Thursday, January 28, 2010

Something for Everybody: MLB's Mechanism Design 

Continuing my recent Yankees theme ... in a curiously long post on his blog, SI writer Joe Posnanski considers the effect of MLB's playoff structure on the Yankees' performance :
And in that way the expanded playoffs have been genius for baseball — not only because they are milking television for every dime but because the short series have been baseball’s one Yankee-proofing defense against the ludicrous unfairness of the New York Yankees. Hey, if the game is rigged, rig the game. The Yankees spend a lot more money than any other team. As a direct result, they had the best record in the American League in 2002, 2003, 2004, 2006 and 2009. They made the playoffs every single year but one this decade (and going back to 1995). They are the best team with the best players every year — that sort of big money virtually guarantees it.
Stefan Szymanksi made similar observations in his 2007 TSE post, A Measure of Success and Dave Berri in 2006 with Is Revenue Sharing Working? However, Posnanski isn't exactly mollified by the relatively small number of World Series titles. In fact, he sees that as part of the plot:

So, you create a system where the best team doesn’t always win. In fact, you create a system where the best team often doesn’t win. For years the Yankees didn’t win. They lost to Florida. They lost Anaheim. They blew a 3-0 series lead against Boston. They lost to Anaheim again and Detroit and Cleveland — and how could you say that baseball is unfair? Look, the Yankees can’t win the World Series! See? Sure they spend $50 million more than any other team and $100 million more than most. But they haven’t won the World Series! Doesn't that make you feel better?

And this has been the Wizard of Oz slight of hand game that Baseball has been playing for a long time … ignore the man behind the curtain who makes more money off of baseball than anyone else and can buy just about any player he wants. Ignore the absurdity of it all. Just remember: The Yankees haven’t won in a while! Just remember: Anything is possible.

Posnanski's on the mark about the system's effects, but I would turn his sarcastic rant about it on its head. Yes, MLB is having it's cake and eating it too, but rather than nefarious "slight of hand" or "absurdity," it's "surdity". As he later observes, the Yankees dwarf the rest of MLB by their payroll, but this is because they dwarf the rest of MLB in their fan base. If I'm running MLB, do I really want the Yankees (as much as I dislike them) at the same performance level as Kansas City and Pittsburgh over a decade?

The playoff structure isn't outside the system, tricking everyone as Posnanski seems to imply. It's an integral part of he system. If the Yankees lose in the playoffs, I enjoy that maybe as much or more than them losing in the regular season. Whether by design or serendipity, the expanded playoff format reduces their chances of winning it all while not taking them "out of the hunt" more frequently as a more constraining revenue-sharing system would. The large Yankee fan base gets something while non-Yankee fan bases get to see some team take them down with a degree of regularity. To use prevailing econ jargon, it's a very useful design mechanism.

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Tuesday, January 19, 2010

"Yankee Premium" Updates 

In 2005 I explored the "Yankee Premium, how much of the Yankee payroll reflected a revenue advantage relative to the rest of baseball and how much reflected the ability of NYY players to negotiate away the revenue advantage into their own pockets.

Here's an update for 2009 salary data where I match Yankee players with players from other teams whose productivity are "in the neighborhood" of the Yankee. The question is, what is the pay rate of a comparable players in terms of production and freedom of movement. I'm not using any sophisticated matching technique, so there's plenty of room to quibble, sometimes that that the match is not good enough and sometimes too good. There's not offensive match for A-Rod among third basemen, but someone like David Wright would be much cheaper than Mike Young. Joe Mauer's years of service are much less than Posada, but Mauer is mobile. The point is not any specific match, but the aggregate amounts. Where one player is considered a better fielder, I've tried to compensate with batting stats such as Mike Cameron and Johnny Damon in a position, CF, where fielding matters more.

Player (Salary, Career OPS or ERA, Years)

1B: Teixeira ($20.6, 0.923, 7) Howard ($15.5, 0.961, 6)
2B: Cano ($6.0, 0.818, 5) Kinsler ($3.2, 0.814, 4)
SS: Jeter ($21.6, 0.847, 15) Tejada ($14.8, 0.810, 13)
3B: Rodriguez ($33.0, 0.966, 16) Young ($13.0, 0.798, 10)
C: Posada ($13.1, 0.885, 15) Mauer ($10.5, 0.892, 6)
OF: Damon ($13.0, 0.854, 15) Cameron ($10.0, 0.788, 15)
OF: Matsui ($13.0, 0.852, 7) Werth ($2.5, 0.827, 7)
OF: Swisher ($5.4, 0.869, 6) Hawpe ($5.5, 0.875, 5)
SP: Sabbathia ($15.3, 3.62, 9) Buerhle ($14.0, 3.80, 9)
SP: Burnett ($16.5, 3.84, 11) Fuentes ($8.5, 3.47, 9)
SP: Pettitte ($5.5, 4.20, 15) Garcia ($10, 4.08, 10)
RP: Riveria ($15, 2.25, 15) K-Rod ($9.1, 2.53, 8)


Yankees: $178m Non-Yankees: $116

A close-to-comparable team has a labor market price tag of about 65 percent of the Yankee total for these key positions. In other words, the Yankee players extracted nearly 40% in "rent" above their market values from the Yankees because they are just as aware as anyone else of the Yankee revenue advantage.

My point is not that the players dissipate all of the revenue advantage of the Yankees. Rather, using gross payroll differences vastly overstates the Yankees advantage. The rent capture by players means that the Yankees must spend their money wisely to make it translate into wins, as the period of the 1980s-early 1990s showed.

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Friday, October 09, 2009

Baseball and the Economy: What Happened to TV Ratings? 

Attendance at MLB games this past season was 6.9% lower than it had been the previous year. That is a HUGE drop. An intriguing question is, what happened?

  1. One possibility is that the rather sudden drop in housing prices and employment led people (individuals AND corporations) to cut back on their spending on entertainment, including baseball. If so, and if people's tastes for baseball haven't changed much, we should expect that the television ratings wouldn't have changed much from 2008 to 2009. In fact, tv viewership might even have increased as more people stay home to watch the game on tv instead going to the ballpark in person. Of course the change in television programming (notably the change at TBS) from one season to the next will have confounded this effect.

    Unfortunately, I haven't been able to locate the full season ratings for 2009. One source I did come across said that as of late May, the tv ratings were about the same as they had been the previous season, but that was early in the season.

  2. Another possible explanation is that there was only one close play-off race, the AL Central. Most of the other play-off teams were well-decided a week or two or more before the season ended. If increasing numbers of the races were, in this sense, "less interesting", that, too might have had an impact on attendance at the ballpark. If this hypothesis is correct, then tv ratings should have been lower in 2009 as well, especially near the end of the season.
In other words, the data on television ratings might help us discern the relative strengths of the two hypotheses. Given these competing hypotheses (both of which could be right, of course in varying strengths), can anyone shed any light on what happened with tv ratings this past season?

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Wednesday, August 19, 2009

Baseball Beaning & Brawls 

John Kruk and Eric Young provide a humorous analysis of the "right way to fight in baseball" following the Red Sox Kevin Youkilis charging of Detroit's Rick Porcello a week ago n ESPN MediaZone.

Beaning (which Porcello's pitch may not have been), on the other hand, does not amuse me. Baseball has long had the tradition of permitting even blatant hitting of batters and inevitable retaliation as "part of the game." In recent years, MLB rules have limited retaliation, but only rarely will umpires eject the initiator as happened this season to John Lackey of LAA. Defenders of this policy view self-enforcement mechanisms and incentives as sufficient with statements like "if you do let these things work out in small ways, it blows up into bigger things." Detractors, like myself, see vigilante justice that, while admittedly involving a degree of self-enforcing incentives, permits a lot of plunking of players with a dangerous weapon and blows up into bigger melees now and then.

Inter-league comparisons throw cold water on the "let them work it out" philosophy of baseball. In a high emotion and intensity game such as football, fights rarely occur and brawls practically never at the professional level. If operating by baseball's "code," a defensive lineman who thought an offensive player gained too much advantage in some way or pulled some dirty maneuver would simply raise up before the next snap and and kick the offensive lineman in the groin. Instead, the league punishes much less egregious behavior with personal fouls and would immediately eject and likely suspend any player engaging in such "settle the score" tactics. the Albert Haynesworth "stomping incident" is a case in point -- ejection, suspension, end of story with no need for the Cowboys to plot their "retaliation" against the Titans and no appearance of any thing of this sort of malfeasance across the league.

One reply might be that Haynesworth's actions left no doubt whereas pitches sometimes "get away." No doubt, no one can perfectly discriminate pitches that are intentionally thrown at batters from pitches thrown inside with no intent to hit anyone. Based on game situation (score, pitch count ...), game history, team histories, pitcher characteristics, and pitch characteristics, MLB players and umps (especially catchers and umps) can likely determine with at least 95 percent accuracy whether a pitch is intended to hit someone or be so far inside as to be equivalent to intending to hit the batter. I can tell with probably 85 percent accuracy watching at home.

The cultural differences that have developed in baseball and football extend beyond just the penalties. In baseball, not only were pitchers like Bob Gipson, Don Drysdale, and Nolan Ryan revered for their ability to get batters out, but a whole folklore of admiration developed around their willingness to throw at batters. Reggie White was a great defensive end, but no one would have thought him better for picking up a QB and dumping him on his head or punching some offensive tackle in the face. Hall of Famer or not, such behavior would diminish his stature. Can anyone imagine a punch to the face of a receiver who just caught a TD pass being acceptable behavior that's "just part of the game"?

Robin Ventura's farcical charge of Nolan Ryan resulting in Ryan's headlock on Ventura made me belly laugh along with everyone else. To my point, here, however, there's nothing funny about Ryan (one of my favorite players) hitting Ventura with a 95 mph fastball. Rather than the futile rush of the mound, Ventura might have called out Ryan -- why does a future Hall of Famer with the stuff that Ryan had find it necessary to throw at people? Why is this accepted behavior?

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Friday, August 14, 2009

MLB Postseason Ticket Pricing 

I am spending the weekend in the NYC area, so the New York Times is my local paper for the next couple of days. I came across an interesting tidbit in the NY edition of the paper this morning.

With the Yankees playing well, Bombers fans are already anticipating October baseball this fall. The Yankees will soon be releasing their postseason ticket prices, and given their track record on pricing, people are anticipating an expensive postseason. Of course, the price elasticity of demand for postseason games is very low, so teams can raise their prices quite a bit. Yankees' fans clearly understand that:

“I don’t think they will raise prices too much because of the backlash they got on the regular- season tickets,” said Michael Bahn, a season-ticket holder since 2003. “The problem is, for the playoffs, they have you over a barrel and you really want to go.”

For me, the interesting information in the article is that MLB sets guidelines (a price ceiling) for the first two rounds of postseason ticket prices. I'm no antitrust expert, but, absent the infamous MLB antitrust exemption (the gift that keeps on giving), that sounds like a per se violation of the Sherman Antitrust Act to me.

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Wednesday, June 10, 2009

The Short Porch has Gotten Shorter in the Bronx 

What has caused the home run derby at the new Yankee Stadium? Is it the new ballpark? Is it changes in the weather? Is it poor pitching? The folks at Accuweather.com have done a little analysis on the right field wall and have discovered something interesting to tell part of the story. Because of a scoreboard in the right field wall, the new Yankee Stadium's right field wall is not as curved as the old stadium's right field wall, resulting in a shorter short porch, even shorter than the famed right field wall in the house that Ruth built. On average, according to the good folks at Accuweather, the right field wall is between 4 and 5 feet shorter, and up to 9 feet shorter in right center. Not only that, but the wall itself is 2 feet shorter in height. Here's the write-up at Accuweather.com. HT to JC Bradbury.

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Tuesday, May 26, 2009

Sonia Sotomayor's Connection to Sports 

President Obama is apparently going to nominate Sonia Sotomayor to the Supreme Court. But, you rightly say, what is the Sports Economics angle in this story? Judge Sotomayor was the judge who issued an injunction that said MLB teams could not impose a collective bargaining agreement nor use replacement players to start the 1995 season, effectively ending the 1994-95 MLB strike.

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Saturday, May 16, 2009

Tracking Changes in MLB Baseball Attendance 

Baseball-Reference.com has a handy page (HT to JC Bradbury) where they are tracking changes in MLB team attendance. It calculates overall attendance, per-game attendance, and comparisons between this year and last year. It also allows you to sort the data and it allows you to display the data in csv format for copying and pasting into your favorite spreadsheet.

As of yesterday (May 15th, 2009), teams as a whole have seen per-game attendance drop by about 5%. While the Yankees, as usual, are garnering most of the headlines (especially with their $2,500 dollar a game seats), the Mets, Nationals, and Tigers all have seen steeper declines in average attendance.

Nine teams have realized attendance increases with the Tampa Bay Rays leading the way. That's not at all surprising given their success on the field last year. Studies routinely show that when teams perform well one year, their attendance tends to be higher the following year because the good performance changes fan expectations, ceteris paribus.

The recession is surely hurting teams. Both the Mets and the Yankees have moved into new palaces, which should ceteris paribus translate into attendance increases, but both rank in the top 4 in per-game attendance decreases with the Mets seeing the sharpest decline so far.

As I metioned above, a lot of attention has been given to the pricing policies of the Yankees. It certainly is possible that they erred when setting ticket prices, but without digging deeper into the numbers, it's hard to say how much of the decline is due to factors such as weather, the recession, poor pricing policies, team quality, changes in capacity, etc. The Yankees' new ballpark has a capacity of 51,800 while the old Yankee stadium had a capacity of 57,545. The Mets' new ballpark has a capacity of 45,000 while its old ballpark had a capacity of 55,601. Surely this is one of the factors that explains why fewer fans are attending Yanks and Mets games this year.

Cross-posted at Market Power.

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Tuesday, April 28, 2009

Yanks Slash Ticket Prices 

WhoDaThunkIt.com?

The New York Yankees slashed prices on more than 40 percent of their front-row seats by up to 50 percent Tuesday and announced many of those who bought tickets closest to the field for $325-$2,500 will be eligible for additional free seats.

Those initiatives could help pack previously unfilled areas that were an eye sore on television broadcasts during the opening homestand at the $1.5 billion ballpark.

“There are a few hundred suite seats in our premium locations that have not been sold on a full season basis,” Yankees managing general partner Hal Steinbrenner said in a statement. “As a result, and for many of our fans who have already purchased full season suite seats in such premium locations, the Yankees are announcing today a program that adjusts certain prices and benefits.”

We'll see how this goes. Meanwhile, the politicians continue to be blustery.

“It’s the public that built Yankee Stadium, and even at these prices, the public has been excluded from the very stadium they built,” Brodsky said. “It’s a continuing disaster.”

First the financial disaster. Now the swine flu that has hit some areas of NY. Will we see prices slashed even more?

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Tuesday, February 24, 2009

Bonus-Skimming in MLB 

Don Coffin sends along two Chicago Trib links on the recent bonus-skimming scandal in MLB.

Here's one that describes some of the alleged skimming involving Dominican players.

Here's one on fired White Sox executive David Wilder who is alleged to have pocketed some bonus cash.

These sorts of stories seem almost routine in the entertainment industry. Young athletes, musicians, and other performers often underestimate their potential worth to the industry and end up signing bad deals.

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Thursday, February 12, 2009

Steroid Publicity & Hall Voting 

Whatever readers and contributors to TSE think about publicity given to MLB steroid use, it continues to hammer the chances of Hall of Fame inductions for an increasing set of players. Two years back, I posted regarding Mark McGwire's chances in view of his low first year ballot relative to his peers on the all-time home run list. In his third year of eligibility, McGwire's vote dropped just a hair from 23.6 to 21.9. Such dips are not without precedent. Duke Snider's numbers were in the same range and dipped to 21% in his third year only to rise steadily until his induction in his 11th year.

Beyond McGwire, what will be the fate of others caught up in the bad press? A Cincinnati Enquirer piece by John Erardi poses this question for A-Rod along with Bonds, Sosa, McGwire, Clemens and others. In a very small sample (10) of baseball writers who have Hall of Fame votes, 7 came out against any of the players while 2 were willing to consider a partiucular guy from their city -- roughly the same percentages currently seen in McGwire votes. On the other hand, it is hard to imagine that no players or very, very few from this era will be inducted. Phil Hagan (who votes uncomitted) of the Philadelphia Inquirer makes this Joe Morgan-esque point in the article:
"In the next several years, there are going to be many players becoming eligible who are suspected of or have admitted using steroids ... Either you vote for a player or players who used performance-enhancing substances or you don't vote for anybody ... I think it's fair to assume at this point that there was, in fact, a Steroid Era and that most players - and pitchers - probably at least tried the stuff ... And, honestly, I don't know where I stand on that right now."

The trouble with that view is that players who did not use such substances stand at a disadvantage, albeit an arguable one. The Astros ace, Roy Oswalt, speaks very forcefully to the views of at least one impacted non-users on MLB.com:
"A-Rod's numbers shouldn't count for anything," Oswalt said in a phone interview with MLB.com. "I feel like he cheated me out of the game." ... "The ones that have come out and admitted it, and are proven guilty, [their numbers] should not count. I've been cheated out of the game," Oswalt continued. "This is my ninth year, and I've done nothing to enhance my performance, other than work my butt off to get guys out. These guys [who took PEDs] have all the talent in the world. All-Star talent. And they put times two on it.
Of course, like the writers, Oswalt is more gracious to a former teammate, Roger Clemens, than he is toward others.

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Tuesday, December 23, 2008

Luxury Tax Paid by Yankees and Tigers 

The New York Yankees (surprise, surprise) have to pay MLB's luxury tax this year. So do the Detroit Tigers.
The New York Yankees not only failed to make the playoffs, they were hit with their highest luxury tax in three years. The Yankees were assessed a $26.9 million tax by the commissioner's office on Monday, up from $23.9 million last year and their biggest bill since paying nearly $34 million for 2005. The Detroit Tigers, who also failed to qualify for the postseason, are the only other team that must pay tax and owe $1.3 million to the commissioner's office.

Checks are due by Jan. 31.

Just for fun: that $26.9 million figure for the Yanks is more than the entire payroll of the Marlins last year. Here's a little bit of history from the article.

While the Yankees pay at a 40 percent rate for the amount over $155 million, the Tigers pay at a 22.5 percent rate because they exceeded the specified threshold for the first time.

This year's figure brings the Yankees' total tax to $148.3 million in the six seasons since it began - 90 percent of the total.

Before this year, the only other teams to pay were the Boston Red Sox, who owed $13.9 million for exceeding the threshold in four seasons, and the Los Angeles Angels, who paid $927,000 in 2004.

The Biz of Baseball gives us a handy table showing us who has paid and how much since 2002. Article XXIII of the current collective bargaining agreement describes the so-called competitive balance tax. Might as well call it the Yankees tax.

More fun with numbers.: suppose the Yankees exceed the tax threshold in every year of of CC Sabbathia's (7 years $161 million) and AJ Burnett's (5 years $82.5 million) contracts. Further suppose the salary payments are made in equal installments over the lives of the contracts, the Yanks pay the top luxury tax rate of 40%, and face a discount rate of 5%. Then the after-tax amount they'll pay for these players is a discounted $286.3 million. To put this in perspective, Hank Steinbrenner could have bought the Tampa Bay Rays franchise for $290 million or the Florida Marlins franchise for $256 million (based on the Forbes franchise values for 2008).

Cross-posted at Market Power

Update:
Dennis Coates notes in the comments that the Yanks have signed Mark Texeira to an 8 year $180 million contract. Updating my numbers, that puts the Yanks' present value of the contracts plus tax of CC, AJ, and Tex at $490 million. For that price they could have bought the storied Cardinals, the Phils, or one of 22 other franchises.

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Wednesday, November 26, 2008

The Free Agent Market 

Has the free agent market seized up?
Since Nov. 14, when teams were permitted to discuss contract terms with free agents, only 2 of the 171 players who filed for free agency have signed: Jeremy Affeldt, who went to San Francisco, and Ryan Dempster, whose decision to re-sign with the Chicago Cubs hardly came as a surprise.

...A review of baseball’s transaction history since 2001 showed that the only period featuring fewer signings in the first 12 days of open bidding than this year came in the 2002-3 off-season, when Jesse Orosco was the only free agent who had signed. Each of the last five free-agent off-seasons included at least six signings by this stage, led by the 2006 bonanza when Alfonso Soriano, Juan Pierre, Nomar Garciaparra, Gary Matthews Jr., Aramis Ramírez and Frank Thomas signed before Thanksgiving.

There is a similarly attractive group of free agents available this year — C. C. Sabathia, Mark Teixeira, Manny Ramírez and Francisco Rodríguez, for starters — but teams seem to be proceeding cautiously and dispensing fewer offers than in years past.

Some baseball executives have suggested that many teams, unsure of how long it will take for the economy to rebound, are reluctant to offer expensive multiyear deals.
This will be interesting to follow between now and the new season. Increased uncertainty over market conditions and the market price for talent should delay contract formation as teams and players wait on more information to arrive. But given the rents involved and the value of pre-season training, one would expect the market to settle sometime before then - perhaps much closer to when players report to camp than in normal years. These conditions may induce more trading of players within the season as well.

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Sunday, October 12, 2008

Kansas City Royals Increase Ticket Prices 

It looks like the Royals are betting on stadium renovations to boost the demand for tickets.

The Royals rolled out a new ticket-price structure Friday for their first season in a renovated Kauffman Stadium.

And, yes, prices are going up.

The average single-game ticket will cost $24.84 in 2009, an increase of nearly $2 from the average 2008 cost for a nonpremium game.

Club officials said the increase still positions the Royals below the average 2008 major-league price of $25.43 and, based on 2008 prices, would rank 24th among the 30 clubs.

“We feel this is a fair and balanced plan that will allow fans a broad menu of price options depending on their desired amenities,” said Kevin Uhlich, the club’s senior vice president for business operations.

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Monday, July 28, 2008

Aggressive & Passive Responses to Doping 

A Yahoo! Sports headline and associated summary regarding the Tour on Monday headline reads, Sastre Wins Doping-Scarred Tour de France. Setting aside moral philosophy, I wonder whether the Tour's (and related governing bodies) aggressive testing and enforcement regarding banned substances, itself, diminishes fan interest. The Tour appears to be generating its own scrutiny. We didn't read about a "doping-scarred" season in MLB last year or a tainted Red Sox championship in spite of all the hullaballoo surrounding Barry Bonds and Roger Clemens personally. MLB's very passive "ignore-minimize-forgive" strategy over the last decade seems to have paid dividends versus the "zero tolerance" strategy of cycling in recent years. (Of course, I'm taking the Caminiti-Canseco figures of 50% and above use of illicit substances in MLB as my guide so that the difference between cycling and MLB (at their highest levels of use) are not the difference -- rather it has been the degree of testing and enforcement.) Even though MLB has generated some mean glares from legislators and legal and public opinion problems of specific players have come under intense scrutiny, baseball itself seems to have escaped much fan response.

On the other hand, maybe the nature of the sports (indivdiual v. team oriented) or differences in fan base (American v. European) suggests different optimal strategies.

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Sunday, July 27, 2008

Free agents and the winner's curse 

Another Journal of Sports Economics article rates a feature in Kevin Lewis' Boston Globe column, "Surprising insights from the social sciences."
IN SPORTS, FREE agency has allowed players, especially star players, to earn dramatically higher salaries. This has been good for players, but it also means that team owners have to be smarter in their hiring practices. But are they? An economist examined performance and salary data for all hitters in Major League Baseball who signed free-agent contracts between 1985 and 2004. He found that many teams systematically over-estimated the predictive value of a player's performance in the most recent season, relative to earlier seasons, in setting salary levels. This kind of error was especially acute for older players, and it was generally committed by teams who underperformed relative to their payroll (e.g., Tampa Bay vis-a-vis overperformers like Oakland).

Healy, A., "Do Firms Have Short Memories? Evidence from Major League Baseball," Journal of Sports Economics (August 2008).
Also from Lewis' column: it's good to take an occasional day off from the razor, because the girls like stubble.

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Monday, June 09, 2008

Keeping the ball, & the horse in play 

Henry Waxman is a master at milking sports for publicity:
“It’s clear that some of the information Major League Baseball and the players union gave the committee in 2005 was inaccurate,” Waxman said in a written statement. “It isn’t clear whether this was intentional or just reflects confusion over the testing program for 2003 and 2004. In any case, the misinformation is unacceptable.”

Manfred, speaking for the commissioner’s office, said that he and Selig had testified truthfully.

“The testimony of Major League Baseball officials was completely accurate, and we are happy to address any concerns that Congressman Waxman may have,” Manfred said.

Michael Weiner, the union’s general counsel, said in reference to Fehr: “Don’s statements at the March 2005 hearing were accurate. If Congressman Waxman has any questions, we would be happy to respond.”
Vis a vis the horse, various commentators have stated that Big Brown's loss in the Belmont might be the last time we see him on the racetrack. NY Times columnist Joe Drape uses a bit of economic logic to suggest otherwise:
Before the Preakness, Three Chimneys Farm in Midway, Ky., purchased a percentage of Big Brown’s stallion rights in a deal valued at $60 million.

If he had become the first to sweep the series since Affirmed in 1978, Big Brown would have been expected to stand for at least $200,000 a mating and, as the only living Triple Crown champion, would have been worth up to $120 million.

Instead, I.E.A.H. and Big Brown’s other co-owners are going to be hard pressed to restore the colt’s stallion market to perhaps half of that $60 million level. Big Brown does not have a particularly fashionable pedigree: his sire, Boundary, stood for $10,000 for 11 seasons before being pensioned, and he produced a modest 16 stakes winners, mostly sprinters.

Big Brown is pointed to run in the Travers at Saratoga in August, and the Breeders’ Cup Classic in October at Santa Anita, where he is likely to meet Curlin, the reigning horse of the year.

“It puts a little more pressure on us to win those races,” Iavarone said. “I know a lot of people say we haven’t beaten anyone, and we needed to take on older horses.”

So for now, Big Brown’s future is pretty straightforward.
If he can stay healthy, he will run again. As for the poor performance Saturday, it might be the case of a bunch of little things all adding up to a dull performance. The best explanation I've seen so far comes from veterinarian Sid Gustafson in his post at The Rail.

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Monday, June 02, 2008

A new ballpark for the Rays? 

The newly competitive Rays of Major League Baseball are attempting to move from Tropicana Field - an outdated facility, to put it mildly - to the waterfront on Tampa Bay. The distance is only twelve blocks, but getting there will take some time and effort, and perhaps a little luck. As always seems to be the case, stadium deals and franchise re-location, even over a short distance (see Brooklyn in the 1950s), are complicated and nettlesome.

Tom Nickens of the St. Petersburg Times looks back on the city's initial approach to wooing a team to the area:
On a hot afternoon in July 1986, the St. Petersburg City Council placed a big bet that would be unimaginable today.

"It was billed as a once-in-a-lifetime chance," I wrote as a young City Hall reporter for the front page of the next day's St. Petersburg Times. "Thursday, St. Petersburg's City Council took it. The council voted 6-3 to build a domed stadium downtown that is promoted as the cornerstone of a new beginning for the city."

Downtown St. Petersburg became a more vibrant place over the years, and it eventually got a baseball franchise after the dome marked time hosting its share of flea markets, monster truck rallies and rock concerts. Now the city finds itself in the midst of another stadium debate. The Tampa Bay Rays are making a pitch for an iconic downtown waterfront stadium that would open the door for redevelopment on the Tropicana Field site that city leaders a generation ago would have instantly embraced.

...Fast-forward 22 years.

The Rays are in their 11th season, hold a long-term lease and own one of the best records in baseball after years of having one of the worst. The relatively new team owners have spent millions to refurbish the Trop, and they have followed through on promises to invest in the franchise. They are not publicly threatening to leave, but they want a new $450-million stadium to boost attendance that ranks at the bottom of the major leagues. They promise to invest $150-million and are seeking no tax increases or new public money to pay for it, only the extension of about $11-million a year in city tax dollars and county resort taxes being spent on the dome now. It would be a public-private partnership, and St. Petersburg would get an enormous redevelopment project as well.
Nickens seems to buy the redevelopment myth. This seems odd given the fact that the Trop as a development stimulus must surely be considered a failure. Many cities have made advances in the past quarter century without ballparks surrounded by empty lots, as the picture accompanying Nickens' story depicts:


But now the Rays are showing the effects of new (and clever) ownership on the field of play - first place, in June !! - and their stadium proposal must be considered state of the art in every dimension, including the magnitude of the requested subsidy. An important vote will be held this week at the City Council, to initiate the process which would put a stadium referendum on the ballot in November.

Coverage of the issue in the St. Petersburg Times has been excellent, and balanced, the best I've seen. Their recent poll indicates that the public are not yet on board with the plan (but see this interpretation from a thoughtful stadium supporter). Last month the paper asked Matheson, de Mause, Rosentraub, and Zimbalist for detailed commentary (rather than a selective quote or two) on the stadium financing plan. Reporter Aaron Sharockman has been put on the stadium beat full time. His blog Ballpark Frankness has links and commentary on the numerous stories on the issue over the last six weeks.

The team's new digs would certainly be in a nice spot, the site of Al Lang Stadium, where spring training has been held since 1916.

The new home plate would be where right field of the old ballpark currently resides.

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Tuesday, April 29, 2008

Sports Econ Musings 

A Real-Time Economic Indicator from Sports World: One of my colleagues returned from Talladega, reporting that crowds for the Sprint Cup and Nationwide Series races were way off from last year. He described the Nationwide attendance as sparse.

Free-Agency & MLBPA: Buck Martinez (TBS Analyst for NYY-Cleveland Game)went to some lengths describing the pressure put on C.C. Sabbathia, potentially the marquee free agent pitcher for next off-season, by the MLBPA to follow through and become a free agent rather than resign -- which is what Sabbathia says he prefers. Martinez' imputed rationale for the MLBPA is that getting the top guy on the market sets higher prices for everyone. That's a testable proposition for the sports economists out there with the free agent data sets -- does a higher quality player in the pool raise average offers?

My Ongoing NBA Playoff Beef: (See "Where Hardly Any Game Matters") Sixers beat the Pistons in Detroit, win in Philly, but must win two more to advance and one more to put the Pistons at the very brink of elimination. In spite of the Sixers play, there's been about as much drama as a Seton Hall-Providence matchup. A Celtic-Lakers matchup may be entertaining, but getting there will seem a lot like the WWF.

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Saturday, April 12, 2008

Pete Rose's Bets: How Smart? 

Most readers will recall that Pete Rose has been banned from baseball for betting on the game. Rutgers Professor Douglas Coate does the sums on the bets listed in the Dowd Report as having been made by Rose:
In this paper the betting on baseball games from April 8, 1987 to May 12, 1987 attributed to Pete Rose in the Dowd Report to the Commissioner of Baseball is analyzed. The results show Rose lost $4,200 betting on the Cincinnati Reds, the team which he managed; $36,000 betting on other teams in the National League, and $7,000 on his American League wagers. These losses, which include about $20,000 to $25,000 in transaction fees are small relative to the $450,000 in winning and losing bets (including the transaction fees) and are consistent with an informational efficient market. Assuming these bets are Rose's, his expertise (24 years as a player, 4 years as a manager, major league leader in games played) was not an advantage when betting on his own team, on other teams in his league that he studied and competed against, or on teams in the other major league.
Rose typically bet four or more baseball games each day, in addition to a bet on the Reds (always to win, apparently). Coate doesn't include betting on NBA games (see exhibit 16 of the Dowd report, which shows winning and losing bets on NBA spreads). It would be interesting to test the null hypothesis that Rose's wagering on MLB and NBA games was equally futile.

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Wednesday, March 26, 2008

MLB in Japan & the EPL too? 

From today's WSJ:
The number of MLB licensees in Japan has grown to 61 from just six in 2000, according to MLB. Retail sales revenue from licensed products has nearly tripled during that time to $103.7 million, according to MLB figures.

Local partnerships include Uniqlo, a unit of Fast Retailing Co. and one of Japan's leading clothing retail chains; LB-03, a fashion line for young women; and Toys "R" Us, whose stores in Japan have MLB corners selling branded toys and apparel. MLB apparel is also sold at some 2,000 sporting-goods stores around the country, according to Miki Yamamoto, senior vice president of IMG Licensing Asia, which handles licensing here for the league.

At the 109 shopping mall in the Shibuya neighborhood, a popular hangout for Tokyo's young and fashionable, "you can see kids with very hippy, trendy designs with a Red Sox logo or shocking pink Yankees clothing," Ms. Yamamoto says. "Those girls are buying those products without knowing how Daisuke is doing or how Ichiro is doing. This is not just about baseball; it's a culture now."

In terms of TV viewership, pitcher Hideo Nomo, who joined the Los Angeles Dodgers in 1995, was the wedge in the door, with the public broadcaster NHK showing the games he pitched. But the advent of Ichiro, a center fielder, took things to another level, because a position player plays every day, while pitchers rotate in every few days.

"Now you had an everyday player, who's out playing 162 games a year," MLB's Mr. Small says. "That made great television: Folks could tune in every day knowing he was going to play."

MLB soon negotiated a new six-year TV deal with Japanese advertising giant Dentsu Inc. valued at a reported $235 million, three times as much as the previous deal. The money from the broadcasts, as well as from sponsorship deals and sales of licensed merchandise, is split equally among the 30 major-league teams. Fans also can catch a nightly news feed with highlights of Japanese stars in the majors.
So the money is there. No question about that. A similar prospect is roiling the waters across the Atlantic. English fans are out of sorts over the Premier League's consideration of playing "games that count" abroad. In MLB's case it is just two games out of two thousand or so, and the home field advantage is slight. The competition is marginally affected, at best, by playing games abroad at the start of the season. In English football, home field advantage is significant, and every point is precious when relegation is a threat or European places are at stake. But the money tide will be very difficult for EPL owners to ignore.

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Wednesday, December 05, 2007

MLB's Hall of Fame Shame 

Marvin Miller did more to reshape the economics of labor in American Sport than any man in history. He is currently 90 years old, and based on this account from ESPN's John Helyar, as sharp and pugnacious as ever. Yet Miller's nomination to baseball's Hall of Fame failed once again to obtain the required number of votes. I have wondered how this could be.

As executive director the players union, Marvin Miller single-handedly (in the sense of being a uniquely strategic and effective leader) won freedom of contract for major league baseball players by obliterating the odious "for life" interpretation of baseball's monopsonistic reserve clause. In doing so he erased much of the damage from one of the most bizarre and inexplicable Supreme Court Decisions in our country's history (The Federal League Case of 1922), breaking a logjam that subsequent courts and congresses could not breach.

More than any person I can think of, Miller merits a place in the Hall of Fame. Why is he not there? Pettiness, it seems. Helyar provides the background to this year's tally, along with commentary from Miller himself.

When I called Miller at his Upper West Side apartment in New York on Monday night, he wasn't seething about the Hall of Fame vote. He was listening to the soundtrack of "Guys and Dolls" and letting his wife, Terry, handle the seething. But he, too, had a sense of deja vu.

"They seem to be the same kind of small-minded, vicious people as the owners were when I came in," he told me, though, ever the cool, rational man, he wasn't taking it personally.

"I'm only mad at myself," he said. "After the first time on the ballot, I should have just withdrawn my name from consideration. My judgment of my chances was, 'Never.'"

But Terry Miller and others talked him out of it. That first time, he drew 44 percent of the votes. And, indeed, he climbed to 63 percent the next time around, just 10 votes shy of what he needed for the 75 percent that would get him in.

Kuhn [MLB's commissioner and Miller's foil in the 1970s] made it onto only 17 percent of the ballots in the last round of voting conducted under the old process earlier this year.

Then the Hall of Fame changed the format. Instead of allowing all Hall of Famers to vote for "veterans" nominees, it created three new panels. Nominees in the "executive/pioneer" category were no longer being considered by 81 voters, but by 12, and that group is comprised primarily of former MLB executives.

Voila!Kuhn, a longtime Hall of Fame board member, got 10 votes. Miller got three.

Vladimir Putin couldn't have done it better; Cooperstown couldn't look worse.
Miller's leadership reformed the reserve clause system. This led to a significant transfer of income to players from owners, who were ultimately forced to pay market prices. The owners responded with a twenty year long, Sisyphus-like ordeal of lockouts and strong-arm tactics in an attempt to turn back the clock in the labor market. Miller and the players were unfairly tarred by the media's brush throughout this period. Yet the game did not suffer from free agency, as economics implies. Indeed, the commissioner himself now proclaims the financial state of the game to be better than ever.

If there were ever a time to make peace between MLB, former commissioner Kuhn, and Marvin Miller, the Hall of Fame vote is a fit and proper place to do it. But MLB's executives have indeed succeeded in turning back the clock, once again cloaking their legacy in shame.

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Wednesday, October 24, 2007

MLB, Same as it Ever Was 

The arrival of the Colorado Rockies to play at Fenway tonight in game one of the World Series is sure to be heralded as sign that the new era of baseball economics is working. One writer at mlb.com goes so far as to say "Avoid logic at all cost... Parity = removal of logic." We won't avoid logic here at TSE, nosiree!

One can't argue with the idea that lessons can be drawn from the Rockies' success. They are relatively low in the spending rankings, listed as having the 25th highest of 30 payrolls in the 2007 database at USAToday.com. Like the 1999-2004 vintage Oakland Athletics, they built a successful, low budget team around a different model from the typical organization. But what does history say about the upstart Rockies? Are they a unique harbinger of change?

To examine the question, lets consider the data on playoff appearances since the league expanded to 30 teams ten years ago, and how playoff success matches up with spending. The top spending team during this period are the NY Yankees, who have an immaculate 10 appearances over ten years. Third in the spending category and second with 8 appearances are the Braves, whose average payroll rank is 6. Second in spending (average rank 5.7) and third in appearances are the Red Sox, with 6. The Red Sox and Yanks are so dominant that no other team from the AL East has managed a single playoff appearance in the past ten years.

What may seem novel about this year are the playoff appearances of three teams with below median payrolls. But this is not out of step with recent history. In 2000, there were also three playoff teams with below-median payrolls, and there has been at least one such team among the eight contenders in each year since: two in 2001, two in 2002, three in 2003, one in 2004, one in 2005, and three in 2006. It is hard to discern a trend in these figures.

The Red Sox and Yankees account for four of the last nine world series champions, and the Sox are heavily favored to win again. But even if the Rockies pull off the upset (they are currently given a 33% chance at tradesports), you don't have to go back very far to find a close parallel. The 2004 Marlins upset the league's biggest spender (the Yankees, of course) with a team ranked 25th in payroll.

Spending money on players doesn't guarantee a world championship, of course. But as the Sox and Yanks demonstrate, plenty of money plenty well spent sure increases your chances.

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Friday, July 06, 2007

Downsizing while going upscale 

In his review of the career of MLB's Bud Selig, Tim Marchman closes with the "milking the cow, but not feeding it" theme:
Across the nation, virtually every ballpark in the game has been replaced or scheduled for demolition over the last 15 years; those few that haven't, like Fenway Park and Wrigley Field, have been carefully renovated. The purpose of this new construction has always been the same: To build smaller, more intimate parks specializing in providing more high-end service to businessmen. Money isn't made these days from the family out to take the annual trip to the local park; it's made from clients who spend hundreds of thousands of dollars on luxury suites in which they entertain clients.

This is a broad conceptual shift, and I don't think it was inevitable. There is a great tension in marketing a mass entertainment as a boutique product, and a different commissioner would have made different choices, handling that tension differently. Selig has come down on one side, firmly and consistently.

You can see the ultimate example of this in California, where the Athletics are moving from a football field in relatively low-rent Oakland to a 35,000-seat park in Fremont, which isn't, by baseball's historical standards, even a definable place. It's the most extreme manifestation of the shift the sport has made toward valuing quality over quantity — to cater to the relatively few at the expense of the many. It was inevitable that baseball would move in this direction, but under Selig the sport has become totally committed to it. Even in New York, a city with enough passionate fans to support five successful teams, the new stadiums are limiting supply to increase demand and better serve the wealthiest patrons — the Mets' new field, for instance, will have 10,000 fewer seats than Shea Stadium does, and that's not because they have a problem moving tickets.

Only the years will tell, but I think this could prove to be a catastrophic choice.
I'm obviously sympathetic to Marchman's point. But while the risks of catastrophe are notoriously difficult to quantify, they must be quite small, at least over the next two decades. For the time being, electronic media will supply the product to the masses and generate future demand.

Despite Marchman's critique of downsizing, his review [part one, part two] credits Selig for successfully steering baseball through significant periods of economic change. It's a savvy account too, as shown by his take on the public subsidy game. "Blame the city councils, not Selig, for the waste of your money."

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Monday, May 21, 2007

Stadiums and eminent domain 

Raymond Keating has a nice column in Newsday, "New stadiums hit property rights." Those of you familiar with the literature on stadium subsidies will recognize Keating as the author of "Sports Pork", a fine Policy Analysis paper from the Cato Institute.

Here's some bits from Keating's column today:
Part of the allure of the recent retro parks has been asymmetrical playing fields. In place of the bland,
uniform dimensions that came with multipurpose stadiums from the 1960s to the 1980s, the new fields have varying outfield distances, walls of differing heights and assorted peculiar angles. It certainly provides these new ballparks with added character.

But a little history shows that this is a manufactured character, as opposed to the organic kind that sprang from the original ballparks of yesteryear.

...[W]here did the special dimensions come from? Well, teams had to make their
stadiums fit on a particular piece of urban land, often within a set of city streets and having to accommodate many neighbors.

For example, Griffith Stadium in Washington, D.C., which was home to the
Senators, had a center-field wall that jutted in towards the playing field. Why? Because, PhilipLowry reported in "Green Cathedrals," there were five houses and a large tree on the other side.

...What a difference a century makes. Developers, sports team owners and players now reap rewards not only from taxpayer-subsidized stadiums, but also from the government's muscling homeowners and small businesses off their properties to enrich the politically connected.

That's what looms with Mayor Michael Bloomberg's Willets Point proposal to move some 100 small businesses and one resident to alter the area near the new Mets home to fit his political vision. Eminent domain also is a weapon to grab property provided by government to Bruce Ratner for his multibillion-dollar Brooklyn residential, office and retail project, including an arena for the Nets.
As I recall from the excellent book Dodgers Move West, the willingness to use eminent domain was instrumental in the Dodgers leaving Brooklyn for L.A. The powerful Robert Moses blocked every move that WalterO'Malley and the Dodgers could make in Brooklyn (apparently preferring a location in Queens). Meanwhile, the L.A. city fathers gave O'Malley Chavez Ravine, easy freeway access, etc. in order to lure the team to the west coast. It seems clear that restrictions on the number of franchises (in contrast to the open systems of Europe) raise the stakes in the stadium game, and make the use of eminent domain more likely.

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Saturday, March 31, 2007

Questec, and tweaking the rules in baseball 

I have a long-running interest in the use of technology to assist umpires and referees in calling the game. Umps and refs are fallible in ways that new technology is not. Hence I'm in favor of judiciously employing advances like QuesTec, which monitors calls of balls and strikes in Major League Baseball. Better measurement and adjustment using technology and umpire training can help restore the essential notion that the rules of the game are the same for all, i.e. that there aren't special rules for special players.

A relevant example is the case of NY Mets pitcher Tom Glavine, who was forced to switch from an in and out scheme (making use of erroneous strike calls off the outside corner), to an up and down strategy. Glavine deserves credit for adapting to how the game was being called in both the pre and post-QuesTec eras. In the pre-QuesTec era, and even today, high and low strikes are not called as the rules state. Glavine cant be faulted for pitching as dictated by umpires calls, rather than the rules per se. It is MLB's obligation to make the rules meaningful.

On this theme, there may be changes in store for the upcoming season, based in part on QuesTec. SI writer Tom Verducci spent a few days suited up as a Toronto Blue Jay during spring training. His account of the Blue Jays' team meeting with the supervisor of umpires foretells the changes:
At 8 a.m. we are back in the classroom -- Wells, with a fresh apple, in the same seat -- this time for the annual umpires' presentation, delivered by umpire supervisor Rich Garcia. Garcia notes that the average time of game increased by one minute last year, to 2:51, and players need to be aware of pace-of-game guidelines. He also says more strikes on the upper and lower edges of the strike zone will be called this year -- too many were called balls last year, according to the laser-guided QuesTec umpire information system.

Johnson asks Garcia if it is true that QuesTec allows a two-inch buffer zone on each side of the plate when grading umpires. Garcia acknowledges that it's true, and adds that if you include the three-inch width of the baseball, the 17-inch plate actually becomes a 27-inch plate to QuesTec.

There are grumbles in the back of the room.

"Schilling gets more."

"Pedro gets more."

Garcia moves on to beanballs. The quick warnings issued by umpires are designed to cut down on brawls. "And they have," he says. "We had only three last year. Myth: Once a warning is issued, my guy can't pitch inside. Fact: 75 percent of hit batters following a warning did not result in an ejection. So it's working."

"I thoroughly disagree!"

It is Batista, raising a loud objection.

"Last year I was given a warning for throwing a changeup in the dirt," he says angrily. "A changeup!"

Garcia admits umpires can make mistakes but reiterates that brawls are terrible for the game's image and the umpires will act aggressively to prevent them.

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