Date of Award

Spring 5-2-2025

Document Type

Thesis

Degree Name

Bachelor of Arts (BA)

Department

Economics

First Advisor

Monica Das

Abstract

This paper investigates the economic and competitive impacts of foreign-born players' salaries in Major League Baseball (MLB). Utilizing a fixed effects Ordinary Least Squares (OLS) regression model and a self-collected panel data set covering eight Northeastern MLB teams over the 2014-2023 seasons, the analysis addresses the question of whether salaries of international players influence team revenue and team winning percentage. Key findings indicate that allocating payroll to foreign-born players slightly increases team revenue, reflecting positive consumer (fan) reception. However, complex dynamics emerge at higher proportions of foreign-born players, revealing nonlinear fan discrimination. Regarding competitive outcomes, the analysis reveals that increasing payroll allocated to foreign-born talent only marginally enhances team performance, underscoring a merit-based valuation of talent by employers (general managers) rather than discriminatory practices. Contrary to previous literature suggesting conflicting revenue and attendance impacts, this study identifies consistently positive correlations between international player presence, stadium attendance, and overall revenue. The paper highlights that performance metrics, such as Wins Above Replacement (WAR), significantly predict winning percentages, reinforcing that MLB operates predominantly as a meritocratic market. These findings offer strategic insights for MLB executives regarding optimal payroll allocations and international talent investments while highlighting the global nature of the sport today.

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