Is Professional Baseball Fielders' Performance Reflected in Their Compensation Structure? An Application of Three-Stage Data Envelopment Analysis

Once a national sport, baseball in Taiwan has been devalued with repeated cheating in local games and underperformance in international tournaments. Although some attribute its demise to the compensation structure, there does not seem to be any empirical assessment of whether Taiwan's baseball players are paid based on their efficient performance. This paper investigates a sample of 59, 190, and 385 fielders in Taiwan, Japan, and the US, and applies three-stage (including individual and system) data envelopment analysis (DEA) to evaluate the compensation structure with 25 batting and fielding records in 2008 and compensation data in 2009. Overall, our findings suggest that the compensation structure in Taiwan's professional baseball industry appears to be more (less) efficient in terms of national (international) rankings, implying a significant compensation gap for local players vis-a-vis those with the same performance in Japan and in the US. Hence, it is imperative to reestablish the credibility of the industry to attract more fans, which will serve to secure a higher level of compensation for Taiwan's players.