Graduation Year

2025

Date of Submission

4-2025

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Richard Burdekin

Abstract

This thesis investigates the impact of long-term contracts in Major League Baseball on performance of the individual player and organizational success from the seasons 2000-2024. This paper uses data from the sources fangraphs.com, baseballreference.com, and spotrac.com, focusing on specific player performance statistics for both position players and pitchers along with their annual salary both before and after signing their contract. Using the Ordinary Least Squares (OLS) regression model, this thesis measures the relationship between a production dropoff after the financial stability of a long-term contract is earned as well as, the organizational impact through team success from giving out such contracts. The initial regressions measure the impact of signing a long-term contract on performance statistics OPS and WAR for position players and WHIP, ERA, and WAR for pitchers. It is found that these statistics all regress, except for ERA, after signing a long-term contract, showing an individual decline in performance. On the other hand, I am looking at how to pay for these long-term contracts from an organizational standpoint. The regressions measure the impact of spending large sums of money, payroll being my independent variable, on the impact of win percentage, playoffs percentage, and overall team WAR, as my dependent variables. The regression analysis implies there is no significant impact on payroll to win percentage and playoff appearances but it does on WAR. Translating to spending money doesn’t guarantee wins or playoff appearances, it only helps if it results in more productive players.

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This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

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