The Sports Economist

The Sports Economist:


High salaries for workers and rising prices for the product (ticket prices are reportedly up 6.3 per cent) reflect a healthy business, with high and growing demand. They are problems any business would like to have

unless, like hockey, you don’t see the revenue curve level off fast enough, and you spend money you don’t have. Rising revenues can flatten, and unless you see it coming and be ready for it, you can outspend your budget before you notice, and then you’re in trouble. Adn the inertia of increasing salaries is a lot harder to deal with than a fan’s inertia of buying tickets in the face of increasing prices. Stopping the salary train is very difficult.

On top of thisserious financial disparity continues to exist betweeen the haves (Yankees, Red Sox, Braves) and the have-nots (Royals, A’s) — a ticking time bomb that is just looking for an excuse to explode, and one the Billy Beane’s of the world can’t solve, merely continue to defer. Sooner or later, he’s going to trip, or sneeze, or blink.

before declaring the sport healthy and happy, I’d want to know where the advance ticket sale increase came from: a normally well-attended team leaving a down cycle? new ballparks generating temporary demand where none existed? some cinderella team geting a burst of support it won’t sustain into future years? That number may well be less than it seems to be at first glance.

And any time I see ticket prices rising above inflation, I worry. I see that as mortgaging today’s salaries against future dollars, because you are sending tickets closer to that nebulous point where fans declare “too expensive” and start looking for reason to stop buying, or buy fewer. you can cotinue to hope to drive demand beyond that point and defer it, but as long as tickets prices are growing faster than the salaries that pay them, you’re at risk of some event changing fans perceptions and redefining that line downward suddenly.

this isn’t to say things aren’t going well for baseball — they clearly are (and even I, after years of more or less ignoring baseball, have been following it a bit again, and have even — gasp — bought tickets to a game. for laurie. well, mostly (it’s A’s/Mariners, and she’s become a big M’s fan). So if even I’ve gotten interested again, they’re doing many things right.

but if you look behind the good numbers, you see a sport that really ought to be doing even better — IMHO, salaries are escalating too fast, driving ticket prices beyond inflation, and the revenue inequities create an unstable franchise environment potential — and gee, they had to move a team, and it took how long to find a new home? for the first time in how many years? (hello, seattle pilots!). but unlike hockey, they didn’t have the teams go bankrupt or owners go to jail….

Not trying to rain on baseball’s parade: just trying to remind us that beyond the good numbers are many challenges and problems yet to be solved in major league baseball. Steroids is almost a non-starter, except the union futzed around on it so long, they allowed it to become a problem that never should have existed. but it’s also one that the average fan just isn’t going to care about, and will soon be relegated to the hard-cores looking for an excuse to complain…

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