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There are few things that Justin Monteforte ’02 (West Pittston, Pa.) enjoys more than playing and watching sports. That is one reason he chose a sports study for his senior honors thesis in economics and business. Previously, Monteforte conducted research for a class project on the salaries of NFL quarterbacks based on their performance.
“Paying employees their true worth is an important part of the business world that as economists we don’t know enough about,” says Monteforte, an economics and business major and psychology minor. “I am excited to try to explain this area of business through baseball.”
His thesis is titled “Exposure vs. Production: Paying Employees Their True Worth. A Study through Professional Sports.” Monteforte contends that a team owner’s ability to make money from an athlete is what drives salaries. This differs from the business world, where it is difficult to determine how much each employee is worth.
“The owners and managers are trying to maximize their profits by keeping costs low and revenues high, while employees are trying to maximize their personal profit by moving to the job with the highest salary,” says Monteforte. “In sports, there is the benefit of statistics as a way to single out individual output from the success of the team. This is a useful tool to measure a single person’s output, not available to the business world. In today’s professional sports world, the prevailing opinion is that players are paid based on their performance. But is this always the case?”
“While it may be true for 80 to 90 percent of athletes, among top athletes there are additional forces driving salary other than sheer statistical output,” contends Monteforte. “I feel that some of this variation can be accurately modeled. It is possible that flashy or attention-getting play may be even more important than performance? Endorsements, perhaps, can also up a player’s worth. If an athlete is on television more than another, maybe he can draw a bigger crowd to the game.”
Monteforte is examining the factors behind all of the money using a cross section of players and factoring in such variables as charisma, personality, trading card price, all-star votes, and memorabilia sales. “These factors will measure demand for a player on the open market and help explain differences in salary between players with identical performance,” says Monteforte.
Thomas Bruggink, associate professor of economics and business, is Monteforte’s thesis advisor. “I am very glad to be working with Professor Bruggink,” says Monteforte. “He is very well respected and highly knowledgeable in the field of econometrics and the economics of sports.”
Professor Bruggink believes that the project provides Monteforte with a distinctive learning opportunity. “Justin’s honors thesis is much like the work done by a consulting company, only he is doing everything instead of parsing out the work to team members,” says Bruggink. “He has to research the pay-for-performance paradigm and gather statistics to estimate an earnings model for baseball players. When finished, his thesis will parallel a consultant’s report, only Justin’s will be much longer.”
A graduate of Wyoming Seminary, Monteforte has received dean’s list honors and is a member of Omicron Delta Epsilon, the international honor society for economics. He also is a member of Delta Upsilon fraternity and an America Reads tutor.
A National Leader in Undergraduate Research. Justin Monteforte ’02 made a presentation on honors research he did under the guidance of Thomas Bruggink, professor of economics and business, at the National Conference on Undergraduate Research.