Devin Mathura

Comments

Advisor: Matthew Morey

Finance

Document Type

Thesis

Abstract

With my passion for baseball, I decided to calculate the value of each player on an MLB active roster and determine whether they are underpaid or overpaid. I then used that information to evaluate and rank how efficient each MLB general manager utilizes their money on players. With the luxury tax becoming more of an issue for teams with high payrolls, there has been an emphasis on general managers to construct a team that will be highly competitive at a reasonably low price. In my report, I imported data that reflected the position for each player as well as their adjusted salary. The key metric used to determine the value is known as wins above replacement (WAR). A player's WAR was applied to the average salary for their position to get an estimated value. Using the salary error and percentage error for the whole team, I ranked each general manager. There are numerous ways that statisticians have come up with to apply to the valuation of players. WAR is a relatively new metric that is considered to be one of the best when comparing players. Usually, valuations have been done using traditional statistics such as batting average, on-base percentage, and slugging percentage. My method provides a newer and hopefully more accurate way to determine the true value of each player. The results showed that better-rated teams usually had a higher salary error. This means they were getting more production from players than their salary would suggest. When analyzing the data, I noticed that calculations such as a team's percentage salary error can be misrepresented by having some outliers in the data. Ultimately my method gives a different perspective to create a player's valuation. My future research include multiple statistics in order to get a more accurate representation of one's salary based on their production.

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