Date of Award

2019

Degree Type

Thesis

Degree Name

Honors Thesis

Department

Business

First Advisor

Jennifer Rice

Abstract

This paper seeks to add to the existing literature regarding sports teams and whether they follow a win-maximizing or profit-maximizing strategy. Specifically, this paper seeks to analyze Designated Players (DPs) in Major League Soccer (MLS) and see if DPs contribute more toward a team’s on-field success, measured as win percentage, or overall revenue. Prior studies have analyzed soccer leagues across Europe and found that most teams follow win-maximizing strategies over profit-maximizing strategies. This analysis has not yet been carried over to MLS, which is not the most prevalent sports league in its home country and features a unique DP structure. Match-specific and DP data was collected over the span of four MLS seasons from 2014 to 2017, while financial data was compiled from annual reports published by Forbes. The data was analyzed through a series of linear regressions. The results showed that DPs have a positive effect on both win percentage and team revenue, and that DPs can explain a larger amount of the variation in team revenues than the variation in win percentage. The results imply that teams in MLS may be signing DPs in order to maximize short-term profits over long-term on-field successes.

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