Introduction
In recent years there has been the argument that an increasing gap in financial economics of Major League Baseball teams is the cause and effect between winning and losing. Teams with greater financial resources --as measured by team value and team payroll spending-- have a higher winning percentage. In baseball, each of the 30 franchises in 2002 played a 162 game schedule, where winning and losing a game is determined by scoring ˇ§runsˇ¨ and not allowing your opponent to score more ˇ§runsˇ¨ than your team (allowed runs). So it is concluded that runs scored and runs allowed are a function of winning. However many argue that team value and total team salary are also a function on winning.
Background
In 2000 the Commissionerˇ¦s Office of Major League Baseball commissioned a study by a Blue Ribbon Panel on the economics of Major League Baseball (MLB). This report concluded that there is a competitive imbalance between MLB teams with higher financial ability (I will measure as Franchise Value) and who spends more on team salaries than others do. ... This labor strike by the Major League Baseball Players Association caused the cancellation of the balance of the Major League Baseball schedule in August of that year as well as the payoffs and World Series (championship series of best of 7 games). ... Their estimated financial value and resources did not suffer the same decline of others and were able to spend more on premium or ˇ§starˇ¨ players who produced more, but commanded higher salaries. ... After 1994 it grew as a result of the decline in fan loyalty because of the strike and that this imbalance does have an effect on winning and is now significant. ... They said all were functions of winning. They measured the distribution of team salaries to see if that increased performance and also measured distribution of salaries within a team to see if an inequity within a team also had any bearing on winning.
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