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| Spring 1999 issue | . | Errant Throw of Money | |
LINKS: Notre Dame's Department of management & administrative sciences Art/Don Nelson |
 The owner of a major league baseball
team who breaks the bank to sign a big-name free agent or two while paying the rest of the
team significantly less is probably committing a costly error, according to a study by
Matt Bloom, assistant professor of management. Bloom found that teams with wider pay ranges had poorer on-field and financial performances than those with relatively equal salary structures. Won-loss records, final standings, attendance, gate receipts, total income and franchise values all were worse for teams with less balanced payrolls. Bloom also discovered that individual players perform worse on teams with wider pay ranges, even the highly paid players. However, teams with higher average salaries across their rosters win more and have better-performing players than teams with lower average salaries. "The implications seem to be that baseball owners should pay their players well, but pay them relatively the same amount." said Bloom He added that the study's implications may go beyond athletics to the many organizations that are emphasizing team-based management. An article on Bloom's study appeared in the February 1999 Academy of Management Journal. |
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