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


  • Phillip A. Miller

    () (Minnesota State University)


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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    References listed on IDEAS

    1. McDonald, Mark & Rascher, Daniel, 2000. "Does Bat Day Make Cents? The Effect of Promotions on the Demand for Major League Baseball," MPRA Paper 25739, University Library of Munich, Germany.
    2. McEvoy, Chad D. & Nagel, Mark S. & DeSchriver, Timothy D. & Brown, Matthew T., 2005. "Facility Age and Attendance in Major League Baseball," Sport Management Review, Elsevier, vol. 8(1), pages 19-41, May.
    3. Rodney Fort, 2004. "Subsidies as incentive mechanisms in sports," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(2), pages 95-102.
    4. Brown, Matthew & Nagel, Mark & McEvoy, Chad & Rascher, Daniel, 2004. "Revenue and Wealth Maximization in the National Football League: The Impact of Stadia," MPRA Paper 25741, University Library of Munich, Germany.
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    More about this item


    Arbitration; team finances; player salaries; game theory;

    JEL classification:

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


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