Evaluating Management Efficiency of Korean Professional Baseball Teams using Data Envelopment Analysis (DEA)

Abstract

At the outset, the groundwork for this study began with the work by Kang, Lee, and Kwon (2007). Specifically, the researchers evaluated management efficiency of professional baseball teams in Korea using Data Envelopment Analysis (DEA) technique. Kang, Lee, and Kwon (2007) intended to raise the issue that professional teams in the baseball league must undergo management evaluation each year in order to improve operation efficiency and find ways to generate profit. In the meantime, all major sports leagues in Korea are having difficulties due to same financial and management problems as the baseball league. Therefore, the purpose of this study is twofold. First, evaluate management efficiency for each of the three major sports leagues in Korea. Naturally, this will help to understand the relative management efficiency of each team and provide managers an idea which categories need to be improved for higher efficiency when comes new season. These issues are addressed separately for each of the three major sports leagues: Korea Football Association (KFA), Korea Baseball Organization (KBO), and Korean Basketball League (KBL). Second, compare the management efficiency of the three leagues collectively and discover the common trend across each league. According to the evaluation, individual leagues displayed a common trend that wealthier teams performed poorly in the evaluation being ranked in the bottom of each leagues. Comparing the three leagues’ management efficiency collectively, the KBL (74.9%) scored the highest while KBO scored 70.7%, and KFA scored only 53.6%. This result indicates that the salary cap system applied to the KBL has contributed in a positive way to encourage economic parity within the league and promote overall high management efficiency. The study suggests that a certain extent of institutional control is required over the leagues to control cost and improve fan base via implementing various marketing activities. 1)