With the recent $325 million dollar contract sign by Giancarlo Stanton, baseball contracts have reached a new frontier. Baseball contracts have increased in value year after year since free agency began in 1976. Are these contracts efficient? A new approach to measuring the efficiency of baseball contracts makes use of the wins above replacement statistic. That statistic reflects the value and cost of a player compared to a replacement. I conclude that large long-term contracts are efficient right now, but with many contracts not yet finished, and players past their "prime," these contracts may become extremely inefficient.
Major Themes in Economics
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"The Efficiency of the Major League Baseball Free-Agent Market,"
Major Themes in Economics, 18, 35-49.
Available at: https://scholarworks.uni.edu/mtie/vol18/iss1/5