Small market baseball teams may do better signing a pitcher over a hitter

While the St. Louis Cardinals decide whether to re-sign baseball’s best hitter, Albert Pujols, following the 2010 season, they might want to consider a new study by a business professor at Washington University in St. Louis.

Mike Lewis, assistant professor of marketing at the Olin Business School, claims that small market teams can get as many as four times more incremental wins by signing a high-level pitcher over an all-star hitter.

“Perhaps the key finding is that investments in pitchers tend to be much more effective in improving winning rates relative to equal investments in hitters,” Lewis says. “We find that investments in all-star level pitchers lead to between two and four times as many incremental wins as similar investments in all-star position players. However, when the metric of interest is attendance we find that investments in hitters tend to generate better results.”

An interesting result of the study is that when revenue is the focal metric, the relative benefits of investing in pitchers and hitter varies across market size. The dollar return to investments in pitchers is higher in smaller markets while hitters generate greater revenues in larger markets.

Lewis claims the findings are valuable to both teams and to the overall league. “For teams, the findings provide guidance for investing payroll dollars based on current attendance levels relative to stadium capacity and market population,” he says. “For the league, the findings illuminate the issue of competitive balance. Specifically, the results highlight how the ‘returns to investing in stars’ vary across teams.”