MAJOR LEAGUE BASEBALL

MLB Salary &

Performance Report
American & National League
Jennifer Travis

This report is provided to examine the Major League Baseball (MLB) of the United States and
Canada players performance and pay. A random sample of 254 out of 1200 players was examined.
The following report uses 3 variables: Salary, HR, and AVG. The conclusions were based on
calculations such as central location measures, covariance and correlation.

During this analysis 3 variables were examined: Salary, HR, and AVG.
Variable
Salary
HR
AVG

Scale of Measurement
Ratio
Ratio
Interval

During calculation of central location measures it was found that it is skewed to the right;
meaning the "tail" of the distribution goes way long on the positive side. The mean for this data
is skewed due to the outlier of the highest paid player with a salary of $23,428,571 in
comparison to the average salary of $4,689,717. The standard deviation is higher than both the
mean and the median an indicator that the data is not normally distributed (not a bell curve).

Central Location Measures and Skew of Salary

Mean

$4,689,717

Median

$3,500,000

Mode

$380,000

Standard Deviation

$4,808,744

Skew

$1.29907

The frequency polygon below gives a clearer picture of the skew. A data is normally distributed (bell
curve) would have a skew value of 0.

Frequency Polygon of Salary

120
100
80
60
40
20
0
0

5000000 10000000 15000000 20000000 25000000 30000000

Salary within 2 standard deviations

2 x $4,808,744 + $4,689,717 = $14,307,205
2 x $4,808,744 -$4,689, 717= $4,927,771
81.89% of player earn within 1 Standard Deviation

The high percentage of 81.89% within 1 standard deviation is an indicator for the skew and is an
indicator that the data is not normally distribution distributed.
During this analysis it was found that the highest paid player earns $23,428,571 and this player
has an AVG of 0.289. In comparison to the other players in the data set this player had 59 players
with a higher AVG, meaning that 23.2% of the players have a higher AVG.

Z score= (value - mean)/standard deviation

(23,428,571-4,689,717)/4,808,744 = 3.8968
The highest paid players salary is approximately 3.9 standard deviations above the mean.

Salary Percentiles
$12,450,000
$7,289,150
$4,190,000

90th percentile
75th percentile
60th percentile

90% of players make below $12,450,000 and 10% of players make about this amount. 75% of
players in the data set make below $7,289,150 and 25% make above it. 60 % of players make less
than $4,190,000 and 40% of players make more.

HR Percentile
80th percentile
197.4
The minimum HR that will place a player at the 80th percentile is about 198

HR Probability
Z score for 198 HR
Probability for < 198
Probability for > 198

0.64
0.7389137
0.2610863

Probability of batting average of > 0.300

Z Score
1.086265325
Probability for >3
0.138680812
1-.8621=.1379
Approximately 13.79 % of the players have AVG greater than .3

Odds for .300 Batting Average

0.138680812/(1-0.138680812) = 0.161009778

NYY
TBD

Highest/Lowest Average Salary for MLB

$13,536,433
$1,362,789

NYY has the highest average salary for MLB. NYY also has the highest paid player in the data set.
However, the highest paid player does not have the most homeruns or the highest average as shown
in the table below. The second highest paid player in the league has the most homeruns and second
highest average. From the data provided it does not appear the highest paid player is being paid
solely for performance.

Highest Paid 3 Players for High/Low Salary

Team
Salary
NYY
$23,428,571
NYY
$22,708,525
NYY
$21,600,000
TBD
$4,125,000
TBD
$2,700,000
TBD
$1,800,000

HR
364
518
195
62
87
7

AVG
0.289
0.306
0.317
0.296
0.268
0.285

Covariance
Salary, HR
Salary, AVG

429686871.1
42017.19

This is a large, positive covariance with a strong linear relationship. With a positive covariance
means that as one variable gets bigger, so does the other. If it was negative, it would mean that as one
variable gets bigger, the other gets smaller.

Correlation
Salary, HR
Salary, AVG

0.720582577
0.387841

HR & Salary Scatter Plot

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$0
0

s_r

100

200

300

400

500

Correlation Test of Variables

Salary, HR
0.043678

600

700

800

Salary, AVG
0.058063

900

t
p-value

16.4976
42

6.6796
10

Considering the p-value of salary, HR is 42 there is less consideration that there is correlation
between the two variables. If the number was closer to 0 then one would be able to consider that
these two variables are correlated. Yet, one still may not know how they effect each other. Even
though these to effect each other it does not mean they cause each other. However, the p-value of
salary, AVG is more likely to be correlated due to the smaller number of 10 because the number
is closer to 0. Or one may suspect that the hypothesis is true if the number is closer to 0.

AVG & Salary Scatter Plot

$25,000,000

$20,000,000

$15,000,000

$10,000,000

$5,000,000

$0
0.15

0.2

0.25

0.3

0.35

Recommendation for team owners: The correlation test shows that, on average, there is a positive
relationship between salary and batting average, and an even stronger one between salary and home
runs. Therefore, the team owners may consider paying their players more money in return for better
performance. While the highest paid player may be considered an outlier he still has one of the
highest batting averages along with a high home run score. The second highest paid player salary
correlates with his better performance including a higher batting average and home run score than
most players in the data set.