THE BOOK--Playing The Percentages In Baseball

I’m not sure that I buy his definition of competitive balance.  In a league that was truly balanced, those teams that were poorly run (Royals, Pirates, pre-2008 Rays, pre-2010 Orioles) should consistently miss the playoffs.  These teams are bad because they deserve to be bad, not because there isn’t enough “competitive balance”.

Just eyeballing his results, it looks like he is actually measuring top-to-bottom internal stability.  The consistency found in the AL East over this time period is eerie, but if the bottom three teams had mixed it up a bit more, then I have to think the results would look a lot more like the 1998-2002 Brave-dominated NL East.

In my head, “competitive balance” has something to do with the opportunity for a well-run team to win a championship.

I spent an hour reading that and making a few comments.  Since I apparently don’t know how to use my mouse...it magically disappeared.  Sorry.

Overall the paper was good.  I think a more in-depth lit review was my main criticism.  The rest was details about usage of things like “sufficient balance”, use of passive voice, excessive explanation of the bounds of a p-value, and general reports of statistical tests (needs to be more succinct).  Also, the conclusion that the league is unbalanced is a stretch, given that only the AL East was shown to be unbalanced, generally.  I agree that the luxury tax didn’t really help things (probably because MLB didn’t do a very good job at setting what it should be).  Seems like a fairly novel way of looking at things and I enjoyed it.

Red/1,

I think you’re ‘poorly managed’ definition is a bit misguided.  I don’t think the Pirates or Royals had any intention of going to the playoffs.  They’re in a business where their revenue function won’t allow them to make profits if they spend the amount needed for a competitive team.  They made between $9 and $15 million profit last year.  That’s not a very large margin for improvement in the wins category, even if they see some increased revenue from it.  The ‘balance’ issue with regard to the luxury tax is how to allow these teams to compete for free agents and become competitive...though that’s not often the TRUE reason for implementing much of the policy (like revenue sharing) in MLB.

There is not a wide variety of published statistical research done on this topic to offer much of a lit review.  As to the definition of competitive balance this was defined by Selig; what is under question would be one’s definition of “well-run”.  To me, this would be interpreted financially by team; i.e. a team makes money despite losing (Millsy post suggests this interpretation).  Contrary to that would be the Marlins.  Some would probably agree they are not well run as they seem to do a fire sale after they win and have low attendance.  However, many teams would probably wish for their success on the field over the past 10-12 years. Do you believe they would have been as successful on the field if they had been in the AL East? Finally, the one post about over explaining the p-value and mentioning the league is unbalanced is a stretch is critical for a reader to understand the results.  The understanding of how to interpret p-values is vital to understanding the initial conclusion of overall divisional imbalance and to set the reader up to know how and why Brett made the p-value adjustments when discussing results for each division. That is to say, the reason for the overall divisional significance is due to one division.  Therefore, balance is present outside of the AL East and this is generally true for all measures of balance (i.e. win pct, rank, and GOP).  The importance of this is that baseball is very structured: teams set within divisions and therefore, e.g., nobody in the NL East cares who is winning how many games in the AL East.  To address overall balance in MLB is pointless unless you consider it at the divisional level, which Brett has done.  This makes his research quite new, especially the application of his statistical model.

Stathead/3,

Fair enough.  Though my current EndNote folder has upwards of 60 articles on the subject (not all fantastic quality, of course).  It’s a fairly new area of investigation, so that’s fine, but I think a couple articles would be useful in the review that were not mentioned that DO investigate playoff uncertainty in some detail.  That’s all. 

As for the p-value, I don’t think it’s overexplaining to tell your set significance level, corrections, and MUCH of the explanation that was included (I had specifics in my post that I managed to delete).  But I think explaining that a p-value ranges from 0 to 1 and things of that sort are unnecessary for the audience this is directed to (assuming that audience is a peer-reviewed academic journal).  I have no problem with in-depth explanation of the statistical tests, and I agree with you about the needed understanding of the procedure.

“To address overall balance in MLB is pointless unless you consider it at the divisional level” is a bit overstated.  However, I think the addition of that adds real value to the research, as does the somewhat novel statistical techniques used.

Millsy/4

Since the paper is a thesis I am assuming the audience is broad; i.e. if someone googled “competive balance in MLB” and came across this paper then who knows their level of expertise.  This would also explain the need to detail corrections, etc.  I agree, however, that if submitted for peer review in some statistical journal then this is overkill.  Would you be able to provide links to what you believe are quality articles?  I would be very interested to see what else is out there.  I am familiar with those mentioned in this thesis.  Others of which I am aware either are not statistical sufficient, consider the same measure of competitive balance (e.g. winning percentage) or apply the same analytical method.

That seems reasonable.  It was a pretty minor thing anyway.

And yeah, absolutely I’d be happy to provide some citations (I don’t have all the links).  My opinion is just my opinion, but here’s a few I think could be useful to discuss in the realm of this paper.  This small list is far from exhaustive.  Some are better than others, but all have a small niche (and not all would be appropriate for the current paper).  A lot of the things I’ve seen have been small steps in mapping out the trends of balance and theoretical modeling of policies on balance (which seems to be an important aspect of the paper).  Of course, I do agree that there has been an overemphasis on a single type of balance/unbalance at the W%, or ‘game uncertainty’, level.  Anyway, here’s some stuff I like:

Meehan, Nelson & Richardson (2007).  Competitive Balance and Game Attendance in Major League Baseball. (Journal of Sports Economics).

This one looks at balance of any two given teams through win differences and asymmetry of market responses to balance.  I’d like to see something like this done with a little more data.  I think this paper could be extended.
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Humphreys (2002).  Alternative Measures of Competitive Blanace (J. Sp. Econ.).

Humphreys attempts to combine different measures into one.  I think this would be a useful addition to the discussion that begins the paper.
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Schmidt & Berri (2004).  Convergence Clustering in MLB: The Haves and Have Nots.  (Applied Economics).

I’ll be the first to admit the combination of techniques in this paper are a little bit over my head (they combine clustering with time series bandwith data...I understand each general technique, but mashing them together seems to result in a lot of in-depth stuff).  Considering the Yankee/Red Sox domination that the author uses extensively, this could be a useful addition to the discussion.
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Anthony & Lawrence (2006).  Dyansties vs. Pennant Races: Competitive Balance in MLB.  (Managerial and Decision Economics).

I will admit, I haven’t read through more than the intro to this yet.  But they look at more than just W% using Markov transitional probabilities for consecutive season playoff berths.  But it sounds interesting.
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Lee & Fort (2008).  Attendance and the Uncertainty of Outcome Hypothesis in Baseball.  (Review of Industrial Organization).

The authors investigate 3 or 4 measures of balance and go into some detail about true motivations behind certain league policies (wealth redistribution).  They also find significant effects of ‘playoff uncertainty’.  This paper is probably the most useful here and Lee and Fort outline the various weaknesses that many papers before this have had.  I have to say I agree with the authors and STATHEAD’s viewpoint that there has been a myopic view of balance as it pertains to W%.
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Fort & Quirk (forthcoming… available at http://www.rodneyfort.com).  Optimal Competitive Balance in a Season Ticket League.

This discusses the pitfalls to assuming an improvement in balance would be an improvement in league revenues (for that to happen, the loss from Yankee revenue because their team isn’t as good anymore must be made up by that of a team like, say, the Blue Jays...which isn’t likely to happen since their market size is smaller).  It seems there is a precarious balance between “allowing” the large markets to win more and keeping enough interest in those other teams.  It is not as applicable to baseball as, say, football (given it’s directed toward ‘season ticket leagues’, but the general conclusion that losses in large markets would have to be made up in small markets seems to be an important point when calling for more balance.  Since it’s not published at this point, it would be unfair to require any sort of inclusion of this in the paper.  But I think the author could gain some useful knowledge from it.
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Finally, I think at least a mention of the Uncertainty of Outcome Hypothesis by Rottenberg (1956) lays the foundation for the reasoning and theory behind the work.  Empirical research not based on some sort of theory can run into problems.  This one obviously is based on that theory, and I think that should be noted.

All in all, there is much to be done in this area of research.  This isn’t nearly an exhaustive list, and I’m sure many people here have read earlier work.  I also think a discussion of why policies like revenue sharing, the luxury tax, etc. may not be improving balance (there’s plenty of work done here that could be easily cited and summarized).  The author states that revenue sharing is in place to improve balance.  That assumption can be questioned (especially in context of MLB). 

Like I said, I like this paper a lot, and I think it’s a novel approach.  I’m assuming it’s an undergraduate thesis...and under that assumption...it’s probably the most thought-out and in-depth one I’ve seen before.  Obviously a lot of work went into it.

Not sure why there’s a winky face up there. 

I’ve talked with some other people about this type of research, and apparently there some decent stuff that’s been done on European leagues.  I haven’t read any of this, but I’d encourage anyone to try to find it.  I’m still searching for a few papers, and I’m not sure the authors (it was a brief convo), but I’d be glad to hear anyone else’s suggestions.

I was author of the paper, with a lot of guidance/help from my adviser, and I greatly appreciate your comments and praises.  It was an undergraduate thesis but I am certainly interested in improving the piece and delving more into the issue, so I am interested to read a lot of the papers you posted.  If there are any more suggestions you think of please let me know!

Millsy/6

Many thanks for the list of reference materials; very kind and helpful.

No problem guys.  And Brett, like I said you obviously put a lot of thought into this.  It addressess some things that I haven’t seen before (though I, of course, haven’t seen everything) .  I’m sure you had some fun with the project, too.  I’ve been messing around with some of the competitive balance data as well, and it seems like there’s a lot that can still be done.  Good luck!

Just remembered one that I left out of here.  It’s an ANOVA based measure developed by E.W. Eckard in his review of the Blue Ribbon Panel.  It’s from 2001 Journal of Sports Economics.  The title is “Baseball’s Blue Ribbon Economic Report: Solutions in Search of a Problem.” Brad Humphreys brings up some criticisms and there is a reply from Eckard, all in JSE.  Given the use of ANOVA techniques, it may be beneficial to mention how your analysis may meet some shortcomings of Eckard’s (if you feel there are any).  It could prove informative.  Hope it helps.

I would also recommend some theoretical research by Fort and Quirk (1995) if I failed to mention that earlier, looking at policy in pro sports leagues.

One more correction.  The ‘Anthony and Lawrence’ paper is incorrectly cited.  The names were backward in my file.  It’s a Krautmann and Hadley paper.  Sorry about that.