In The Beginning...
Beginnings of Economics
To really understand how the economics of spectator sports work we must travel way back in time to the Roman Arenas, where the spectator sport back then was Gladiator battles. These battles would be widely seen, and very well marketed to get as many people to attend these fights as possible. The reason for this widely marketed scene is because of how these spectacles controlled emotions and pride of the "mob" or people of the country. It created a type of Nationalism and pride in the Roman culture. As discussed in a lecture by Suvy, "Nationalism can be condoned by just one thing that separates a country or nation state from the rest" (lecture). For American Nationalism that would be the birth of Baseball. The beginning of baseball as just a sport was somewhat of a new game that turned America upside down. Every sport has had an opportunity to become a truly spectacular spectacle and this game of baseball is no different. Since its beginning in the early to mid 19th century the game of baseball has been growing and been influential in not only those who love it, but also those who are business savvy and politically in charge. When thinking about Deep history about the economics of baseball we must find out how it turned from a game for fun to a game of american business and fierce competition. From a mom and pop shop to a corporation owned money maker. The start of the growth is the stadiums. Like in the Roman Colosseum the atmosphere was breed for money making. "However the first 20 years of the 20th century saw an unprecedented rise in the popularity of baseball. Large stadiums dedicated to the game were built for many of the larger clubs or existing grounds enlarged, including Shibe Park in Philadelphia, Ebbets Field in Brooklyn, the Polo Grounds in Manhattan, Boston's Fenway Park along with Wrigley Field and Comiskey Park in Chicago"(baseball reference). These field were huge investments because of the money making possibilities. Bigger stadiums make for bigger crowds and more money. Like the famous saying, you got to spend money to make money and that is what the owners of these early professional teams did. "Average major league attendances reached a pre WW1 peak of 5,836 in 1909, before falling back during the war. Where there weren't professional teams, there were semi-pro teams, traveling teams, company clubs and amateur men's leagues. In the days before television, if you wanted to see a game, you had to go to the game" (baseball reference). But even then people had to get to the games. and at the turn of the century transportation was the reason why people could keep attending the long season. "Urban growth had created the need for a quick, affordable way to move lots of people over longer distances. City governments and private companies responded by building networks of electric trolley car lines (late-1880s) and subway tunnels (late-1890s and early-1900s)." (Federal Bank of Boston). |
Influences in Money Exchange During the Early Stages of Baseball
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Economic turning point in the early 20th century
From the turn of the century the game of baseball grew dramatically in popularity. Because of the globalization and easier communication, the game has advanced and started to be marketed. People started seeing baseball scores in the papers and the world of news sharing began to share the game quicker than anyone expected. With the spread in popularity the greed for making money come into play. With low salaries for these baseball players had they found that gambling on the outcomes of their own games was much easier to turn a profit. The biggest gambling debacle was the 1919 “Black Soxs” a team that was plagued by gambling and essentially was charged with throwing the world series in order to stick it to their owner who paid them in low wages as well as get rich from the people behind the scenes betting on the other team to win. In John Thorn's book, "The Garden of Eden; secret history of the early game", he discusses that gambling was a necessity in order to advance the game further into a money making game. It was just a game to watch, but Thorn says that with the introduction of betting on the games, money was able to be made from small town bookies to the big dogs who actually gave a piece of their winnings to the players to ensure more winning bets. This type of gambling was able to grow the game exponentially. Connection to PoliticsPolitics in baseball in the early age of baseball history were because of gambling issues. The court system had to come in and change the game forever by banning any sort of throwing the games for money. The integrity of the game was question and the government of the United States had to step in and help out the commissioner of baseball. Not only did this gambling debacle make headway for how baseball became an American sport, but it also helped the government show that they have power over sports rather than just let all sports athletes and owners do whatever they want.
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There is Money To Be Made
Salaries from yesterday to today
Since the game is continuing to grow the salaries of the players has also changed. "In any economics class there's always a large proportion of sports fans, so it's a topic I bring up quite often in my classes" (Moffatt). The First player to receive a salary of $1,400 ($20,000 equivalency to now) was back in 1863 of the Cincinnati Red Stockings and that was the richest paid man back then. To now when the richest contract in Major League History was just sign when Giancarlo Stanton signed a deal with the Miami Marlins for $325 Million for 10 years. That is not only the highest paid athlete in baseball, but also the highest paid of any athlete around the globe. The growth of the game and the amount of support from all over the world it gets the more money the actual players have to make. But it is how the teams choose to spend the money that is interesting. "But the money a team can spend changes from city to city. Many teams money comes not from the money making ballpark, but from the owners of banks and pizza companies. These people are the true puppeteers of how money is distributed among the Major Leagues. In an interview with Sean Kenny, a former professional baseball player who played in the minor leagues from 1993-1996, says, "That teams control marketing so well that they make money every game. Business and financial majors in college are a must if one would want a career in owning a Major League Baseball team. It used to be back in time, teams were owned by a 'Mom and Pop shop', but now have grown into large corporations who are put in charge." The federal Bank of Boston who has done research on how much many certain teams make nowadays talks about how making money comes down to three things, "Television, Licensed goods (all those products, from caps to computer games, that carry an official sports logo), Ticket sales and stadium revenues"(Federal bank of Boston). Th revenues of all teams are growing substantially even more than the national GDP, which means the demand of baseball is only increasing.
Since the game is continuing to grow the salaries of the players has also changed. "In any economics class there's always a large proportion of sports fans, so it's a topic I bring up quite often in my classes" (Moffatt). The First player to receive a salary of $1,400 ($20,000 equivalency to now) was back in 1863 of the Cincinnati Red Stockings and that was the richest paid man back then. To now when the richest contract in Major League History was just sign when Giancarlo Stanton signed a deal with the Miami Marlins for $325 Million for 10 years. That is not only the highest paid athlete in baseball, but also the highest paid of any athlete around the globe. The growth of the game and the amount of support from all over the world it gets the more money the actual players have to make. But it is how the teams choose to spend the money that is interesting. "But the money a team can spend changes from city to city. Many teams money comes not from the money making ballpark, but from the owners of banks and pizza companies. These people are the true puppeteers of how money is distributed among the Major Leagues. In an interview with Sean Kenny, a former professional baseball player who played in the minor leagues from 1993-1996, says, "That teams control marketing so well that they make money every game. Business and financial majors in college are a must if one would want a career in owning a Major League Baseball team. It used to be back in time, teams were owned by a 'Mom and Pop shop', but now have grown into large corporations who are put in charge." The federal Bank of Boston who has done research on how much many certain teams make nowadays talks about how making money comes down to three things, "Television, Licensed goods (all those products, from caps to computer games, that carry an official sports logo), Ticket sales and stadium revenues"(Federal bank of Boston). Th revenues of all teams are growing substantially even more than the national GDP, which means the demand of baseball is only increasing.
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Salary Cap Differences
The gaps between teams salary cap are crazy. The teams who have the most money obtain the best players, and usually the teams at the end of the season who are playing for something like a championship are the teams who have the biggest salary cap. "The first resource at their disposal is the money that they use to sign players. Teams generally do not have enough money to sign every player they want to a contract, although the New York Yankees are trying to prove otherwise. Had the Blue Jays offered salary arbitration to Jose Cruz, his salary for 2003 would have been decided by an arbitrator. The best estimates available suggest that Cruz would have received $5 million for 2003 if his salary was determined by an arbitrator. If we believe this estimate and if the Jays had offered Cruz arbitration, the Jays would be required to retain Cruz and pay him $5 million for the season. This would be 5 million dollars that they Jays could not use for other purposes" (Moffatt). A Major League Revenue Gap in the 2011 Season. The Highest Revenue Team was the New York Yankees with $439 million. The Lowest Revenue Team was the Miami Marlins with $148 million. That Ratio 3 x 1 Source: Forbes magazine. The graph to the left shows the payrolls for baseball teams from last season and how much of a wealth disparity there is. Sometimes at a LossTeams can lose money though. All teams aren't always making as much money as it seems. Which is why teams are worth more than others. Economist Andrew Zimbalist wrote an article for The New York Times Magazine (October 18, 1998) that explained how the Marlins figured their financial losses.
Hook, Line and Sinker—The 1997 Marlins Revenues ($) Ticket Sales 23.9 million, Broadcasting 23.2 million, Concessions 1.8 million, Other 10.0 million=Total 58.9 million Costs ($)Payroll 53.5 million, Team Operations 18.9 million, Player Development 5.1 million, Other 10.0 million, Scouting 5.1 million, Latin American Operations 0.6 million, Stadium Expenses 5.0 million=Total 88.2 million. |
Zooming In to Smaller Venues
College Summerball economics
Places like Danville, Illinois home of the Danville Dans have been a collegiate summer ball location for more than 20 years and they have crowds that come of up to 6,000 per home game. This city does not seem to be very big, but the passion of baseball has no bounds. Despite the fact that this summer ball team doesn’t maintain the same players every year the team has loyal fans that attend games every year. Danville, Illinois is a town that is built around the historic baseball stadium. Like in an article about Kennecott by William Cronon, the societal boom is based on the natural pride a city has for its environment. "Kennecott was once one of the greatest copper milling centers in the world, yet its rise and fall spanned less than three decades" (Cronon 30). Although the economics of the city eventually fell, they fell because of the natural resources that they used up and the dead of that copper fell. Baseball is different the demand of the sport will always be high because of the love people have for the game. Avid fans of the danville dans will come to almost every home game and buy as many hot dogs and beer as they are legally allowed to have, and because of passion and pride they have for that stadium. Buying hot dogs and beer and watching the great game until their hearts content. But also the ownership of these summer teams aren't just your average baseball fan. These owners are business majors and have to have experience in finance. Sean Kenny has a close friend who owns a team in the Northwoods collegiate summer league and it is a million dollar investment because of the money making opportunities. |
Minor leaguer experience
The first hand take of how the economics of not only the spectators, but also the players that have actually played the game is important. A lot of guy in A ball sign for only around $20,000 a year with around $850 a month for food money and that is non negotiable. Usually that food money is distributed for $5 for breakfast, $8-$10 for lunch, and around $12-$15 for dinner. For players to live off of this salary is almost impossible which is why most players have to plan to live off of their signing bonuses. If my coach had to do it ll over again, he wouldn't work in the off season and go to school in the off season, but rather work as a full time athlete. Back in the 1990s there wasn't big league contracts so many players had to work multiple jobs, but now with the money rolling in people are able to to work full time just on baseball. But just because the parks make money and the business of baseball is growing does;t necessarily mean that the conditions for the actual player improve. With crappy motels, and long bus trips with busses with no air conditioning the minor leagues are nothing but a grind of emotion tiredness and physically draining on the body. Economics in small towns? The major leagues are not the only profitable part of american baseball. But also Minor league systems make a lot of money because they are located in some cities that are remote to any other sport. The real growth came in the North east and the south because of the true baseball fans. When you have more fans come to games you can create more revenue. Back in 1993-1996 when my coach played he said that the stadiums in A ball were not pretty and kind of out of date, but because of the fans that kept coming to the games no matter what, these leagues in New York, and Pennsylvania, they are able to create brand new stadiums. The ball parks even here in Michigan have become cathedrals in their own right. The West Michigan Whitecaps play in a stadium that hold about 10,000 people and have great promotions and marketing to continue bringing fans to the ballpark for a new experience every time. Sean Kenny said, " That stadiums and teams these days have conformed to their crowds to make it the most fun environment they can. They adapt to things such as the food, and promotions that keep fans coming and wanting more. And the reason why baseball fans always come back is because it is just like a cheap date, fun for all and not much of a cost." |
Zooming Out to the Global Venues.
Global economics of baseball
Baseball has not only been a cornerstone for profit in America (its homeland) but also in other countries such as Japan and Australia. There are baseball leagues over there that gross a lot of money because of the growing popularity. There are baseball players that grow up to try to make it to the major leagues in Japan and a couple of them do. Because of this dream, the popularity of this sport grows and expands far passed its americans orders. There have been many movies based on the fact of baseball growing to these areas and because of its growth the economies of the cities in which teams are located, business men thrive. Again Suvy has stated that the nationalism of a nation comes from specific details and customs within that nation. IN Japan specifically baseball has become a huge part of their society. They have so many customs and great economic value that hold and preserve the baseball tradition beyond the american boarders. This economic upturn with full Japanese stadium we have foreign policies with baseball. We send players who need more work overseas in order to help them out. The growth of baseball stretches all across the world and many people love the game and will pay money to continue seeing it. The high demands of baseball will continue to increase. |
Attendance In Japanesse Baseball League
Biblography
Cronon, William, George Miles, and Jay Gitlin, eds. Under An Open Sky. New York And London: W.W Norton and Company, 1992.
Cussack, Joan. Eight Men Out. DVD. Directed by John Sayles. , 1988.
Economic History Association. http://eh.net/encyclopedia/the-economic-history-of-major-league-baseball/.
Federal Bank of Boston. http://www.bostonfed.org/peanuts/sptspage/inning4.htm.
Kenny, Sean. University of Michigan Baseball pitching coach.
Lewis, Michael. Moneyball. N.p.: W.W. Norton & Company Inc., 2003.
Moffatt, Mike. "Baseball Players and Opportunity Costs ." About.com/Economics. Google scholar.
Suvy, Lecture from March 22, 2015
Thorn, John. 'The Garden of Eden: Secret History of the Early Game. N.p.: Simon & Schuster, 2011.
Zimbalist, Andrew. May the Best Team Win: Baseball economics and Public Policy. N.p.: Brookings Institution, 2004.
Cronon, William, George Miles, and Jay Gitlin, eds. Under An Open Sky. New York And London: W.W Norton and Company, 1992.
Cussack, Joan. Eight Men Out. DVD. Directed by John Sayles. , 1988.
Economic History Association. http://eh.net/encyclopedia/the-economic-history-of-major-league-baseball/.
Federal Bank of Boston. http://www.bostonfed.org/peanuts/sptspage/inning4.htm.
Kenny, Sean. University of Michigan Baseball pitching coach.
Lewis, Michael. Moneyball. N.p.: W.W. Norton & Company Inc., 2003.
Moffatt, Mike. "Baseball Players and Opportunity Costs ." About.com/Economics. Google scholar.
Suvy, Lecture from March 22, 2015
Thorn, John. 'The Garden of Eden: Secret History of the Early Game. N.p.: Simon & Schuster, 2011.
Zimbalist, Andrew. May the Best Team Win: Baseball economics and Public Policy. N.p.: Brookings Institution, 2004.