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Do Team-Specific Revenues Matter in Baseball’s Arbitration System?

Author

Listed:
  • Phillip A. Miller

    () (Minnesota State University)

Abstract

According to baseball’s collective bargaining agreement, arbitrators may not consider team finances when rendering a decision. The author develops two theories to examine the setting of final offers. In the first theory, final offers are simply functions of the arbitral criteria and are, therefore, not a function of the revenue-generating capability of the team. In the second theory, the author argues that teams may trade some talented and, thus, high-priced arbitrationeligible players, resulting in an implicit premium embedded in the final offers. The empirical analysis suggests that there are no such premiums embedded in the final offers.

Suggested Citation

  • Phillip A. Miller, 2006. "Do Team-Specific Revenues Matter in Baseball’s Arbitration System?," International Journal of Sport Finance, Fitness Information Technology, vol. 1(3), pages 162-173, August.
  • Handle: RePEc:jsf:intjsf:v:1:y:2006:i:3:p:162-173
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    More about this item

    Keywords

    Arbitration; team finances; player salaries; game theory;

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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