Graduation Year

Fall 2011

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Darren Filson

Reader 2

Gregory Hess

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Terms of Use for work posted in Scholarship@Claremont.

Rights Information

© 2011 David F. Ulrich

Abstract

This paper examines the underlying drivers of MLB franchise value. Using panel data for MLB teams from 2000-2010, I find that a team’s ballpark and metro-area market are significant determinants, yet revenues truly drive value. Further, I find that incremental increases in winning percentage by a particular team has an insignificant effect on total revenues and has no marginal impact on the value of the team, particularly if the team recognizes consistent revenue streams every year. Finally, I show that the modern sabermetric approach to player management negatively impacts firm value, suggesting that although small market teams have been successful using this strategy to increase their on-field performance, its use in isolation is not financially beneficial to the organization in the long run.

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