| Article ID: | iaor20052679 |
| Country: | United States |
| Volume: | 5 |
| Issue: | 2 |
| Start Page Number: | 127 |
| End Page Number: | 151 |
| Publication Date: | Apr 2004 |
| Journal: | Journal of Sports Economics |
| Authors: | Einolf Karl W. |
| Keywords: | statistics: data envelopment analysis |
The data envelopment analysis technique is used to measure franchise payroll efficiency in the National Football League (NFL) from 1981 to 2000 and Major League Baseball (MLB) from 1985 to 2001. This article shows that there is a significant difference in the level of franchise inefficiency between MLB and the NFL because of the different financial structure in these leagues. MLB franchises, with little revenue sharing and no salary cap, tend to be less efficient than NFL franchises. Big spending and inefficient MLB franchises tend to come from large media markets. although this is not the case in the NFL. This article also shows that NFL franchise efficiency significantly improved after the salary cap was introduced in 1994.