Thursday, January 07, 2010

Andre Dawson, Collusion, and the Hall of Fame 

Andre Dawson was elected to Baseball's Hall of Fame yesterday. Those of us who watched him when he played with Montreal Expos really enjoyed watching him. And there is no doubt he was a VERY good player.

And yet, as many sabremetricians will surely point out, Dawson's performances probably contributed less to his teams' winning percentages than did the performances of Bert Blyleven or Tim Raines or even possibly Jack Morris (I really am having hard time understanding why Robbie Alomar received so many votes).

Let's face it. There is one important reason that Dawson was elected to the MLB Hall of Fame, and it is the same reason he won the National League's Most Valuable Player Award in 1987 despite there being other likely more suitable candidates. Leading up to the 1987 season, Dawson made it clear that because of his ailing knees, he no longer wanted to play on astroturf but with his free agency would seek a contract with a team that had a natural grass outfield. He was especially interested in signing with the Chicago Cubs, but this was 1986-87, and no one would sign him to a contract.... No one, despite his potential contributions to a team. 1987 was, it turned out, a year of collusion among MLB teams, and most free agents found no takers other than their original teams (at monopsonistic salaries).

To deal with this collusive situation in the 1987 MLB, Dawson essentially signed a blank contract, gave it to Dallas Green (then general manager of the Cubs) and told him to fill in the numbers. This gesture, plus his overall good performance that season, helped Dawson win the hearts of fans and sportswriters. And it was this gesture that put him over the top in the MVP balloting that year and in the Hall of Fame balloting this year.

Without that action, Andre Dawson would be another very good player just on the cusp of being elected into the Hall of Fame. With it, he became a hero to many who were disgusted by the collusive behaviour of the MLB owners.

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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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Saturday, April 11, 2009

Baseball Stadium Quirks 

From Frank Deford at Sports Illustrated:
Myself, speaking for students of baseball, I'm sorry, but in constructing some things, the trick is not to run away from nostalgia, but simply to monkey around with it and try to gussy it up a bit. Architecturally, baseball parks are like mousetraps. No one has found a way to build a better one than the Orioles did in 1992, when they gave Camden Yards to a grateful world. All of the 18 major league fields and scores of minor league parks built since then have been wise enough to follow that pretty model.

...People simply feel more affectionately about ballyards than they do other sports' stadiums and arenas. Madison Square Garden, for all its fame, is merely an address, not a home. And a place like Gillette Stadium may be a cathedral to New England Patriot fans, just as Old Trafford is to Manchester United fans, but linear football stadiums -- of both varieties -- and the cereal boxes that accommodate basketball and ice hockey are pretty much just so many efficient people containers. Ballyards are quirky and idiocyncratic, living things because the architecture is part and parcel of the outfield itself -- all the better that that's in utter counterpoint to the infield, that diamond of inviolate geometry.
Part of it is because in football, basketball, and hockey, the dimensions of the entire playing surface are standardized. Sure, you can paint your basketball courts all sorts of colors. You can paint your football field blue if you want. You can choose between grass, fieldturf, and Astroturf in football. You can put a pirate ship in the stands. But the playing dimensions are standardized, and that leaves no room for little nooks and crannies.

Baseball field dimensions, on the other hand, are not so much standardized. The dimensions of the diamond portion of the playing surface is standardized. There are 90 feet between the bases. The pitching rubber is 60 feet 6 inches from home plate. But the outfield and the foul territory? That’s libertarian, baby!

As economists might say, the outfield and foul territory characteristics are constrained choice variables. They can have virtually any quirk the team wants as long as the park as a whole fits into it’s geographic corner of the world. Got an old warehouse? No problem. Just build it into the park. Asymmetric outfield? Go for it! A flagpole in dead center field? You got it! You want foul territory big enough to land a jumbo jet? The customer is always right.

We sports economists may turn our noses up at public funding, but teams (and the architect firm HOK that has designed a vast amount of new facilities) have done a nice job incorporating all kinds of things from warehouses to hills to strange corners into the new ballparks.

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Friday, April 03, 2009

"What Moneyball Missed" 

Interesting piece by Adam Fleisher at the American.

The heart of the claim:
The only problem was that Lewis's explanation for the A s success was the same as Commissioner Selig's: the team was an aberration. Since most every other team looks at the market pretty much the same way, as Lewis explained, if every team tried to exploit these same inefficiencies, then no team could. The market would correct, and the most valuable players i.e. the players with the attributes most likely to produce wins would be bought by the wealthiest teams. The championship would be for sale again.

But it isn t. Moneyball missed something. That something is known as the reserve clause.
I don't think it matters much whether Lewis' book had an explicit discussion of the reserve clause and how that factored into the A's menu. Implicitly, of course, it's effects are described throughout the book, with the A's focus on young (underpaid) players, and in particular on the Giambi trade replacement of Giambi's talent, when he became eligible for free agency.

Fleisher's three key claims are that:
1) "Well-run teams" are exploiting the "reserve clause inefficiency."

2) This will create a "smoothing of salary distribution throughout players careers." (as in the Longoria contract, which supposedly locks him and the DRays together). Young players will not be as inexpensive and older players will not be as overpaid. Top free agents will become scarcer over time; their hometown teams have found a way to keep them.

3) "Payroll will matter less and less, management will matter more and more, and the game will stay competitive."
Regarding the first point, low-payroll teams have focused on trying to win with young, "underpaid" players for decades. The A's were unusually successful because of their particular mechanism for doing this. I disagree with the latter two points, and again, the Jason Giambi trade move from the A's to the Yanks is illustrative: the best players are worth more in Yankee stadium than elsewhere. Absent additional league rules designed to inhibit the flow of talent, the market will allocate players to where they are most highly valued.

In short, this is an interesting piece, but at several critical junctures the economics are unsound. Regardless, it's a piece worth discussing over a beer or two.

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Thursday, March 26, 2009

Spring Training & Economic Impact 

Here's a great piece by Charles Fountain, focused on the Grapefruit League. One highlight is the exchange of verbal blows between USF's Phil Porter and a local promoter. Porter wins on points, as the promoter trots out the seeing is believing fallacy, which always overstates the impact.

Here is where Porter nails it:
The only way to be certain of its real impact, Porter believes, is to look at what happens when spring training goes away. “Wait until somebody moves,” he says. “These are the things that provide natural tests for whether or not spring training provides the economic kick it is said to provide. If a team moves out of Winter Haven, say, what happens to Winter Haven? If next year it’s business as always with the same sort of sales and income and employment, then you gotta conclude that the presence of the team didn’t add anything to the community, because its absence didn’t take anything away.”

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Tuesday, November 25, 2008

Amateur Baseball Players and International "Trade" 

The Japanese called it a gentlemen's agreement. It looks more like collusion to me, and it's good to see the competition for good amateurs from any country.

Many Japanese baseball officials are outraged that United States teams are courting Tazawa, a hard-throwing right-handed pitcher, because they insist it is long-established practice for amateurs like him to be strictly off limits to major league clubs. Even some American general managers, including the YankeesBrian Cashman, agree.

Major League Baseball officials maintain that the letter of their protocol agreement with their Japanese counterparts, Nippon Professional Baseball, does not forbid either league from courting amateur talent from the other’s nation. When one Japanese representative characterized the rule as a gentlemen’s agreement during a meeting in New York, he was angrily rebutted by a Major League Baseball official, according to two attendees.

The Tazawa dispute extends beyond one pitching phenom and an interpretation of honor. The Japanese major leagues have already seen established stars leave for American clubs, and amateurs following Tazawa’s path away from those leagues could further hurt the leagues’ long-term viability.

But sports talent is an increasingly free-flowing market — notably demonstrated this summer when Brandon Jennings, one of the United States’ top high school basketball players, signed to play professionally in Italy for $1.2 million rather than play at a college in the United States.

It also is an illustration of the problem with prisoner's dilemma-styled cartelization: the incentive to compete tears away at the fabric of collusion.

Via Al Roth of Market Design

Cross-posted at Market Power

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Friday, September 19, 2008

Economic Meltdown in DC 

It's not happening at the Treasury Department, or at the Board of Governors of the Federal Reserve. According to today's Washington Post, it's happening down on the waterfront, at the new Nationals Park. Academic research indicates that new sports facilities typically draw gobs of fans for the first 4-5 years. There are a number of studies documenting this "novelty" effect in various sports, but for some reason I'm fond of this one.

But something different is happening on the banks of the Anacostia River this season. The Nationals have put an astonishingly bad team on the field, and despite having a shiny, new, publicly financed $600 million ballpark, they are averaging under 30,000 a night (19th best in MLB). The bad news is that DC is financing the principal and interest payments on the bonds used to finance the construction of this new stadium based, in part, on taxes collected at the stadium. DC expected to collect over $16 million in tax revenues at the stadium this year, but it looks like the actual figure will be closer to $13.5 million. Worse, the Nat's owners still have not paid $3.5 million in rent that was due at the beginning of the season because they claim that the stadium is still not finished.

I have argued many times that the claimed economic benefits in "economic impact studies" are forecasts, not gurantees, and that the people who generate those "studies" need to state explicitly that they are forecasting these numbers and provide decision makers with the appropriate information for making informed decisions. Like confidence bounds on their forecasts, or margins of error. But the subsidy seekers want everyone to believe that their economic impact estimates are hard facts, not forecasts of future events. The DC government is learning this lesson the hard way.

In another shocking development, the projected ancillary business and retail development in the neighborhood surrounding the new Nationals Park is also not appearing. I am shocked! Shocked, I say!

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Friday, September 12, 2008

Clutch, or not? 

The numbers guy at the WSJ examines the case of "clutch" hitting. A-Rod "lack of clutch" takes center stage.

Jahn Hakes and I looked pretty carefully for clutch effects several years ago. We were excited since newly available retrosheet data offered new ways of looking at the issue, including the "leverage" effects (changes in probability) of different hits at different times. We found nothing significant. Zip, zilch, nada. And we tried hard. We tried hard because I think real factors (psychological makeup, physical condition) have time-varying effects and thus contribute to some streaks. But randomness is so dominant in baseball that it apparently conjures up the bulk of them.

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Friday, July 25, 2008

Downsizing 

At Baseball Prospectus, Nate Silver provides a thorough analysis of the downsizing of Major League Baseball stadiums in recent years. (Silver's piece is free until 7/27, gated thereafter). I'm struck by two things. New stadia have almost 10,00 fewer seats, a considerable decline. Yet the trend in the English Premier League is the reverse - the top clubs adding a significant number of seats to their stadia. Second, Silver mentions an problem at Wrigley Field which strikes me as moderately serious: "Wrigley Field’s bathrooms can require an inning-long trip once everyone has had their fill of Old Style, and it can take 15-20 minutes to exit the ballpark from the upper deck." In light of yesterday's post on unitized ownership of the Cubs and Wrigley, if this issue is as serious as Silver makes it sound, why hasn't ownership addressed it? (On second thought, I suppose waiting for the subsidy solution applies here too.)

Here the reasons offered by Silver [numbered by me] for why downsizing makes sense in MLB:
1) Firstly, although the number of seats has few theoretical constraints—there are soccer stadiums in Latin America and college football stadiums in the United States whose capacities exceed 100,000—the number of desirable seats is limited. Baseball, more so than football or soccer, is a game that loses a lot when viewed at a significant distance, and particularly when the pitcher-batter confrontation cannot be watched adequately. Dodger Stadium is probably fairly close to the theoretical maximum of "good" baseball seats at 56,000, and more modern facilities will eat into that number by using space on luxury boxes and the like.

2) The availability of cheaply-priced seats might cannibalize one’s market for premium seats, as fans may purchase the cheapest seats available and attempt to 'upgrade' them later. Although such strategies can be combated by hiring ushers or creating firewalls between different parts of the stadium, this may make the ballpark experience less pleasant for fans going to and from their legitimately-purchased seats.

3) Teams are increasingly able to reap the benefits of price discrimination by introducing tiered pricing schemes, and by participating in the resale market through partners like StubHub. Therefore, they can recoup some of the loss stemming from excess demand by charging higher effective ticket prices, without having to bear the negative public relations impact of higher face values.

4) There are some marginal costs associated with each additional fan that attends the game, such as security and janitorial services. The price of such services is trivial in comparison to premium seats that are booked at $50 or $100 each, but become more tangible as compared to the cheap seats.

5) In addition, higher seating capacities can create additional congestion both in and around the ballpark, making the experience less pleasurable for all those that attend. Indeed, some existing stadiums are not especially well equipped to handle a capacity crowd. Wrigley Field’s bathrooms can require an inning-long trip once everyone has had their fill of Old Style, and it can take 15-20 minutes to exit the ballpark from the upper deck.

6) Larger seating capacities may require a larger ballpark footprint, and therefore higher rents or land-purchase prices.

7) The easiest place to add seats is usually in the outfield, but this may impair aesthetics by blocking views of city skylines or natural landmarks.

8) Stadiums with empty seats look less attractive on television—the importance of which should not be understated.

9) In addition, stadiums with empty seats may create a less intimate experience for people at the ballpark, thereby potentially reducing demand. Baseball tickets may be what is known as a "mob good", in which there are mutually-reinforcing, positive externalities conveyed by crowd behavior. To limit the number of seats is arguably to select out the most intense and passionate fans, who are (within certain boundaries) good fans to have sitting around you.

10) Limiting the supply of tickets may create a greater endowment effect (basically, a sense of ownership) for those fans who do hold seats, thereby increasing the amount of repeat business and encouraging fans to purchase season tickets.

After having articulated all of this, you might conclude that I think teams like the Mets are making the right economic decision by substantially reducing their seating capacities, but I do not. I think it may be the right near-term decision, but I do not know that it is the right long-run decision. By limiting their number of seats, a large fraction of which will be occupied by season ticket holders, corporate clients, or fans that are wealthy enough to pay above-face prices to scalpers and brokers, teams risk shutting out a large fraction of their fan bases from the ballpark experience.
Reasons 4,5, and 6 make the most sense to me, particularly in light of the move back towards the inner city, where land prices are higher. I'd not thought about the issue of spending resources to serve and monitor $5 seats, when more lavish attention to the $50 seats might pay higher dividends. I'm with Silver on the future costs of high current prices though. There is so much televised sport now, that I'm not confident that baseball (or basketball, for that matter) on television will generate the fan base like it did when there were only three channels on the dial.

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Tuesday, March 25, 2008

Recession and ticket demand 

Are baseball fans spooked by the recession talk? The early literature on ticket demand suggested that attendance was not affected much by business cycle swings. Let's take a look at this year's spring training attendance:


Cactus League
Despite an economy as shaky as a rookie pitcher's first big-league outing, Cactus League baseball fans are showing up in Arizona on a record pace.

At the season's midpoint, about 550,000 fans have attended 92 games, up nearly 2 percent from the same time last year, said J.P. de la Montaigne, president of the Cactus League Association.
2007 set an attendance record, so a 2% increase suggests baseball demand is holding up well.

The high price of gasoline would seem to make vacation travel to Florida vulnerable, but the Grapefruit League numbers are not off very much:

Grapefruit League:
Through 173 games, following the slate of 10 games on Sunday, March 16, the attendance total stands at 1,036,797.
That's 6,000 fans per game, down 200 from last year's record-breaking total. A 3% decline, which might be due to a change in relative prices (gas) and not an aggregate economy-wide swoon.

As for the regular season, it is clearly too early to tell. But the swoon on Wall Street doesn't seem to be affecting Yankee prices or demand very much. From Wallace Matthews:
As of yesterday, 42 of the 50 luxury suites in the new Yankee Stadium have been sold, at up to $800,000 each. Sixty percent of the park, or more than 30,000 seats, are classified as "premium" seats, priced between $250 and $1,000 each, and right now you couldn't buy one if you knew the mayor.
The same goes for tickets costing $2,500 at the new ballpark, for games that won't be played until 2009. "[T]he choicest seats in their new ballpark, right behind home plate, plus waiter services, free parking, free food and access to three private clubs." All 1,800 are sold. Russell Goldman has more on the transformation of Yankee tickets into luxury goods.

The bottom line: if you are looking for signs of recession, perhaps you should look somewhere other than the ballpark.

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Friday, March 14, 2008

Sports and the Economy 

Some say we're in recession, some say we're not (yet anyway). Meanwhile, the Cactus League is doing fine, thank you.
This season, Cactus League visitors are on track to eclipse the more than 1.27 million record fans in 2005, said Robert Brinton, Cactus League Association vice president.

He said that sports-related tourism seems more resistant to the ebbs of flows of the economy than other travel.

An increase in more locals attending games could also account for the strong turnout through the first half of the Cactus League.

The Chicago Cubs in Mesa, the perennial Cactus League leader at the box office, could set a record for average attendance, Brinton said.

The Cubs have drawn almost 11,000 fans per game the past two seasons.
Early evidence (i.e. dated papers that could be re-examined) indicates that attendance at sporting events is resilient to economic downturns. Recession or not, this story is consistent with that conclusion.

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Wednesday, January 30, 2008

Arduous Arbitration 

It's getting to be arbitration time in baseball. Each year a set of players and teams negotiate under the threat that a third party (a panel of three arbitrators) will render a decision on the player's salary if a negotiated settlement cannot be reached. Even though a given case is not likely to make it all the way to the arbitration panel, the threat of arbitration drives a given player and his team, when they negotiate, to consider what the panel may decide.

Arbitration, first offered to the players by the teams back in the early 1970's as a way of appeasing the union in its calls for free agency, has never been popular with teams. This article by Fred Claire at MLB.com partly explains why.

One reason it is unpopular is because of the nature of the hearing process. For the players, they try to maximize their value to their team in the eyes of the arbitration panel: a sort of "how great I art" argument. For the teams, they try to minimize the player's value: basically arguing "how great thou aren't." This is contentious.

Another reason is that simply by becoming eligible for arbitration, players see a jump in their salaries and teams are bound to accept these salaries.

Here's what Bud Selig (in 1992 PM) had to say when asked by the New York Times about the economics of baseball: "In the last 15 to 18 months, talking to every club, asking 'What do you hate most about the system?' The bottom line is if they had their choice, without a doubt, it's salary arbitration. Free agency at least you can elect to do, but in salary arbitration you're somewhat of a prisoner of what other people have done."

Claire points to the tie between the arbitration system and free agency as one of the problems.

Baseball's labor market consists of three tiers of players: 1. reserved players who have less than three years of service* are, basically, the property of their teams; 2. arbitration-eligibles - players who have at least three years of service are also the property of their teams. But they can have their salaries determined through arbitration; 3. free agents, players who are not the property of their teams and are free to sign with whoever wants to sign them.

The collective bargaining agreement (CBA) restricts what arbitration panels can consider when rendering decisions (Article VI, Section F). Among those considerations are what comparable baseball players have earned as salaries. Because some free agents are comparable to arbitration-eligibles, their salaries, somewhat filtered down and averaged out, become part of the consideration (Dan Marburger's 2004 Economic Inquiry paper on arbitrator compromise provides econometric evidence of this). That's one reason why players see a jump in their salaries when they first become eligible.

But reading the article, the rhetoric and one-sidedness reminded me that this article comes from MLB.com, the official site of MLB and, therefore, a mouthpiece of the teams. So Claire doesn't discuss another reason for why the average player sees a nice raise just for becoming eligible: reserved players are in a monopsonistic labor market and, thus, earn salaries below their marginal values to their respective teams.

You can argue that part of the difference between salaries and marginal value can be considered a return on investment in minor league training. You can also argue that part of the difference goes to pure monopsony rent. The point is that reserved players are paid less than their marginal value and arbitrated players are paid closer to their marginal value because arbitration mimics, albeit imperfectly, a competitive labor market. Thus the jump in salaries by becoming eligible.

*A set of players with two years of service are also eligible for arbitration.

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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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Thursday, November 15, 2007

A-Rod Discovers the "Yankee Premium" 

Three weeks ago Scott Boras stole the spotlight from the (flagging) World Series by announcing A-Rod's intention to seek a new employer. Breaking news last night and today: A-Rod returns to New York for roughly the same amount.

View #1) Boras/A-Rod were gaming the Yanks all along. If so, they aren't good game players.

View # 2) Offered by some guy on Dan Patrick's Fox Sports Radio show today -- A-Rod's followed his heart back to NY. A-Rod and emotion? Maybe the guy was Scott Boras.

View #3) Expressed by Dan Patrick -- A-Rod and Boras tested the market and quickly figured out that no team would be offering anything near the Yanks. Bingo!

View #3 fits with my post on the Yankee Premium (June 2005). Yankee players near their prime can't expect to receive anything near their Yankee salary unless they find a totally insane owner. My premise is that the Yankees' huge revenue advantage over the rest of the league does not all end up in the Steinbrenners' pockets. Instead, players effectively capture large shares of this surplus ("rent"). One implication is that Yankee payroll figures hugely overstate the competitive abilities of their players. I did a quick comparison to similar players and estimated that among starters and top pitchers, the "Premium" doubled what the players skills were valued in the rest the market value.

While the idea and especially my crude methods for estimating the premium generated the most comments for any of my Sports Economist posts, recent Yankee signings offer strong confirmation of the basic idea The 36 year old Jorge Posada signed a deal worth $13 mil per year for 4 years. A 38 year old Mariano Rivera signed for an astonishing $15 million per year for 3 years, up from his prior $10 million. That's a lot for a guy pitching 70 innings per year. Maybe the Yankees made poor decisions on the personnel, and maybe not. In either case, the amounts that they forked vastly exceed the market values of comparable (or even better) players. Top flight catchers with strong offensive numbers can be purchased in the $4-$10 million range. Rivera's salary breaks down to about $70,000 per out. By comparison, Johan Santana made about $12,000 per out in 2006 and $20,000 per out in 2007 while Josh Beckett was around $12,000 this year. Yet, if Santana ends up with NY or anyone else for that matter, their salary will jump up to Yankee levels.

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Tuesday, May 22, 2007

Dropping the Ball 

That's the title of Dave Winfield's new book, in which he examines the problems of Major League Baseball and offers some solutions. He discusses the book with Jamie Reno at Newsweek, in which one of the big questions is the decline of interest in baseball among African Americans:
Reno: You attribute African-Americans’ fading interest in baseball to a number of economic and cultural factors, which you refer to as the Three C's: cost, continuity and competition. Can you briefly explain that?

Winfield: There are scores of reasons why African-Americans have set the sport aside to a large extent—and I’m talking about fans as well as players. But most of these reasons fall under these three categories. I’ll start with competition. When I grew up, baseball was No. 1. There was a glove in everyone’s crib. No one thought football would have such a huge impact on society. Young people didn’t aspire to be NBA players when [Bob] Cousy and [Bill] Russell were winning championships. These sports have done a good job marketing players and their sport. As for cost, baseball was free when I was a kid—in every park and “rec,” every school system. Now it costs money. And to be good at it, parents have to pay for training, for travel, etc. Can a single parent in an urban setting on a fixed income pay for that? No. And then there’s continuity. Used to be, baseball was a constant from age 8 to 18. There’s a disconnect now in the neighborhoods.
Winfield proposes a program of targeted marketing to bring black youth to the ballpark, and a system of "Jackie Robinson Grants" (funded by MLB, I presume) to get inner city kids playing the game. The grants would pay teenagers to compete in baseball leagues. This would offset the monetary barrier faced by poor urban blacks, and the attraction posed by the differential in scholarship numbers between NCAA football and baseball.

Winfield's grant program might work, but it's is sure to be expensive. What we are observing now is an equilibrium that has sunk deep roots over several decades. It stems from economic and social networking forces, as Winfield points out, but these are not easy to dislodge.

One of Winfield's interesting observations relates to the "long tail" phenomenon:
Baseball used to be like a vast ocean, it was broad, deep and connected to everything. Today it isn’t like that. There are many big lakes, rivers, tributaries, ponds, streams, you name it, but it’s not all connected. But if you go to a Southeastern Conference baseball game, look at the ballpark, look at the enthusiasm, Go to Omaha and check out the College World Series. Go to Williamsport for the Little League World Series. There are a lot of places where baseball is still very strong, in big cities and small towns.
Having sports on television 24/7 changes the dynamic from what was in place a century ago, when baseball was king. Every sport has a niche in the world of global satellite television. The "vast ocean" of a century ago is not attainable in a long tail world.

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Wednesday, February 21, 2007

More on luxury suites 

From Danny O'Neil in the Seattle Times:
Safeco Field opened in 1999 with 67 luxury suites and subsequently added another suite on the press-box level. For the first few years, 98 to 99 percent of the suites were filled, said Aylward. He said last year's percentage was in the mid- to upper-80s.

Aylward then talked to someone with the Detroit Tigers who mentioned the team's success with a new type of premium seating.

"We started talking about how they had discovered a new niche market that people really seemed to spark to," Aylward said.

The 140 seats in the All-Star Club will sell for $100-$125. Tickets are sold in packages of 10, 20, 40 and 81 games. Single-game suites, which include 16 seats, range from $2,400 to $4,000.

The All-Star Club came out of a realization that there was a consumer need that was not being met.

"There is this bucket of people out there that we didn't have a product to offer," Aylward said. "So any business is going to sit there and say, 'Let's create something for them.' "

The All-Star Club has three rows of assigned seating in an open-air terrace and then an indoor dining area and complimentary buffet. Beer, wine and spirits will be sold at a cash bar. Plasma televisions will be located throughout the indoor dining area.

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Friday, February 16, 2007

The Baseball Economist 

J.C. Bradbury's new book is reviewed in the Science Journal column of today's WSJ (free article) . Sharon Begley writes:
With pitchers and catchers reporting to the grapefruit and cactus leagues this week, it's time for baseball fans to dust off the equipment they, too, need for the 2007 season. I am referring, of course, to calculators, statistics, economics and multiple regression analysis, which calculates how much one factor (such as market size) contributes to some outcome (team wins).

In the hands of Prof. Bradbury, of Kennesaw State University, Georgia, these techniques lead to counterintuitive results sure to spark a bar fight or two. His coming book "The Baseball Economist: The Real Game Exposed," takes aim at all sorts of baseball lore to separate fact from myth.
I've read the draft of J.C.'s book and it is superb. It is scheduled to ship in March, and you can pre-order here. In the meantime, read Sharon's excellent column, and visit J.C.'s blog, Sabernomics.

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