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?
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.
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.
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?
- 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. - 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.
Labels: MLB, television
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?
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?
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:
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.
Labels: antitrust, MLB, ticket pricing
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.
Labels: MLB, New Yankee Stadium
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.
Labels: collective bargaining, MLB, strikes and lockouts
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.
Labels: MLB, recession, ticket pricing
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?
Labels: MLB, ticket demand, ticket prices
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.
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.
Labels: marginal revenue product, MLB
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:
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:
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.
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.
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.
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.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.Checks are due by Jan. 31.
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.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.
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.
Labels: luxury tax, MLB
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.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.
...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.
Labels: labor markets, MLB
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.
Labels: MLB, pricing, stadium renovations
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.
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.
Labels: cycling, MLB, steroids, Tour de France
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).Also from Lewis' column: it's good to take an occasional day off from the razor, because the girls like stubble.
Healy, A., "Do Firms Have Short Memories? Evidence from Major League Baseball," Journal of Sports Economics (August 2008).
Labels: labor markets, MLB
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.”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:
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.”
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 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.
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.
Labels: horse racing, MLB, steroids
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:
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.
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.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:
"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.
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.
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.
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.
Labels: labor markets, MLB, NASCAR, NBA
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.
