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Friday, July 15, 2011

Olson: Petty malice keeps Marvin Miller out of baseball’s Hall of Fame

Damn, Miller was sharp on that Curt Flood HBO special.

Marvin Miller isn’t sure how he’ll spend July 24. He often plans his life day by day, and now that he’s 94, the hours tend to be more precious and slightly less crammed. He’d rather not fill them with anything that causes ulcers.

“Maybe I’ll watch it,” Miller says. “Depends on if I get a better offer.”

We are talking about baseball’s Hall of Fame inductions in Cooperstown, N.Y., the festivities culminating with ceremonies honoring players Roberto Alomar and Bert Blyleven and executive Pat Gillick. It should make for compelling viewing.

...Some of the members of the expansion era committee whose roles are to consider managers, umpires, executives and long-retired players for enshrinement are the type of men Miller once schooled in labor battles. The criteria for non-playing personnel is meant to lean heavily on the impact they had on the sport, which long ago should have made Miller’s inclusion a cinch, if only petty souls would release their malice.

“I’ve never campaigned to be in the Hall and have asked not to be included on any ballot,” Miller says.

“But they continue to put me on the list and then rig the election. Considering who runs the place, not being a part of it gives me credibility as a union leader. That’s how I hope it stays long after I’m gone.”

“I still say I don’t want to belong to any club that would have me,” he says. “Even when I’m dead.”

Repoz Posted: July 15, 2011 at 11:56 AM | 448 comment(s) Login to Bookmark
  Tags: business, hall of fame, history, media

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   1. adenzeno Posted: July 15, 2011 at 12:27 PM (#3878136)
The fact that he is not yet in the HOF is a shame.
   2. True Blue Posted: July 15, 2011 at 01:24 PM (#3878155)
The malice they show towards Miller is petty compared to the malice on the game that he and Fehr have been.
   3. cabintwelve Posted: July 15, 2011 at 01:46 PM (#3878174)
LOL @ True Blue.
   4. jack the seal clubber (on the sidelines of life) Posted: July 15, 2011 at 02:01 PM (#3878186)
Ah, I don't know. The players were getting screwed before he showed up. But if he didn't, we'd be paying $15 to get in to the park and beers would be $3. All that money going in players' pockets is coming from somebody, and guess who that is.
   5. Random Transaction Generator Posted: July 15, 2011 at 02:16 PM (#3878199)
But if he didn't, we'd be paying $15 to get in to the park and beers would be $3. All that money going in players' pockets is coming from somebody, and guess who that is.

This may be the dumbest thing I've seen written on this site.

Your complete lack of economic understanding floors me.
   6. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 02:24 PM (#3878204)
Post-Miller vs pre-Miller correlations:

1. higher salaries, higher ticket prices, bigger profits for the owners

2. a much bigger talent pool and a better game on the field

3. a tenfold or more increase in the availability of games on TV, at ridiculously cheap prices

OTOH trying to isolate one factor (free agent salaries) and say that this was the cause of all the bad things (ticket prices), while not recognizing its role in the good things (increased talent pool, TV accessibility) is kind of one-sided, to say the least. It's also kind of hard to imagine that if Marvin Miller hadn't come along, that the cumulative effect of the philosophy of individualism and the greater outlets for marketing wouldn't have eventually led us to pretty much the same point we're at today. Miller's efforts jump-started it, and for his pioneering work alone he obviously deserves to be in the Hall of Fame, but even if he hadn't existed, everything that we associate with free agency probably would have been delayed until the early 80's at the latest, and probably not even that long.
   7. jack the seal clubber (on the sidelines of life) Posted: July 15, 2011 at 02:28 PM (#3878212)
This may be the dumbest thing I've seen written on this site.

Your complete lack of economic understanding floors me


You're saying there's no correlation between player salaries and ticket prices? Enlighten me with your wisdom.
   8. cardsfanboy Posted: July 15, 2011 at 02:33 PM (#3878215)

You're saying there's no correlation between player salaries and ticket prices? Enlighten me with your wisdom.


Not an economist, but yep, there is very little correlations between player salaries and ticket prices. That seems pretty obvious to anyone who has even glanced at the issue.

Ticket prices isn't dictated by what the players are paid, ticket prices are dictated by what the market is willing to pay. If the players were making 100k a year, it wouldn't affect ticket prices one iota. The difference is who is keeping the profits. Think of it this way, if a movie cost 100mil to make, and another movie costs 10mil to make, why is the ticket prices for both movies exactly the same?
   9. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 02:36 PM (#3878217)
But if he didn't, we'd be paying $15 to get in to the park and beers would be $3. All that money going in players' pockets is coming from somebody, and guess who that is.


This may be the dumbest thing I've seen written on this site.

It is pretty simplistic, but it's equally absurd to think that owners could have jacked up the costs of an evening at the ballpark to the extent that they have today** without having the salary explosion as a convenient excuse.

But that said, the truth is that even though there've been some markedly negative consequences (like the auction mentality applied to many ticket prices), free agency was probably necessary for baseball to thrive in the 21st century.

**A fellow Primate who was going on vacation gave me 2 box seats to a Nats-Cubs game last week. If we'd paid for those tickets, the cost of those two box seats along with a BBQ sandwich, a hamburger, two beers, one dessert and parking would have enabled both of us to attend every game of the season BITD, including public transportation to the park. Obviously the CPI accounts for some of that, but if that were all it was, those same tickets would have cost about 20 bucks today, rather than 75.
   10. Kurt Posted: July 15, 2011 at 02:42 PM (#3878219)
If the players were making 100k a year, it wouldn't affect ticket prices one iota.

This part isn't true - if the players were making 100k, the best players would go to some other league (or sport), and people wouldn't be nearly as interested in watching.

I thought jack was paying Miller a huge compliment, in saying that without Miller, MLB would today be no more popular than college baseball.

Obviously the CPI accounts for some of that, but if that were all it was, those same tickets would have cost about 20 bucks today, rather than 75.

Funny, $75 is exactly what I paid for NCAA tournament tickets this spring. If only the Marvin Miller of college basketball hadn't jacked up the player salaries so obscenely high...
   11. The Id of SugarBear Blanks Posted: July 15, 2011 at 02:42 PM (#3878220)
Pretty much what Andy said. Baseball has grown from a sleepy mom-and-pop enterprise to big business at roughly the same pace as six or seven other sports here and in Europe/Asia, and the players' stature relative to the promoters, and their freedoms of movement and relative cut of the pot have grown at roughly the same pace in all of them. The economics of baseball were ultimately driven by forces much more potent than Marvin Miller.

But then, again, we can say that about practically all individuals. It certainly wouldn't be wrong to put him in the HOF, he deserves it more than Bowie Kuhn, and his protests that he doesn't want to be in show how much he does want to be in. At this point, it's entirely petty to keep him out.
   12. Bob Tufts Posted: July 15, 2011 at 02:42 PM (#3878222)
I suggest that the Luddites read either "Lords of the Realm" or "The Imperfect Diamond" before commenting further.
   13. Jose Can Still Seabiscuit Posted: July 15, 2011 at 02:47 PM (#3878226)
You're saying there's no correlation between player salaries and ticket prices? Enlighten me with your wisdom.


Consider it this way; I charge you $100 to come to BTF and in exchange I pay Jim $50 for the right to sell your access to BTF. I make a $50 profit, life is good.

Now, through a collective bargaining agreement I only pay Jim $20 for the right to sell access to BTF. My choices are;

1. Sell you the access for $70 keeping my profit at $50 or
2. Sell you the access for the same $100 you've proven you are willing to spend. My profit is now $80.

Higher or lower profit, what do you think the owner of these businesses is going to elect?

Andy is right, there probably is some ancillary impact that the higher salaries allowed owners to "explain" why they are jacking up prices but that's not the only cause. I will be stunned if the new labor agreements in the NBA and NFL that reduce salaries will also result in reduced ticket prices.
   14. Chris D Posted: July 15, 2011 at 02:51 PM (#3878230)
College basketball salaries have made NCAA tournament tickets out of reach for me. Oh wait...
   15. McCoy Posted: July 15, 2011 at 02:51 PM (#3878231)
Pretty much what Andy said. Baseball has grown from a sleepy mom-and-pop enterprise to big business at roughly the same pace as six or seven other sports here and in Europe/Asia, and the players' stature relative to the promoters, and their freedoms of movement and relative cut of the pot have grown at roughly the same pace in all of them. The economics of baseball were ultimately driven by forces much more potent than Marvin Miller.

And almost all of them have had their Marvin Miller-like moment. The NFL had the USFL force them to jack up salaries and also become aware of the danger of not paying their players.
   16. Moloka'i Three-Finger Brown (Declino DeShields) Posted: July 15, 2011 at 02:54 PM (#3878235)
   17. The Id of SugarBear Blanks Posted: July 15, 2011 at 02:54 PM (#3878237)
A good seat for the NCAA regional semis or later is worth more than $75 -- and is clearly worth more than a comparable seat for a single regular season MLB game.
   18. Random Transaction Generator Posted: July 15, 2011 at 02:59 PM (#3878243)
Enlighten me with your wisdom.

I stepped away for a bit, and it seems everyone else has done that for me.
   19. Best Regards, President of Comfort, Esq. Posted: July 15, 2011 at 03:00 PM (#3878245)
Economically illiterate #######.
   20. McCoy Posted: July 15, 2011 at 03:06 PM (#3878253)
I'm thinking that Marvin Miller being a bit of a dick has something to do with him not being in the hall.
   21. David Nieporent (now, with children) Posted: July 15, 2011 at 03:10 PM (#3878257)
It is pretty simplistic, but it's equally absurd to think that owners could have jacked up the costs of an evening at the ballpark to the extent that they have today** without having the salary explosion as a convenient excuse.
No, it isn't.
   22. Kurt Posted: July 15, 2011 at 03:16 PM (#3878262)
You know what else grinds my gears? I can't see U2 in a small club for 5 bucks any more like I could 30 years ago. I blame their manager, for paying the band members so much.
   23. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 03:18 PM (#3878264)
Obviously the CPI accounts for some of that, but if that were all it was, those same tickets would have cost about 20 bucks today, rather than 75.

Funny, $75 is exactly what I paid for NCAA tournament tickets this spring. If only the Marvin Miller of college basketball hadn't jacked up the player salaries so obscenely high...


Well, if the Nats ever got into the postseason, those box seats would be a lot more than 75 bucks, probably 2 or 3 times as much as the Nats progressed from the DS to the WS.

That said, your point has a lot of truth to it, even if the details don't perfectly correlate. I think we can safely say that baseball free agency was the first shot in the transformation of live big time sports from being a pleasant way to enjoy a cheap and spontaneous evening to a hyperstimulated "total fan experience" that leaves most working and many middle class fans completely out of the picture, at least if they like to attend games more than once or twice a month and don't want to sit in the nosebleed seats.

But once the genie was out of the bottle, the division between "professional" and "amateur" sports became harder and harder to maintain, since the same basic motivating force---money, and the more the better---is just as likely to be found among college marketing gurus as it is among Selig's and Goodell's FOX-sucking flunkies.

And don't kid yourself: When it comes to fan loyalty, the alumni of Texas, Alabama and Duke are just as likely to open their wallets as the fans of the Yankees or the Redskins. The pro owners have player salaries an excuse for their ticket prices, but the colleges have an even better excuse: You devoted alumni are helping to subsidize your beloved alma mater's scholarships and intramural sports, and maybe a science lab or two.

Of course it's all mostly bullshit, but the people who notice it aren't generally part of the cheering section to begin with. We ain't in Kansas anymore.
   24. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 03:27 PM (#3878272)
It is pretty simplistic, but it's equally absurd to think that owners could have jacked up the costs of an evening at the ballpark to the extent that they have today** without having the salary explosion as a convenient excuse.

No, it isn't.


It's not to say that they might not have tried, but unless you think that neither the fans nor the media would have noticed a strange discrepancy between payrolls of 5 to maybe 15 million dollars, and ticket prices like today's, it's impossible to think that there wouldn't have been plenty of kickback, ranging from terrible publicity to congressional jawboning to congressional action to the refusal of cities to build ballparks, and so on. The net effect of all that would have certainly kept ticket prices below what they are today. Your model assumes a complete elimination of all political and other intangible factors that often drive the level of demand beyond** the desirability of the product on the field. It's what often happens when you try to make sense of the real world by relying solely on an economics textbook.

**in both directions
   25. McCoy Posted: July 15, 2011 at 03:28 PM (#3878274)
Baseball salaries were going up even before free agencies.
   26. The Id of SugarBear Blanks Posted: July 15, 2011 at 03:45 PM (#3878291)
It's not to say that they might not have tried, but unless you think that neither the fans nor the media would have noticed a strange discrepancy between payrolls of 5 to maybe 15 million dollars, and ticket prices like today's, it's impossible to think that there wouldn't have been plenty of kickback, ranging from terrible publicity to congressional jawboning to congressional action to the refusal of cities to build ballparks, and so on. The net effect of all that would have certainly kept ticket prices below what they are today. Your model assumes a complete elimination of all political and other intangible factors that often drive the level of demand beyond** the desirability of the product on the field. It's what often happens when you try to make sense of the real world by relying solely on an economics textbook.

As Phil Mushnick rightly notes thrice-weekly, the media are much more indifferent to the predation of today's sports monopolists (that is, when they aren't affirmatively enabling it). There's simply no doubt the late-pre and early-post free agency baseball owners left a bunch of money on the table they could have nabbed in today's political and intangible environment. They were constricted in how much they could gouge their customers, in part because of their own underestimation of the prices they could charge (**), but also because they couldn't have gotten away with charging them.

(**) Arising in part from the fact that they didn't have to charge them to make money.

And don't kid yourself: When it comes to fan loyalty, the alumni of Texas, Alabama and Duke are just as likely to open their wallets as the fans of the Yankees or the Redskins. The pro owners have player salaries an excuse for their ticket prices, but the colleges have an even better excuse: You devoted alumni are helping to subsidize your beloved alma mater's scholarships and intramural sports, and maybe a science lab or two.

True, but there's a much more organic and meaningful relationship between, say, me and the University of Michigan than between me and any conspicuously for-profit sports franchise. Not to mention that tickets on the 50-yard line for Big Ten games are either $70 or $85 for the upcoming season -- a relative pittance.
   27. AROM Posted: July 15, 2011 at 03:47 PM (#3878293)
I fail to see free agency as increasing the baseball talent pool. Before free agency, baseball players were paid very well, well above what an average worker would make. Plus, it's baseball. Playing baseball is infinitely more fun than any kind of office or factory job.

This is a case where the economic textbook is not helpful. You already had a situation where just about anyone who is capable of playing the sport wanted to play it. Raising their wages doesn't bring any new supply of super athletes jumping into the sport from other walks of life.
   28. AROM Posted: July 15, 2011 at 03:49 PM (#3878296)
I could see a limited increase if baseball was able to get the multi-sport athletes who otherwise would have chosen other sports. Maybe Dave Winfield doesn't play baseball if the reserve clause stayed intact?

But athletes capable of succeeding at the highest level in multiple sports are exceptions, not the rule.
   29. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 04:21 PM (#3878329)
Baseball salaries were going up even before free agencies.

Yeah, but at nowhere near the rate that they've been going up ever since. It doesn't matter whether you compare the minimum salary, the median salary, the average salary, or the top salaries, the results are all the same.

-----------------------------------------------

As Phil Mushnick rightly notes thrice-weekly, the media are much more indifferent to the predation of today's sports monopolists (that is, when they aren't affirmatively enabling it). There's simply no doubt the late-pre and early-post free agency baseball owners left a bunch of money on the table they could have nabbed in today's political and intangible environment. They were constricted in how much they could gouge their customers, in part because of their own underestimation of the prices they could charge (**), but also because they couldn't have gotten away with charging them.

(**) Arising in part from the fact that they didn't have to charge them to make money.


Much of that is true, but there's still the question of scale, which you simply can't ignore. It sometimes takes a lot to get the media's attention, but I doubt if a ticket price rise on the scale we've had over the past 30 or 35 years could have gone unchecked without the salary excuse.

And don't kid yourself: When it comes to fan loyalty, the alumni of Texas, Alabama and Duke are just as likely to open their wallets as the fans of the Yankees or the Redskins. The pro owners have player salaries an excuse for their ticket prices, but the colleges have an even better excuse: You devoted alumni are helping to subsidize your beloved alma mater's scholarships and intramural sports, and maybe a science lab or two.

True, but there's a much more organic and meaningful relationship between, say, me and the University of Michigan than between me and any conspicuously for-profit sports franchise. Not to mention that tickets on the 50-yard line for Big Ten games are either $70 or $85 for the upcoming season -- a relative pittance.


You're welcome to do a little searching and find out how much you have to cough up in the way of alumni contributions and personal seat licenses before you can become eligible for those $70 - $85 midfield seats in the first place. That may not be true for Indiana, but within the Big Ten that's likely to be the only exception. A fan with no inside connections would be about as likely to be able to walk up and get a choice midfield seat for most Big Ten conference games at $70 to $85 as he'd be to get a comparable seat at the Super Bowl for face value.
   30. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 04:22 PM (#3878331)
I fail to see free agency as increasing the baseball talent pool. Before free agency, baseball players were paid very well, well above what an average worker would make. Plus, it's baseball. Playing baseball is infinitely more fun than any kind of office or factory job.

Look at the amount of money invested in non-U.S. scouting since free agency began, consider the extra motivation that free agency salaries give to ballplayers from Latin America and Japan, consider the hugely increased emphasis in college baseball programs, and put it all together and look at the results as seen on Major League rosters. Money drives all of that, even if it's not the only factor.

The multi-sport athlete question is a wash, since for every college athlete who might choose baseball because of the salaries and the longevity, there's likely a high school counterpart who got steered into football and basketball because of the atrophying of most inner city high school baseball programs. In any case there's absolutely no way to quantify this and reach any firm conclusion.
   31. Banta Posted: July 15, 2011 at 04:29 PM (#3878339)
neither the fans nor the media would have noticed a strange discrepancy between payrolls of 5 to maybe 15 million dollars

You know, I actually think in a world where A-Rod is making 5 million a year, even in today's money, that most people would still be saying "5 million a year to play baseball??? Holy ####! That's ridiculous!" I mean, you cut the league minimum down to 100,000 dollars and rank everything from there, I don't think that has much of an impact on the average fan/media-type's viewing of the situation. The owners could still charge what they do now and still base it on their unspoken "these players are ####### greedy" because when you're an average American bringing home 35,000 to 40,000 dollars a year, the fact that anyone is gonna make MILLIONS (even if it isn't tens of millions)playing a kid's game is gonna seem ridiculous.
   32. David Nieporent (now, with children) Posted: July 15, 2011 at 04:37 PM (#3878345)
It's not to say that they might not have tried, but unless you think that neither the fans nor the media would have noticed a strange discrepancy between payrolls of 5 to maybe 15 million dollars, and ticket prices like today's, it's impossible to think that there wouldn't have been plenty of kickback, ranging from terrible publicity to congressional jawboning to congressional action to the refusal of cities to build ballparks, and so on. The net effect of all that would have certainly kept ticket prices below what they are today. Your model assumes a complete elimination of all political and other intangible factors that often drive the level of demand beyond** the desirability of the product on the field. It's what often happens when you try to make sense of the real world by relying solely on an economics textbook.
I think that not only would the fans and media not "have noticed a strange discrepancy," but wouldn't have even known that there was something to notice, and would not have considered that there was some connection between the two such that it constituted a "discrepancy."

Your theory doesn't even make any sense. Congress was going to hold hearings on the topic of the players not being paid enough? Throughout baseball sports history, fans and the media have consistently sided with the owners on the topic of player salaries.
   33. McCoy Posted: July 15, 2011 at 04:49 PM (#3878360)
Yeah, but at nowhere near the rate that they've been going up ever since. It doesn't matter whether you compare the minimum salary, the median salary, the average salary, or the top salaries, the results are all the same.

Well, yeah, but salaries have skyrocketed since we landed on the moon as well. Or more importantly since every house had a TV and all the major networks were broadcasting in color.

In the early 70's salaries in baseball were jumping well before the Messersmith case. Would they have risen as fast as they did if there was no free agency? I doubt it. Would we still have 20 million dollar a year players nowadays? I would say so.
   34. Howie Menckel Posted: July 15, 2011 at 04:55 PM (#3878372)
I'm sure this makes me a bad person, but I'm kind of tired of BBTF chatter about how wonderful Marvin Miller is.

I don't have anything against the guy, I get why he's important, I don't think he's the reason for high ticket prices (lol), I don't even mind if he gets elected to the Hall of Fame.

But it seems like as with athletes, the older they get, the fewer outs their fans remember they made.

Did this guy never screw up?

[ducks]
   35. Joe OBrien Posted: July 15, 2011 at 04:56 PM (#3878375)
Someone needs to explain how higher salaries drive ticket prices higher and not the other way around. I mean what other business in the world raises their own expenses to justify raising their prices? Could you imagine Apple announcing a 25% across the board pay raise for all employees followed by a 30% increase in the price of Ipads?

It's obvious ticket prices have gone up because the owners knew they could charge more. Look at the number of sellouts of games now versus 40 years ago. Look at the number of games with less than 10,000 fans. Demand is clearly higher. A lot of this is as simple as an increase in population and more efficient transportation. Fenway and Wrigley haven't gotten (appreciably) bigger, but the number of people living in and around Boston and Chicago sure has. If Charles Comiskey had been turning them away at the door every game he sure as heck would have raised ticket prices.
   36. AROM Posted: July 15, 2011 at 04:56 PM (#3878376)
Look at the amount of money invested in non-U.S. scouting since free agency began, consider the extra motivation that free agency salaries give to ballplayers from Latin America and Japan, consider the hugely increased emphasis in college baseball programs, and put it all together and look at the results as seen on Major League rosters. Money drives all of that, even if it's not the only factor.


Baseball without free agency would still have plenty of reason to invest in scouting and academies in Latin America. As for player motivation, the chance of a 100,000 salary of a big league superstar would have looked pretty good to a kid in the 1970's Dominican Republic. Even today, that is more than 10x that country's per capita GDP. I don't think they were sitting around and waiting until MLB bumped that number up into the millions before they'd put everything they had into making such jobs a reality.

It's true that there are more non-USA players than pre free agency, but that trend was already on the upswing. Part of it is that the vestiges of discrimination didn't disappear overnight, as I'm sure I don't need to tell someone who lived through that era. Going from no team bothering to pay attention to a place with dark skinned baseball players that they can't sign anyway, to creating baseball player factories in such places, took some time. The cost differential, in that you could get a lot more potential prospects in a poor Latin American country than spending the same $ on US players guaranteed over time that this investment would be made.
   37. Steve Treder Posted: July 15, 2011 at 05:05 PM (#3878388)
I'm sure this makes me a bad person, but I'm kind of tired of BBTF chatter about how wonderful Marvin Miller is.

I don't have anything against the guy, I get why he's important, I don't think he's the reason for high ticket prices (lol), I don't even mind if he gets elected to the Hall of Fame.

But it seems like as with athletes, the older they get, the fewer outs their fans remember they made.

Did this guy never screw up?


Of course he did. But the fact is that he screwed up very, very rarely. He was as consistently effective in his job as any executive in any capacity could realistically hope to be. He was a remarkable, brilliant performer within his role. He's the Mariano Rivera of sports labor leaders. He deserves his accolades, and he's correct in saying that it's the best possible illustration of his enduring effectiveness that the MLB PTB still work to keep him out of the HOF.
   38. Brian C Posted: July 15, 2011 at 05:07 PM (#3878389)
But it seems like as with athletes, the older they get, the fewer outs their fans remember they made.

Did this guy never screw up?

This sounds suspiciously like "petty malice" to me...

McCoy already acknowledged that he was sort of a dick. What more do you want? People paying attention to what they see as ongoing injustices is a good thing, and if you're tired of it there are tons of other threads to read.
   39. bjhanke Posted: July 15, 2011 at 05:14 PM (#3878396)
Every year, each team has its marketing department run algorithm after algorithm to decide what prices hit the "sweet spot" where, if you charged any more, you'd lose buyers faster than the extra price per ticket would make up, and where, if you charged any less, the extra buyers you would get would not make up for the drop in price. None of this has anything to do with player salaries. So, no, ticket prices are not correlated to player salaries. You charge what the algorithms say. No matter what your player salaries, charging those prices MAXIMIZES THE INCOME, which is all you can do with ticket prices.

There are two items of interest. First, increasing the player salaries DOES decrease the amount of profit made by the owner. There is the same amount of income, derived from point one, but more cost. Owners may be starting to actually risk bankruptcy over their teams whereas before, if an owner went bankrupt, the baseball team was often his last, most valuable, profitmaking asset. And second, as Bill James predicted back in one of his annuals, the main effect is to run those owners out of the game who cannot afford to play at the new economic level. That is, they can't make money with free agent costs and their best maximized revenues. This is GOOD for the game, as it brings in new, fresh, needed money (see Dodgers, et al). Bad for anyone who wants to duplicate Bill Veeck's career, but better for the game, because there's more money in the game.

At the high school level, a top athlete is often a prized prospect in more than one sport. Baseball competes for these guys with minor league salaries and signing bonuses against football and basketball's college scholarships. The higher the rookie bonus and minor league salary, the more chance that the baseball team will woo the prospect away from college. So more money in the game does lead to at least a few extra baseball players.

And lurking over all of this is the fact that, treated as an investment, buying a major league team is an exercise is "growth" investing as opposed to "value" investing. You don't make your money year by year, which is why owners' presentations on their team's current year balance sheets are irrelevant in labor negotiations. No, where you make your money is when you sell the team, and Forbes tells you that the price (which may not equal value) of the team has increased by 150% over the ten years you held it, so you made out like the bandit you are. That is the primary economic effect of owing a team as opposed to owning something else. Owners will go to just about ANY lengths to occlude this from the fan base, stating their yearly balance sheets over and over, dodging any question about how much they stand to make when they finally do sell. They don't want you to know how the economics really works for THEM as INVESTORS.

- Brock Hanke
   40. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 05:18 PM (#3878400)
It's not to say that they [the owners] might not have tried [to jack up prices to today's levels, in the absence of free agency level salaries], but unless you think that neither the fans nor the media would have noticed a strange discrepancy between payrolls of 5 to maybe 15 million dollars,

You know, I actually think in a world where A-Rod is making 5 million a year, even in today's money, that most people would still be saying "5 million a year to play baseball???


Sure, but who's talking about $5 million dollar salaries for individual players? Hank Aaron's final contract before free agency was for $900,446 in today's dollars, signed just before he broke Ruth's record, and at a time when the Braves were marketing him for all that he was worth. I'm talking about team payrolls between 5 and 15 million dollars, which is hardly an unreasonable estimate without the pressure of free agency to drive them beyond that.

Just to remind you, the average salary in the last year of the reserve clause (1975) was $44,676, which is equal to $182,856 in 2011 dollars. This is five and a half percent of the actual average salary today. Or to put it another way: The average player in 1975 wouldn't have even have been affected by the repeal of the upper level Bush tax cuts. To think that this nearly twentyfold increase in payroll hasn't affected ticket prices is pure fantasy. Obviously there are other factors that have gone into the cost of those tickets, but payroll certainly plays a part.
   41. jack the seal clubber (on the sidelines of life) Posted: July 15, 2011 at 05:21 PM (#3878404)
Every year, each team has its marketing department run algorithm after algorithm to decide what prices hit the "sweet spot" where, if you charged any more, you'd lose buyers faster than the extra price per ticket would make up, and where, if you charged any less, the extra buyers you would get would not make up for the drop in price. None of this has anything to do with player salaries. So, no, ticket prices are not correlated to player salaries. You charge what the algorithms say. No matter what your player salaries, charging those prices MAXIMIZES THE INCOME, which is all you can do with ticket prices.

There are two items of interest. First, increasing the player salaries DOES decrease the amount of profit made by the owner. There is the same amount of income, derived from point one, but more cost. Owners may be starting to actually risk bankruptcy over their teams whereas before, if an owner went bankrupt, the baseball team was often his last, most valuable, profitmaking asset. And second, as Bill James predicted back in one of his annuals, the main effect is to run those owners out of the game who cannot afford to play at the new economic level. That is, they can't make money with free agent costs and their best maximized revenues. This is GOOD for the game, as it brings in new, fresh, needed money (see Dodgers, et al). Bad for anyone who wants to duplicate Bill Veeck's career, but better for the game, because there's more money in the game.

At the high school level, a top athlete is often a prized prospect in more than one sport. Baseball competes for these guys with minor league salaries and signing bonuses against football and basketball's college scholarships. The higher the rookie bonus and minor league salary, the more chance that the baseball team will woo the prospect away from college. So more money in the game does lead to at least a few extra baseball players.

And lurking over all of this is the fact that, treated as an investment, buying a major league team is an exercise is "growth" investing as opposed to "value" investing. You don't make your money year by year, which is why owners' presentations on their team's current year balance sheets are irrelevant in labor negotiations. No, where you make your money is when you sell the team, and Forbes tells you that the price (which may not equal value) of the team has increased by 150% over the ten years you held it, so you made out like the bandit you are. That is the primary economic effect of owing a team as opposed to owning something else. Owners will go to just about ANY lengths to occlude this from the fan base, stating their yearly balance sheets over and over, dodging any question about how much they stand to make when they finally do sell. They don't want you to know how the economics really works for THEM as INVESTORS.

- Brock Hanke

Brock, thanks for taking the time to address the issue (ie, salaries/ticket prices) thoughtfully, instead of just tossing around insults.
   42. base ball chick Posted: July 15, 2011 at 05:21 PM (#3878405)
. jack the seal clubber (on the sidelines of life) Posted: July 15, 2011 at 10:28 AM (#3878212)

This may be the dumbest thing I've seen written on this site.

Your complete lack of economic understanding floors me


You're saying there's no correlation between player salaries and ticket prices? Enlighten me with your wisdom.


- sigh
dear jack,

please check ticket prices of the marlins vs their payrolls and then check ticket prices of royals vs their payroll and prices of any other club vs their payroll. then explain why the marlins charge more for tickets than the astros do

if you think that ticket prices would fall if somehow we were able to force all the ballplayers back into indentured servitude, and not what the market prices would be, dead wrong.

all you'd get is any great athlete going into some better paying sport.

of course, we'd then be free to watch indentured servants from latin america and gloat over how them darkies had to do what they told or be shipped out

i've never understood how people like you think that a small group of human beings here in america should have zero rights concerning their work except to not work at all. you sure as heck wouldn't like it if you had no decision as to who you worked for in the first place, how much you got paid and who they could SELL you to
   43. The Yankee Clapper Posted: July 15, 2011 at 05:31 PM (#3878418)
The players on the Veterans Committee should withhold their votes for any executives under consideration until the various executives on the Committee vote for Miller. Seems like only one side is using a veto now.
   44. Randy Jones Posted: July 15, 2011 at 05:33 PM (#3878420)
Higher salaries do not drive up ticket prices, the reverse in fact. Higher ticket prices drive salaries up.
   45. Brian C Posted: July 15, 2011 at 05:36 PM (#3878425)
To think that this nearly twentyfold increase in payroll hasn't affected ticket prices is pure fantasy.

... except that your only argument for this is to vaguely but endlessly conflate correlation with causation. You keep doing this despite examples to the contrary and basic economic theory patiently explained to you ad nauseum.

Do you also think that owners charge TV networks more to broadcast games because of high player salaries? Do you think they charge more for stadium parking because of high player salaries? Do you think that teams charge more for hats and t-shirts in the gift shop because of high player salaries?
   46. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 05:40 PM (#3878432)
Yeah, but at nowhere near the rate that they've been going up ever since. It doesn't matter whether you compare the minimum salary, the median salary, the average salary, or the top salaries, the results are all the same.

Well, yeah, but salaries have skyrocketed since we landed on the moon as well. Or more importantly since every house had a TV and all the major networks were broadcasting in color.

In the early 70's salaries in baseball were jumping well before the Messersmith case. Would they have risen as fast as they did if there was no free agency? I doubt it. Would we still have 20 million dollar a year players nowadays? I would say so.


Based on what? Spontaneous owner generosity? I suppose that you might get greater bidding wars for young amateur players who fall outside the U.S. amateur draft, but once that first contract bound a player to his first team, what incentive would the owners possibly have to do anything more than give them modest increases? What thought process would induce your generic profit maximizing owner to increase his star's salary by more than George Weiss or Walter O'Malley increments, or in some case even cut his salary if "we could have finished last without you"?

Public relations? But if the owners don't care about that when it comes to ticket prices, as everyone here says, then why should they care about it when it comes to player salaries?

The problem with most of you here is that you're relying on static reasoning. You're assuming that because fans and media accept radical ticket price hikes in one set of circumstances (with the excuse of eight or nine figure payrolls), they'd accept the same increases in prices in another set of circumstances (seven figure payrolls and no excuses that would make even nominal sense). And since there are no examples in the real world that could prove your case---for the simple reason that we've never had parallel leagues with free agency and reserve clauses during the same time frame---you resort to a complete denial of any factors other than that of consumer demand, and throw in the usual bromides about media collaboration and fan gullibility. Sorry, but that's just nuts.
   47. Johnny Sycophant-Laden Fora Posted: July 15, 2011 at 05:44 PM (#3878437)
Every year, each team has its marketing department run algorithm after algorithm to decide what prices hit the "sweet spot" where, if you charged any more, you'd lose buyers faster than the extra price per ticket would make up, and where, if you charged any less, the extra buyers you would get would not make up for the drop in price.


every team?????
   48. Morty Causa Posted: July 15, 2011 at 05:47 PM (#3878443)
   49. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 05:48 PM (#3878444)
Of course another problem here is that you're apparently thinking that I'm saying that ticket prices would have remained static in the absence of free agency. But I've never said that, and I never would. What I am saying is that those ticket prices wouldn't have risen to their present levels. Once again this discussion seems to be driven by people who want to force it into an either-or situation, which is unfortunately all too typical when it's driven by the need to "win" an argument rather than to discuss an issue from more than one side.
   50. PreservedFish Posted: July 15, 2011 at 05:57 PM (#3878448)
I don't think it's wrong to think that higher salaries might have had something to do with higher ticket prices. Surely there are examples of companies that directly increase the price of their products when the cost of their supplies increases. Grey's Papaya raised its hot dog prices when its rent was raised. Some restaurants in San Francisco have added a surcharge to pay for the Healthy SF initiative. Maybe these businessmen do not themselves understand economics. (I worked for a chef that didn't understand the principle explained in this thread, would increase the price of a dish according to the price of its ingredients, which was not maximizing revenue.) You sometimes see airlines add a fuel surcharge when oil prices are really high. Perhaps they only add this charge because, with highly publicized oil price increases, they can get away with it. But that's the dynamic that Andy has described here.
   51. AROM Posted: July 15, 2011 at 05:59 PM (#3878450)
At the high school level, a top athlete is often a prized prospect in more than one sport. Baseball competes for these guys with minor league salaries and signing bonuses against football and basketball's college scholarships. The higher the rookie bonus and minor league salary, the more chance that the baseball team will woo the prospect away from college. So more money in the game does lead to at least a few extra baseball players.


But this has almost nothing to do with the free agency that players with 6+ years of service get. A much more direct impact to these amateur players deciding to play baseball or accept a football scholarship, which came about less than a decade before 6 year veteran free agency, is the draft : anti-free agency if you will.

Rick Reichardt's pre draft bonus of 205K was not topped until 1979. Considering inflation, it took even longer than that. This would theoretically have a direct, negative effect on the baseball talent pool right at the same time free agency for veterans became a reality.
   52. GuyM Posted: July 15, 2011 at 06:02 PM (#3878452)
Andy: I think it's clearly true that a world in which teams have hundreds of millions of dollars in annual revenue, and yet the average player makes $200K, is impossible. But I think you are wrong to think the circle would be squared by lower prices. If baseball were a bargain compared to other entertainments, stadiums would become full and it would become obvious that teams could charge more for tickets. Why wouldn't they? Maybe the obscene profits would produce demand for repeal of the anti-trust exemption, but if that happened the end result would be higher player salaries more than lower prices. Realistically, the players would organize in some form, either forming a union or finding backers to create an alternative league at some point. It's impossible to know how this would all play out, but the end result would always be the same: more money for players, not cheaper prices for fans.
   53. AROM Posted: July 15, 2011 at 06:02 PM (#3878453)
Using the CPI inflation calculator, it wasn't until 1991, when Brien Taylor signed for 1.55 million, that someone beat Reichardt's bonus in real terms.
   54. PreservedFish Posted: July 15, 2011 at 06:06 PM (#3878461)
I don't know much about economics, so excuse me for going over really basic stuff: but what about stuff like gas and milk? Why do their prices fluctuate? Why does gas not follow the principle of: "You charge what the algorithms say. No matter what your [crude oil costs], charging those prices MAXIMIZES THE INCOME, which is all you can do with [gas] prices."
   55. PreservedFish Posted: July 15, 2011 at 06:07 PM (#3878463)
double
   56. AROM Posted: July 15, 2011 at 06:09 PM (#3878467)
Realistically, the players would organize in some form, either forming a union or finding backers to create an alternative league at some point. It's impossible to know how this would all play out, but the end result would always be the same: more money for players, not cheaper prices for fans.


I agree with this. If we assume no unions (considering this is a hypothetical about what would be in Miller's absence) then top players would probably get raises through holdouts. Say I'm A-Rod in my prime, and I realize that the 8 wins per year are adding 30 million to your bottom line, and I'm only making 200K. It costs me 200K to sit out, it costs you 29.8 million to lose my services. If you pay me 15 million then a holdout costs us both as much.

I realize the team has a lot more power, can survive a holdout better than the player, so they may not meet in the middle. But they will end up paying A-Rod a whole lot more than 200K.
   57. Randy Jones Posted: July 15, 2011 at 06:11 PM (#3878469)
The demand for gasoline doesn't fluctuate with price nearly as much as the demand for entertainment type things, like baseball tickets.
   58. AROM Posted: July 15, 2011 at 06:12 PM (#3878470)
And certainly from the lessons of baseball history, the likely result at some point is the establishment of competing leagues. With a reserve clause the owners can keep more than their fair share of the profits, but only to a certain extent. When they go to far correcting forces will creep in.
   59. Karl from NY Posted: July 15, 2011 at 06:16 PM (#3878473)
Just to remind you, the average salary in the last year of the reserve clause (1975) was $44,676, which is equal to $182,856 in 2011 dollars. ... To think that this nearly twentyfold increase in payroll hasn't affected ticket prices is pure fantasy.


You've got the causation backwards. Customers willing to pay nearly twentyfold higher prices means that players create much more value for their employer, so they can demand and get the higher salaries. ("Customers" here goes beyond ticket sales, also to advertisers and television. They are also customers, buying an MLB team's inventory of eyeball time, and the prices they are willing to pay have also soared.)
   60. PreservedFish Posted: July 15, 2011 at 06:19 PM (#3878476)
The demand for gasoline doesn't fluctuate with price nearly as much as the demand for entertainment type things, like baseball tickets.


The principle explained throughout the thread above is more or less: "it doesn't matter how much supplies cost, businesses will always charge whatever they can in order to maximize revenue." But gas stations do not follow that model at all. Their prices are absurdly reliant on the cost of their supplies.

Again, apologies for trodding over Econ 101 stuff.
   61. GuyM Posted: July 15, 2011 at 06:22 PM (#3878478)
If we assume no unions (considering this is a hypothetical about what would be in Miller's absence) then top players would probably get raises through holdouts. Say I'm A-Rod in my prime, and I realize that the 8 wins per year are adding 30 million to your bottom line, and I'm only making 200K. It costs me 200K to sit out, it costs you 29.8 million to lose my services. If you pay me 15 million then a holdout costs us both as much.

Great example. This would become a collective action problem for the owners. Collectively, they would all benefit from refusing to give their stars more than token raises. But it would be hard for an individual owner to face down A-Rod and let him miss a season, which would not only bring ferocious public criticism but also cost the owner millions and maybe a shot at the pennant. As the salary/revenue disparity grew, it would be harder to maintain owner solidarity.
   62. Randy Jones Posted: July 15, 2011 at 06:25 PM (#3878480)
Baseball doesn't have any real direct competition, other forms of entertainment of course, but no other source that offers the same product(minor league baseball is not the same). Gas is the same regardless of which gas station you get it from.
   63. Kiko Sakata Posted: July 15, 2011 at 06:32 PM (#3878483)
The principle explained throughout the thread above is more or less: "it doesn't matter how much supplies cost, businesses will always charge whatever they can in order to maximize revenue." But gas stations do not follow that model at all. Their prices are absurdly reliant on the cost of their supplies.


In baseball, the supply is being assumed to be fixed. The Cubs will offer 40,000 seats 81 times per year. Period. In this case, then, the profit-maximizing price will vary almost entirely due to fluctuations in demand. There is a much greater demand for Cubs tickets today than there was 40 years ago; therefore, the demand curve (which shifts down to the right) has shifted dramatically to the right, so it intersects the supply curve (which is very nearly a straight vertical line) at a higher price.

In the case of gasoline, we see just the opposite. The demand for gasoline is fairly stable (in the short run; in the long run, the demand for gasoline has also risen, which has contributed to increases in the long-run price for gasoline), but supply can be more erratic. So if supply is disrupted for some reason, the supply curve (which slopes up to the right) will shift leftward, intersecting the demand curve at a higher price.

EDIT: #62 is also correct that the level of direct competition also affects the slope of the supply and demand curves.
   64. PreservedFish Posted: July 15, 2011 at 06:34 PM (#3878484)
But I'm back at #50. It seems like some businesses do in fact allow increased cost of supplies to effect their prices. It's not just the revenue maximizing algorithm. It's more complicated than that.
   65. The Id of SugarBear Blanks Posted: July 15, 2011 at 06:34 PM (#3878485)
The onset of free agency wasn't merely an increase in the price of supplies, it was an exogenous price shock, akin to the oil embargoes of the 70s. That will obviously work its way to consumer inflation in the baseball economy, and it did.(**) What happened when the price shock had been completely internalized has little to do with the time before it had.

Now, sure, the owners charge what they can get, without regard to the cost of salaries.

(**) You see the "salary excuse" all the time in the actual world; something along the lines of, "Due to the recent increase in the cost of coffee, we've been forced to raise our prices. We apologize to our loyal customers," has adorned the sneeze guard of many a coffee shop.
   66. Brian C Posted: July 15, 2011 at 06:38 PM (#3878488)
Gas is the same regardless of which gas station you get it from.

Ha ha, maybe if they stopped spending millions per year convincing us that their competitors' gas would break our cars, gas wouldn't be so expensive!
   67. Kiko Sakata Posted: July 15, 2011 at 06:42 PM (#3878490)
But I'm back at #50. It seems like some businesses do in fact allow increased cost of supplies to effect their prices.


Changes in the cost of supplies will move the supply curve, yes. To that extent, it's probably an oversimplification to say there's NO effect of player salaries on ticket prices. But, as I said, in the case of baseball, the supply is relatively fixed. It's not entirely fixed - if demand gets lower, a team can tarp its upper deck; if it gets more popular, it can start to sell SRO tickets or build a bigger stadium. But in contrast to demand - which should be quite elastic for a luxury good like baseball - supply doesn't change much. The Cubs were willing to sell as many tickets in 1962 as they are in 2011, more or less. That they sold more at a much higher price this year is because of a dramatic increase in demand. So, prices in baseball are driven much more heavily by demand.


Short-run fluctuations in gas prices, on the other hand, are being driven to a much larger extent by changes in the supply curve. In the longer-run, though, gas prices are also being driven by demand, which is one of the factors driving longer-term positive trends in gasoline prices.
   68. Bob Tufts Posted: July 15, 2011 at 06:45 PM (#3878491)
Lincoln surely screwed up the Southern economy where those poor businessman and their customers had to pay market value for labor, goods and services.
   69. The Id of SugarBear Blanks Posted: July 15, 2011 at 06:46 PM (#3878493)
In baseball, the supply is being assumed to be fixed. The Cubs will offer 40,000 seats 81 times per year. Period. In this case, then, the profit-maximizing price will vary almost entirely due to fluctuations in demand. There is a much greater demand for Cubs tickets today than there was 40 years ago; therefore, the demand curve (which shifts down to the right) has shifted dramatically to the right, so it intersects the supply curve (which is very nearly a straight vertical line) at a higher price.

Sellers of baseball tickets have a lot less pricing flexibility than most businesses. They sell much of their inventory well in advance of its use, and, indeed, well before they're aware of how appealing to customers their product will really be. While they're technically free to do so, customers who have already locked in their price wouldn't appreciate the team raising or lowering the price of a ticket if the team was better or worse.

Given these microeconomic realities, you'd expect teams to resort more readily to a "cost-plus" pricing model than you would in most other industries. And, everything else being equal, a cost-plus pricing model is more politically palatable, and better for public relations. The highest price charged by a team serves as a de facto floor on prices, it is true, so prices don't adjust down for lower salaries, which likely leads to whatever purely mathematical relationship between salaries and ticket prices -- or lack thereof -- that has been discerned.
   70. Brian C Posted: July 15, 2011 at 06:49 PM (#3878496)
To that extent, it's probably an oversimplification to say there's NO effect of player salaries on ticket prices.

At the same time, no one would argue if commenters went around saying, "Player salaries have a VERY MARGINAL effect on ticket prices!"
   71. Random Transaction Generator Posted: July 15, 2011 at 06:49 PM (#3878498)
But I'm back at #50. It seems like some businesses do in fact allow increased cost of supplies to effect their prices. It's not just the revenue maximizing algorithm. It's more complicated than that.

The cost of supplies don't change for baseball. You aren't selling the players, you are selling the seats. Unless there is a change in the venue, you have a pretty static supply cost. From there, you judge the market and set your prices.

If every home game was played in one of 5 different venues, where each venue had different number of seats (100, 1000, 10000, 50000, 100000), then you'd see a fluctuation of prices.

Another example of supply/demand is the current ticket pricing system the Blue Jays have.
Regular tickets for the seats I want to sit in are about $40. But when the Red Sox or Yankees come to town, the Blue Jays call them "premium games" and charge $60.

The supply hasn't changed, but the demand sure has.
   72. PreservedFish Posted: July 15, 2011 at 06:54 PM (#3878502)
The cost of supplies don't change for baseball. You aren't selling the players, you are selling the seats. Unless there is a change in the venue, you have a pretty static supply cost. From there, you judge the market and set your prices.


This seems like the wrong way to look at it. If you're only selling the seats, then the premium game pricing wouldn't make sense. If you can charge more money (if demand increases) for a more exciting product, then you have to consider player salaries as part of the supply costs.

Why do airlines tack on a fuel surcharge? Is it just because they can get away with it?
   73. Random Transaction Generator Posted: July 15, 2011 at 07:04 PM (#3878513)
Why do airlines tack on a fuel surcharge? Is it just because they can get away with it?

They've always charged for fuel costs, but they simply buried it in the price.
By separating it out, they are trying to make the public think that the higher price isn't their fault/choice, but because of "damn fuel prices".

It's a marketing trick.
   74. Brian C Posted: July 15, 2011 at 07:05 PM (#3878515)
Astros ticket prices over the past 5 years. You'll see they go up each of the last three years, even though their payroll has gone down over $30 million in that time.

This seems like the wrong way to look at it. If you're only selling the seats, then the premium game pricing wouldn't make sense. If you can charge more money (if demand increases) for a more exciting product, then you have to consider player salaries as part of the supply costs.

I'm not sure this makes any sense, in the sense that I do not understand what you're saying. It's because they're only selling the seats that a premium pricing system makes sense - it's not like the Jays' players are getting paid more for games against Boston or New York than against other teams. How do labor costs figure into it?
   75. SOLockwood Posted: July 15, 2011 at 07:18 PM (#3878527)
The sudden shock of the salary increases caused by Messersmith / McNally did contribute to increased ticket prices but were not the sole cause. Here's how I see the process going:

1) M/McN causes salaries as a % of revenue to increase.

2) Ownership starts looking for ways to increase revenue so as to keep roughly the same amount of money coming into their pockets.

3) Ticket prices (as well as putting ads back on the fences, etc.) are a quick way of raising money fast.

4) The owners having this extra revenue, use it to bid salaries higher and the cycle continues.

Obviously Baseball was popular enough to attract enough fans to raise enough money to propser -- as opposed to the NHL.

-- Note, I would assert that Baseball in the late 60s through the 70s and into the 80s did not focus on maximising revenue. Lords Of The Realm quotes Ueberroth harshly criticising owners for not doing so, and thus leaving millions on the table.
   76. The Id of SugarBear Blanks Posted: July 15, 2011 at 07:23 PM (#3878530)
Note, I would assert that Baseball in the late 60s through the 70s and into the 80s did not focus on maximising revenue. Lords Of The Realm quotes Ueberroth harshly criticising owners for not doing so, and thus leaving millions on the table.

Yep. They didn't have much pressure to do it, because of the reserve clause. If one was stuck in a position where they still couldn't get the numbers to work, there were viable untapped markets, and expansion fees. It's been noted upthread, but it's no coincidence that rival leagues cropped up in an era where labor wasn't making its true value. Markets that plainly weren't "major league" were still worth a shot under those conditions.
   77. Brian C Posted: July 15, 2011 at 08:03 PM (#3878553)
Note, I would assert that Baseball in the late 60s through the 70s and into the 80s did not focus on maximising revenue. Lords Of The Realm quotes Ueberroth harshly criticising owners for not doing so, and thus leaving millions on the table.

Probably true, but insofar as this relates to attendance and ticket prices, it's worth noting that MLB attendance has been on a pretty steady upward curve since the 60s after being generally flat for decades before that.
   78. AROM Posted: July 15, 2011 at 08:10 PM (#3878556)
Note, I would assert that Baseball in the late 60s through the 70s and into the 80s did not focus on maximising revenue. Lords Of The Realm quotes Ueberroth harshly criticising owners for not doing so, and thus leaving millions on the table.


So they could have raised ticket prices earlier and gained more revenue, but simply saw no need to do so?

I could buy that if convinced that these owners operating in a system of controlled expenses where profit maximizing was not necessary. But I don't think that's quite right, the teams owned by Bill Veeck had to be very creative to sustain the business. Several franchises moved because they weren't making enough money where they were. I don't believe the Philadelphia, and later KC Athletics were in a position where they could have just raised ticket prices and brought in more money but refused to do so.

Looking at 1975, the year before Messersmith signed a free agent contract, 4 teams failed to draw 10,000 fans per game. Only 6 drew more than 20,000, and the Yankees only drew 16,500 per game, which was good enough for 7th place out of 24 teams. They sure were not filling their stadiums.
   79. Bob Tufts Posted: July 15, 2011 at 08:30 PM (#3878583)
And if you do not fill the stadium, you have no pricing power over customers.

Sports equals entertainment which equals business. Baseball battles on site and on your couch against other sports, movies, sports participation, outdoor recreation, etc. - and a smaller and smaller percentage of their revenues come from tickets each year due to TV/RSN's, radio, advertising/sponsorship and divisions like the Fenway Sports Group.
   80. The Id of SugarBear Blanks Posted: July 15, 2011 at 08:46 PM (#3878608)
Looking at 1975, the year before Messersmith signed a free agent contract, 4 teams failed to draw 10,000 fans per game. Only 6 drew more than 20,000, and the Yankees only drew 16,500 per game, which was good enough for 7th place out of 24 teams. They sure were not filling their stadiums.

Which doesn't necessarily mean (and I think, in fact, doesn't mean) they were maximizing revenues. They could have charged more for tickets and made up for whatever customers didn't want to pay them with more revenue from customers who did. Eight thousand customers paying an average price of $6 is better than 10,000 paying an average cost of $4.(**)

The demand for sports tickets has proven, on the evidence of the last 35 years, to be quite inelastic. While some would have, nowhere near as many customers would have been driven away by much higher prices than the owners of that era feared. Nor has that trend really ended; the Knicks jacked up their already sky-high prices by dozens of percent and they'll still sell the place out (if there's a season, of course). And, as owners always have, they pointed to specific reasons to justify it: Carmelo Anthony, and the renovated Garden.

(**) And as that process continues, your prices get so high that you begin, against all reason, to be seen as a luxury item -- a separate avenue of appeal in itself ("Wow, that must be great, look how much it costs!!!!") That's what pro sports have become.
   81. vortex of dissipation Posted: July 15, 2011 at 09:22 PM (#3878645)
Olson: Petty malice keeps Marvin Miller out of baseball’s Hall of Fame


The waiting is the hardest part.
   82. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 09:24 PM (#3878646)
The sudden shock of the salary increases caused by Messersmith / McNally did contribute to increased ticket prices but were not the sole cause. Here's how I see the process going:

1) M/McN causes salaries as a % of revenue to increase.

2) Ownership starts looking for ways to increase revenue so as to keep roughly the same amount of money coming into their pockets.

3) Ticket prices (as well as putting ads back on the fences, etc.) are a quick way of raising money fast.

4) The owners having this extra revenue, use it to bid salaries higher and the cycle continues.


That's a pretty good description of the overall picture. It should also be noted that even in the free market era, in the case of many teams there's often a muddy relationship between ticket prices and demand. To take but one example, in 1980 the A's (previous year's attendance 306,763) priced their lower deck box seats at $5.00---fifty cents more than it'd been following a year where they'd just won their third straight championship and the attendance had been nearly triple. Meanwhile the Giants (previous year's attendance 1,456,402) priced the same seats at $6.00. So far so good.

But then the Angels (previous year's attendance 2,523,575) topped out at $5.00; and the Dodgers (previous year's attendance 2,860,954) priced their box seats at $4.50. Not much relationship there.

The point here isn't that demand isn't a factor, or that in the long run it may not be the biggest factor. The point is that it's not the only factor. Other factors include not only payroll, but costs in general, and also the overall pricing philosophy of a team. And when it comes to that philosophy, it's obvious from the above examples that not all teams are necessarily alike. Some owners want to maximize short term revenue by increasing ticket prices, while other owners might take the longer range view and try to maximize attendance (and fan loyalty) by holding the line and trying to make it up in volume. With Finley and O'Malley you had the perfect point and counterpoint to these two philosophies, and there will always be variants on those two, with most owners somewhere in the middle. I'm not sure why anyone, either a yahoo sportswriter or a economics textbook quoting Primate, would want to reduce ticket pricing to a simplistic relationship to one factor or another. It's never as simple as that.
   83. Karl from NY Posted: July 15, 2011 at 09:35 PM (#3878653)
3) Ticket prices (as well as putting ads back on the fences, etc.) are a quick way of raising money fast.


This only works if the owners were stupid beforehand, if they were pricing their tickets for less money than customers were willing to pay. Customers don't decide to pay more for tickets based on the salaries of the players. If Apple multiplied Steve Jobs' salary by 10, you would not then be willing to pay more for an iPod.


2) Ownership starts looking for ways to increase revenue so as to keep roughly the same amount of money coming into their pockets.


Why in the world would ownership not have already implemented those ways to increase revenue? The argument appears to be that they simply weren't motivated, that it took the higher expenses of free agent salaries to make the owners wake up and try. It may be true to some small extent, but it's a pretty lousy capitalist that lollygags about when there is more revenue to be had.
   84. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 09:37 PM (#3878655)
The demand for sports tickets has proven, on the evidence of the last 35 years, to be quite inelastic. While some would have, nowhere near as many customers would have been driven away by much higher prices than the owners of that era feared.

What this overlooks is the revolution in marketing that's shifted the attention from the individual "average" fan to the corporate "fans" with their tax writeoffs, along with the handful of fans like Spike Lee or Jack Nicholson who can absorb any price increases in our increasingly winner-take-all economy, and who often in fact show off their high priced tickets as symbols of their own status. As I've mentioned before in other threads, it would be very interesting to see what attendance (and ticket prices) would be like without this corporate subsidy that helps keep the sports economy chugging along in high gear.

(**) And as that process continues, your prices get so high that you begin, against all reason, to be seen as a luxury item -- a separate avenue of appeal in itself ("Wow, that must be great, look how much it costs!!!!") That's what pro sports have become.

Which is exactly what I just said. And the less that sports tickets become affordable to the average fan as his wages stagnate, the more the emphasis will be on bleeding the last dollar out of the remaining high end market. Good thing that cable TV and Extra Innings gives the rest of us a cheap alternative, as well as cheap publicity, or I think you'd really start to see a slippage in fan interest.
   85. Jolly Old St. Nick Still Gags in October Posted: July 15, 2011 at 09:40 PM (#3878656)
3) Ticket prices (as well as putting ads back on the fences, etc.) are a quick way of raising money fast.


This only works if the owners were stupid beforehand, if they were pricing their tickets for less money than customers were willing to pay.

So in the Finley / O'Malley ticket pricing examples I just noted in #82, who was the smart one and who was the stupid one?
   86. The Id of SugarBear Blanks Posted: July 15, 2011 at 09:45 PM (#3878659)
If Apple multiplied Steve Jobs' salary by 10, you would not then be willing to pay more for an iPod.

One of the factors in buying an iPod isn't your perception of how committed to winning Apple is.

And at least in the mind of many fans the best, if not only, proxy for that commitment is how much the owner is paying in salaries.
   87. The Id of SugarBear Blanks Posted: July 15, 2011 at 09:46 PM (#3878660)
If Apple multiplied Steve Jobs' salary by 10, you would not then be willing to pay more for an iPod.

One of the factors in buying an iPod isn't your perception of how committed to winning Apple is.

And at least in the mind of many fans the best, if not only, proxy for that commitment is how much the owner is paying in salaries.
   88. Brian C Posted: July 15, 2011 at 10:13 PM (#3878671)
The point here isn't that demand isn't a factor, or that in the long run it may not be the biggest factor. The point is that it's not the only factor. Other factors include not only payroll...

But how does any of what you wrote pertain to payroll?

Look, like I alluded to earlier, owners have a lot of ways to generate revenue; tickets to games are just one of them. And I ask again:

Do you also think that owners charge TV networks more to broadcast games because of high player salaries? Do you think they charge more for stadium parking because of high player salaries? Do you think that teams charge more for hats and t-shirts in the gift shop because of high player salaries?

I'm sincerely interested in your answers to these questions. If the answer is "yes" to any of them, I'd like to know what you see as the underlying economics that make it so. And if the answers are "no", I'd like to know why you single out ticket prices as the only revenue stream subject to player salaries.
   89. Kiko Sakata Posted: July 15, 2011 at 10:47 PM (#3878681)
And at least in the mind of many fans the best, if not only, proxy for that commitment is how much the owner is paying in salaries.


But that's mostly true on a relative basis. Higher salaries correlate reasonably well with more wins and more wins leads to more demand. But wins (over .500) are a zero-sum game in MLB. So, the same principle doesn't really work for MLB as a whole - if EVERYBODY in MLB raises their salaries by 100% or whatever happened between, say, 1970 and 2010, this doesn't make ANYBODY more likely to win - or for every team MORE likely to win (say, the Yankees), there's one who's less likely (perhaps the A's).

The fact that player salaries affect both the supply and demand curves is an interesting cross-sectional issue, but I don't think it's all that relevant in looking at changes in industry-wide ticket prices over time.
   90. Ron J Posted: July 15, 2011 at 10:52 PM (#3878684)
#8 I'd suggest reading "Predictably Irrational" (Dan Ariely). He's done some good work (and reports on others) on the underpinnings of the "rational market" argument.

What more, I've found pretty clear evidence that adding to payroll increases the fan base's willingness to pay. At minimum these days, payroll functions as very effective advertizing.

So while the post you're responding to isn't quite right -- owners will charge what the market will bear (as Zimbalist demonstrates in "Baseball and Billions") -- the signing of free agents seems to change what the market will in fact bear.
   91. David Nieporent (now, with children) Posted: July 15, 2011 at 10:59 PM (#3878685)
Sellers of baseball tickets have a lot less pricing flexibility than most businesses. They sell much of their inventory well in advance of its use, and, indeed, well before they're aware of how appealing to customers their product will really be. While they're technically free to do so, customers who have already locked in their price wouldn't appreciate the team raising or lowering the price of a ticket if the team was better or worse.
First, why wouldn't customers who have already locked in their price appreciate the team raising the price if the team was better? It doesn't affect them. Second, airline passengers seem to adjust okay to the airlines adjusting prices willy-nilly. Third, teams don't generally lower the price of a ticket directly; instead, they give various deals and packages which bring the effective price down without lowering the face value.
   92. Ron J Posted: July 15, 2011 at 11:06 PM (#3878687)
#75 Can't speak to anything before the 80s -- there just isn't enough data. But Zimbalist did take a serious look at the issue in Baseball and Billions, and by the 80s there's clear evidence of two things.

A) Ownership was in fact attempting to set their prices at the level that was optimium for maximum revenue.

B) They underestimated what the top end of the market was willing to pay. The money they were leaving on the table was in the area of luxury boxes, high end concessions and the like.
   93. Karl from NY Posted: July 16, 2011 at 12:14 AM (#3878748)
So in the Finley / O'Malley ticket pricing examples I just noted in #82, who was the smart one and who was the stupid one?


It's hard to say without more data. O'Malley may have been undershooting on ticket price, or he might have been just at about the sweet spot to stimulate enough demand to keep the stadium close to full. If the A's were drawing 10% of that attendance on essentially similar prices, that suggests that the A's had way deeper marketing problems than ticket price. Quite possibly they couldn't have filled the stadium even with free tickets. (Demand for a free good is unbounded, but attending a game is never entirely free, between the cost of travel, value of the travel time, and opportunity cost of what could be otherwise done in that time.)
   94. Jolly Old St. Nick Still Gags in October Posted: July 16, 2011 at 12:45 AM (#3878766)
The point here isn't that demand isn't a factor, or that in the long run it may not be the biggest factor. The point is that it's not the only factor. Other factors include not only payroll...

But how does any of what you wrote pertain to payroll?

Look, like I alluded to earlier, owners have a lot of ways to generate revenue; tickets to games are just one of them. And I ask again:

Do you also think that owners charge TV networks more to broadcast games because of high player salaries? Do you think they charge more for stadium parking because of high player salaries? Do you think that teams charge more for hats and t-shirts in the gift shop because of high player salaries?

I'm sincerely interested in your answers to these questions. If the answer is "yes" to any of them, I'd like to know what you see as the underlying economics that make it so. And if the answers are "no", I'd like to know why you single out ticket prices as the only revenue stream subject to player salaries.


The short answer is I think that all of these costs and prices are interrelated in one way or another. When you've got seats selling for $75 or $200, it's not hard to make an $8 beer seem relatively benign, and when you're signing free agents to 8 figure contracts, it's relatively easy to justify those $75 or $200 seats.

Ticket prices remained relatively stagnant in the reserve clause era, rising with inflation but not much else.** I don't know of any online source for ticket prices in history, but you can find team-by-team data in the Baseball Dope Books from 1964 through 1985, and there's very little non-CPI related rise in ticket prices until free agency came along.

I don't disagree that to a great extent (though with plenty of exceptions, some of which I noted above) demand drives prices, but you can't just leave it at that. Player salaries are driven from the top down, and when a bidding war jacks up the price for a Catfish Hunter or a Reggie Jackson, that (a) adds to the buzz surrounding a team, and (b) helps CREATE the demand that you speak of. And of course the timing also provides a perfect excuse to raise prices; the Yankees raised their top prices 75% between 1974 (the year before Catfish Hunter's arrival) and 1979 (the year after Hunter, Jackson and Gossage powered them to a second straight championship).

Of course you can say that if those key free agents had been earning pre-FA salaries, they would have created an equal number of wins (and an equal amount of demand), but the problem with that is that in the pre-FA era, those three players would've been playing for the A's and the White Sox, or perhaps the A's and the Pirates. The whole dynamic would have been different.

And when I say that the whole dynamic is different, I think that this is the crucial point. Baseball*** over the past 30 or 40 years has been transformed from a low-cost spontaneous night out to an "event" that in many cities requires months of advance planning at much higher prices, at least for anything other than the nosebleed seats. And the stratospheric payroll escalation is one important factor in this whole cultural evolution in the sports world. You can't remove any one factor and leave the whole edifice in place.

** other than the World Series, but back then the World Series was more the equivalent of today's Super Bowl in terms of national attention, rather than today's NBA final round

*** which I'll use as a stand-in for all Big Time sports, including Division A football and basketball, since they're all variants of each other
   95. Jolly Old St. Nick Still Gags in October Posted: July 16, 2011 at 01:11 AM (#3878769)
So in the Finley / O'Malley ticket pricing examples I just noted in #82, who was the smart one and who was the stupid one?

It's hard to say without more data. O'Malley may have been undershooting on ticket price, or he might have been just at about the sweet spot to stimulate enough demand to keep the stadium close to full.


Whichever it was, for the entire O'Malley era the Dodgers were famous for their family-friendly prices. I don't think it was a "sweet spot" as much as it was trying to maintain that reputation, with the added bonus that he made up in concessions what he lost in possible lost ticket revenue. O'Malley was perhaps the best example baseball's ever had of an owner with a long term point of view.

If the A's were drawing 10% of that attendance on essentially similar prices, that suggests that the A's had way deeper marketing problems than ticket price. Quite possibly they couldn't have filled the stadium even with free tickets. (Demand for a free good is unbounded, but attending a game is never entirely free, between the cost of travel, value of the travel time, and opportunity cost of what could be otherwise done in that time.)

In the case of the A's, the cause of their low attendance was primarily Finley himself and the overall miserable fan experience he created, seemingly almost with sadistic pleasure. I lived in Berkeley in the Summers of 1969 and 1971, and with my appreciation for a fabulously talented and entertaining team, I spent many an afternoon in the Coliseum. And every afternoon I got an earful about Finley, from his then-almost unheard of policy of making every seat outside the bleachers either "reserved" (nosebleed third level) or "mezzanine boxes" (second deck), and pricing them accordingly.

In fact those uppermost seats were selling at prices that were 67% higher than the Yankees', and twice as high as the World Champion Orioles. There was no other seeming explanation for this bizarre pricing other than a mixture of greed and stupidity.

And of course when anyone ever had the nerve to point this out and complain, this phony populist d-bag would blame the fans and threaten to pack up and move. Finley was a hell of a talent scout, but as a promoter he was one of the most miserable failures in Major League history, a Bungholus Maximus whose "colorful" personality was a lot easier to appreciate if you didn't have to deal with it on a local level. On that local level, he was a lot closer to Bob Short than to Bill Veeck.
   96. Harold can be a fun sponge Posted: July 16, 2011 at 01:23 AM (#3878776)
Once again this discussion seems to be driven by people who want to force it into an either-or situation, which is unfortunately all too typical when it's driven by the need to "win" an argument rather than to discuss an issue from more than one side.

You would know.
   97. this space for rent Posted: July 16, 2011 at 01:33 AM (#3878780)
It seems like some businesses do in fact allow increased cost of supplies to effect their prices. It's not just the revenue maximizing algorithm. It's more complicated than that.


Not much more complicated. To oversimplify:

Revenue = Quantity Sold * Price
Profit = Quantity Sold * (Price - Marginal Cost) - Fixed Cost

When marginal costs are high, as for example they can be in the food industry, then the price at which revenue is maximized may be different from the price at which profit is maximized. If you have a choice between selling 100 lobster dinners at $30 or 200 at $20, you might well be better off with the former.

But when marginal costs are low, maximizing revenue and maximizing profit are almost the same thing.

And that's the case in baseball. Most of the costs of running a baseball team -- hiring the players and management, renting the stadium, etc. -- are fixed. The only marginal (per-ticket) costs are things like stadium upkeep and the like, and those are clearly dwarfed by the ticket price. So maximizing ticket revenue is likely to be very close to maximizing profit.

Which is all a roundabout way of saying that fixed costs (like player salaries) have no direct impact on ticket price if the owners are looking to maximize profit.
   98. Dan Evensen Posted: July 16, 2011 at 01:52 AM (#3878789)
If baseball were a bargain compared to other entertainments, stadiums would become full and it would become obvious that teams could charge more for tickets.

The ironic bit here is that baseball was a bargain compared to other forms of entertainment for decades. Stadiums weren't selling out back then -- not classic parks like Fenway and Wrigley, not parks in densely populated areas like Yankee Stadium and Shea, nothing. And then, after the player strike angered so many fans, teams started holding cities hostage for new stadiums, raised ticket prices, and suddenly sellouts were common. I don't understand why these things happened the way they did, but I strongly believe that free market economics does not provide a satisfactory answer. My suspicion is that teams started selling more to corporate entities, which were more willing and able to pay higher ticket prices than the average fan, and were able to use the tickets as tax write-offs of some sort.

The supply-demand arguments being made here ignore the radical change in the target customer base over the past few decades, simplify the pricing structure (remember, tiered pricing back in 1980 was nothing like it is today), ignore the availability of season tickets for all seats in the park, and ignore the political clout teams developed to strongarm cities into building new stadiums (often against the stated wish of the voting public: see Seattle).

You simply can't use Econ 101 arguments to explain the actions of baseball teams, because they are not dealing with free market conditions. Hell, even the cross-league competition that defined Major League Baseball for over 90 years is gone, thanks to Selig and the elimination of the League Presidents.

Honestly, I'm not entirely convinced that teams are doing a good job at maximizing revenue, even with tiered ticket pricing. Does it really make sense for teams to build smaller stadiums for the sole purpose of pricing out lower tiers of fans? Is the sport really maximizing the amount of merchandise that could be sold under its own name (perhaps I should mention the return to the Topps monopoly, or the fact that only two companies are licensed to make baseball video games)? If the league as a whole was trying so hard to maximize revenue from all possible sources, why allow FOX to continue to drive fans away with its unwatchable broadcasts? Or, why did the league allow the Sporting News to collapse, effectively denying a new generation of young fans access to its rich history and lore? If teams are trying to minimize expense, why do we still see this trend of building larger and louder scoreboards, which has escalated to the point that some stadiums (i.e. Nationals Park) feel like giant pinball machines?

Having said all that, I think Marvin Miller really did a lot of good for the game. I don't think the owners are the rational actors some of you make them out to be, and I know they are not dealing with the market conditions you assume they are.

Then again, it shouldn't be a surprise to you that I've sided with Andy on this issue yet again.
   99. Dan Evensen Posted: July 16, 2011 at 02:13 AM (#3878794)
And that's the case in baseball. Most of the costs of running a baseball team -- hiring the players and management, renting the stadium, etc. -- are fixed. The only marginal (per-ticket) costs are things like stadium upkeep and the like, and those are clearly dwarfed by the ticket price. So maximizing ticket revenue is likely to be very close to maximizing profit.

This isn't an argument against your overall point -- which I agree with -- but:

The number of tickets available for a given game are fixed as well. Why would teams not want to sell every ticket possible at any price? I've always been told that it was because the costs of running concessions or doing stadium maintenance for a sellout was higher than the potential marginal income, but you indicate that those maintenance costs are all fixed.

I'd also like to point out that you've taken into consideration a number of team costs, but only one potential source of team revenue. Furthermore, you've ignored the complexities of team costs, especially given the newfound ability they have of forcing concessions from the cities they play in.

In short, this is a lot more complicated than your model allows for. I know you created a simplistic model, but it simply isn't true that teams are running off of ticket revenue alone. That hasn't been true for decades in any sport.

----------------------------------------

I'm really interested in the fact that the ticket price inflation phenomenon has been an international development, not merely limited to the particulars of American politics. For example, tickets for Premier League football in the UK are much more expensive than they ever were before, especially if you look at pre-EPL conditions. As I understand, the causes are pretty similar, too: Hillsborough and the Taylor Report resulted in teams being ordered to convert their stadiums to all-seaters (so much for the common men on the terraces!), the Football League / EPL began showing more games live on television (hard to imagine, but regular season football matches were not shown live on TV before 1984 or so), and the English game has gone after international audiences much more aggressively. What fascinates me is that all of this happened at pretty much the same time these things were changing in American sport, and, in both cases, the switch to a "premium" product happened well after salaries rose (the first 1,000,000 Pound player signing happened almost the same year as Nolan Ryan's famous $1,000,000 Astros contract).

And, to top it off, I've been reading news articles about how the FA Cup is an archaic exhibition that nobody wants to watch on television anymore. Sounds kind of like our once-beloved All Star Game.
   100. Karl from NY Posted: July 16, 2011 at 02:26 AM (#3878800)
Does it really make sense for teams to build smaller stadiums for the sole purpose of pricing out lower tiers of fans?


As I understand it, the primary idea here is to create scarcity. Create the perception that tickets are always in danger of selling out, and customers will buy more seats farther in advance. I'm not entirely sure this is true with the modern StubHub-fueled highly liquid secondary market, but then again these stadiums get designed with the consultation of some very smart economic analysts, so it's quite possible they do know what they're doing. Seats 40,000 to 50,000 would be in the low-revenue upper decks anyway, so it's quite possible the teams do come out ahead by sacrificing those seats to increase scarcity and demand for the first 40k. There's also some PR value in being able to claim frequent sellouts vs exposing large swaths of empty seats in the ballpark, and some value in having a more compact thus louder stadium (every study shows people consume more in loud environments, hence the deafening stadium/bar/themepark experience.)
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