An independent study project by two seniors that examined Major League Baseball’s collective bargaining agreement has helped fuel the debate over the labor pact and has led to several requests for the student researchers to make conference presentations.
Seniors Ethan Levitt and Harry Raymond teamed up to study two of the most controversial parts of the current agreement: the revenue-sharing program and the draft pick-free agent compensation system.
Utilizing sabermetrics, a field of advanced statistical analysis of baseball, Levitt and Raymond worked with physics professor Ken Segall in compiling data, creating and testing various models, and ultimately writing papers analyzing their results.
Levitt, a mathematical economics major, found that the revenue-sharing program, which redistributes local revenue from the large market teams to the smaller ones in order to theoretically create competitive balance, creates a disincentive for small market teams to spend money on team payroll.
Using a model based on three expectedly positive relationships, (payroll spending and winning, winning and attendance, and attendance and team revenue), Levitt deduced that several underlying factors were damaging these positive relationships for the teams they were designed to benefit.
Raymond, a political science major, noticed that the correlation between payroll spending and winning has been decreasing steadily over the past decade. Since this is the relationship that the revenue-sharing program focuses on, he decided to explore why this was occurring.
He found that the current system of rewarding teams that lose free agents with premium draft picks was outdated. Raymond used sabermetric statistics to quantify in a more definitive way the relationship between the value of free agents and corresponding draft picks in terms of wins. His findings suggested that the current system significantly overcompensates teams that lose a player to free agency, which encourages teams to spend less money on free agents and focus more on developing young players.
Both papers written by the seniors were featured in the conference proceedings of the MIT Sloan Sports Analytics Conference sponsored by ESPN. In April, the authors also presented at the National Undergraduate Research Conference in Ithaca, and they will be presenting at the Cooperstown Symposium on Baseball and American Culture at the National Baseball Hall of Fame in June.
Front-office personnel from the Tampa Bay Rays have reached out to the students to discuss their findings, as have officials with the NBA’s Houston Rockets.
Both Levitt and Raymond, members of the Theta Chi fraternity, are huge baseball fans and hope that owners and players will avoid a player lockout, an issue confronting both the NBA and NFL, and reach a new agreement before the current pact expires in December.