Did revenue sharing create parity in MLB?

Sports economist Dave Berri says no.

 Commissioner Bud Selig tells us that the 2002 agreement has ushered in a “golden age.” If by “golden age” he means an era of pay equality and competitive balance, then the data doesn’t seem to agree. Team payrolls are even less equal today and the level of competitive balance appears to be about the same.

The reality is that competitive balance improved in baseball during the 2oth century as the population of available athletes expanded. And the improvements occurred well before the 2002 agreement. For the mechanism of how this works, please read chapter four of The Wages of Wins (shameless book plug, sorry about that). Or perhaps I will comment on this at our blog – The Wages of Wins Journal (another shameless plug, sorry again). In the last thirty years the standard deviation of winning percentage in both leagues has changed very little. Yes, payrolls have increased dramatically, but competitive balance remains basically the same.

So is this a “golden age” of baseball? If by “golden age” we mean the Yankees are not winning the World Series every year, then I guess that is true. But one should not be confused about how that trick was pulled off. The true trick happened when baseball expanded participation in the playoffs. Since 1995 the team with the best record in baseball has only won the World Series once. And that is because the best team now has to navigate three playoff rounds to win the title.

The revenue sharing plan, which put more gold in the pockets of small market teams, may have made the lives of some owners come closer to a “golden age.” But it is hard to see how this altered the level of parity we observe in the National Pastime.

Economic Impact Analysis Survey Article

I will be discussing this article in class on Thursday, October 19.
Caught Stealing: Debunking the Economic Case for D.C. Baseball

District of Columbia mayor Anthony Williams has convinced Major League Baseball to move the Montreal Expos to D.C. in exchange for the city’s building a new ballpark. Williams has claimed that the new stadium will create thousands of jobs and spur economic development in a depressed area of the city.

Williams also claims that this can be accomplished without tax dollars from D.C. residents. Yet the proposed plan to pay for the stadium relies on some kind of tax increase that will likely be felt by D.C. residents.

Our conclusion, and that of nearly all academic economists studying this issue, is that professional sports generally have little, if any, positive effect on a city’s economy. The net economic impact of professional sports in Washington, D.C., and the 36 other cities that hosted professional sports teams over nearly 30 years, was a reduction in real per capita income over the entire metropolitan area.

A baseball team in D.C. might produce intangible benefits. Rooting for the team might provide satisfaction to many local baseball fans. That is hardly a reason for the city government to subsidize the team. D.C. policymakers should not be mesmerized by faulty impact studies that claim that a baseball team and a new stadium can be an engine of economic growth.

What’s a losing season worth?

Tim Tucker summarizes the Braves attendance and ratings for 2006.

Fans reacted ambiguously to the Braves‘ worst season in 16 years.

Roughly as many people attended games at Turner Field as the year before, but dramatically fewer watched games on television. Entering this weekend’s final series of the season, attendance was up 1 percent and TV ratings down as much as 31 percent vs. last season.

On balance, though, “the team probably did better off the field than on the field” this year, said Braves president Terry McGuirk, who quickly added: “That’s not meant to be a pejorative remark about the team.”

The divergence in the response between attendance and TV viewers is interesting.

TBS’ rating for Braves games dropped 30 percent in the metro Atlanta TV market vs. last year, from 7.2 to 5.0, which translates to a loss of about 48,000 Atlanta households from the average audience. Outside Atlanta, TBS’ already-beaten-down national rating for Braves games dropped another 14 percent, from 0.7 to 0.6.

In the Atlanta market, the combined average ratings for Braves games on regional cable channels Turner South and FSN South dropped 31 percent, from 6.1 last year to 4.2.

I bet there’s a good test question in all of this information.