Performance measurement of major league baseball teams using network DEA

Data envelopment analysis (DEA) has been extensively applied to measure the performance of individual athletes and teams in a variety of sports as well as to analyze nations competing in the Olympics. Most of the models presented in the literature are single-stage DEA models which treat the underlying process of converting inputs into outputs as a “black box.” In many situations, analysts are interested in investigating the sources of inefficiency within the organization in order to improve organizational performance. To accomplish this, researchers have developed two-stage and network DEA methodologies. In this chapter, we model an MLB team as comprised of a front office operation which consumes money in the form of player salaries to acquire offensive and defensive talent and an on-field operation which uses the talent to outscore opponents and win games. We present a network DEA methodology to measure performance of the front office operation, the on-field operation, and the overall team. Finally, we conduct two industry-wide studies of Major League Baseball which utilize the network DEA methodology.