The Postseason Value of an Elite Player to a Contending Team

Abstract

This paper suggests the possibility that a superstar's ability to propel a team into the playoffs may make him particularly valuable—pushing his salary beyond that which would otherwise be expected. Whereas a team in Major League Baseball (MLB) could play as many as 11 additional home games by the time it concludes the World Series, the number of home-field playoff games is a random variable with a mean of about 4 extra home games. Using reasonable assumptions, this implies that the expected increase in a MLB team's revenues associated with making the playoffs is about $11 million. The analysis shows that contending teams pay elite players (on average) an extra $2.8 million—a 40% bonus—to lure superstars to their rosters.

Keywords

value elite player

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