'If the Team Doesn't Win, Nobody Wins:' A Team-Level Analysis of Pay and Performance Relationships in Major League Baseball

This analysis of team-level major league baseball performance, for the 1985 through 2001 seasons, addresses four questions: (1) 'Is there a relationship between winning and performance?' (2) 'Is there a relationship between pay and performance?' (3) 'Is there a relationship between winning and pay?' and (4) 'Is there interaction between batting and pitching?' The findings are that: (1) the relationship between performance and winning is significant. Pitching explains 2/3 of the variance, with batting covering the other 1/3; (2) the pay and performance relationship is significant, but the practical importance of the relationships is low, because non-performance factors exert stronger influence on pay levels; (3) the pay and winning relationship is significant, but becomes non-significant when performance variables are used to predict winning; and (4) the batting and pitching interaction is significant, but weak, with limited effects. This type of analysis should help teams be managed more effectively than may presently be the case.