On the Efficiency of Trading Intangible Fixed Assets in Major League Baseball

38 Pages Posted: 17 Dec 2022

See all articles by Ryan Pinheiro

Ryan Pinheiro

St. Bonaventure University

Stefan Szymanski

University of Michigan at Ann Arbor

Abstract

This paper proposes novel approaches to measuring team productivity and evaluating trading efficiency in Major League Baseball (MLB) from 1994-2016.  Player performance is measured using a structural approach relating player outcomes to team runs.  Using a portfolio theory framework, we treat MLB teams as portfolios of players (assets), each of which can be defined by an expected value and variance of their runs per game contribution.  Trading efficiency between teams is evaluated given team level pre-trade expected values and variances and the traded player’s pre-trade expected value and variance.  We find that trade efficiency has improved substantially over our timeframe.

Keywords: Sport finance, portfolio theory, baseball

Suggested Citation

Pinheiro, Ryan and Szymanski, Stefan, On the Efficiency of Trading Intangible Fixed Assets in Major League Baseball. Available at SSRN: https://ssrn.com/abstract=4305663 or http://dx.doi.org/10.2139/ssrn.4305663

Ryan Pinheiro (Contact Author)

St. Bonaventure University ( email )

United States

Stefan Szymanski

University of Michigan at Ann Arbor ( email )

500 S. State Street
Ann Arbor, MI 48109
United States

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