New BU Study Examines MLB Pay Versus Performance for All 30 Teams

The researchers also built an app to allow findings to inform and help improve MLB front office decision making

BOSTON--(BUSINESS WIRE)--A new study out of Boston University’s Questrom School of Business evaluates pay versus performance for all 30 MLB teams – and over 4,000 individual players – from 2021 to 2025, ranking teams based on spend efficiency to wins.

The study, led by Mark Williams, Master Lecturer of Finance at Questrom, and supported by a team of graduate students, was conducted to better understand which payroll size and what spending habits increase likelihood of advancing to the playoffs, as well as teams that overspent, underspent, and optimally spent.

To measure if teams that spend efficiently actually win more in October, Williams and his team compared playoff appearance rates between the least and most efficient teams over the last five seasons. A key finding shows that higher payrolls do not always translate to efficient spending, and inefficient spending can ultimately limit team success. The research also found that teams that allocate payroll efficiently – regardless if they are top, mid, or bottom payroll tier – tend to go further in post-season play. In other words, higher payrolls do not automatically equate to more wins. To add to this, teams that are forced to spend less but more efficiently, often get far more bang for their buck. The highest spending teams – such as those in larger markets – see diminishing incremental returns on higher payroll spending; essentially paying more without necessarily winning more. Some teams are paying veteran-contract premiums, but many times without committing to championship-level talent.

Small-market teams, such as the Milwaukee Brewers and the Cleveland Guardians, can punch above their payroll weight as measured in dollars spent to wins produced. Larger-market teams, like the New York Mets, top the list of gross underperformers. Payroll constrained teams can also underperform, as evidenced by the Colorado Rockies, who last year led the league in lowest wins.

“Based on study findings, the Milwaukee Brewers are the most efficient spend-to-win team in MLB,” says Williams. “Last season, with a payroll 4x less than the Los Angeles Dodgers, this franchise won more regular season games. An impressive feat,” he adds.

The report reveals a widening gap in how MLB teams construct competitive rosters, as rising player costs increasingly shape team-building strategies across the league. The findings show that teams generally need to accumulate at least 30 fWAR* to remain competitive, yet the cost of acquiring fWAR through free agency has surged 170% since the 2021 season. As a result, organizations are taking markedly different approaches to roster construction, with some relying heavily on free agents and arbitration-eligible players, while others prioritize younger, pre-arbitration talent.

“As the cost for free agent players escalates, there are lessons to be learned from several small market teams who are adept at spending payroll efficiently for wins,” notes Williams.

The study also found that younger players on pre-arbitration contracts deliver some of the strongest pay-versus-performance value in Major League Baseball, creating an advantage for teams that can successfully develop homegrown talent. While large-market organizations such as the Los Angeles Dodgers and New York Yankees are better positioned to absorb escalating free agent costs, small-market teams are increasingly dependent on maximizing value from pre-arbitration players to remain competitive. Bidding wars for free agents can reduce team spending efficiency, increasing overpaid player risk, while pre-arb contracts allow for increased opportunities to cultivate stars at lower rates.

Accompanying the study is a new app called MLB Toolbox, also designed by the research team, which aims to keep the research alive and serve as a tool for improving Major League Baseball, as well as informing MLB front office decision makers and fans. It also allows users to build their dream roster under any budget and provides live statistics that are continuously updated.

This study was also developed by BU MBA students Ethan Davis, MSMFT ‘27, and Dan Shin, MSMFT ‘27, as well as BU MBA alum, Brandon Cohen, MBA ‘20, who served as a consultant.

*(fWAR stands for FanGraphs Wins Above Replacement. WAR is a commonly used metric in baseball analytics to estimate a player’s overall value and how many additional wins they can bring to a team. fWAR refers to FanGraphs' calculation of WAR and was used in this study.)

About Mark Williams
Mark Williams is a faculty member in the Finance Department at Boston University’s Questrom School of Business where he has taught courses in economic activity, capital markets, and risk management for over 24 years. In 2018, he was named the James E. Freeman Lecturer in Management Chair. In 2019, he published research on MLB low umpire accuracy rates that contributed to the recent adoption of the ABS challenge system. Williams is a nationally recognized risk management expert in the field of economics and banking.

About Boston University Questrom School of Business
Founded in 1913, the Boston University Questrom School of Business is a global top-tier academic research business school. Led by Allen Questrom Professor and Dean, Susan Fournier, Questrom develops business leaders who create value for the world. Questrom redefines transformational business programs, strengthens partnerships with the business community, advances the impact of research on business, and manages the school as a high-performing enterprise committed to excellence with a service mindset. Comprising a renowned full-time faculty of 165 researchers, teaching faculty, and accomplished practitioners, Questrom generates insights to address today’s business challenges and prepares students with the tools they need to succeed from Day 1 in their professional lives. Questrom’s portfolio of academic programs is robust and includes a Top 20 undergraduate program of over 2,200 students; distinctive MBA offerings including 900 students in a full- and part-time MBA, the affordable Online MBA and specialty MBAs in social impact, health, and digital technology; several thriving specialized master’s programs in areas including business analytics, mathematical finance, and management studies; and a rigorous PhD program. More than 50,000 Questrom alumni form a powerful global network of leaders driving value creation that changes the world.