starting point for researchers to plan research strategies, to discover opportunities for cross-disciplinary research innovations, and to categorize their work in the context of the state of research.

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“…Team revenue 1 served as a proxy for the acquiring organization's financial resources. Performance of a free agent's previous team has been associated with increased future salary (Terry, McGee, & Kass, 2018) and was measured by winning percentage in t-1 (Team performancet-1).…”

Section: Control Variablesmentioning

confidence: 99%

Assessing star value: The influence of prior performance and visibility on compensation strategy

Terry

McGee

Kass

et al. 2022

Human Res Mgmt Journal

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The greatest competition among rivals in many industries is not for market share but human capital. In the so-called talent war, organizations compete aggressively to attract star employees-individuals with disproportionate productivity and external visibility-in pursuit of competitive advantage. Building on human capital and resource-based view theories, we argue that firms' compensation strategies are influenced by the intangible assets that define stars. With data from Major League Baseball, we find that organizations are likely to pay higher wages to stars based on their prior performance and visibility. Furthermore, our data indicate that firm competitive position influences which of these intangible assets holds greater value for managers. We discuss the implications of these findings for organizations waging war for talent and suggest directions for future research on a matter that is far from over.

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The not-so-free agent: Non-performance factors that contribute to free agent compensation premiums

Cited by 7 publications

References 42 publications

Does a salary premium exist for offensive output in Major League Baseball?

Does a salary premium exist for offensive output in Major League Baseball?

A Multidisciplinary Perspective on Publicly Available Sports Data in the Era of Big Data: A Scoping Review of the Literature on Major League Baseball

Assessing star value: The influence of prior performance and visibility on compensation strategy

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