Value Added in Major League Baseball
Courtney Birkins
Macroeconomics
Dr. Clark
April 2014
Throughout the years sports have become more popular in our society. The average American watches at least one of the major sports if not more, but how do these professional sports affect our economy? Many believe that they can bring more profit and jobs to an economy, but is that really the case, or do taxpayers spend a lot of money for a sports team that does not draw in the revenue it is suppose to?
According to Siegfried and Zimbalist (2000) there were 46 major league stadiums and arenas built and renovated for the four major professional sports; Baseball, Basketball, Football and Hockey. Along with those being built, they added jobs and increased revenue but not without spending money first. In specific, Major League and Minor League baseball have several perks in regards to value added.
When a new Minor League Stadium is under construction you can have a large impact of up to $5,812,756 in regional sales (Colcough, Daellenbach, and Sherony, 1994). Construction brings the opportunity for a boom in the job market. Once construction is done, it can leave some unemployment for those who were once employed to construct the stadium.
Operating a new stadium would bring new jobs and more revenue. Stadium revenue would consist of ticket sales, concessions, and merchandise. In 1994 ticket prices in the Midwest League ranged between $2.00 to $5.00, so that means that revenue from those tickets would range from $0.61 to $4.00 (Colcough, Daellenbach, and Sherony, 1994).
A loss to value added is when you have two professional sports team within a good driving distance of each other. “Incumbent owners have made it clear...
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... are also times such as the Major League expansion and team relocation that has made both teams lose money and profit for the city.
References
Baade, R. A., Baumann, R., & Matheson, V. A. (2008). Selling the game: Estimating the economic impact of professional sports through taxable sales. Southern Economic Journal, , 794-810.
Colclough, W. G., Daellenbach, L. A., & Sherony, K. R. (1994). Estimating the economic impact of a minor league baseball stadium. Managerial and Decision Economics, 15(5), 497-502.
Siegfried, J., & Zimbalist, A. (2000). The economics of sports facilities and their communities. The Journal of Economic Perspectives, , 95-114.
Winfree * , Jason A., McCluskey, J. J., Mittelhammer, R. C., & Fort, R. (2004). Location and attendance in major league baseball. Applied Economics, 36(19), 2117-2124. doi:10.1080/0003684042000287664
Ultimately, there are three exceptionally important criteria for deciding on good candidate for an expansion team. The first criterion is that the stadium must be controlled or owned by the baseball team. The stadium is a crucial aspect because most of the team’s revenue is generated in relation to the stadium. This stadium revenue comprises of ticket sales, parking, merchandise and concessions. Thus, without a stadium, the team will not be able to generate a stable source of revenue. The second criterion is that local ownership must have strong roots within the community. Without ties to the community, fan attendance could decrease. This is because fans could eventually perceive that the owner(s)’s only goal for the MLB franchise was to be profitable. The third criterion is the city must have long-term political support in the community. It is vital to have political support in order to gain financial support throughout the team’s years of existence, especially in tax payer monies. Particularly, this is significant when the team experiences issues or fights that involve the stadium and the land around the stadium. If there is a lack of political support, the expansion teams will not be able to obtain enough for money for stadium renovations, repairs, or to build new stadiums for the same team within the same city. This circumstance was apparent when the New York Yankees used tax revenue generated by New York City to fund the building of their brand new stadium for the 2009 season. Therefore, expansion committees believe it is necessary to confirm that the prospective cities will have enough political support because this political factor will help stabilize and financially support the prosp...
The current trend in baseball park construction is a retro design, reminiscent of the early years, combined with modern technology. This trend, dubbed “The Construction Era” by Frank Deford of Sports Illustrated, is prominent in three new American League parks: Oriole Park at Camden Yards, Jacobs Field, and The Ballpark at Arlington. The current idea for ballpark construction is to locate the retro style parks in the heart of urban areas. The whole movement was initiated by the construction of Oriole Park at Camden Yards, and it’s radical new design concept.
(Bradbury). For some, it’s hard not to root for the lower paid teams. If the big money teams, like Goliath, are always supposed to win, it’s hard not cheer for David. This paper will discuss the effects of payroll budgets on the percentage of wins for the 30 Major League Baseball teams of 2007. There’s 30 major league baseball teams divided into two divisions.
B. The owners claim that it would not be profitable to keep playing baseball in Montreal and Minnesota.
However, if the current rules remain in place and baseball continues without a salary cap, the only hope a small market team may have is to fend for themselves on the big market with financially superior teams. This becomes an exceedingly harder task when one team can afford the salary of two top players while those contracts are equal to the entire payroll of another team’s entire roster. Therefore, the question remains should baseball implement a salary cap, and if they do, how would it come into play. When asking the question regarding the salary cap, four supporting ideas arise for either the implementation of a salary cap or keeping it nonexistent.
Under the protection of Major League Baseball’s (“MLB”) longtime antitrust exemption, Minor League Baseball (“MiLB”) has continuously redefined and reshaped itself according to Baseball’s overall needs. But while MLB salaries have increased dramatically since the MLB reserve clause was broken in 1975, the salaries of minor league players have not followed suit.
Baseball remains today one of America’s most popular sports, and furthermore, baseball is one of America’s most successful forms of entertainment. As a result, Baseball is an economic being of its own. However, the sustainability of any professional sport organization depends directly on its economic capabilities. For example, in Baseball, all revenue is a product of the fans reaction to ticket prices, advertisements, television contracts, etc. During the devastating Great Depression in 1929, the fans of baseball experienced fiscal suffering. The appeal of baseball declined as more and more people were trying to make enough money to live. There was a significant drop in attention, attendance, and enjoyment. Although baseball’s vitality might have seemed threatened by the overwhelming Great Depression, the baseball community modernized their sport by implementing new changes that resulted in the game’s survival.
Financial aspects and profitability of college athletic programs is one of the most important arguments involved in this controversy. A group of people expresses that college athletic programs are over emphasized. The point they show on the first hand, is that athletic programs are too expensive for community colleges and small universities. Besides, statistics prove that financial aspects of college athletic programs are extremely questionable. It is true that maintenance, and facility costs for athletic programs are significantly high in comparison to academic programs. Therefore, Denhart, Villwock, and Vedder argue that athletic programs drag money away from important academics programs and degrade their quality. According to them, median expenditures per athlete in Football Bowl Subdivision were $65,800 in 2006. And it has shown a 15.6 percent median expenditure increase fro...
Mermal, Allison. "A Positions Against Public Funding of Professional Sports Stadiums." At What Cost. Aug, 5 1998. Available WWW: http://www.macalester.edu/~communic/course_projects/am.html
There have been many studies in the economics literature on factors that influence the consumption of sports. It is generally represented by the attendance at sporting events. Economic models have been widely applied to analyze the factors that determine spectator attendance, and this method has been applied to various sports.
In Major League Baseball, stadiums can affect the game dramatically by the size and by the way the dirt is laid out and how the weather is as well. The baseball teams and players can be affected by this in their major life physically and mentally. Major League Baseball is a prominent organization in our daily life. The game is very important for most people. The game is a lifestyle to people as well. Baseball has changed over the years. For instance, Pete Palmer states, “The way baseball is playing right now is completely different from the past” (Palmer, summary, 2014). A very helping part of baseball are baseball stadiums. For example, ballparks of america says, “... ballparks are amazing, they help us play” (ballparks of america, summary,
Sports are one of the most profitable industries in the world. Everyone wants to get their hands on a piece of the action. Those individuals and industries that spend hundreds of millions of dollars on these sports teams are hoping to make a profit, but it may be an indirect profit. It could be a profit for the sports club, or it could be a promotion for another organization (i.e. Rupert Murdoch, FOX). The economics involved with sports have drastically changed over the last ten years.
Privet research firms have done studies for professional sports franchises to see if moving their franchise is more profitable than their current location. Currently three of the six Canadian markets are more profitable than the open locations in the United States (Dryden 2). A study done by J.C.H. Jones and D.G. Ferguson has come to the conclusion that the quality of a location directly affects a teams profitability. Also take into the consideration that the quality of a location also impact the quality of the athletic talent.
The largest home winning percentage happens in college basketball at 69.1% and the smallest home winning percentage is in Major League Baseball at 54.1%. What the authors found out was that the travel that the visiting teams have to go through to get to their games had no effect on their play such as a team from Los Angles traveling to Boston didn’t affect the LA team at all. This is the case because most teams travel a few days in advance of the game so they can get acclimated to the location. Also, the stadium design seemed to have no effect on the visiting players. For example the unique design of Fenway Park with the Green Monster does not give the Red Sox an advantage, since they play with it all the time, or give visiting teams a disadvantage, since they play at Fenway Park only a few times each year. The other conventional wisdom that most people would think of when discussing home field advantage is that fan noise has a huge impact on the players, but when you look at the stats this is not the case. The fan noise has little to no effect on the players, but the referees are a different story. The referees or umpires tended to favor the home team in their calls especially during
While debating where we should host the 2028 Summer Olympic Games there were a lot to take into consideration. Some areas we had to consider, the population, demographics, finance, stadium access, transportation and reasons why we want LA to hold the Olympic Games. We have decided The Los Angeles Memorial Coliseum would be our main stadium while it can hold 93,607 people and there are other stadiums close by where we can hold smaller events such as the Staples Center, Dodger Stadium, and Rose Bowl Stadium which holds 92,542 people. These stadiums have been established for many years now are are still being used today which concluded they will not be white elephants after the Summer Olympic Games. Having more than one large arena can decrease