As a graduate student in the mid-1990s, I began work on a project on the economics of baseball for a research methods class. In researching the existing literature, I read Andrew Zimbalist’s 1994 classic Baseball and Billions, a detailed examination of the American baseball industry from the eyes of an economist, a book which I refer to this day.
Although it is the world’s game, soccer does not have the appeal in the United States that it has in the rest of the world. Baseball, on the other hand, has limited appeal outside the US. Yet soccer and baseball share common origins, and developed roughly parallel to one another in time. A comparative study of the economic factors shaping the two sports has been begging for consideration for some time. Such an analysis has just been delivered by Zimbalist and one of Europe’sÂ’s top sports economists, Stefan Szymanski, in the new book National Pastime: How Americans Play Baseball and the Rest of the World Plays Soccer. This post summarizes my lengthier review of this book (which for space reasons is located in the Essays section of The Sports Economist).
Szymanski and Zimbalist describe the origins of the sports’ organizational structure and their development to the present day. As one has come to expect from the authors, the book is logically sound and loaded with facts and illustrative anecdotes. The prose steers clear of professional jargon while remaining true to the authors’ training in economics. The result is an entertaining and informative book. It will appeal to lay readers interested in the common origins and different growth paths of soccer and baseball, as well as professionally-trained economists interested in the economics of sports.
Both sports owe their organizational roots to cricket, England’sÂ’s aristocratic game of the 18th century. Like cricket, both baseball and soccer were developed as gentlemen’s games but in contrast, they had commercial appeal. SoccerÂ’s growth into the world’s sport is tied to the economic and political reach of 19th century England. While America’s global reach was several decades away when baseball started growing, England was the dominant global power when soccer was developed. In addition, early pioneers in each sport faced different motivations. In the United States, baseball was organized around a business model with profit maximization as the primary goal of owners. In England, soccer was organized more socially, with social participation as a goal. In many ways, the development of these sports mirrored social and business attitudes in the two countries.
The authors also examine many of the familiar subjects in sports economics: the demand for competition and team finances; the economic motivation of team owners in both sports; and the development of labor markets in each sport (both deriving from their roots as gentleman’Â’s games). The authors also examine competitive balance issues in both sports.
The authors conclude the book by describing what they view as the biggest challenge to each sport and provide prescriptions to help cure what ails each. Interestingly, the authors suggest that each sport can learn from the other to help it face its challenges.
Soccer faces a relatively short-term problem – a financial crisis due to four primary factors:1.the strict adherence by league governing bodies to national leagues which blunts the incentive to generate competition between the biggest teams between countries;2.the lack of a profit motive which helps to make soccer teams poor financial investments;3.the enormous incentives to invest in playing talent related to the promotion and relegation system used in soccer leagues;4.The reliance on past public assistance as crutches for teams in financial difficulty. To help soccer face its challenge, the authors suggest that soccer leagues adopt some qualities of the business model used in baseball to encourage more entrepreneurship and risk-taking.
Baseball’s problem is more long-term. When the pioneers of baseball tried to take the game internationally, their main focus was on building an immediate audience instead of encouraging participation in the sport. Domestically, baseball had very little competition in the sporting world, owing in part to its antitrust exemption. Today, however, youngsters have a wide variety of choices of sports to play. Unfortunately for baseball, kids are more likely to follow and play basketball, football, and soccer than baseball. While attendance levels at baseball games are currently strong, what will they be when today’Â’s youngsters become tomorrow’Â’s adults? Thus, while the present financial situation is positive, growth prospects for baseball are not nearly as bright.
Szymanski and Zimbalist have written a readable and well-researched book that touches on most of the important topics in the economics of sports teams and leagues. One topic that did not receive much attention was a comparison of stadium investments between the two sports. The authors argue that baseball teams’Â’ local monopoly positions have allowed many of them to receive generous subsidies for stadiums. Soccer teams, on the other hand, lack such a monopoly position for soccer clubs. In addition, the promotion and relegation system used in soccer leagues provides an incentive to teams to invest more in playing talent than in stadiums (relative to baseball teams). This has led to underinvestment in soccer stadiums which may have led to some fatal incidents at soccer stadiums. Unfortunately, the authors do not provide much of an examination of the stadium issues in the two sports. Given the importance of this issue, especially in the United States, a more thorough treatment of the subject would have been very interesting and would have fit in very well with the rest of the book.
The analysis of the uncertainty of outcome and competitive balance, while well-written and researched, is a bit incomplete. The authors examine two types of competitive balance: the competitive balance within a season (the dispersion of team winning percent within a league) and the competitive balance between seasons (how are championships spread among the various teams). One issue that did not receive attention in this discussion is the competitive balance issue which is the root of all uncertainty of outcome, namely the uncertainty of the outcome of individual matches. This omission is not too troubling given the context of the book. Baseball teams play a 162-game schedule while soccer teams generally play between 30 and 40 matches. But because match uncertainty is the root of within-season and between-season uncertainty, it deserved a bit more attention than it received.
The criticisms I have of this book are minor, as one might expect about a book written by two of the best sports economists in the business. Each chapter is organized so that there are separate sections on baseball and soccer. While the individual sections do not break much ground by themselves, having a discussion of one sport followed by a discussion of the other sport improves the overall flow of the book. If you are interested in the historical and economic parallels between these sports, this book is a solid source of information, and (particularly if you’ve read this far) a recommended addition to your library.
