Compensation in Sports

In Major League Baseball (MLB) there has long been discussion on how teams like the NY Yankees and the Detroit Tigers have attempted to win championships using high team payrolls. Most teams that have taken this approach have not been successful. (In 2009 the Yankees actually did win the championship but in other years fizzled early in the playoffs). Teams taking the high payroll approach results in the annual salaries of some players on the team exceeding the entire team payroll of others (http://www.usatoday.com/sports/mlb/salaries/2014/team/all/). For example on the Detroit Tigers; Prince Fielder ($23 million a year)* and Justin Verlander ($20.1 million a year) were both been extended very lucrative long term contracts. *Note – Prince Fielder was traded prior to the end of his contract, The entire payroll for the Houston Astros in 2013 was $22 Million for the entire season. In the NBA (professional basketball), there were several key signings of free agents by the Miami Heat in 2011. The signing of these players included very lucrative contracts in hopes to guarantee a championship. The first year they were unsuccessful, but have since won two back-to-back championships (2012, 2013). Note – That Miami dream team broke up when Labron James opted out of that lucrative contract to go back to Cleveland for a short term deal (which he just extended two more years in July 2015). In the NFL, football teams provide high salary and long term guaranteed contracts to those signed in the first round of the draft even though those individuals have never played a professional game of football with assumptions that they will perform. On a side note regarding that issue, this was a tense issue of discussion in the 2012 labor negotiations/lockout with the NFL and players regarding restrictions on rookie salaries some of which become the highest paid player for that position in their first season of play. In your post please answer the following: (1) Does the Tournament Theory also apply in team sports? (2) What are the motivators for player performance (is it the mega contract, the championship or other factors)? (3) Does a large team payroll guarantee player performance? Whatever your theories are on this topic please provide enough information to defend your answer either with applied facts and theories (from outside sources and the text if appropriate.)