Cost-Efficiency Analysis of Korean Professional Baseball Using DEA and SFA Models

The purpose of this study is to analyze the cost efficiency of Korean professional baseball(KBO) teams through Data Envelopment Analysis(DEA) and Stochastic Frontier Analysis(SFA) and to examine its determinants.. In this study, we used 20 years of data from 2003 to 2022 for eight teams to examine the cost efficiency and its influencing factors of each team through DEA window analysis and SFA reflecting the time series. The empirical results showed that the cost efficiency of KBO teams is not high, but it is generally improving. Among them, the size of the stadium and the number of wins have a positive effect on cost efficiency, while the number of new stadiums and free agents has a negative effect on cost efficiency. In particular, the difference between the efficiency values derived from the two methods is quite large, which means that it is highly sensitive to external shocks due to the probable error. The fact that many teams react greatly to external shocks suggests that the support of parent companies and local governments greatly affects the sustainability of the teams due to the lack of self-reliance of the teams. In order to increase the self-reliance of KBO teams facing a new competitive environment after COVID-19, continuous efforts are needed to transform into solid companies, including positive external support and cooperation with local governments, as well as creating higher-quality cultural content and discovering diverse sources of revenue.